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/raid1/www/Hosts/bankrupt/TCR_Public/061109.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, November 9, 2006, Vol. 10, No. 267 Headlines AGRICORE UNITED: Responds to Saskatchewan Wheat's Merger Offer ALLIED HOLDINGS: Creditors' Panel Hires Lang as Special Counsel ALLIED HOLDINGS: Wants to Amend And Assume Suntrust Leases ANCHOR GLASS: Alpha Trustee Has Until Dec. 15 to Object to Claims ANCHOR GLASS: Court Approves Compromise Deal with Encore APOSTOLIC CHURCH: Case Summary & Six Largest Unsecured Creditors BANKATLANTIC BANCORP: Fitch Holds Issuer Default Rating at BB+ BENCHMARK ELECTRONICS: Earns $29.3 Million in 2006 Third Quarter BERTUCCI'S CORP: Moody's Assigns Loss-Given-Default Ratings BRICKMAN GROUP: Groundmaster Deal Cues S&P's Revised Outlook BROWN AND COLE: Case Summary & 20 Largest Unsecured Creditors BUTLER ANIMAL: Moody's Assigns Loss-Given-Default Ratings CA INC: Moody's Holds Ba1 Rating After Fiscal 2nd Quarter Results CATHOLIC CHURCH: Davenport Will File Chapter 11 Plan Until Feb. 7 CB RICHARD: Launches 9-3/4% Senior Notes Solicitation Consent CCS MEDICAL: Moody's Assigns Loss-Given-Default Ratings CENTER FOR DIAGNOSTIC: Moody's Assigns Loss-Given-Default Ratings CERADYNE INC: Earns $36.9 Million in Quarter Ended Sept. 30 CHARLES RIVER: Moody's Assigns Loss-Given-Default Ratings CHEMED CORP: Reports $9.7 Million Net Income in Third Quarter CHEMED CORP: Moody's Assigns Loss-Given-Default Ratings CLEAR CHOICE: Unit's Funded Loan Volume Increases in October 2006 COLLINS & AIKMAN: Court Allows Rejection of Westland Lease COLLINS & AIKMAN: Court Approves Settlement Pact with GECC CONCENTRA OPERATING: Inks Pact to Sell First Notice to Innovation CONCENTRA OPERATING: Moody's Assigns Loss-Given-Default Ratings CRC HEALTH: Earns $1.7 Million in Second Quarter of 2006 CRC HEALTH: Moody's Assigns Loss-Given-Default Ratings DANA CORP: Dana Credit Claims Filing Deadline Stretched to Dec. 7 DANA CORP: Inks Pact Modifying Tennessee Power Supply Contract DAVID EDSTROM: Case Summary & 15 Largest Unsecured Creditors DAVITA INC: Moody's Assigns Loss-Given-Default Ratings DEREK ROLLE: Voluntary Chapter 11 Case Summary DEVELOPERS DIVERSIFIED: Inks Joint Venture Deal with TIAA-CREF DIAGNOSTIC IMAGING: Moody's Assigns Loss-Given-Default Ratings DIXIE GROUP: Earns $2.6 Million in 2006 Third Quarter EASTMAN KODAK: Proposed Sale Cues Moody's to Review Low-B Ratings ENTERCOM COMMS: S&P Lowers Long-Term Corp. Credit Rating to BB- EVANS INDUSTRIES: Ct. Approves Locke Liddell as Committee Counsel EVERGREEN INT'L: Closes Purchase of 12% Senior Notes due 2010 EXTENDICARE INC: Intends to Complete Reorganization by Tomorrow EXTENDICARE INC: Earns CDN$1.656 Million in Third Quarter of 2006 FHC HEALTH: Moody's Affirms B2 Corporate Family Rating FIBERVISIONS DELAWARE: Moody's Assigns Loss-Given-Default Rating FLEXTRONICS INT'L: Fitch Cuts Issuer Default Rating to BB+ FLYI INC: International Lease Wants Disclosure Statement Denied FREDDIE MAC: S&P Places Class B-5 Certs' B Rating on Neg. Watch FRIENDLY ICE CREAM: Moody's Assigns Loss-Given-Default Ratings GE COMMERCIAL: Fitch Holds Low-B Ratings on Five Cert Classes GENERAL MOTORS: Selling Hybrid Cars to Chinese Market in 2008 GENTIVA HEALTH: Earns $5.3 Million in Quarter Ended October 1 GENTIVA HEALTH: Moody's Assigns Loss-Given-Default Ratings GLOBAL POWER: Hires AlixPartners LLC as Claims & Balloting Agent GRAFTECH INTERNATIONAL: Moody's Assigns Loss-Given-Default Rating GREENMAN TECH: Unit Wins Deal to Clean Iowa Scrap Tire Sites HADEN INTERNATIONAL: Voluntary Chapter 7 Case Summary HAI PHAM: Case Summary & 14 Largest Unsecured Creditors HEALTHWAYS INC: Moody's Rates $600-Million Loans at Ba2 HERCULES INC: Moody's Assigns Loss-Given-Default Rating HINES HORTICULTURE: Adds $11.1 Million Asset Impairment Charge HINES HORTICULTURE: Sells Miami Properties to F&J for $12.5 Mil. HOLLINGER INC: Subsidiary Sells Toronto Property for $9.8 Million HOVNANIAN ENTERPRISES: Warns of Losses in 2006 Fourth Quarter IMMUNE RESPONSE: Issues 13 Million Common Shares for PR Services INT'L FINANCIAL: Case Summary & Three Largest Unsecured Creditors JETBLUE AIRWAYS: Moody's Rates Class B-1 Certificates at Ba3 JLG INDUSTRIES: Launches 8-1/4% Sr. Notes Offers & Solicitations KB HOME: U.S. Bank Issues Notice of Default on Senior Notes KIRKLAND KNIGHTSBRIDGE: Wants MacConaghy as Bankruptcy Counsel KIRKLAND KNIGHTSBRIDGE: Selects Sugarman as Special Accountant KRATON POLYMERS: Moody's Assigns Loss-Given-Default Rating KRONOS INTERNATIONAL: Moody's Assigns Loss-Given-Default Rating L'EAU LLC: Involuntary Chapter 11 Case Summary LB-UBS: Moody's Affirms Junk Rating on $3.9MM Class N Certificates LEESA NASCIMENTO: Voluntary Chapter 11 Case Summary LYONDELL CHEMICAL: Moody's Assigns Loss-Given-Default Rating MAIN STREET: Chapter 11 Trustee Hires Berger Singerman as Counsel MAIN STREET: Meeting of Creditors Scheduled on December 4 MATRIA HEALTH: Successfully Amends First Lien Credit Facility MAYCO PLASTICS: Ct. OKs Kurtzman Carson as Claims & Noticing Agent MCKESSON CORP: To Acquire Per-Se Technologies for $1.8 Billion MCKESSON CORP: $1.8-Bil. Buyout Cues Moody's to Affirm CFR at B1 MORGAN STANLEY: S&P Puts 'BB' Ratings on Positive Creditwatch MOSAIC COMPANY: Fitch Rates Proposed Senior Unsecured Notes at BB MOSAIC COMPANY: Moody's Places B1 Rating on Proposed $1BB Loan MRS. FIELDS: Moody's Assigns Loss-Given-Default Ratings NANTUCKET CBO: Moody's Junks Rating on $57 Million Senior NATHAN MCMULLEN: Voluntary Chapter 11 Case Summary NATIONSLINK FUNDING: Moody's Rates $15-Mil. Class J Certs at B3 NEW YORK RACING: Gets Court's Initial OK on Weil Gotshal Retention NEW YORK RACING: Taps Hinman Straub as Special Legislative Counsel NOMURA ASSET: S&P Puts B-Rated Class 1-B-5 Loan on CreditWatch NORTEL NETWORKS: Appoints Dr. Kristina M. Johnson to Board NORTEL NETWORKS: Posts $99 Million Net Loss in 2006 Third Quarter NORTH AMERICAN: Extends 9% Senior Notes Offering to November 24 NORTHWEST AIRLINES: Bombardier & Embraer Aircraft Purchase Okayed NORTHWEST AIRLINES: Wants to File Microsoft Accord Under Seal NRG ENERGY: S&P Affirms B+ Corp. Credit Rating with Stable Outlook ONEIDA LTD: July 29 Balance Sheet Upside-Down by $58.5 Million PANAVISION INC: AFM Buyout Cues Moody's to Affirm B2 Rating PBG AIRCRAFT: S&P Pares Rating on Class B Notes to B From BB PER-SE: McKesson Buyout Offer Cues Moody's to Affirm Rating at B1 PETER LOMBARDI: Case Summary & Five Largest Unsecured Creditors PIERRE FOODS: Buys Zartic Inc.'s Assets for $94 Million PORTRAIT CORP: Creditors' Panel Hires Stroock & Stroock as Counsel PORTRAIT CORP: Panel Hires Peter Solomon Co. as Financial Advisor PROBUILT CONSTRUCTION: Case Summary & 3 Largest Unsec. Creditors PSYCHIATRIC SOLUTIONS: FHC Deal Cues Moody's to Affirm CFR at B1 PSYCHIATRIC SOLUTIONS: S&P Rates Amended $650 MM Sec. Debts at B+ RADIATION THERAPY: Moody's Assigns Loss-Given-Default Ratings RADIOLOGIX INC: Moody's Assigns Loss-Given-Default Rating RADNET MANAGEMENT: Moody's Assigns Loss-Given-Default Ratings RAIT CRE: Fitch Rates $35 Mil. Class J Floating Rate Notes at BB REAL MEX: Moody's Assigns Loss-Given-Default Ratings RES-CARE INC: Moody's Assigns Loss-Given-Default Ratings ROTECH HEALTHCARE: Moody's Assigns Loss-Given-Default Ratings ROWE COMPANIES: Selects Tyler Bartl as Conflicts Counsel SAGITTARIUS RESTAURANTS: Moody's Assigns LGD Ratings SAINT VINCENTS: Court Approves Venable as Special Counsel SAINT VINCENTS: Tort Panel Wants Godward Kronish as Counsel SASKATCHEWAN WHEAT: Offers Merger Deal to Agricore United SBARRO INC: Moody's Assigns Loss-Given-Default Ratings SCALES FISHOUSE: Case Summary & 18 Largest Unsecured Creditors STANDARD PARKING: Earns $4.5 Million in Third Quarter 2006 SUPERIOR ENERGY: Earns $55.2 Million in 2006 Second Quarter TECHNICAL OLYMPIC: Balks at Deutsche's Guaranties Payment Demand TELCOM USA: Proofs of Claim Filing Period Ends on November 13 THOMPSON & WALTERS: Selling Nursery Grounds on November 17 TRIBUNE CO: Ousts LA Times Editor Dean Baquet TRW AUTOMOTIVE: Fitch Says Low-B Ratings Unaffected by Stock Deals TWC HOLDINGS: S&P Junks Corporate Credit Rating UNO RESTAURANT: Moody's Assigns Loss-Given-Default Ratings U.S. ENERGY: Denies Countryside Canada's Default Claims VESTA INSURANCE: Committee Seeks Court's OK on Salary Reduction VESTA INSURANCE: Gaines to Execute Non-Insider Worker Bonus VICORP RESTAURANTS: Moody's Assigns Loss-Given-Default Ratings VOLUME SERVICES: Moody's Assigns Loss-Given-Default Ratings WASHINGTON MUTUAL: Moody's Rates Class B Certificates at Ba1 WAVE WIRELESS: Wants to Sell Repair Business Assets for $150,000 WAVE WIRELESS: Wants to Use Cash Collateral to Pay Operation Costs WINSTAR COMMS: Chapter 7 Trustee Wants to Hire ESB as Accountants WORNICK CO: Uncertainty Over Waiver Cues S&P to Junk Rating XM SATELLITE: Posts $84 Mil. Net Loss in Quarter Ended Sept. 30 ZIFF-DAVIS: Moody's Affirms Corporate Family Rating at Caa1 * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ********* AGRICORE UNITED: Responds to Saskatchewan Wheat's Merger Offer -------------------------------------------------------------- Agricore United Limited's Board of Directors will be meeting to consider the unsolicited proposal of Saskatchewan Wheat Pool Inc. to purchase all of Agricore's outstanding Limited Voting Common Shares, Convertible Unsecured Subordinated Debentures (excluding debentures held by U.S. residents) and Series A Convertible Preferred Shares. Agricore said that in the meantime, it will not comment on the offers and will not speculate as to any future course of action it might take. The company urged shareholders not to tender their securities pending completion of their review and recommendation from the Board. Under Saskatchewan's offer, the Pool would merge with Agricore on the basis of each outstanding Limited Voting Common Shares of Agricore being exchanged for 1.35 common shares of Saskatchewan Wheat Pool, each outstanding $1,000 principal of Convertible Unsecured Subordinated Debentures of Agricore being exchanged for 180 common shares of Saskatchewan Wheat Pool and each outstanding Series A Convertible Preferred Share being acquired for $24 in cash. The Limited Voting Common Share exchange ratio, based on trading prices at the close of business on Nov. 7, 2006, represents a premium of approximately 13% to Agricore shareholders. In addition to the premium offered directly to Agricore shareholders and the proportionate sharing of synergies, Agricore would significantly de-lever its balance sheet. About Saskatchewan Wheat Based in Regina, Canada, Saskatchewan Wheat Pool Inc. (TSX:SWP) -- http://www.swp.com/-- is a publicly traded agribusiness. Anchored by a prairie-wide grain handling and agri-products marketing network, the Pool channels Prairie production to end-use markets in North America and around the world. About Agricore United Headquartered in Winnipeg, Manitoba, in Canada, Agricore United Limited -- http://www.agricoreunited.com/-- is an agri-business with extensive operations and distribution capabilities across western Canada. The Company's operations are diversified into sales of crop inputs and services, grain merchandising, livestock production services and financial services. * * * As reported in the Troubled Company Reporter on Sept. 27, 2006, Moody's Investors Service confirmed its Ba3 Corporate Family Rating for Agricore United Ltd. in connection with its implementation the Probability-of-Default and Loss-Given-Default rating methodology for the U.S. Consumer Products, Beverage, Toy, Natural Product Processors, Packaged Food Processors, and Agricultural Cooperative sectors. In August 2006, Moody's assigned a Ba3 rating to new senior secured credit facilities for Agricore United and AU Holdings Inc., a Ba2 rating to Agricore United's $525 million senior secured revolving credit, and a Ba3 corporate family rating. Moody's also assigned an SGL-2 speculative grade liquidity rating to Agricore United. The outlook on all ratings is stable. ALLIED HOLDINGS: Creditors' Panel Hires Lang as Special Counsel --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia authorized The Official Committee of Unsecured Creditors in Allied Holdings Inc. and its debtor-affiliates' chapter 11 cases to: (a) retain Lang Michener LLP as its special Canadian counsel, effective as of Oct. 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 Sept. 30, 2006. As reported in the Troubled Company Reporter on Oct. 31, 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. 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 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. 33; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/ or 215/945-7000) ALLIED HOLDINGS: Wants to Amend And Assume Suntrust Leases ---------------------------------------------------------- Allied Holdings, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Georgia to approve the amendment and assumption of certain lease agreements with SunTrust Leasing Corporation. BancBoston Leasing, Inc., leased certain truck tractors and car- haul trailers to Allied Systems, Ltd. (L.P.) pursuant to: * a master equipment lease dated June 30, 1998; and * lease supplements nos. 6 and 7, each dated May 17, 1999. Allied Holdings, Inc., agreed to be liable for the payment and performance of all Allied Systems' Lease obligations pursuant to an equipment lease guaranty dated June 29, 1998. The Lease Supplements were later assigned to SunTrust Leasing. Ezra H. Cohen, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, related that the Master Lease and Lease Supplements provide for, among other things: -- the lessee's option to purchase the equipment at the end of the seven-year term for a purchase price equal to 25% of the lessor's acquisition cost; -- the return of the Equipment to the Lessor at the conclusion of the seven-year term if the Lessee does not exercise its purchase option; -- the Lessor's sale of the Equipment if it is returned at the end of the lease term; and -- a "terminal rental adjustment clause", which states that if the equipment is returned to the Lessor and sold, a one- time lump-sum adjustment will be due based on the amount of the net sales proceeds for the Equipment. The Lease Supplements expired on May 31, 2006. The parties entered into a third amendment with respect to the Lease Supplements, the terms of which include: (1) the Lessee will cure any rent defaults, including those arising prepetition; (2) the term of the lease will be extended for one year; (3) during the Extended Term, Lessee will pay monthly rent at the pre-expiry rate set forth in the Lease Supplements; (4) the Lessee's obligation to pay rent and any TRAC Amount will be an administrative expense; and (5) the TRAC Amount will be reduced by 87.5% of the rent paid during the Extended Term. Mr. Cohen told the Court that the Lease Amendment will allow continued use of the Equipment, which is used by the Debtors to produce revenue. Mr. Cohen added that having considered the appraised value of comparable equipment and the cost of new equipment, the Debtors believe that the TRAC Amount equates to less than the value of the Equipment leased pursuant to the Lease Supplements. 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. 33; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/ or 215/945-7000) ANCHOR GLASS: Alpha Trustee Has Until Dec. 15 to Object to Claims ----------------------------------------------------------------- The Honorable Alexander L. Paskay of the U.S. Bankruptcy Court for the Middle District of Florida permits the Alpha Trustee appointed in Anchor Glass Container Corporation's Second Amended Plan of Reorganization to object to Class 5 Disputed Claims filed against Anchor Glass, through and including Dec. 15, 2006, without prejudice to the Alpha Trustee's right to seek another extension. Pursuant to Anchor Glass' Plan of Reorganization, Samuel M. Stricklin, as the Alpha Resolution Trustee, is responsible for objecting to any Class 5 Disputed Claims and resolving any pending objections to General Unsecured Claims. Mr. Stricklin asked the Court to extend his Claims Objection deadline through and including January 29, 2007. According to Edward J. Peterson, III, Esq., at Stichter, Riedel, Blain & Prosser, P.A., in Tampa, Florida, an extension will help ensure the Alpha Trustee has ample opportunity to fulfill his obligations under the confirmed Chapter 11 Plan. To date, the Alpha Trustee's attorneys have investigated the validity of more than 1,000 General Unsecured Claims, and have filed objections to hundreds of General Unsecured Claims that are set for hearing in the next couple of months, Mr. Peterson stated. The Trustee's attorneys have also reached settlements on numerous Disputed Claims, including the $6,000,000 claim filed by Encore Glass, Mr. Peterson added. The Trustee continues to research and investigate the allowability of some claims. The Alpha Trustee's attorneys have met with the Debtor's representatives on several occasions and have coordinated with Anchor Glass on the filing of objections, Mr. Peterson related. In some instances, however, the Trustee is still awaiting information or documents from Anchor Glass and will need to review those materials before determining whether objections are appropriate. 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) ANCHOR GLASS: Court Approves Compromise Deal with Encore -------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida authorized Samuel M. Stricklin, as the Alpha Resolution Trustee appointed pursuant to Anchor Glass Container Corporation's plan of reorganization, to enter into the Settlement Agreement with Encore Glass, Inc. Encore and Mr. Stricklin had asked the Court to approve a Compromise and Settlement Agreement resolving Encore's Claim No. 730 for $6,102,912. The pertinent terms of the Settlement Agreement are: -- Encore will be entitled to a $15,000 distribution from the Alpha Trustee in full and final satisfaction of any and all claims against Anchor Glass Container Corporation and the Alpha Resolution Trust; -- Within five days of receipt of the Distribution, Encore will dismiss its Appeal, which it filed in the Eleventh Circuit Court of Appeals, with prejudice; and -- Encore will have no further claims against the Debtor, the Alpha Resolution Trust, or the Alpha Trustee, and the Alpha Trustee will not be required to maintain any reserve for Claim No. 730. The Settlement Agreement ends the risks and uncertainty of litigation, the Alpha Trustee relates. It will save the time and expense of litigation. "If this matter were litigated, it would deplete assets of the Alpha Resolution Trust," the Alpha Trustee said. "The cash payment to Encore is approximately the amount that would be paid to Encore if its Claim were to be allowed in the amount of $150,000 to $225,000, depending upon other variables affecting the amount of distribution." 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) APOSTOLIC CHURCH: Case Summary & Six Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: The Apostolic Church, USA 1623 West Parmer Lane Austin, TX 78727 Bankruptcy Case No.: 06-11819 Type of Business: The Debtor is a religious organization. The Debtor filed for chapter 11 protection on Dec. 12, 2003 (Bankr. W.D. Tex. Case No. 03- 16045). Chapter 11 Petition Date: November 11, 2006 Court: Western District of Texas (Austin) Judge: Frank R. Monroe Debtor's Counsel: Stephen W. Sather, Esq. Barron & Newburger, P.C. 1212 Guadalupe, Suite 104 Austin, TX 78701 Tel: (512) 476-9103 Ext. 220 Fax: (512) 476-9253 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's Six Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Femi Onabajo Loan $300,000 1623 Parmer Lane Austin, TX 78727 Ezekiel Adejobi Loan $35,000 2074 Fieldview Tracy, CA 95377 Mike Faulk Loan $19,000 8905 Joachim Lane Austin, TX 78717 Stephen Onabajo Loan $11,000 6302 Eldridge View Houston, TX 77083 Adetutu Adesanya Loan $8,000 1623 Parmer Lane Austin, TX 78727 The Meadows at Chandler Creek Fees $5,000 MUD 14050 Summit Drive, Suite 113 Austin, TX 78728-7101 BANKATLANTIC BANCORP: Fitch Holds Issuer Default Rating at BB+ -------------------------------------------------------------- Fitch has affirmed the ratings of BankAtlantic Bancorp, Inc., and its subsidiaries. The Rating Outlook remains Stable. Fitch affirms these ratings: BankAtlantic Bancorp, Inc: -- Long-term Issuer Default Rating (IDR) and debt at 'BB+'; -- Short-term issuer rating at 'B'; -- Individual at 'C'; -- Support at '5'; -- Rating Outlook Stable. BankAtlantic FSB: -- Long-term IDR at 'BB+'; -- Long-term deposits at 'BBB-'; -- Short-term deposits at 'F3'; -- Short-term issuer rating at 'B'; -- Individual at 'C'; -- Support at '5'; -- Rating Outlook Stable. BBX's ratings reflect the company's solid capital, sound asset quality, and strong core deposit base. Conversely, BBX's concentrated banking franchise and volatile revenue contribution from its broker/dealer, Ryan Beck & Co. remain rating constraints. On a stand-alone basis, BBX's bank unit results were modest due to the elevated cost base, which has been inflated by the additional expenditures associated with its branch expansion program. Although management remains committed to its expansion strategy, Fitch believes modifications may be necessary if core operating performance does not improve. On the positive side, the bank's core deposit base has expanded over the past few years, spurred by its deposit growth initiatives. The bank continues to reduce its reliance on non-deposit funding sources. The loan portfolio continues to exhibit sound asset quality, which is attributable to solid underwriting standards. Loan loss reserve levels are ample, given historical levels of net chargeoffs and nonperforming loans. The company's capital levels remain solid and support its present business mix and risk profile. BankAtlantic's regulatory capital levels are above 'well capitalized' as defined by the regulators, augmented by a considerable level of trust-preferred securities. As such, BBX's Fitch capital ratio was a solid 9.94% at Sept. 30, 2006. BBX's recent earnings were affected by Ryan Beck's poor performance. The business segment reported three consecutive quarter losses, reflecting weakness in its investment banking activities, while operating costs remained elevated due to the expansion of its capital markets and investment banking platforms. Fitch believes there is limited strategic synergy between the broker/dealer unit and BBX's banking business. The company's present ratings incorporate the volatile earnings of its Ryan Beck unit. Nonetheless, BBX's ratings would come under pressure should it fail to improve its overall performance metrics. BENCHMARK ELECTRONICS: Earns $29.3 Million in 2006 Third Quarter ---------------------------------------------------------------- Benchmark Electronics, Inc. reported $29.3 million of net income for the quarter ended Sept. 30, 2006. In the comparable period last year, net income was $20.3 million. Excluding restructuring charges and the impact of stock-based compensation expense, the Company had net income before special items of $30 million in the third quarter of 2006. The Company generated sales of $770 million for the quarter ended Sept. 30, 2006, compared to $561 million for the same quarter last year. "Our teams continued to deliver solid results during the quarter, while running at record levels. Our focus will be on working capital metric improvements during upcoming quarters in addition to our ongoing focus on volume ramps of programs," stated Benchmark's President and CEO Cary T. Fu. Third Quarter 2006 Financial Highlights -- Operating margin for the third quarter was 4.5% on a GAAP basis and was 4.6%, excluding restructuring charges and the impact of stock-based compensation expense. -- Cash flows used in operating activities for the third quarter were $12 million. -- Cash and short-term investments balance at September 30, 2006 of $265 million. -- No debt outstanding. -- Accounts receivable balance at September 30, 2006 of $442 million; calculated days sales outstanding were 52 days. -- Inventory of $532 million at September 30, 2006; inventory turns were 5.4 times. Revenues for the fourth quarter of 2006 are expected to be between $710 million and $740 million. About Benchmark Benchmark Electronics, Inc. -- http://www.bench.com/-- manufactures electronics and provides its services to original equipment manufacturers of computers and related products for business enterprises, medical devices, industrial control equipment, testing and instrumentation products, and telecommunication equipment. Benchmark's global operations include facilities in eight countries. Benchmark's Common Shares trade on the New York Stock Exchange under the symbol BHE. * * * As reported in the Troubled Company Reporter on Nov. 3, 2006, Standard & Poor's Ratings Services placed its 'BB-' corporate credit rating on Angleton, Texas-based Benchmark Electronics Inc. on CreditWatch with positive implications after the company announced it will acquire Pemstar Inc. in a stock transaction valued at about $300 million. Moody's rates Benchmark's long-term corporate family rating at Ba3; Bank loan debt at Ba2; and equity linked at B2. The ratings were assigned on March 2003. BERTUCCI'S CORP: Moody's Assigns Loss-Given-Default Ratings ----------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the Restaurant sector, the rating agency revised its Caa1 Corporate Family Rating to B3 for Bertucci's Corporation, and held its Caa1 rating on the company's 10.75% Senior Unsecured Notes due 2008. In addition, Moody's assigned an LGD4 rating to those bonds, suggesting noteholders will experience a 67% 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%). Based in Northborough, Massachusetts, Bertucci's Corporation -- http://www.bertuccis.com/-- operates 92 Bertucci's casual dining pizza restaurants principally located in New England. BRICKMAN GROUP: Groundmaster Deal Cues S&P's Revised Outlook ------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on The Brickman Group Ltd. to stable from positive. At the same time, the company's 'BB-' senior secured debt rating was withdrawn. Existing ratings on the company, including the 'BB-' corporate credit and 'B' subordinated debt ratings were affirmed. About $225 million of debt was outstanding at June 30, 2006. For analytical purposes, the rating agency views The Brickman Group and Brickman Group Holdings Inc. as one economic entity. "The outlook revision follows Brickman's announcement that it has acquired substantially all of the assets of Groundmasters Inc., a full-service landscape company headquartered in Loveland, Ohio, with branch locations in Ohio, and Kentucky, for approximately $52.8 million," said Standard & Poor's credit analyst Jean C. Stout. The transaction was financed with $40 million of borrowings under the company's recently amended and upsized revolving credit facility, a $5 million junior subordinated convertible note and working capital. Given the increased debt levels, and diminished expectations for the continued strengthening of key credit measures, the rating agency no longer expect an upgrade in the near-to-intermediate term. The ratings on Brickman continue to reflect its narrow business focus, reliance on seasonal workers, and high debt burden. These factors are somewhat mitigated by the company's good position within the highly fragmented commercial landscape maintenance service market and by the favorable growth prospects in the industry. Brickman provides commercial landscape maintenance and design, and snow removal services. While Brickman is one of only a few national providers, it is focused solely on the U.S. market. This market is highly fragmented, with more than 45,000 local and regional competitors, and highly price competitive. However, the company's broad geographic presence and maintenance contracts with diverse customers somewhat limit the risk from changes in a single market, and provide a stream of recurring revenue. BROWN AND COLE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Brown and Cole Stores, LLC 1331 Commercial Street Bellingham, WA 98225 Bankruptcy Case No.: 06-13950 Type of Business: The Debtor is Washington state's oldest grocery company, founded in 1909. The Debtor currently operates 27 supermarkets across the state. See http://www.brownandcole.com/ Chapter 11 Petition Date: November 7, 2006 Court: Western District of Washington (Seattle) Judge: Samuel J. Steiner Debtor's Counsel: Aimee S. Willig, Esq. Armand J. Kornfeld, Esq. Gayle E. Bush, Esq. Katriana L. Samiljan, Esq. Bush Strout & Kornfeld 601 Union Street, Suite 5500 Seattle, WA 98101-2373 Tel: (206) 292-2110 Fax: (206) 292-2104 Estimated Assets: $1 Million to $100 Million Estimated Debts: More than $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Charlies Produce $676,911 c/o Bob Viggers P.O. Box 24606 Seattle, WA 98134 Washington State $600,000 Department of Revenue P.O. Box 47478 Olympia, WA 98504 Department of Labor & Industries $375,990 P.O. Box 34388 Seattle, WA 98124-1388 The News Group $263,423 3900 A Industry Drive East Fife, WA 98424 Franz Family Bakeries $219,635 Gais Division, Suite 269 P.O. Box 5037 Portland, OR 97208 Service Paper $209,882 McKesson Drug Co. $194,553 Mission Foods $185,548 Coca Cola Co. $171,165 Draper Valley $159,628 Dreyers $124,466 Bimbo Bakeries USA, Inc. $123,065 Marquez Brothers NW, Inc. $120,501 DPI Northwest $120,213 Pepsi Cola Bottling-Yakima $112,455 Dawn Food Products $111,473 Washington State Department of Revenue $110,000 NABISCO $105,062 Reser's Fine Foods $92,162 Benjamin News Group $83,240 BUTLER ANIMAL: 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 Healthcare Service and Distribution sector, the rating agency confirmed its B2 Corporate Family Rating for Butler Animal Health Holding Co. LLC. Additionally, Moody's revised or confirmed its probability-of- default ratings and assigned loss-given-default ratings on these debts: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Senior secured first lien revolver B2 B1 LGD3 42% Senior secured first lien term loan B2 B1 LGD3 42% Senior secured second lien term loan Caa1 Caa1 LGD5 86% Moody's current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as its research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% - 9%) to LGD6 (loss anticipated to be 90% - 100%). Dublin, Ohio-based Butler Animal Health Holding Co. LLC was created by the combination of W.A. Butler Company LLC and Burns Veterinary Supply Inc. Butler AHHC's 100% owned operating subsidiary, Butler Animal Health Supply LLC, serves over 29,000 veterinary clinics in all 50 states and distributes over 15,000 products for more than 300 vendors. The Company operates with 24 distribution centers and 11 telecenters. CA INC: Moody's Holds Ba1 Rating After Fiscal 2nd Quarter Results ----------------------------------------------------------------- Moody's Investors Service affirmed CA's Ba1 senior unsecured rating and negative rating outlook following the company's announcement of fiscal second quarter financial results and fiscal 2007 revised guidance. On Nov. 2, 2006, CA reported Q2 fiscal 2007 results, including client bookings and billings, which were below the company's and Moody's expectations. In addition, the company revised FY 2007 guidance for cash flow from operations to a range of $900 million to $1 billion from a prior $1.3 billion target, a nearly 30% reduction, and reported its intention to reassess further share repurchases until it deems financial performance has improved. The company's Ba1 senior unsecured rating reflects its large portfolio of mission critical software product offerings and installed base of a diverse set of creditworthy clients, which in isolation could potentially map to a high Baa rating. However, the rating also reflects the company's weakened client billings and bookings performance, exposure to mature mainframe and Unix markets, uncertainties surrounding effective internal financial controls, unsettled fulfillment of the terms of the Deferred Prosecution Agreement, moderate financial leverage, and modest returns on net assets, which collectively drive the overall Ba1 rating. The negative outlook reflects challenges the company has to revive organic growth, implement effective financial controls, remediate material weaknesses to its financial reporting, and contain costs. Headquartered in Islandia, New York, with nearly $3.9 billion LTM September 2006 revenues, CA, Inc. is an enterprise software vendor for enterprise management, security, and storage applications. CATHOLIC CHURCH: Davenport Will File Chapter 11 Plan Until Feb. 7 ----------------------------------------------------------------- The Diocese of Davenport has represented to the U.S. Bankruptcy Court for the Southern District of Iowa that it intends to file a plan of reorganization and disclosure statement as soon as possible, but no later than Feb. 7, 2007. The Court will schedule a status conference pursuant to Section 105(d) of the Bankruptcy Code after the Diocese has filed its plan and disclosure Statement, to discuss deadlines and hearings pertaining to those Plan documents. The United States Trustee will file a report on or before Dec. 10, 2006, regarding the status of the interest of every known claimant who has sought bankruptcy relief. The U.S. Trustee will update that report upon learning the names of any additional claimants. The U.S. Trustee will refer to those claimants who wish to remain anonymous by reference to a master list. The Diocese of Davenport in Iowa filed for chapter 11 protection (Bankr. S.D. Ia. Case No. 06-02229) on October 10, 2006. Richard A. Davidson, Esq., at Lane & Waterman LLP, represents the Davenport Diocese in its restructuring efforts. In its Schedules of Assets and Liabilities filed with the Court, the Davenport Diocese reports $4,492,809 in assets and $1,650,439 in liabilities. (Catholic Church Bankruptcy News, Issue No. 72; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CB RICHARD: Launches 9-3/4% Senior Notes Solicitation Consent ------------------------------------------------------------- CB Richard Ellis Services Inc., wholly-owned subsidiary of CB Richard Ellis Group Inc., commenced a cash tender offer for any and all of its outstanding $130,000,000 aggregate principal amount 9-3/4% Senior Notes due 2010 on the terms and subject to the conditions set forth in its Offer to Purchase and Consent Solicitation Statement dated Nov. 3, 2006 and the related Consent and Letter of Transmittal. The Company is also soliciting consents to certain proposed amendments to the indenture governing the Notes to eliminate most of the restrictive covenants and certain events of default. The tender offer documents more fully set forth the terms of the tender offer and consent solicitation. The tender offer will expire at 5:00 p.m., New York City time, on Dec. 4, 2006, unless extended or earlier terminated by the Company. The Company reserves the right to terminate, withdraw or amend the tender offer and consent solicitation at any time subject to applicable law. The Company expects to pay for any Notes purchased pursuant to the tender offer and consent solicitation in same-day funds on a date promptly following the expiration of the tender offer. The Company's obligation to accept for purchase, and to pay for, Notes validly tendered and not withdrawn pursuant to the tender offer and the consent solicitation is subject to the satisfaction or waiver of certain conditions, including the receipt of sufficient consents with respect to the proposed amendments to the indenture. The Company intends to finance the purchase of the Notes and related fees and expenses with cash on hand or funds drawn under its existing credit facility. The complete terms and conditions of the tender offer and the consent solicitation are set forth in the tender offer documents which are being sent to holders of Notes. The Company has retained Credit Suisse to act as Dealer Manager in connection with the tender offer and consent solicitation. Questions about the tender offer and consent solicitation may be directed to Credit Suisse at 800-820-1653 or 212-538-0652. Copies of the tender offer documents and other related documents may be obtained from Georgeson Inc., the information agent for the tender offer and consent solicitation, at 866-244-9585 or 212-440-9800. Headquartered in Los Angeles, California, CB Richard Ellis Services, Inc., provides commercial real estate services. Services it provides include property sales/leasing brokerage, property management, corporate services and facilities management, capital markets advice and execution, appraisal/valuation services, research and consulting. CB Richard Ellis has approximately 14,500 employees and over 200 offices across more than 50 countries. * * * On Nov. 2, 2006, Moody's Investors Service affirmed the ratings of CB Richard Ellis Services Inc.'s senior secured bank credit facility at Ba1; senior unsecured debt at Ba1, with a stable outlook following the announcement that CBRE will acquire Trammell Crow Company in a transaction valued at $2.2 billion. In April 2006, Moody's raised the senior debt ratings of CB Richard Ellis Services, Inc. to Ba1, from Ba3. CCS MEDICAL: 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 Healthcare Service and Distribution sector, the rating agency confirmed its Caa1 Corporate Family Rating for CCS Medical Inc. Additionally, Moody's upgraded its probability-of-default ratings and assigned loss-given-default ratings on these debts: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- First Priority Secured Revolver Caa1 B3 LGD3 33% First Priority Term Loan Caa1 B3 LGD3 33% Second Priority Term Loan Caa3 Caa2 LGD5 81% Moody's current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as its research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% - 9%) to LGD6 (loss anticipated to be 90% - 100%). Headquartered in Clearwater, Fla., CCS Medical Inc. -- http://www.diabetic.com/-- is a nationwide direct-to-home provider of diabetes supplies, name brand medical supplies and prescription medications for Medicare and private insurance patients. The Company delivers diabetic testing supplies, insulin pumps, diabetic medications, nebulizers and respiratory supplies, ostomy supplies, and prescription medications for Medicare and private insurance patients. CENTER FOR DIAGNOSTIC: 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 Healthcare Service and Distribution sector, the rating agency revised its Corporate Family Rating for Center for Diagnostic Imaging Inc. to B3 from B2. Additionally, Moody's upgraded its probability-of-default ratings and assigned loss-given-default ratings on these debts: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- 5-yr. Senior Secured Revolver due 2009 B2 B1 LGD2 25% 6-yr. Senior Secured Term Loan due 2010 B2 B1 LGD2 25% Moody's current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as its research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% - 9%) to LGD6 (loss anticipated to be 90% - 100%). Minneapolis, Minn.-based Center for Diagnostic Imaging Inc. known as CDI -- http://www.cdiradiology.com/-- provides diagnostic imaging services through a network of 37 freestanding outpatient imaging centers in eight states. The company's centers provide a full range of imaging services including magnetic resonance imaging -- MRI, computed tomography -- CT, nuclear medicine, diagnostic and therapeutic injection procedures -- DTI, positron emission tomography -- PET, ultrasound, nuclear medicine, mammography, fluoroscopy and conventional radiography. CERADYNE INC: Earns $36.9 Million in Quarter Ended Sept. 30 ----------------------------------------------------------- Ceradyne Inc. filed its third quarter financial statements for the three months ended Sept. 30, 2006, with the Securities and Exchange Commission on Nov. 1, 2006. For the quarter ended Sept. 30, 2006, the Company earned $36.9 million of net income on $185.7 million of net revenues compared to $13.3 million of net income on $94.4 million of net revenues for the same period in 2005. The Company's cash, cash equivalents and short-term investments totaled $175.5 million at Sept. 30, 2006, compared to $99.4 million at Dec. 31, 2005. At Sept. 30, 2006, the Company had working capital of $294 million, compared to $212.3 million at Dec. 31, 2005. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?14a4 Based in Costa Mesa, California, Ceradyne, Inc., (Nasdaq: CRDN) -- http://www.ceradyne.com/-- develops, manufactures and markets advanced technical ceramic products and components for defense, industrial, automotive and consumer applications. * * * Ceradyne's $50 million revolving credit facility due 2009 carries Standard & Poor's BB- rating. The Company's credit rating is also rated BB- by Standard & Poor's. CHARLES RIVER: 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 Healthcare Service and Distribution sector, the rating agency confirmed its Ba1 Corporate Family Rating for Charles River Laboratories International Inc. Additionally, Moody's upgraded its probability-of-default ratings and assigned loss-given-default ratings on these debts: ISSUER: Charles River Laboratories International Inc. Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Senior Secured U.S. Revolving Credit Facility Ba1 Baa3 LGD2 23% Senior Secured U.S. term loan A Ba1 Baa3 LGD2 23% ISSUER: Charles River Laboratories Pre-clinical Services Montreal Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Canadian Term Loan Ba1 Baa3 LGD2 23% Canadian Revolving Credit Facility Ba1 Baa3 LGD2 23% ISSUER: Charles River Laboratories Pre-clinical Services Edinburgh Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- GBP Revolving Credit Facility Ba1 Baa3 LGD2 23% GBP Term Loan Ba1 Baa3 LGD2 23% Moody's current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as its research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% - 9%) to LGD6 (loss anticipated to be 90% - 100%). Wilmington, Mass.-based Charles River Laboratories International Inc. (NYSE: CRL) -- http://www.criver.com/-- sells pathogen-free, fertilized chicken eggs to poultry vaccine makers. It also offers contract staffing, preclinical drug candidate testing, and other drug development services. It also markets research models -- rats and mice bred for preclinical experiments, including transgenic "knock out" mice -- to the pharmaceutical and biotech industries. It sells its products in more than 50 countries to drug and biotech companies, hospitals, and government entities. The Company employs 7,500 people. CHEMED CORP: Reports $9.7 Million Net Income in Third Quarter ------------------------------------------------------------- Chemed Corporation filed its third quarter financial statements for the three months ended Sept. 30, 2006, with the Securities and Exchange Commission on Nov. 1, 2006. The Company earned $7.9 million of net income on $253.2 million of net revenues for the quarter ended Sept. 30, 2006, compared to $14.6 million of net income on $233.3 million of net revenues for the same period in 2005. The Company disclosed significant changes in its balance sheet accounts from Dec. 31, 2005, to Sept. 30, 2006: (1) the $51.7 million decline in cash and cash equivalents from $57.1 million at Dec. 31, 2005, to $5.4 million at Sept. 30, 2006, is primarily attributable to the use of $69.1 million in cash to repay the Company's $84.4 million term note, the use of approximately $20 million in cash to fund the Costa case settlement, the use of approximately $8.3 million for purchases of treasury stock and the delay in the monthly U.S. federal government payment for VITAS services. The U.S. federal government generally pays VITAS in the same month hospice care was provided. The payment due Sept. 29, 2006, of $23.9 million was delayed until early October by the U.S. federal government due to its budgetary constraints. The cash uses were partially offset by cash provided by operations. (2) the decrease in other current liabilities of $20.8 million is primarily attributable to the Company's funding of the Costa settlement during the second and third quarter of 2006. The legal accrual for the Costa case of $19.7 million at Dec. 31, 2005, was classified in other current liabilities. (3) the reduction in long-term debt from $234.1 million at Dec. 31, 2005, to $165.8 million at Sept. 30, 2006, resulted from repayment of the Company's $84.4 million term loan with JPMorgan Chase in March 2006, partially offset by borrowings on our revolving line of credit to fund a portion of the repayment. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?14a3 Cincinnati, Ohio-based Chemed Corporation (NYSE:CHE) -- http://www.chemed.com/-- operates VITAS Healthcare Corporation, which provides end-of-life care, and Roto-Rooter, a commercial and residential plumbing and drain cleaning services provider. CHEMED CORP: Moody's Assigns Loss-Given-Default Ratings ------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the Healthcare Service and Distribution sector, the rating agency confirmed its Ba2 Corporate Family Rating for Chemed Corporation. Additionally, Moody's upgraded its probability-of-default ratings and assigned loss-given-default ratings on these debts: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Senior secured revolving credit facility Ba2 Baa2 LGD2 11% 8.75% senior unsecured notes Ba3 Ba3 LGD4 68% Moody's current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as its research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% - 9%) to LGD6 (loss anticipated to be 90% - 100%). Cincinnati, Ohio-based Chemed Corporation (NYSE:CHE) -- http://www.chemed.com/-- operates VITAS Healthcare Corporation, which provides end-of-life care, and Roto-Rooter, a commercial and residential plumbing and drain cleaning services provider. CLEAR CHOICE: Unit's Funded Loan Volume Increases in October 2006 ----------------------------------------------------------------- Clear Choice Financial, Inc.'s wholly owned subsidiary Bay Capital Corp. reached a four month high for both total loan submissions and funded loan volume for October 2006. The Company achieved this 23% increase over September's numbers by funding just over $27 million in mortgage refinancings and new home loans. "By most accounts October was an excellent month," remarked Clear Choice President and CEO Chad Mooney. "Our thirteen Bay Capital branches nationwide have all been exhibiting a renewed sense of excitement and vigor following the Company's recent transformation process." Clear Choice's lending operations subsidiary, comprised of company-owned and affiliated branch offices operating under the Bay Capital name, was widely reorganized over the past three to five months. The management of Clear Choice engaged in a cogitative restructuring process that resulted in the successful consolidation of both Bay Capital Corp. and Allstate Capital, Inc. into the Clear Choice Financial family. "As Bay Capital's pipeline continues to grow, it is likely that the Company will experience continued increases in both loan submissions and funded loan volumes," added Mr. Mooney. "These milestones are nice, as they indicate that the tireless efforts put forth recently by the men and women of Clear Choice's lending operations are setting the stage for substantial organic growth in 2007." About Clear Choice Financial Headquartered in Tempe, Arizona, Clear Choice Financial, Inc. (OTCBB: CLRC) -- http://www.clearchoicecorp.com/-- is a publicly traded company that specializes in assisting consumers with the settlement of unsecured debt through its debt resolution business unit. The Company has acquired Bay Capital Corporation as part of the company's strategy to build a comprehensive financial solutions organization with a national presence. Going Concern Doubt As reported in the Troubled Company Reporter on July 6, 2006, Farber & Hass LLP expressed substantial doubt about Clear Choice's ability to continue as a going concern after it audited the Company's financial statements for the years ended June 30, 2005 and 2004. The auditing firm pointed to the Company's significant net losses and stockholders' deficit. COLLINS & AIKMAN: Court Allows Rejection of Westland Lease ---------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Michigan authorized Collins & Aikman Corporation and its debtor-affiliates to reject the lease for certain premises at 1515 Newburgh Road, in Westland, Michigan, effective as of the earlier of: (a) December 31, 2006; and (b) the date the Debtors surrender the premises under the Lease. The Debtors told the Court they will no longer need an unexpired lease associated with their plant in Westland, Michigan, as they are closing that plant. The Debtors said the Rejection Date will provide them sufficient time to wind down their operations at the plant and surrender the premises. InSite Westland, LLC, the landlord under the lease, has consented to the rejection. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) COLLINS & AIKMAN: Court Approves Settlement Pact with GECC ---------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Michigan has approved a stipulation between Collins & Aikman Corporation, its debtor-affiliates and General Electric Capital Corporation. Pursuant to the stipulation, GECC will receive payments to satisfy its claims under a Receivables Transfer Agreement. On Sept. 14, 2005, GECC filed a complaint against Collins & Aikman Corporation; Carcorp, Inc.; General Motors Corporation; General Motors of Canada Limited; General Motors de Mexico, S. del R.L. de C.V.; Saturn Corporation; DaimlerChrysler Corporation; DaimlerChrysler Canada, Inc.; and DaimlerChrysler Motor Company, LLC. The GECC Adversary Proceeding addresses prepetition receivables that GECC believes were sold by the Debtors to Carcorp, and subsequently sold by Carcorp to GECC. GECC sought a declaratory judgment as to its interest in the receivables. The Debtors sought to collect the receivables as GECC's collection agent. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CONCENTRA OPERATING: Inks Pact to Sell First Notice to Innovation ----------------------------------------------------------------- Concentra Operating Corporation has signed an agreement to sell its subsidiary, First Notice Systems Inc., to The Innovation Group plc for $50 million in cash. First Notice, headquartered in Boston, Mass., currently generates approximately $20 million in annual revenue by providing first notice of loss or injury services to insurance carriers, third- party administrators and self-insured customers. First Notice was acquired by Concentra in 1997 and has operated since that time as a stand-alone unit within the Company's Network Services business segment. Hassan Sadiq, The Innovation Group's CEO, said, "The acquisition of First Notice gives The Innovation Group critical mass in the U.S. and is complementary to our recently announced acquisition of SurePlan. "This strategic U.S. presence, underpinned by a strong global performance, leaves the enlarged group well placed for future growth." The Innovation Group's U.S. operations are based principally in Connecticut, and global operations for the Group are headquartered in the United Kingdom near London. Commenting on the announcement, Daniel Thomas, Concentra's president and CEO, said, "We believe our customers will benefit from the pairing of First Notice and The Innovation Group. "We consider The Innovation Group to be a strategic partner in delivering cost-effective solutions to our clients in common." Concentra and The Innovation Group expect to complete the sale of First Notice later this year, subject to the approval of Concentra's senior lenders, the approval of The Innovation Group's shareholders, the arrangement of necessary financing by The Innovation Group, and other customary conditions. Pursuant to the requirements of its Senior Credit Agreement, Concentra currently anticipates that it will apply approximately $25 million to $30 million of the net after-tax cash proceeds it receives from the sale toward the prepayment of a portion of its senior term indebtedness. About The Innovation Group plc The Innovation Group plc (LSE: TIG.L) provides outsourcing services and software solutions to insurers and other risk carriers through its international network of offices. The Group has assembled a portfolio of important assets comprising a set of software-led business processes for the handling of the breadth of the administrative processes of insurers and risk carriers, including back office functions such as claims management and sales, as well as software technology for both policy and claims administration that can be both utilized in connection with the Group's outsourcing operations and implemented on a stand-alone basis. The Group has offices in the United Kingdom, Continental Europe, South Africa, Japan, Australia, and North America. About Concentra Concentra Operating Corporation -- http://www.concentra.com/-- is a wholly owned subsidiary of Concentra Inc. The Company serves the occupational, auto, and group healthcare markets. Concentra provides employers, insurers, and payors with a series of integrated services that include employment-related injury and occupational healthcare, in-network and out-of-network medical claims review and repricing, access to preferred provider organizations, first notice of loss services, case management, and other cost containment services. The Company has 310 health centers located in 40 states. It also operates the Beech Street and FOCUS PPO networks. These networks include 544,000 providers, 52,000 ancillary providers and 4,400 acute-care hospitals nationwide. CONCENTRA OPERATING: 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 Healthcare Service and Distribution sector, the rating agency confirmed its B1 Corporate Family Rating for Concentra Operating Corporation. Additionally, Moody's upgraded its probability-of-default ratings and assigned loss-given-default ratings on these debts: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Senior Secured Revolving Credit Facility due 2010 B1 Ba2 LGD2 29% Senior Secured Term Loan due 2011 B1 Ba2 LGD2 29% Senior Subordinated Notes due 2010 B3 B3 LGD5 83% Senior Subordinated Notes due 2012 B3 B3 LGD5 83% Moody's current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as its research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% - 9%) to LGD6 (loss anticipated to be 90% - 100%). Concentra Operating Corporation -- http://www.concentra.com/-- is a wholly owned subsidiary of Concentra Inc. The Company serves the occupational, auto, and group healthcare markets. Concentra provides employers, insurers, and payors with a series of integrated services that include employment-related injury and occupational healthcare, in-network and out-of-network medical claims review and repricing, access to preferred provider organizations, first notice of loss services, case management, and other cost containment services. The Company has 310 health centers located in 40 states. It also operates the Beech Street and FOCUS PPO networks. These networks include 544,000 providers, 52,000 ancillary providers and 4,400 acute-care hospitals nationwide. CRC HEALTH: Earns $1.7 Million in Second Quarter of 2006 -------------------------------------------------------- CRC Health Corporation filed its financial statements for the second quarter ended June 30, 2006, with the Securities and Exchange Commission. For the second quarter ended June 30, 2006, the Company reported $1.727 million of net income. Consolidated net revenue increased $11.4 million, or 22.5%, to $62.1 million in the quarter ended June 30, 2006, from $50.7 million in the quarter ended June 30, 2005. Excluding the one time effect of the unearned revenue adjustment, its consolidated net revenue increased $10.9 million, or 21.4%, in the quarter ended June 30, 2006. The increase in consolidated net revenue of $11.4 million was primarily attributable to an increase of $9.6 million, or 31.9%, in residential treatment net revenue, and, to a lesser extent, an increase of $1.7 million, or 8.1%, in opiate treatment net revenue. The growth in residential treatment net revenue was in part attributable to a $2.6 million, or 9.5%, increase in same-facility net revenue, and in part to the $4.7 million and $1.2 million of net revenue generated by Sierra Tucson and Wellness Resource Center, which it acquired in May 2005 and September 2005, respectively. The Company's same-facility residential growth was driven in part by a 6.4% increase in patient census and a 2.9% increase in revenue per patient day. Opiate treatment same-facility net revenue increased 6.9%. This increase was primarily attributable to an increase in the number of patients receiving treatment at our opiate treatment clinics. On a same-facility basis, opiate treatment clinic census increased 5.1% from an average daily census of 20,305 in the second quarter of 2005 to an average daily census of 21,330 in the second quarter of 2006. Consolidated income from operations increased $1.4 million, or 11.7%, in the second quarter of 2006 compared with the second quarter of 2005. Other income increased $600,000 in 2006 due primarily to a non- cash gain recognized on the fair value of our interest rate swap. Interest expense and other financing costs increased $3.8 million, or 56.0%, to $10.6 million in 2006 from $6.8 million in 2005. This increase is attributable to the issuance of new senior and subordinated debt related to the Transactions. Income tax expense remained flat in the second quarter of 2006 compared with the second quarter of 2005. The effective tax rate increased from 40.1% for 2005 to 56.4% for 2006. This increase relates primarily to the tax benefit in January 2006 attributable to deduction of one-time costs. The one-time deductions include: payments for stock options and management bonuses; sellers' fees paid at the closing of the Transactions; and write-offs of debt discount and capitalized financing costs. Excluding the one-time deductions, the effective tax rate for the second quarter of 2006 would have been 41.2%. At June 30, 2006, the Company's balance sheet showed $883.282 million in total assets, $584.465 million in total liabilities, and $298.817 million in total stockholders' equity. Working Capital The Company had working capital of $17.6 million on June 30, 2006, compared with working capital of $2.3 million at Dec. 31, 2005. The increase in working capital from Dec. 31, 2005, to June 30, 2006 was primarily attributable to a net increase in income tax receivable of $5.9 million (an increase in income tax receivable of $2.5 million and a decrease in income tax payable of $3.4 million) and a decrease in current portion of long-term debt of $9.1 million. The increase in income tax receivable resulted from a pre-tax book loss in the six months ended June 30, 2006, due to charges to the Predecessor Company statement of operations in January 2006 in connection with the Transactions. Those charges included: write- offs of discount on debt and capitalized financing costs; accrual for payment of stock options and management bonuses; and accrual for payment of sellers' fees. Acquisitions In the second quarter of 2006, the Company completed two acquisitions for a total cash consideration of approximately $3.6 million. The Company recorded $3.3 million of goodwill and $200,000 of purchased intangibles in connection with these acquisitions. The goodwill amount is expected to be fully deductible for tax purposes and was assigned to the Company's residential segment. The acquisitions were accounted for as a purchase and, accordingly the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values. The Company has included the results of operations in the condensed consolidated statements of operations of these acquisitions from the respective date of the acquisition. Pro forma results of operations have not been presented because the effects of these acquisitions are not material on either an individual or an aggregate basis. In May 2005, the Company acquired substantially all of the assets of Sierra Tucson for approximately $132.1 million, including acquisition related expenses of $2.7 million, and assumed certain of its liabilities. Sierra Tucson was a 91-bed residential treatment facility (at the time of acquisition) and is located outside Tucson, Arizona. In connection with the 4therapy acquisition in October 2005, the Company is obligated to make certain earn-out payments in the amount of up to $1.8 million in the first year and up to $2 million in the second year if 4therapy meets certain milestones relating to the generation of referrals in the first and second year after closing. As of June 30, 2006, 4therapy has achieved the pro-rata portion of the first year milestones and as result the Company recorded additional goodwill and a liability of $1.3 million, respectively. As of Aug. 10, 2006, 4therpay has achieved the full amount of first year milestones. The Company expects to make an earn-out payment of $1.8 million related to the first year milestones in the fourth quarter of 2006. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?14a2 Cupertino, Calif.-based CRC Health Corporation 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. CRC HEALTH: 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 Healthcare Service and Distribution sector, the rating agency confirmed its B2 Corporate Family Rating for CRC Health Corporation. Additionally, Moody's upgraded its probability-of-default ratings and assigned loss-given-default ratings on these debts: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- 6-yr. Senior Secured Revolver due 2012 B1 Ba3 LGD2 29% Senior Secured Term Loan B due 2013 B1 Ba3 LGD2 29% 10.75% Senior Suburdinated Notes due 2016 Caa1 Caa1 LGD5 84% Moody's current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as its research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% - 9%) to LGD6 (loss anticipated to be 90% - 100%). Cupertino, Calif.-based CRC Health Corporation 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. DANA CORP: Dana Credit Claims Filing Deadline Stretched to Dec. 7 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has approved the stipulation among Dana Corporation and its debtor-affiliates, Dana Credit Corporation, and the holders of notes from Dana Credit extending the Sept. 21, 2006 claims filing deadline, solely for Dana Credit and the Noteholders, until Dec. 7, 2006, to permit the parties to continue to engage in good- faith settlement negotiations. As reported in the Troubled Company Reporter on Oct. 26, 2006, the Debtors and Dana Credit asserted various claims against each other related to transfers, loans, other business relationships and the conduct of the parties over the years. DCC is a non- debtor subsidiary of Dana Corp. Certain holders of notes from DCC also assert various claims against Dana and DCC. The Noteholders, represented by Kirkland & Ellis, LLP, are: * Angelo, Gordon & Co., * Banc of America Securities, * Bear Stearns & Co., * Blackstone, * Canyon Capital Advisors, LLC, * Castle Creek Partners, * Citigroup Distressed Debt, * CRT Capital Group, * Delaware Investments, * DK Partners, * Durham Asset Management L.L.C., * Fortress Investment Group LLC, * Franklin Mutual Advisors, LLC, * Gruss & Co., * Harvest Management, LLC, * Intermarket Corp., * JP Morgan Chase, * Mast Capital, LLC, * MBIA Asset Management, * Merrill Lynch Inc., * Par IV Capital Management, * Plainfield Asset Management, * Polygon Investment Partners, LP, * Quadrangle Group, LLC, * Silverpoint Capital, * St. Paul Travelers, * Stonehill Capital Management, LLC, * Taconic Capital, * Talek Investments, and * York Capital Management, L.P. 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. 25; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DANA CORP: Inks Pact Modifying Tennessee Power Supply Contract -------------------------------------------------------------- Dana Corporation and its debtor-affiliates, the city of Paris, Tennessee Board of Public Utilities and the Tennessee Valley Authority further modified the power supply contract they previously entered into to provide that if the Debtors provide notice of their intent to terminate their power takings under the modified Contract on less than 24 months notice, Paris will waive all claims for FPI charges after the termination of the Debtors' power takings, provided that the Debtors provide Paris and TVA at least 60 days' written notice. The parties further modified the Agreement to provide that it does not restrict Paris from collecting the applicable firm rate schedule charges for the firm demand for up to the full 24-month termination period provided for by the Modified Contract. Corinne Ball, Esq., at Jones Day, in New York, contends that based on the present applicable firm rate schedule, the FPI Charges would be approximately $60,000 for the entire 24-month period. Ms. Ball explains that the modification does not materially affect the benefits the Debtors can obtain in assuming the Modified Contract. Hence, the Debtors ask the U.S. Bankruptcy Court for the Southern District of New York to approve the modification of the Contract. As reported in the Troubled Company Reporter on Oct. 26, 2006, the Debtors sought the Court's authority to assume a modified firm and variable price interruptible power supply contract they entered into with the city of Paris, Tennessee Board of Public Utilities on Nov. 1, 2000. Pursuant to the Contract, Paris purchases electric power from the Tennessee Valley Authority, and resells the electric power to the Debtors for their facility in Paris, Tennessee. Since November 2000, the Debtors have consumed an average of $2,500,000 in VPI power on an annual basis. As of Mar. 3, 2006, Paris held a $168,854 prepetition general unsecured claim against the Debtors related to the consumption of VPI power. Paris has advised the Debtors that it intends to terminate the Contract effective September 2009. Pursuant to the final utility order, the Court allows the Debtors to resolve objections to their utility motion in the form of individualized adequate assurance agreements with the objecting parties. Accordingly, in April 2006, the Debtors entered into an adequate assurance agreement with Paris. The Adequate Assurance Agreement provides that the Debtors would: (i) provide Paris a $319,000 cash security deposit, which will be held by Paris until the Debtors emerge from Chapter 11; and (ii) pay Paris on account of their postpetition electricity consumption under the Contract on a bi-monthly basis. Power Supply Contract On Oct. 1, 2006, the Debtors, Paris and the TVA modified the Power Supply Contract to provide that: (a) Paris will provide the Debtors with "flat price interruptible" power rather than VPI power; (b) The Bi-Monthly Payment Terms will be revoked and the Contract will return to the normal billing practices before the execution of the Adequate Assurance Agreement; (c) The parties will be permitted to terminate the Contract upon 24 months' written notice; (d) The Debtors will pay $50,656 cash to Paris, as a lump sum wire transfer, on the earlier of the entry of an order granting the Assumption Motion or December 15, 2006; (e) Paris will have an allowed administrative claim for $118,198 against the Debtors' estate, pursuant to Sections 503(b) and 507(a)(2) of the Bankruptcy Code. The Claim will be accorded the treatment generally provided to administrative claims pursuant to the terms of a plan of reorganization ultimately confirmed in the Debtors' Chapter 11 cases; (f) Paris' Non-Contract Claim will be allowed as a general unsecured non-priority claim for $17,461 against the Debtors; (g) Paris will waive all claims for Minimum Bills or Facilities Rental Charge after the termination date, provided that the Debtors provide Paris and the TVA with at least 60 days' written notice of their intent to terminate the Contract; and (h) The Debtors will release Paris from any preference liabilities arising under Section 547 of the Bankruptcy Code related to payments made by the Debtors pursuant to the Contract. A full-text copy of the Modified Power Contract is available for free at http://researcharchives.com/t/s?13e8 The Debtors also asked the Court to approve the modifications on the Contract. 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. 25; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DAVID EDSTROM: Case Summary & 15 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: David George Edstrom 113 West Gordon Street Savannah, GA 31401 Bankruptcy Case No.: 06-41588 Chapter 11 Petition Date: November 7, 2006 Court: Southern District of Georgia (Savannah) Judge: Lamar W. Davis Jr. Debtor's Counsel: C. James McCallar, Jr., Esq. McCallar Law Firm P.O. Box 9026 Savannah, GA 31412 Tel: (912) 234-1215 Fax: (912) 236-7549 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Coastal Bank Line of Credit $200,000 P.O. Box 9585 Savannah, GA 31401 BMW Financial Services BMW 530I $26,381 P.O. Box 9001065 Louisville, KY 40290 BMW 330I $4,930 American Express Platinum Credit Card $12,500 P.O. Box 360001 Fort Lauderdale, FL 33336 Branch Banking & Trust Co. Visa Credit Card $10,000 Operations Center P.O. Box 819 Wilson, NC 27894-0819 Wachovia Visa Credit Card $10,000 136 Bull Street Savannah, GA 31401 American Express Credit Card - $6,513 Delta Card Credit Card - $3,715 Blue Card Art Miller, CPA Services Rendered $6,000 Capital One Bank Credit Card $5,650 The Club at Savanah Harbor Bills $2,040 Nathan Belzer, Esq. Services Rendered $1,450 First City Club Bills $767 Raindance Bills $540 Career Builders Bills $495 Hunter Maclean Services Rendered $450 Georgia Coastal Center Bills $300 DAVITA 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 Healthcare Service and Distribution sector, the rating agency confirmed its B1 Corporate Family Rating for DaVita Inc. Additionally, Moody's revised or confirmed its probability-of- default ratings and assigned loss-given-default ratings on these debts: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Senior secured revolving credit facility due 2011 B1 Ba2 LGD2 29% Senior secured term loan A due 2011 B1 Ba2 LGD2 29% Senior secured term loan B due 2012 B1 Ba2 LGD2 29% 6.625% senior unsecured notes due 2013 B2 B2 LGD5 75% 7.25% senior subordinated notes due 2015 B3 B3 LGD6 91% Moody's current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as its research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% - 9%) to LGD6 (loss anticipated to be 90% - 100%). El Segundo, Calif.-based DaVita Inc. (NYSE: DVA) -- http://www.davita.com/-- provides dialysis services for patients suffering from chronic kidney failure. The Company provides services at kidney dialysis centers and home peritoneal dialysis programs domestically in 41 states, as well as Washington, D.C. DaVita operates or manages over 1,200 outpatient facilities serving approximately 100,000 patients. DEREK ROLLE: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Derek Rolle 18 Commanders Cover Missouri City, TX 77459 Bankruptcy Case No.: 06-36247 Type of Business: The Debtor filed for chapter 11 protection on September 2, 2005 (Bankr. S.D. Tex. Case No. 05- 44123). Chapter 11 Petition Date: November 7, 2006 Court: Southern District of Texas (Houston) Judge: Letitia Z. Clark Debtor's Counsel: Reese W. Baker, Esq. Baker & Associates LLP 5151 Katy Freeway, Suite 200 Houston, TX 77007 Tel: (713) 869-9200 Fax: (713) 869-9100 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. DEVELOPERS DIVERSIFIED: Inks Joint Venture Deal with TIAA-CREF -------------------------------------------------------------- TIAA-CREF and Developers Diversified have entered into a joint venture to purchase a portfolio of 67 community retail centers for approximately $3 billion of total asset value. "We believe that this joint venture shows that TIAA-CREF Global Real Estate can move nimbly on large and complex transactions and forge strong relationships with expert operators, such as Developers Diversified," said Tom Garbutt, managing director and head of TIAA-CREF's Global Real Estate unit. "As a long-term investor, we believe the purchase of high quality properties such as the 67 community retail centers will be an attractive way to bring value to our clients." The properties that this joint venture intends to acquire represent a portion of the assets that will be acquired by Developers Diversified upon the consummation of its merger with Inland Retail Real Estate Trust, Inc. The execution of this merger agreement was announced on Oct. 23, 2006 and the merger is expected to be completed in the first quarter of 2007. The purchase by the joint venture of these 67 properties is conditioned upon the consummation of Developers Diversified's merger with Inland and other closing conditions. Scott Wolstein, Developers Diversified's Chairman and Chief Executive Officer, commented, "We're delighted to establish this strategic partnership with TIAA-CREF, which we consider to be a leader among institutional real estate investors. TIAA-CREF's early commitment to this portfolio acquisition underscores both their recognition of the quality of the real estate and our ability to create value through aggressive asset management." Mr. Garbutt further stated, "We believe that the attractive pricing and terms of this venture are a direct result of TIAA-CREF Global Real Estate's early participation in this transaction. We have been looking to strategically increase our retail exposure and we believe this purchase represents a unique opportunity to do so while focusing on opportunities for attractive rates of return for our investors." Given Developers Diversified's size and experience, TIAA-CREF expects to receive added value from Developers Diversified's management through enhanced operating proficiency and strong tenant relationships. An affiliate of TIAA will contribute 85% of the equity in the joint venture, and an affiliate of Developers Diversified will contribute 15% of the equity in the joint venture. The parties expect that leverage will not exceed 60% of the aggregate value of the properties. The properties in this portfolio are located predominately in Southeastern U.S. markets and are currently anchored by leading discount and specialty retailers. With an approximately $68 billion global portfolio of direct and indirect investments, TIAA-CREF is one of the largest institutional real estate investors in the nation. TIAA-CREF Global Real Estate through the accounts they manage directly owns over $20 billion in real estate assets made up of primarily high quality properties in the office, retail, industrial, and multi- family sectors. Investments are both domestic -- covering more than 40 states and the District of Columbia -- and foreign -- in Canada and Western Europe. About TIAA-CREF TIAA-CREF -- http://www.tiaa-cref.org/-- is a national financial services organization with more than $390 billion in combined assets under management. The Company provides retirement services to individuals and institutions in the academic, research, medical, philanthropic and cultural fields. About Developers Diversified Based in Beachwood, Ohio, 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. * * * As reported in the Troubled Company Reporter on Oct. 31, 2006, Fitch Ratings affirmed Developers Diversified Realty Corporation's ratings following the company's announcement of the pending acquisition of Inland Retail Real Estate Trust Inc. Ratings affirmed include the Company's BBB Issuer Default Rating, BBB Senior unsecured debt and BB+ preferred stock rating. DIAGNOSTIC IMAGING: 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 Healthcare Service and Distribution sector, the rating agency revised its Corporate Family Rating for Diagnostic Imaging Group LLC to B3 from B2. Additionally, Moody's upgraded its probability-of-default ratings and assigned loss-given-default ratings on these debts: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- 5-yr. Senior Secured Revolver due 2010 B2 B1 LGD2 25% 7-yr. Senior Secured Term Loan B due 2012 B2 B1 LGD2 25% Moody's current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as its research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% - 9%) to LGD6 (loss anticipated to be 90% - 100%). Hicksville, New York-based Diagnostic Imaging Group LLC operates facilities, equipment, and certain administrative services pursuant to a 40-year management services agreement with Doshi Diagnostic Imaging Services P.C., a provider of diagnostic imaging services in 16 centers in the metropolitan New York area. Diagnostic Imaging operates a total of 38 facilities. DIXIE GROUP: Earns $2.6 Million in 2006 Third Quarter ----------------------------------------------------- The Dixie Group Inc. reported financial results for the third quarter and nine months ended Sept. 30, 2006. For the third quarter, income from continuing operations was $2,703,000 compared with income from continuing operations of $1,253,000 for the third quarter of 2005. Including discontinued operations, the Company reported net income of $2,617,000 for the third quarter of 2006, compared with net income of $1,221,000 for the third quarter of 2005. Sales for the third quarter of 2006 were $83,606,000, up 9% from sales of $76,661,000 in the year-earlier quarter. For the nine months ended Sept. 30, 2006, income from continuing operations was $6,533,000 compared with income from continuing operations of $6,709,000 for the similar period in 2005. For the first nine months of 2006, net income was $4,396,000 compared with net income of $7,004,000 in the 2005 period. Sales for the nine-month period in 2006 were $250,825,000, up 9% from sales of $230,768,000 in the prior-year period. At Sept. 30, 2006, the Company's balance sheet showed $289,582,000 in total assets, $158,401,000 in total liabilities, and $131,181,000 in total stockholders' equity. Commenting on the results, Daniel K. Frierson, chairman and chief executive officer, said, "Despite weakness in the carpet industry, sales in all of our carpet business units reflected year-over-year growth in the third quarter of this year, and our business continues to outpace the industry. "Compared with the same periods in 2005, net sales of carpet products rose 8% in the third quarter and 10% for the first nine months of this year. "Units of broadloom carpet sold increased 5% in the third quarter and 12% for the first nine months of 2006. "Sales of our modular/carpet tile products were not significant in the third quarter; however, we are extremely pleased with the acceptance these products have received in the marketplace. "The order activity we are seeing and our backlog position give us reason to be optimistic about the future of this business and our modular/carpet tile strategy. "Our continued progress in improving quality issues and controlling discretionary spending is reflected in our third quarter operating results. "Despite higher raw material costs and approximately $800,000 of costs related to the start-up of our modular/carpet tile operation, our gross margins and operating profits, as a percent of sales, improved in the third quarter of this year, compared with the first two quarters of this year and the third quarter of last year. "Raw material costs increased in early July of this year. We raised selling prices to recoup these higher costs; however, the full effect of our higher selling prices will not be realized until the fourth quarter. "For the first nine months of this year, higher sales and control of general and administrative expenses led to improved gross margins and operating profit comparisons. "As a percentage of sales, these performance measures were negatively affected by expenses in the first half of 2006 related to the start-up of our new tufting and modular/carpet tile operations, termination of a legacy defined benefit retirement plan and product quality issues. "We are optimistic that our sales will continue to outperform the carpet industry. Our carpet sales were about 4% above year- earlier levels in the first five weeks of the fourth quarter; however, order entry comparisons to the prior year softened. "We believe the order entry comparisons were affected by selling price increases a year ago that appear to have significantly increased the 2005 order entry. "The weakness the carpet industry is experiencing is also a factor in our order levels. Sales comparisons in the fourth quarter of this year will be difficult due to differences in our accounting calendar: the fourth quarter and year ended Dec. 30, 2006, will contain 13 and 52 weeks, respectively, compared with 14 and 53 weeks in the fourth quarter and year ended Dec. 31, 2005. "These trends lead us to believe that our revenue will grow in the 5% to 7% range for the full 2006 year," Mr. Frierson concluded. Results of discontinued operations reflected a loss of $86,000 for the third quarter of 2006, compared with a loss of $32,000 for the third quarter of 2005. For the first nine months of 2006, the loss from discontinued operations was $2,137,000 compared with income of $295,000 in the year-earlier period. The loss from discontinued operations in 2006 was primarily related to settlement expenses for a defined benefit pension plan terminated in June of this year. The Dixie Group Inc. (NASDAQ:DXYN) -- http://thedixiegroup.com/-- sells and makes carpets and rugs to higher-end residential and commercial customers through the Fabrica International, Masland Carpets, and Dixie Home brands. * * * As reported in the Troubled Company Reporter on Sept. 27, 2006, Moody's Investors Service confirmed The Dixie Group, Inc.'s B1 Corporate Family Rating in connection with the rating agency's implementation of its new Probability-of-Default and Loss-Given- Default rating methodology. Standard & Poor's Ratings Services revised in Oct. 2005 its outlook on Dalton, Georgia-based carpet and rug manufacturer The Dixie Group Inc. to stable from positive. At the same time, Standard & Poor's 'B+' corporate credit and 'B-' subordinated debt ratings were affirmed. EASTMAN KODAK: Proposed Sale Cues Moody's to Review Low-B Ratings ----------------------------------------------------------------- Moody's Investors Service commented that its review for possible downgrade for the Eastman Kodak Company continues to focus on the company's potential sale of the Kodak Health Group as well as the fundamental operating performance of the company. If the sale of KHG were not pending, Moody's would expect to confirm Kodak's B1 rating with a negative outlook. The company intends to announce the outcome of the KHG strategic review by calendar year end 2006. On Oct. 31, 2006, Kodak reported third quarter 2006 results, which included a YTD 2006 6% overall revenue decline, revised 2006 digital revenue growth guidance to somewhat below 10% from July 2006 guidance of approximately 10%, and reaffirmed cash and digital earnings goals. The company also generated digital earnings in third quarter 2006, which by Moody's estimates included about $60 million non recurring Consumer Digital Group license fee revenues. Moody's believes the company's plan to increase digital revenues remains challenged, with execution difficulties related to finding a balance between profitability and sales growth, especially in its CDG division; so far in 2006, the company has twice revised 2006 digital revenue growth guidance from an initial range of 16% to 22% established at the start of the year, to approximately 10% in Aug., to somewhat below 10% on Oct. 31. In Moody's view, the company's overall operating results for the Sept. 2006 quarter and YTD September 2006 reflected pre- restructuring charge operating profit which was stronger than Moody's had anticipated, negatively impacted by lower KHG profits, yet supported by results in its consumer Film Products Group and CDG that exceeded Moody's expectations. The company's performance in its commercial Graphic Communications Group was in line with Moody's expectations. Moody's notes that KHG's Q3 2006 EBIT was approximately the same as KHG's $96 million Q3 2005 EBIT, excluding 2006's silver commodity price increases and costs incurred related to KHG's strategic review. Moody's also notes that FPG, whose business is supported by a stable motion picture film business of about $1 billion annual revenues, GCG, CDG, and a new technologies division are the businesses the company expects to retain subsequent to any potential KHG sale. The review for possible downgrade continues to focus on any potential KHG sale consummation and any application of proceeds from a KHG sale toward debt reduction, the company's management of recurring restructuring costs associated with its business as it continues to transition from film to digital, and its stated goal of attaining at least $350 million in digital earnings in 2006. By conditions of its secured credit facilities, the company can apply asset sale proceeds in excess of $75 million to debt reduction, capital asset reinvestment, and non-digital business cash restructuring costs. Regarding liquidity, Kodak maintains ample liquidity from its available cash balance of $1.1 billion at Sept. 30, 2006, free cash flow, and its undrawn $1 billion secured revolving credit facility. Moody's expects the company will maintain sufficient headroom under the two financial covenants of the revolver for at least the next twelve months. The company also plans to provide termination benefits for the majority of U.S. employees impacted by restructuring actions reported after Oct. 18, 2006 through most of 2007 in the form of special termination benefits payable from its over funded U.S. pension plan, which mitigates restructuring cash outflows that the company would otherwise make from its cash and operating cash flow into 2007. The company's restructuring cash outflows have been significant, ranging between about $100 million and $200 million per quarter since before Q1 2005. With YTD September 2006 debt reduction of $244 million, Moody's believes Kodak is on track to meet its goal of $800 million debt reduction in FY 2006. Kodak has no material debt maturities until 2008 and 2010. The $31 per share strike price of these convertible notes is higher than the company's current approximate $25 per share equity trading price. Ratings on Review for Possible Downgrade: -- Corporate Family Rating B1 -- Senior Unsecured Rating B2 -- Senior Secured Credit Facilities Ba3 Headquartered in Rochester, New York, the Eastman Kodak Company is a worldwide provider of imaging products and services. ENTERCOM COMMS: S&P Lowers Long-Term Corp. Credit Rating to BB- --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Bala Cynwyd, Pa.-based radio broadcaster Entercom Communications Corp. to 'BB-' from 'BB'. At the same time, S&P removed the ratings from CreditWatch, where they were placed with negative implications on June 2, 2006. The CreditWatch removal followed S&P's preliminary review of the company's financing structure for its previously announced acquisition of 15 radio stations from CBS for $262 million and one station from Radio One Inc. for $30 million. The outlook is stable. As of Sept. 30, 2006, the company had $661 million of debt outstanding. "The downgrade recognizes that the company's leverage has continued to increase over the past nine months because of debt- financed share repurchases, acquisitions, and profit declines," Standard & Poor's credit analyst Michael Altberg said. Although this amount of leverage and limited pro forma borrowing capacity under its senior credit facility will likely reduce the company's appetite for acquisitions, especially for sizable ones in the near future, S&P expects that Entercom is more likely to use its good discretionary cash flow to return cash to shareholders or to reinvest in the business rather than to reduce debt meaningfully. EVANS INDUSTRIES: Ct. Approves Locke Liddell as Committee Counsel ----------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Evans Industries, Inc.'s chapter 11 case, obtained permission from the U.S. Bankruptcy Court for the Eastern District of Louisiana to retain Locke Liddell & Sapp LLP as its counsel. Locke Liddell is expected to: a) assist and advise the Committee in its consultations with the Debtor and other committees relative to the overall administration of the estate; b) represent the Committee at hearings to be held before the Court and communicate with the Committee regarding matters heard and issues raised as well as decisions and considerations of the Court; c) assist and advise the Committee in its examination and analysis of the Debtor's conduct and financial affairs; d) review and analyze all applications, orders, operating reports, schedules and statement of affairs filed and to be filed with the Court by the Debtor or other interested parties; advise the Committee as to the necessity and propriety of the foregoing and their impact upon the rights of the lesser related claimants, and upon the case generally; and, after the consultation with and approval of the Committee or its designees, consenting to appropriate orders on its behalf; e) assist the Committee in preparing appropriate legal pleadings and proposed orders as may be required in support of positions taken by the Committee and preparing witness and reviewing relevant documents; f) coordinate the receipt and dissemination of information prepared by and received from other professionals retained by the Debtor, as well as information as may be received from independent professionals engaged by the Committee and other committees, as applicable; g) advise and assist the Committee in the negotiations with respect to any proposed plan or plans of reorganization; and h) assist and advise the Committee with regard to communications to the unsecured creditors regarding the Committee's efforts, progress and recommendation with respect to matters arising in the Debtor's case as well as any proposed plans of reorganization. C. Davin Boldissar, Esq., a Locke Liddell associate, disclosed that the firm's professionals bill: Professional Hourly Rate ------------ ----------- Omer F. Kuebel, III, Esq. $325 Victoria M. de Lisle, Esq. $325 Philip G. Eisenberg, Esq. $325 C. David Boldissar, Esq. $250 Monique Lafontaine, Esq. $250 Demond Smith, Esq. $85 Julie Burmaster, Esq. $85 Mr. Boldissar assured the Court that the firm does not hold nor represent any interest adverse to the Debtor or its estate. Headquartered in Harvey, Louisiana, Evans Industries, Inc. -- http://www.evansindustriesinc.com/-- manufactures and distributes steel drums. The company filed for chapter 11 protection on April 25, 2006 (Bankr. E.D. La. Case No. 06-10370). Eric J. Derbes, Esq., and Melanie M. Mulcahy, Esq., at The Derbes Law Firm, LLC, represent the Debtor. When the Debtor filed for protection from its creditors, it estimated assets between $500,000 and $1 million and debts between $10 million and $50 million. EVERGREEN INT'L: Closes Purchase of 12% Senior Notes due 2010 ------------------------------------------------------------- Evergreen International Aviation, Inc. closed its purchase of 97.99% of its outstanding 12% Senior Second Secured Notes Due 2010. Evergreen accepted the entire amount of Notes tendered pursuant to the tender offer and consent solicitation. Holders of the same amount of the Notes tendered also consented to the proposed amendments to the indenture governing the Notes. Evergreen simultaneously entered into a new Senior Secured Credit Facility, a portion of the proceeds of which was used to purchase the Notes. Evergreen believes the refinancing of the Notes will provide it with greater financial flexibility and promote future growth. Based in McMinnville, Oregon, Evergreen International Aviation, Inc. -- http://www.evergreenaviation.com/-- is a privately held global aviation services company that is active through several subsidiary companies. * * * As reported in the Troubled Company Reporter on Nov. 7, 2006, Standard & Poor's Ratings Services raised its corporate credit rating on Evergreen International Aviation Inc. to 'B' from 'B-' and removed the rating from CreditWatch with positive implications, where it was placed on July 21, 2006. At the same time, the rating agency affirmed the company's 'B+' bank loan rating and withdrew the 'CCC+' senior secured debt rating. The rating actions reflect the successful completion of Evergreen's debt refinancing, in which the company replaced existing debt with new bank debt. The outlook is stable. EXTENDICARE INC: Intends to Complete Reorganization by Tomorrow --------------------------------------------------------------- Extendicare Inc. intends to complete its Reorganization on Nov. 10, 2006. Under the Reorganization, Extendicare will distribute to Extendicare shareholders Assisted Living Concepts, Inc. and convert the remaining business of Extendicare into a Canadian real estate investment trust. Holders of Extendicare Subordinate Voting Shares will receive for each share one Class A common share of ALC and one Extendicare REIT unit or, if they have elected, one exchangeable limited partnership unit. Holders of Extendicare Multiple Voting Shares will receive for each share one Class B common share of ALC and 1.075 Extendicare REIT units or, if they have elected, 1.075 Exchangeable LP Units. The Extendicare REIT units will be listed for trading on Nov. 10, 2006, on the Toronto Stock Exchange and the ALC Class A common shares will be listed for trading on Nov. 10, 2006, on the New York Stock Exchange. As previously announced, Extendicare had concluded all matters to complete its Reorganization on Nov. 1, 2006. On the evening of Oct. 31, 2006, the Minister of Finance announced the Tax Fairness Plan for Canadians, which included proposals to tax income received by income trusts at corporate rates and to treat distributions of those income as taxable dividends in the hands of unitholders. The Proposals generally apply to the 2007 and subsequent taxation years, except that in the case of income trusts that were trading before Nov. 1, 2006, the Proposals are deferred for a four year period and do not take effect until the 2011 and subsequent taxation years. The Proposals do not apply to certain exempted REITs. Under the technical provisions of the Proposals as announced, the Extendicare REIT will not be eligible for the four year deferral nor will it qualify as an exempt REIT. Although Extendicare intends to make submissions to the Department of Finance that the Extendicare REIT should be exempted from the Proposals, there can be no assurance that the Proposals will be amended so that the Extendicare REIT qualifies as an exempt REIT. In response to the Minister of Finance's announcement of the Proposals, the Extendicare Board of Directors met on the evening of Oct. 31, 2006, and decided to delay the implementation of the Reorganization until the Board had the opportunity to give further consideration to the potential consequences of the Proposals on the Reorganization. After taking into account the recommendations of senior management, the advice of its financial and legal advisors, consultations with various stakeholders, and after carefully considering the merits of completing the Reorganization, the Directors have unanimously decided that it is in the best interests of Extendicare and its shareholders to complete the Reorganization as soon as possible, even if the Extendicare REIT does not qualify for the four year deferral or as an exempt REIT under the Proposals. The Board believes the Reorganization represents a fundamental realignment of Extendicare's businesses which remains important and in the best interests of the Extendicare shareholders. Although the Board is disappointed that the new tax regime applicable to income trusts under the Proposals may apply to the Extendicare REIT, it has carefully reviewed the alternatives and has concluded that even if the Extendicare REIT does not qualify as an exempt REIT under the Proposals, the merits of proceeding with the Reorganization at this time remain compelling. The Extendicare REIT was determined to be an effective structure to conduct Extendicare's long-term care operations. The REIT structure is designed: -- to provide superior returns to its unitholders, -- to accommodate its existing operations, and -- to effectively facilitate its strategic acquisition plans. "From the beginning it was clear that maintaining the status quo was never an option if we were to increase shareholder value," Extendicare president and chief executive officer Mel Rhinelander commented. "We are pleased to announce a successful conclusion to Extendicare's reorganization process and look forward to ALC and Extendicare REIT providing strong returns to their shareholders in the future." Phil Small, president and chief operating officer and incoming president and chief executive officer of Extendicare REIT commented, "We are now focused on running the day to day operations of the REIT as well as looking at a number of attractive acquisition opportunities." As a result of the new distribution tax imposed under the Proposals, the Extendicare REIT trustees expect that the initial annual distribution to Extendicare REIT unitholders will be CDN$1.11 per unit, which compared with CDN$1.20 per unit as previously disclosed under the pre-Plan tax regime is not materially different on an after tax basis to an individual unitholder at the highest marginal tax rate, once the recent proposals to amend the federal dividend tax credit are phased in. Exchanges of Exchangeable LP Units into Extendicare REIT units will be permitted any time instead of ninety days after the closing of the Reorganization as originally contemplated. The Directors believe that providing liquidity for the Exchangeable LP Units is important in view of the Proposals. Extendicare expresses no view as to whether any investor should or should not convert into Extendicare REIT units. Investors should be aware that an exchange into Extendicare REIT units could result in a capital gain to the investor. Extendicare REIT is continuing to actively identify and review strategic value enhancing acquisition opportunities in both Canada and the United States. The REIT is reviewing several opportunities currently and negotiations are progressing for its acquisition of a skilled nursing home business in the United States, which operates approximately 30 facilities. The REIT Trustees expect to be in a position to make a public announcement on this matter in the near future. As disclosed in the Extendicare management proxy circular for the meeting relating to the Reorganization, the Extendicare REIT has adopted a distribution reinvestment plan. Extendicare REIT unitholders who are residents of Canada and holders of exchangeable LP units will have the opportunity to participate in the plan to acquire additional units at a 3% discount, commencing immediately including in respect of the first distribution on Jan. 15, 2007. The election forms will be sent to Extendicare REIT unitholders and exchangeable LP unitholders shortly. Although the Extendicare REIT trustees are not making any recommendation in this regard, unitholders should carefully consider this option. Markham, Ontario-based Extendicare Inc. (TSX: EXE & EXE.A; NYSE: EXE.A) -- http://www.extendicare.com/-- is currently a major provider of long-term care and related services in North America. Through its subsidiaries, Extendicare operates 438 nursing and assisted living facilities in North America, with capacity for over 35,100 residents. As well, through its operations in the United States, Extendicare offers medical specialty services such as subacute care and rehabilitative therapy services, while home health care services are provided in Canada. Extendicare employs 38,500 people in North America. * * * Standard & Poor's assigned on June 19, 2006, Extendicare Inc. a BB- long-term foreign and local issuer credit rating. EXTENDICARE INC: Earns CDN$1.656 Million in Third Quarter of 2006 ----------------------------------------------------------------- Extendicare Inc. reported 2006 third quarter earnings from health care operations, excluding restructuring costs and other one-time items, of CDN$20.8 million compared with CDN$21.5 million in the 2005 third quarter. Restructuring costs and related taxes associated with the Reorganization totaled CDN$15.8 million in the 2006 third quarter. As well, other one-time items negatively affected results. Earnings from continuing operations, after restructuring costs and other one-time items, were CDN$2.5 million compared with earnings of CDN$29.8 million in the 2005 third quarter. For the third quarter ended Sept. 30, 2006, the Company reported CDN$1.656 million of net income compared with CDN$13.016 million of net income in the comparable quarter of 2005. Quarters ended Sept. 30, 2006, and 2005 Extendicare Health Services Inc.'s average daily census of Medicare patients on a same-facility basis declined 1.9% to 2,181 in the 2006 third quarter from 2,224 in the 2005 third quarter. Medicare ADC also declined by 3.1% compared with the 2006 second quarter, which is the normal trend between these quarters. As a percent of same-facility nursing home census, Medicare ADC was 17.6% in the 2006 third quarter compared with 17.7% in the 2005 third quarter, and 18.1% in the 2006 second quarter. During the 2006 third quarter, nursing home occupancy on a same- facility basis declined to 90.9% from 92.7% in the 2005 third quarter, and from 91.4% in the 2006 second quarter. Extendicare Health Services Inc.'s average daily Medicare Part A rate increased 7.0% to US$368.72 in the 2006 third quarter from US$344.51 in the 2005 third quarter. Approximately 36.9% of Medicare census patients were classified under the nine new Resource Utilization Group categories that took effect Jan. 1, 2006, which resulted in an increase in the number of therapy residents to 82.5% in the 2006 third quarter from 79.8% in the 2005 fourth quarter. Extendicare's earnings from continuing health care operations, excluding restructuring costs and other one-time items, were CDN$20.8 million in the 2006 third quarter compared with CDN$21.5 million in the 2005 third quarter. Restructuring costs and related taxes associated with the Reorganization totaled CDN$15.8 million in the 2006 third quarter. As well, other one-time items negatively affected results. Earnings from continuing operations, after restructuring costs and other one-time items, were $2.5 million compared with earnings of CDN$29.8 million in the 2005 third quarter. The Company reported an overall loss from restructuring charges, asset impairment, disposals and other items of pre-tax CDN$18.2 million in the 2006 third quarter compared with a gain of CDN$11.9 million in the 2005 third quarter. As well, the Company recorded a pre-tax loss on the valuation of interest rate lock and caps during the 2006 third quarter of CDN$16.6 million, compared with a gain of CDN$100,000 in the 2005 third quarter. In addition, the Company booked a future income tax benefit of CDN$1.4 million in the 2006 third quarter related to Extendicare Health Services' investment in ALC. On an after-tax basis these items totaled a loss of CDN$19.6 million in the 2006 third quarter, compared with a gain of $7.6 million in the 2005 third quarter. Excluding these items, earnings from continuing health care operations were CDN$20.8 million compared with CDN$21.5 million in the 2005 third quarter. This decline in results for the 2006 third quarter was from the U.S. operations. Earnings from continuing U.S. operations were $2.8 million in the 2006 third quarter compared with $24.2 million in the 2005 third quarter, representing a decline of $21.4 million. Excluding an unfavorable $19.9 million variance of the one-time items attributable to the U.S. operations, earnings were $16.1 million in the 2006 third quarter compared with $17.6 million in the 2005 third quarter, reflecting a decline of $1.5 million. The contribution from newly acquired or constructed facilities and nursing home funding increases was offset by below inflation rate increases, increased costs of care, and lower overall occupancy between quarters. Extendicare Health Services' average same-facility Medicaid rates increased only 2.9% in the 2006 third quarter over those of the 2005 third quarter, while average nursing home wage rates increased 5.3%. The U.S. operations benefited from a lower effective tax rate during the 2006 third quarter as a result of the expiration of certain statutes of limitations for U.S. tax liabilities, partially offset by the non-renewal for 2006 of the U.S. Work Opportunity Tax Credit and Welfare to Work tax credits. Continuing Canadian operations reported a loss of CDN$1.6 million in the 2006 third quarter compared with earnings of CDN$4.8 million in the 2005 third quarter. Excluding an unfavorable CDN$7.3 million variance of the one-time items, earnings from Canadian operations were CDN$4.7 million in the 2006 third quarter compared with CDN$3.8 million in the 2005 third quarter, reflecting an improvement of CDN$900,000. Consolidated revenue from continuing operations improved by CDN$15 million, or 3.1%, to CDN$500.7 million in the 2006 third quarter compared with CDN$485.7 million in the 2005 third quarter. Newly acquired or constructed facilities (including the acquisition of ALC in 2005) generated revenue of CDN$72.9 million in the 2006 third quarter and CDN$59.1 million in the 2005 third quarter, for a net improvement of CDN$13.8 million. The stronger Canadian dollar negatively impacted remaining same- facility revenue by CDN$20.4 million. Excluding these items, revenue improved between periods by CDN$21.6 million. U.S. operations revenue on a same-facility basis improved by CDN$14.2 million (US$11.8 million, or 4.8%, in its functional currency) primarily due to increases in average rates, partially offset by lower nursing home occupancy and a decline in outpatient therapy revenue due to prior period Medicaid settlements. Revenue from Canadian operations grew CDN$7.4 million, or 5.7%, in the 2006 third quarter compared with the 2005 third quarter. Of this improvement, CDN$4.7 million was derived from nursing home operations, and represented funding to enhance resident care. Revenue from home health care operations increased by CDN$2.7 million, or 8.5%, due to a 5.8% increase in hours of service and 2.5% increase in average rates. Consolidated EBITDA declined CDN$4.7 million to CDN$63 million in the 2006 third quarter from CDN$67.7 million in the 2005 third quarter, and as a percent of revenue was 12.6% compared with 13.9%. Newly acquired or constructed facilities (including the acquisition of ALC in 2005) contributed CDN$14.7 million to EBITDA in the 2006 third quarter and CDN$13.3 million in the 2005 third quarter, while the stronger Canadian dollar negatively impacted the comparison of earnings on a same-facility basis by CDN$2.4 million. Prior to these items, EBITDA was lower by CDN$3.7 million. Same- facility results for the 2006 third quarter were unfavorably impacted by: -- Medicaid rate increases, net of provider taxes, of 2.9% compared with a 7.6% increase in U.S. wages and benefits; -- increased provision for bad debts; -- increased costs of care, and lower overall occupancy in the U.S. operations between periods. U.S. EBITDA on a same-facility basis declined by CDN$4 million (US$3.3 million). The improvement in revenue of US$11.8 million was offset by US$15.1 million of higher operating, administrative and lease costs. Labor-related costs grew by US$11.2 million representing a 7.6% increase over the 2005 third quarter. As well, the provision for bad debts increased by US$1.5 million, of which US$1.3 million related to two managed homes in Pennsylvania. EBITDA from Canadian operations was CDN$13.3 million in the 2006 third quarter compared with CDN$13.1 million in the 2005 third quarter. The CDN$7.4 million improvement in revenue was partially offset by higher operating, administrative and lease costs of CDN$7.2 million. Labor costs accounted for CDN$5.7 million of this increase, represented by nursing home wage cost increases tied to funding enhancements, and increased home health care hours of service. In each of the third quarters of 2006 and 2005, labor costs represented 83% and 83.2% of operating and administrative costs and 74.5% and 74.3% of revenue, respectively. The Company reported a tax recovery of CDN$6.3 million in the 2006 third quarter compared with a provision of CDN$17 million in the 2005 third quarter. The effective tax rate was distorted by the reported loss (gain) from restructuring charges, asset impairment, disposals and other items, which included non-deductible items. Excluding these items, the 2006 third quarter effective tax rate would have been 29.9%, compared with 36.8% in the 2005 third quarter. The decrease in the effective tax rate in the 2006 third quarter from the same 2005 quarter was primarily due to the expiration of certain statutes of limitations for U.S. tax liabilities of CDN$3.1 million, partially offset by the non-renewal for 2006 of the U.S. Work Opportunity Tax Credit and Welfare to Work tax credits. During the 2006 third quarter, Extendicare completed an interim independent actuarial review, which confirmed the adequacy of its reserves for resident care liabilities, and as a result the Company released US$1 million of reserves in the quarter. The 2005 third quarter results also included a US$1 million release of reserves as a result of an interim actuarial review. Markham, Ontario-based Extendicare Inc. (TSX: EXE & EXE.A; NYSE: EXE.A) -- http://www.extendicare.com/-- is a major provider of long-term care and related services in North America. Through its subsidiaries, Extendicare operates 438 nursing and assisted living facilities in North America, with capacity for over 35,100 residents. As well, through its operations in the United States, Extendicare offers medical specialty services such as subacute care and rehabilitative therapy services, while home health care services are provided in Canada. Extendicare employs 38,500 people in North America. * * * In June 2006, Standard & Poor's assigned Extendicare Inc. a BB- long-term foreign and local issuer credit rating. FHC HEALTH: Moody's Affirms B2 Corporate Family Rating ------------------------------------------------------ Moody's Investors Service affirmed the B2 Corporate Family Rating and Ba3 senior secured term loan ratings of FHC Health Systems, Inc, following the Oct. 30, 2006 announcement that it amended and restated its prior purchase agreement with Psychiatric Solutions, Inc. At the same time, Moody's upgraded the company's senior secured third lien term loan rating to B3 from Caa1 given the expected change in the company's pro-forma capital structure. Psychiatric intends to acquire Alternative Behavioral Services, Inc. from FHC for a cash purchase price of $210 million. Under the new agreement, FHC will dismiss its lawsuit against Psychiatric while Psychiatric is expected to withdraw its demand for payment for termination fees and other expenses. The deal is expected to close on Dec. 1, 2006. The outlook remains stable for FHC. On May 30, 2006, Psychiatric disclosed that it had signed an agreement to purchase ABS, a provider of specialty behavioral treatment for children and adults, for $250 million. Subsequently, Psychiatric indicated that it has identified and has been unable to resolve certain issues with ABS, and terminated the initial agreement to acquire ABS on Oct. 10, 2006. FHC, in response, subsequently filed a lawsuit to compel Psychiatric to complete the acquisition of ABS. The affirmation of FHC's ratings reflect the anticipated decline in leverage as Moody's assumes that FHC will use a majority of the proceeds from the sale of its ABS division to reduce outstanding debt and property mortgages. Moody's expects that FHC's cash flow coverage of debt will improve with the expected reduction in debt significantly outweighing the loss of cash flow from operations and earnings from the ABS division. Moody's upgraded the third lien term loan one notch to B3 from Caa1, reflecting an LGD-5 loss given default assessment equal to or greater than 70% and less than 90%. While this instrument lacks security and is still contractually subordinated to the senior secured term loan, it benefits from having less senior secured debt after the transaction closes. At the same time, Moody's affirmed the company's senior secured term loan rating of Ba3, reflecting an LGD-2 loss given default assessment equal to or greater than 10% and less than 30% as this facility is secured by a pledge of substantially all of company's domestic assets. These ratings are upgraded: -- Senior Secured Second Lien Term Loan, due 2009, upgraded to Ba3, LGD 2, 25% from B2, LGD 3, 48% -- Senior Secured Third Lien Term Loan, due 2010, upgraded to B3, LGD5, 75%, from Caa1, LGD 5, 88% These ratings are affirmed: -- Corporate Family Rating, B2 rating -- Probability of Default Rating, B2 rating The outlook is stable. FHC Health Systems, Inc., headquartered in Norfolk, Virginia, is one of the leading behavioral managed care providers in the U.S., covering approximately 23 million lives. The company's remaining subsidiary, Value Options, provides services to the public sector, employer groups, health plans and federal agencies. FHC generated $1.4 billion in revenues for 2005. FIBERVISIONS DELAWARE: 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 U.S. Chemicals and Allied Products sectors, the rating agency confirmed its B2 Corporate Family Rating for FiberVisions Delaware Corporation. 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 ---------- ------- ------- ------ ---------- $20 Million Guaranteed Senior Secured First Lien Revolving Credit Facility due 2011 B2 B1 LGD3 43% $70 Million Guaranteed Senior Secured First Lien Term Loan due 2013 B2 B1 LGD3 43% $20 Million Guaranteed Senior Secured Second Lien Term Loan due 2013 Caa1 Caa1 LGD3 89% Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Wilmington, Delaware, FiberVisions Delaware Corporation produces polypropylene-based staple fiber for nonwoven fabrics and textile fibers used in consumer and industrial products. FiberVisions through its ES FiberVisions joint venture is also the world's largest supplier of bi-component fibers. The firm has four manufacturing facilities in three continents and 510 employees worldwide. Revenues for LTM Dec. 31, 2005, were approximately $280 million. FLEXTRONICS INT'L: Fitch Cuts Issuer Default Rating to BB+ ---------------------------------------------------------- Fitch Ratings has downgraded the ratings for Flextronics International Ltd.: -- Issuer Default Rating (IDR) to 'BB+' from 'BBB-'; -- Senior Unsecured credit facility to 'BB+' from 'BBB-'; -- Senior subordinated notes to 'BB' from 'BB+'; The Rating Outlook is Stable. Fitch's action affects approximately $1.7 billion of total debt. The ratings downgrade reflects Fitch's expectations that Flextronics will continue to operate near historically low margin levels versus Fitch's prior expectations for material margin expansion for the core EMS business, and will experience negative free-cash flow likely through FY08 (March 2008) while investing heavily in expanded manufacturing capacity and working capital to support a significant expected increase in revenue. These factors are somewhat mitigated by Fitch's belief that Flextronics is at an inflection point as the company is beginning to benefit from its original design manufacturer and vertical integration strategy after several years of disappointing results which negatively impacted profitability. The ramp in ODM and vertical integration business has contributed to a turnaround in overall revenue growth and, longer-term, could drive increases in operating profitability. In addition, despite the lack of improvement in operating margin, return on invested capital, which is a primary focus of the company, has improved considerably over the past several years from 6.1% in F2Q04 to 11% in F2Q07. However, Fitch expects that upside to Flextronics' operating model over the next several quarters will be limited by high costs associated with ramping new program wins, adding significant operating and program specific risk to expectations that already include negative free cash flow. In addition, Fitch believes that the electronics manufacturing services industry in general continues to suffer from excess capacity which will likely continue to negatively impact pricing for all competitors and represents further risk to Flextronics' margins and free cash flow outlook. The Ratings and Stable Outlook reflect: -- low operating EBIT margins consistent with the EMS industry in general; -- increasing investment in vertical integration through R&D and acquisitions resulting in higher fixed costs; -- inconsistent free cash flow that has been negative for the past three quarters due to rising capital expenditures and increased working capital, the latter a function of higher revenue as well as increasing cash conversion cycle days, a trend which has been driven by lower inventory turns as OEM customers such as Nortel require Flextronics to hold increasing levels of inventory; and -- the risk associated with ramping and integrating new program wins as well as on going program specific risk which has negatively impacted the company and others EMS providers historically. Flextronics' ratings strengths center on the company's: -- top-tier EMS industry position with leading scale and low- cost manufacturing operations; -- relatively stable operating performance with industry leading cash conversion cycle days that are, however, expected to continue to moderately increase from a low of 8 days in F3Q06 (December 2005) to a historically normal range of 16 to 18 days as Flextronics absorbs increasing inventory levels for OEM customers; -- broad end market diversification with significant exposure to more stable and non-traditional end markets such as mobile handsets and consumer electronics; and -- continued strong growth of its small but higher margin ODM business in high growth markets such as handsets, possibly enabling the ODM business to turn profitable in FY07 (March 2007). In addition, Fitch expects the long-term trend of OEMs increasingly outsourcing manufacturing and design services to continue across most end markets. Liquidity as of Sept. 30, 2006 was solid and consisted of: -- $1 billion in cash and cash equivalents; -- a $1.35 billion revolving credit facility expiring May 2010 which was undrawn and fully available; and -- an accounts receivable securitization program expiring September 2007, which is off-balance sheet and allows Flextronics to sell an interest of up to $700 million in receivables providing a maximum of $500 million in total liquidity, of which approximately $245 million was available as of June 30, 2006. Free cash flow has been inconsistent over the past several quarters due to higher working capital associated with the significant ramp in new program wins as well as an increase in capital expenditures. Fitch believes free cash flow will remain inconsistent as Flextronics' revenue grows approximately 20% year- over-year for the remainder of FY07. However, Fitch expects the company will produce consistent positive free cash flow once annual revenue growth subsides to more normalized levels of 10% or less and CCC days stabilize closer to historical levels of approximately 16 to 18 days from the current level of 13 days as days payable outstanding decreases as well as Fitch's expectation that the company will continue to face inventory pressure from OEM customers. Total debt as of Sept. 30, 2006 was $1.7 billion and consisted of: -- $250 million in short-term debt including credit facilities and the current portion of capital leases; -- $195 million in zero coupon convertible junior subordinated notes due 2009; -- $500 million in 1% convertible subordinated notes due 2010; -- $400 million in 6.5% senior subordinated notes due 2013; -- $386 million in 6.25% senior subordinated notes due 2014; and -- $9 million in other long-term debt. Flextronics recently completed the divestiture of several non- strategic business units including the sale of its software group in September 2006 which generated roughly $600 million in cash proceeds, part of which was utilized to reduce debt by approximately $70 million in F3Q07 (September 2006). FLYI INC: International Lease Wants Disclosure Statement Denied --------------------------------------------------------------- International Lease Finance Corporation asks the U.S. Bankruptcy Court for the District of Delaware to deny approval of FLYi Inc. and its debtor-affiliates' Disclosure Statement with respect to their Joint Plan of Liquidation. ILFC leases and remarkets advanced technology commercial jet aircraft to airlines around the world. Atlantic Coast Airlines, now known as Independence Air, Inc., leased eight new A319-100 aircraft from ILFC before the Petition Date. Independence Air rejected all its prepetition agreements with ILFC. Consequently, ILFC filed a $6,176,070 administrative expense claim and a $72,893,166 claim against Independence Air. ILFC's prepetition claim is secured by security deposits and by any and all set-off rights. Theresa V. Brown-Edwards, Esq., at Potter Anderson & Corroon LLP, in Wilmington, Delaware, relates that the central component of the Debtors' Joint Plan of Liquidation is a global resolution, which effects a settlement of (i) the allocation of proceeds received in connection with settlement of claims against United Air Lines, Inc., and (ii) certain key intercompany issues between the estates of FLYi, Inc., and Independence Air. Ms. Brown-Edwards asserts that although ILFC still needs further information to make fully informed judgment regarding whether the global resolution is fair to Independence creditors, certain statements in the Disclosure Statement suggest that the settlement may unfairly favor the FLYi creditors. Specifically, it appears that allocation of the UAL proceeds inexplicably favors FLYi creditors by not discounting at all the outcome most favorable to them, Ms. Brown-Edwards notes. The allocation also does not take into account the likely facts that FLYi was not a signatory to subsequent written amendments of certain UAL agreements, and that FLYi was not a factor in the ordinary course of conduct with respect to those agreements. Ms. Brown-Edwards tells the Court that the Disclosure Statement lacks information on the claims asserted against the Debtors and the entities, the other Debtors except for FLYi, consolidated into Independence. There is also no discussion of the legal basis for the substantive consolidation. The Disclosure Statement further provides that the Debtors will be providing releases to various parties, including the members of the Official Committee of Unsecured Creditors. A rationale should be provided for the releases, Ms. Brown-Edwards insists. Moreover, Ms. Brown-Edwards argues that the Debtors failed to provide an analysis of various components of an intercompany claim, including whether the claims can be recharacterized as equity or otherwise subordinated. Without further detailed quantitative and qualitative information, creditors do not know whether or not to support the global resolution, she says. Ms. Brown-Edwards maintains that the Disclosure Statement also needs clarification with respect to the funding of the various trusts accounts established by the Plan, and on the assumption with respect to Aircraft Deposits in the liquidation analysis under the Plan. Headquartered in Dulles, Virginia, FLYi, Inc., aka Atlantic Coast Airlines Holdings, Inc. -- http://www.flyi.com/-- is the parent of Independence Air Inc., a small airline based at Washington Dulles International Airport. The Debtor and its six affiliates filed for chapter 11 protection on Nov. 7, 2005 (Bankr. D. Del. Case Nos. 05-20011 through 05-20017). Brendan Linehan Shannon, Esq., M. Blake Cleary, Esq., and Matthew Barry Lunn, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. Brett H. Miller, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represents the Official Committee of Unsecured Creditors. As of Sept. 30, 2005, the Debtors listed assets totaling $378,500,000 and debts totaling $455,400,000. (FLYi Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). FREDDIE MAC: S&P Places Class B-5 Certs' B Rating on Neg. Watch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its rating on the class B-5 certificates from Freddie Mac Structured Pass-Through Certificates Series T-057 on CreditWatch with negative implications. At the same time, ratings are affirmed on the four other publicly rated certificates from this transaction. The rating on class B-5 is placed on CreditWatch with negative implications because additional losses may result from high delinquencies. The current credit support for this class is 0.39%, down from its original credit support of 0.50%. As of the September 2006 distribution date, total delinquencies, as a percentage of the current pool principal balance, were 53.49%, with 21.83% categorized as seriously delinquent (90-plus days, foreclosure, and REO). Standard & Poor's will continue to closely monitor the performance of this transaction. If delinquencies translate into realized losses, S&P may downgrade class B-5, depending on the extent of the losses and the level of remaining credit support. In contrast, if the delinquencies decrease and do not cause significant additional losses, S&P will affirm the rating on class B-5 and remove it from CreditWatch. The affirmations are based on credit support percentages that are sufficient to maintain the current ratings. Credit enhancement for this transaction is provided by subordination. Rating Placed on Creditwatch Negative Freddie Mac Structured Pass-Through Certificates Series T-057 Rating ------ Class To From ----- -- ---- B-5 B/Watch Neg B Ratings Affirmed Freddie Mac Structured Pass-Through Certificates Series T-057 Class Rating ----- ------ B-1 AA B-2 A B-3 BBB B-4 BB FRIENDLY ICE CREAM: 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 Restaurant sector, the rating agency confirmed its B3 Corporate Family Rating for Friendly Ice Cream Corp., and revised its B3 rating to Caa1 on the company's $175 million, 8.375% Senior Unsecured Notes due on June 2012. Moody's also assigned an LGD4 rating to those bonds, suggesting noteholders will experience a 65% 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%). Friendly Ice Cream Corporation (AMEX: FRN) -- http://www.friendlys.com/-- is a vertically integrated restaurant company serving signature sandwiches, entrees and ice cream desserts in a friendly, family environment in 525 company and franchised restaurants throughout the Northeast. The company also manufactures ice cream, which is distributed through more than 4,500 supermarkets and other retail locations. With a 70- year operating history, Friendly's enjoys strong brand recognition and is currently remodeling its restaurants and introducing new products to grow its customer base. GE COMMERCIAL: Fitch Holds Low-B Ratings on Five Cert Classes ------------------------------------------------------------- Fitch Ratings affirms GE Commercial Mortgage Securities Inc. commercial mortgage pass-through certificates, series 2005-C3: -- $63.8 million class A-1 at 'AAA'; -- $117.4 million class A-2 at 'AAA'; -- $180 million class A-3FX at 'AAA'; -- $25 million class A-3FL at 'AAA'; -- $145.4 million class A-4 at 'AAA'; -- $118.2 million class A-5 at 'AAA'; -- $75 million class A-6 at 'AAA'; -- $74.5 million class A-AB at 'AAA'; -- $386.7 million class A-7A at 'AAA'; -- $55.2 million class A-7B at 'AAA'; -- $442.3 million class A-1A at 'AAA'; -- $161.4 million class A-J at 'AAA'; -- Interest-only class X-C at 'AAA'; -- Interest-only class X-P at 'AAA'; -- $13.2 million class B at 'AA+'; -- $29.1 million class C at 'AA'; -- $21.2 million class D at 'AA-'; -- $34.4 million class E at 'A'; -- $18.5 million class F at 'A-'; -- $23.8 million class G at 'BBB+'; -- $21.2 million class H at 'BBB'; -- $31.7 million class J at 'BBB-'; -- $7.9 million class K at 'BB+'; -- $7.9 million class L at 'BB'; -- $10.6 million class M at 'BB-'; -- $2.6 million class N at 'B+'; -- $7.9 million class O at 'B'. Fitch does not rate the $7.9 million class P and the $23.8 million class Q. The rating affirmations reflect the stable pool performance and minimal paydown since issuance. As of the October 2006 distribution date, the pool has paid down 0.5% to $2.11 billion from $2.12 billion at issuance. There are currently no delinquent or specially serviced loans. Fitch reviewed credit assessments of four loans: Oakland City Center, Inland Hewitt Office Portfolio, Loews Universal Hotel Portfolio, and Stone Gate Apartments. All loans maintain investment grade credit assessments due to their stable performance since issuance. Oakland City Center (7.2%) is secured by a 1.6 million square foot commercial complex that consists of seven office/retail buildings in the Oakland, CA central business district. Occupancy as of June 30, 2006 increased to 97% from 92.4% at issuance. Inland Hewitt Office Portfolio (6.2%) is secured by two office properties (in two locations, approximately three miles apart) that consist of seven buildings totaling 1.1 million sf in Lincolnshire, Illinois. The collateral is 100% leased to Hewitt Associates, Inc. on a triple net basis. Loews Universal Hotel Portfolio (3.8%) is secured by a leasehold interest in three full-service luxury hotels located within the Universal Theme Park in Orlando, Florida. The occupancy as of June 30, 2006 remained strong at 87.2% from 83.3% at issuance, with RevPar at $195.06. Stone Gate Apartments (0.7%) is secured by a student apartment complex with 672 bedrooms located less than one mile away from James Madison University in Harrisonburg, Virginia. Occupancy as of June 30, 2006 decreased to 90% from 99% at issuance due to seasonality. Occupancy is expected to return to issuance level when school starts in fall. GENERAL MOTORS: Selling Hybrid Cars to Chinese Market in 2008 ------------------------------------------------------------- General Motors Corp. will launch its hybrid cars in China beginning 2008, in time for the Beijing Olympics, Geoff Dyer of the Financial Times reports. GM chief executive Rick Wagoner revealed that it will work with its local partner Shanghai Automotive Industry Corp. to provide alternative energy vehicles for the fast-growing Chinese market, FT relates. According to the report, GM would continue its investment in China despite the group's cost pressures. Mr. Wagoner said that the company is buying more parts locally in order to cut costs in its China operations in order to maintain a healthy profit while lowering prices, Gordon Fairclough writes for The Wall Street Journal. About General Motors General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- the world's largest automaker, has been the global industry sales leader since 1931. Founded in 1908, GM employs about 317,000 people around the world. It has manufacturing operations in 32 countries and its vehicles are sold in 200 countries. * * * As reported in the Troubled Company Reporter on Oct. 11, 2006, Standard & Poor's Ratings Services said that its 'B' long-term and 'B-3' short-term corporate credit ratings on General Motors Corp. would remain on CreditWatch with negative implications, where they were placed March 29, 2006. As reported in the Troubled Company Reporter on July 27, 2006, Dominion Bond Rating Service downgraded the long-term debt ratings of General Motors Corporation and General Motors of Canada Limited to B. The commercial paper ratings of both companies are also downgraded to R-3 (low) from R-3. As reported in the Troubled Company Reporter on June 22, 2006, Fitch assigned a rating of 'BB' and a Recovery Rating of 'RR1' to General Motor's new $4.48 billion senior secured bank facility. The 'RR1' is based on the collateral package and other protections that are expected to provide full recovery in the event of a bankruptcy filing. As reported in the Troubled Company Reporter on June 21, 2006, Moody's Investors Service assigned a B2 rating to the secured tranches of the amended and extended secured credit facility of up to $4.5 billion being proposed by General Motors Corporation, affirmed the company's B3 corporate family and SGL-3 speculative grade liquidity ratings, and lowered its senior unsecured rating to Caa1 from B3. The rating outlook is negative. GENTIVA HEALTH: Earns $5.3 Million in Quarter Ended October 1 ------------------------------------------------------------- Gentiva Health Services Inc. reported financial results for the third quarter and nine months ended Oct. 1, 2006, including results generated by The Healthfield Group, Inc., which was acquired by Gentiva on February 28, 2006. The Company also announced a revised outlook for fiscal 2006 and a preview of 2007. Gentiva reported these results for the third quarter of 2006: -- Net revenues were $286.2 million, up 30% compared with $219.6 million reported for the third quarter of 2005. -- Net income was $5.3 million versus net income of $4.3 million for the third quarter of 2005. The figures are based on average diluted shares outstanding of 28 million for the third quarter of 2006 and 25.1 million for the prior year period. -- Earnings before interest, taxes, depreciation and amortization (EBITDA) were $17.8 million versus $9 million for the third quarter of 2005. -- EBITDA for the 2006 third quarter included restructuring and integration costs of $1.7 million. Gentiva reported these results for the nine months ended Oct. 1, 2006: -- Net revenues were $813.5 million, up 26% compared with $646.8 million reported for the prior year period. -- Net income was $15.3 million. For the comparable period of 2005, net income was $17 million, including a second quarter tax benefit of $4.2 million due to a favorable resolution of tax audit issues relating to fiscal 1997 through 2000. -- EBITDA was $50.3 million versus $26 million for the first nine months of 2005. -- EBITDA for the first nine months of 2006 included incremental operating income of $1.9 million relating to the settlement of Gentiva's appeal with the U.S. Provider Reimbursement Review Board on the reopening of the Company's 1999 Medicare cost reports; restructuring and integration costs of $4.4 million; and a charge of $3 million due to the new accounting rule for equity-based compensation. -- The Company generated operating cash flow of over $45 million and made prepayments of $17 million on its term loan, resulting in a long-term debt balance of $353 million at Oct. 1, 2006. Segment Results Home Health Third quarter 2006 net revenues were $192.3 million, up 40% from $137.7 million in the prior year period. Operating contribution was $23.6 million, an increase of 83% from $12.9 million in the third quarter of 2005. Nine-month 2006 net revenues were $549.8 million, up 35% from $405.9 million in the prior year period. Operating contribution was $68.6 million for the nine-month period, an increase of 90% from $36.1 million in the first nine months of 2005. The improvements in the 2006 periods were due primarily to Healthfield's contribution to the Company's performance and continued Medicare revenue growth over the prior year periods. CareCentrix Third quarter 2006 net revenues were $64.8 million, a decline of 23% from $84.6 million reported in the prior year period. Operating contribution was $5.7 million, a decline of 10% from $6.3 million in the third quarter of 2005. Nine-month 2006 net revenues were $199.4 million, a 20% decline from the $250.6 million reported in the prior year period. Operating contribution for the nine-month period was $18.3 million, a decrease of 10% from $20.3 million for the comparable period of 2005. The anticipated declines in net revenues and operating contribution in the 2006 periods were due to previously disclosed changes in certain commercial relationships. Other Related Services Third quarter 2006 net revenues for this segment, which includes hospice, respiratory therapy, home medical equipment, infusion services and consulting, were $32 million compared with $1.4 million in the prior year period due primarily to businesses related to the Healthfield acquisition. Operating contribution was $6.3 million compared with $200,000 in the third quarter of 2005. Nine-month 2006 net revenues were $74.1 million compared with $4 million in the prior year period. Operating contribution was $13.8 million compared with $700,000 in the first nine months of 2005. "We have continued to make progress on our priorities, including the Healthfield integration and the focus on new business opportunities," Gentiva chairman and chief executive officer Ron Malone said. "We've accelerated our work to review the mix and improve the performance of our home health and hospice businesses and we are launching new relationships within CareCentrix. As a result, 2006 is a year in which Gentiva has concentrated on strategies to transform and reposition the Company for the future." 2006 and 2007 Information Gentiva announced a revised 2006 revenue outlook in a range between $1.09 billion and $1.11 billion. The Company also noted that, based on current revenue trends, clarity on equity compensation expense and various other items, it anticipates 2006 financial results at the lower end of its previously announced ranges of $0.84 to $0.90 for diluted earnings per share and $75 million to $80 million in EBITDA. The 2006 outlook excludes the impact of restructuring charges and Healthfield integration costs. The 2006 financial outlook has been revised to reflect the additional time necessary for Gentiva to fully benefit from its growth strategies for home health, hospice and CareCentrix. The Company believes that Medicare revenues in the home health and hospice businesses, as well as CareCentrix revenues, will achieve a double-digit percentage growth rate for 2007. In this regard, the Company announced a preview of 2007, based on existing Medicare reimbursement rates that anticipates full year net revenues in a range between $1.23 billion and $1.27 billion. The Company also indicated that it expects 2007 EBITDA margins to increase as compared with the current year, and will provide a profitability outlook once 2007 Medicare reimbursement rates and other factors, such as 2007 equity compensation expense, are determined. Gentiva Health Services, Inc. (NASDAQ: GTIV) -- http://www.gentiva.com/-- provides comprehensive home health and related services. Gentiva serves patients through more than 500 direct service delivery units within over 400 locations in 35 states, and through CareCentrix, which manages home health services for major managed care organizations throughout the United States and delivers them in all 50 states through a network of more than 3,000 third-party provider locations, as well as Gentiva locations. The Company is a single source for skilled nursing; physical, occupational, speech and neuro-rehabilitation services; hospice services; social work; nutrition; disease management education; help with daily living activities; respiratory therapy and home medical equipment; infusion therapy services; and other therapies and services. GENTIVA HEALTH: 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 Healthcare Service and Distribution sector, the rating agency confirmed its Corporate Family Rating for Gentiva Health Services Inc. to B1 from Ba3. Additionally, Moody's upgraded its probability-of-default ratings and assigned loss-given-default ratings on these debts: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Senior Secured Revolver due 2012 Ba3 Ba3 LGD3 34% Senior Secured Term Loan B due 2013 Ba3 Ba3 LGD3 34% Moody's current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as its research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% - 9%) to LGD6 (loss anticipated to be 90% - 100%). Gentiva Health Services, Inc. (NASDAQ: GTIV) -- http://www.gentiva.com/-- provides comprehensive home health and related services. Gentiva serves patients through more than 500 direct service delivery units within over 400 locations in 35 states, and through CareCentrix(R), which manages home health services for major managed care organizations throughout the United States and delivers them in all 50 states through a network of more than 3,000 third-party provider locations, as well as Gentiva locations. GLOBAL POWER: Hires AlixPartners LLC as Claims & Balloting Agent ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Global Power Equipment Group Inc. and its debtor-affiliates permission to employ AlixPartners LLC, as its noticing, claims and balloting agent. AlixPartners is expected to: a) prepare and serve required notices in these chapter 11 cases, including: -- notice of the commencement of these chapter 11 cases and the initial meeting of creditors under Section 341(a) of the Bankruptcy Code. -- notice of claims bar date; -- notice of objections to claims; -- notice of any hearings on a disclosure statement and confirmation of a plan of reorganization; -- other miscellaneous notices to any entities as the Debtor of the Bankruptcy Court may deem necessary or appropriate for an orderly administration of these chapter 11 cases; and -- the publication of required notices, as necessary. b) file with the clerk, within 5-days after the mailing of a particular notice, with the clerk's office a certificate of affidavit of service that includes a copy of the notice involved, a list of persons to whom the notice was mailed, and the date and manner of mailing; c) assist the Debtor in the preparation and filing of the schedules of assets and liabilities and statement of financial affairs; d) maintain copies of all proofs of claim and proofs of interest filed; e) maintain official claims registers, including, among other things, these information for each proof of claim or proof of interest: -- name and address of the claimant and any agent thereof; -- date received; -- claim number assigned; and -- asserted amount and classification of the claim; f) create and administer a claims database; g) implement necessary security measure to ensure the completeness and integrity of the claims register; h) transmit to the clerk's office a copy of the claims register on a monthly basis or, in the alternative, make available the proof of claim docket online to the clerk's office via the claims manager claims system; i) maintain an up to date mailing list for all entities that have filed a proofs of claim or interest, which list shall be available upon request of a party in interest or the clerk's office; j) provide access to the public for examination of copies of the proofs of claim or interest without charge during regular business hours; k) record all transfers of claims pursuant to the Bankruptcy Rule 3001(e) and provide notice of such transfers as required by the Bankruptcy Rule 3001(e); l) assist the Debtors in the reconciliation and resolution of claims; m) comply with applicable federal, state, municipal, and local statutes, ordinances, rules, regulations, orders and other requirements; n) provide temporary employees to process claims, as necessary; o) provide balloting services in connection with the solicitation process for any chapter 11 plan to which a disclosure statement has been approved by the Court; p) provide other claims processing, noticing, and related administrative services as may be requested form time to time by the Debtors; and q) promptly comply with further conditions and requirements as the clerk's office of the Court may at any time prescribe. The Debtor's application did not disclose the firm's compensation rates. Meade A. Monger, Esq., firm's managing director, assured the Court that his firm does not hold any interest adverse and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Monger can be reached at: Meade A. Monger, Esq. Managing Director AlixPartners LLC 2100 McKinney Avenue, Suite 800 Dallas, TX 75201 Tel: (214) 647-7500 Fax: (214) 647-7501 http://www.alixpartners.com/ Headquartered in Tulsa, Oklahoma, Global Power Equipment Group Inc. aka GEEG Inc. -- http://www.globalpower.com/-- provides power generation equipment and maintenance services for its customers in the domestic and international energy, power and infrastructure and service industries. The Company designs, engineers and manufactures a range of heat recovery and auxiliary equipment primarily used to enhance the efficiency and facilitate the operation of gas turbine power plants as well as for other industrial and power-related applications. The Company has facilities in Plymouth, Minnesota; Tulsa, Oklahoma; Auburn, Massachusetts; Atlanta, Georgia; Monterrey, Mexico; Shanghai, China; Nanjing, China; and Heerleen, The Netherlands. The Company and 10 of its affiliates filed for chapter 11 protection on Sept. 28, 2006 (Bankr. D. Del. Case No 06-11045). Attorneys at White & Case LLP and The Bayard Firm, P.A., represent the Debtors. The Official Committee of Unsecured Creditors appointed in the Debtors' cases has selected Landis Rath & Cobb LLP as its counsel. As of Sept. 30, 2005, the Debtors reported total assets of $381,131,000 and total debts of $123,221,000. The Debtors' exclusive period to filed a chapter 11 plan expires on Jan. 26, 2007. GRAFTECH INTERNATIONAL: Moody's Assigns Loss-Given-Default Rating ----------------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. Chemicals and Allied Products sectors, the rating agency confirmed its B1 Corporate Family Rating for GrafTech International Ltd. 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 ---------- ------- ------- ------ ---------- $215 Million Guaranteed Senior Secured Revolving Credit Facility due 2010 Ba3 Ba1 LGD1 7% $435 Million 10.25% Guaranteed Senior Unsecured Global Notes due 2012 B2 B2 LGD4 62% $225 Million 1.625% Guaranteed Conv. Debentures due 2024 B2 B2 LGD4 62% 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%). GrafTech International Ltd. -- http://www.graftechaet.com/-- manufactures and provides synthetic and natural graphite and carbon based products and technical and research and development services, with customers in 80 countries engaged in the manufacture of steel, aluminum, silicon metal, automotive products and electronics. It manufactures graphite electrodes and cathodes, products essential to the production of electric arc furnace steel and aluminum. It also manufactures thermal management, fuel cell and other specialty graphite and carbon products for, and provides services to, the electronics, power generation, semiconductor, transportation, petrochemical and other metals markets. It operates 13 manufacturing facilities located on four continents. GRAFCELL, GRAFOIL, and eGRAF are its registered trademarks. GREENMAN TECH: Unit Wins Deal to Clean Iowa Scrap Tire Sites ------------------------------------------------------------ GreenMan Technologies Inc. disclosed that the Iowa Department of Natural Resources has awarded GreenMan's Iowa subsidiary the contract to cleanup scrap tires located at various sites throughout Iowa during the next five months. "We are very pleased the Iowa Department of Natural Resources has chosen us to complete this cleanup project" Mark Maust, President of GreenMan of Iowa said. "We anticipate commencing the project during November on a limited basis with a majority of the work to be completed during the December through March 2007 timeframe" Mr. Maust added. This coincides with our seasonally slower time of the year. We estimate this cleanup project will generate approximately $400,000 of new accretive revenue and will be recycled into alternative fuel and other value-added material for Iowa industries." Based in Lynnfield, Massachusetts, GreenMan Technologies, Inc., markets scrap granular tires in the United States. The company's products are used as a tire-derived fuel used by pulp and paper producers. * * * At June 30, 2006, the Company's balance sheet showed $10.6 million in total assets and $22.3 million in total liabilities, resulting in an $11.6 million stockholders' deficit. The Company's equity deficit stood at $8.6 million as of Dec. 31, 2005. HADEN INTERNATIONAL: Voluntary Chapter 7 Case Summary ----------------------------------------------------- Lead Debtor: Haden International Group, Inc. 1399 Pacific Drive Auburn Hills, MI 48326 Bankruptcy Case No.: 06-11287 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Haden Environmental Corporation 06-11282 Haden, Inc. 06-11285 Haden Schweitzer Corporation 06-11286 Type of Business: The Debtor develops and engineers paint and metal finishing systems and industrial control process systems, for car manufacturers and other industries. Chapter 7 Petition Date: November 6, 2006 Court: District of Delaware Judge: Christopher S. Sontchi Debtor's Counsel: John Henry Knight, Esq. Richards, Layton & Finger, P.A. One Rodney Square P.O. Box 551 Wilmington, DE 19899 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. HAI PHAM: Case Summary & 14 Largest Unsecured Creditors ------------------------------------------------------- Debtor: Hai Van Pham Jennifer Tran Pham 602 Royal Oaks Drive Friendswood, TX 77546 Bankruptcy Case No.: 06-10480 Chapter 11 Petition Date: November 7, 2006 Court: Eastern District of Texas (Beaumont) Debtors' Counsel: Frank J. Maida, Esq. Maida Law Firm P.C. 4320 Calder Avenue Beaumont, TX 77706-4631 Tel: (409) 898-8200 Fax: (409) 898-8400 Total Assets: $1,098,354 Total Debts: $1,526,457 Debtors' 14 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Business Loan Express Security Agreement $916,962 1633 Broadway, 39th Floor Value: New York, NY 10019 $425,000 U.S. Small Business Loan $78,223 Administration 2719 Air Fresno Drive Street 107 Fresno, CA 93727 Bank of America Credit Card $6,996 P.O. Box 650687 Dallas, TX 75266-0687 Toys 'R Us Credit Card $5,932 P.O. Box 94014 Palatine, IL 60094-4014 Capital One Credit Card $5,835 P.O. Box 30285 Salt Lake City, UT 84130-0285 Citi Credit Card $4,930 Bank of America Credit Card $4,819 Sears Credit Card $4,575 MBNA America Credit Card $4,482 Home Depot Purchase of Goods $2,454 Best Buy Purchase of Goods $2,275 Chase (Circuit City) Purchase of Goods $1,990 Chase Credit Card $967 Target Credit Card $948 HEALTHWAYS INC: Moody's Rates $600-Million Loans at Ba2 ------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to Healthways, Inc.'s proposed credit facilities, including a $400 million revolver and a $200 million term loan B. The proposed credit facilities are intended to partially fund the acquisition of Axia Health Management, Inc., a privately held health support company. Moody's also assigned a Corporate Family Rating of Ba2, a Probability of Default Rating of Ba3 and a speculative grade liquidity rating of SGL-1. The outlook for the ratings is stable. The ratings reflect Healthways' strong revenue growth, sizable margins and solid financial metrics. The ratings also incorporate Moody's expectations that Healthways will benefit from favorable demographic trends, increased scale associated with the acquisition and expanded scope into the health support market. Moody's expects the combined company to maintain stable margins over the intermediate term while paying down amounts drawn on the revolver to fund the acquisition. The ratings are constrained by the continued customer concentration and relatively small revenue base. Further, the intended acquisition is the largest in the company's history and the ratings reflect integration risk and Moody's expectation of a continued acquisition strategy. Additionally, the ratings acknowledge the potential risks associated with revenue and earnings volatility as a result of Medicare Health Support pilot programs. The stable ratings outlook reflects Moody's expectation that the company will able to integrate the Axia business while continuing to grow its existing book of business. The ratings also reflect Moody's expectation of a measured approach toward acquisitions and maintenance of conservative financial policies, including rapid repayment of amounts outstanding under the revolver. Moody's expects the company to use available cash flow to repay amounts outstanding on the revolver. If the company diverges from its conservative financial policy and significantly increases leverage for either acquisitions or expansion, Moody's could revise the outlook to negative or downgrade the ratings. Given the company's appetite for acquisitions, relatively small size and customer concentration, Moody's does not believe an upgrade in the near term is likely. The assignment of the Speculative Grade Liquidity Rating of SGL-1 reflects Moody's belief that the company will have very good liquidity over the next four quarters. Contributing factors include the expectation of cash flows that are sufficient to fund all working capital and capital expenditure needs and access to the unused portion of the $400 million revolver. Moody's assigned these ratings: -- Corporate Family Rating, Ba2 -- Revolving Credit Facility due 2011, Ba2 (LGD3, 31%) -- Term Loan B due 2013, Ba2 (LGD3, 31%) -- Speculative Grade Liquidity Rating, SGL-1 -- Probability of Default Rating, Ba3 Headquartered in Nashville, Tennessee, Healthways, Inc. provides Health and Care Support programs and services, including disease management, care enhancement services and Outcomes-Driven Wellness programs to health plans, hospitals, governments and employers. Healthways recognized revenue of approximately $412 million for the fiscal year ended Aug. 31, 2006. HERCULES INC: Moody's Assigns Loss-Given-Default Rating ------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. Chemicals and Allied Products sectors, the rating agency confirmed its Ba2 Corporate Family Rating for Hercules Incorporated. 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 ---------- ------- ------- ------ ---------- $150 Million Guaranteed Senior Secured Revolving Credit Facility due 10/2010 Ba1 Baa3 LGD2 18% $391 Million Guaranteed Senior Secured Term Loan Bdue 2012 Ba1 Baa3 LGD2 18% $100 Million 6.60% Guaranteed Senior Secured Notes due 2027 Ba1 Baa3 LGD2 18% $16 Million 11.125% Guaranteed Senior Unsecured Notes due 2007 Ba2 Ba2 LGD3 40% $250 Million 6.75% Guaranteed Senior Sub. Notes due 2029 Ba3 Ba3 LGD4 61% $3 Million 8.00% Convertible Sub. Debentures due 2010 B1 B1 LGD5 89% $217 Million 6.50% Junior Sub. Deferrable Int. Debentures due 2029 B1 B1 LGD5 89% Shelf - Senior Unsecured Ba2 Ba2 LGD3 40% Shelf - Sub. B1 Ba3 LGD4 61% Shelf - Junior Subordinated B1 B1 LGD5 89% Shelf - Pref. Cum. B1 B1 LGD6 97% Shelf - Pref. Non Cum. B2 B1 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%). Hercules Inc. -- http://www.herc.com/-- manufactures and markets chemical specialties globally for making a variety of products for home, office and industrial markets. HINES HORTICULTURE: Adds $11.1 Million Asset Impairment Charge -------------------------------------------------------------- Hines Horticulture Inc., relative to its re-evaluation of the fair value of its four Northeast facilities, recorded an additional impairment charge of $11.1 million on Sept. 30, 2006. The Company previously disclosed that it had performed impairment tests on the assets it is seeking to sell by Dec. 31, 2006. The assets included its four nursery facilities located in the Northeast as well as certain assets located in Miami, Florida. The original impairment tests determined that the carrying value of the long-lived assets for the Northeast facilities had exceeded the estimated undiscounted future cash flows associated with the use of the assets and therefore were deemed unrecoverable. An impairment charge of approximately $8 million was recorded in the Company's statements of operations for the period ended June 30, 2006. On October 30, 2006, the Company conducted a re-evaluation of the fair value of its four Northeast facilities. The re-evaluation followed from two major customers withdrawing substantial future sales commitments from three of the four sites, which occurred subsequent to the original announcement of the sale of the four Northeast facilities. The withdrawal represented a 78% reduction of the 2007 annual sales commitments for the three facilities and reduced the fair market value of the assets. As a result of the re-evaluation, the Company has determined that an additional impairment charge of $11.1 million be recorded to more accurately reflect the fair value of the assets. The impairment charge was recorded in the statements of operations for the period ended September 30, 2006. Headquartered in Irvine, California, Hines Horticulture Inc. (NASDAQ: HORT) -- http://www.hineshorticulture.com/-- operates commercial nurseries in North America, producing a broad assortment of container grown plants. Hines Horticulture sells nursery products primarily to the retail segment, which includes premium independent garden centers, as well as leading home centers and mass merchandisers, such as Home Depot, Lowe's and Wal-Mart. * * * Hines Horticulture Inc.'s 10-1/4% Bonds carry Moody's Investors Service's B3 rating and Standard & Poor's Ratings Services' CCC+ rating. HINES HORTICULTURE: Sells Miami Properties to F&J for $12.5 Mil. ---------------------------------------------------------------- Hines Horticulture, Inc.'s subsidiary, Hines Nurseries, Inc., in connection with the second phase of the Company's disposition plan, entered into a commercial contract with F & J Farms, LLC, a Florida limited liability company, to sell to F&J one of the two Miami properties consisting of approximately 138 acres of land in Miami-Dade County, Florida and certain other assets of Hines Nurseries which will be identified during the Due Diligence period. The Company disclosed that the sales price for the land and other assets is approximately $12.5 million. The Company previously disclosed that it had determined to discontinue its nursery operations in the Miami, Florida area and sell its assets located in Miami, Florida in two phases. The first phase involved the disposition of the operating assets and inventory located in Miami, Florida and the second phase comprises the disposition of its two remaining real properties located in the Miami, Florida area. Pursuant to the terms of the F&J Contract, F&J has 40 days to inspect the Land and the other assets and to perform due diligence to determine whether the land and the other assets are suitable for F&J's intended use. The Company anticipates that the closing of the purchase and sale of the land and the other assets will occur on or before Dec. 28, 2006. The Company also said that there are no material relationships, other than in respect of the F&J Contract between the Company, Hines Nurseries and F&J. A full text-copy of the Commercial Contract between Hines Nurseries, Inc. and F & J Farms, LLC may be viewed at no charge at http://ResearchArchives.com/t/s?14a1 Headquartered in Irvine, California, Hines Horticulture Inc. (NASDAQ: HORT) -- http://www.hineshorticulture.com/-- operates commercial nurseries in North America, producing a broad assortment of container grown plants. Hines Horticulture sells nursery products primarily to the retail segment, which includes premium independent garden centers, as well as leading home centers and mass merchandisers, such as Home Depot, Lowe's and Wal-Mart. * * * Hines Horticulture Inc.'s 10-1/4% Bonds carry Moody's Investors Service's B3 rating and Standard & Poor's Ratings Services' CCC+ rating. HOLLINGER INC: Subsidiary Sells Toronto Property for $9.8 Million ----------------------------------------------------------------- Domgroup Ltd., a wholly owned subsidiary of Hollinger Inc., completed the sale of real property located at 3087-3101 Dufferin Street and 770 Lawrence Avenue West, Toronto, Ontario. Domgroup Ltd. received cash proceeds of approximately $9.8 million and a vendor take-back mortgage in the principal amount of $9.8 million, interest-free until Oct. 31, 2008, bearing 4.95% thereafter, and due on Oct. 31, 2009. The Company also reported that Robert Gillespie has resigned from Hollinger's Board of Directors, effective Oct. 26, 2006. About Hollinger Inc. The principal asset of Hollinger Inc. (TSX: HLG.C)(TSX: HLG.PR.B) -- http://www.hollingerinc.com/-- is its approximately 70.1% voting and 19.7% equity interest in Sun-Times Media Group Inc. (formerly Hollinger International Inc.), a newspaper publisher with assets which include the Chicago Sun-Times and a large number of community newspapers in the Chicago area. Hollinger also owns a portfolio of commercial real estate in Canada. Litigation Risks Hollinger Inc. faces various court cases and investigations: (1) a consolidated class action complaint filed in Chicago, Illinois; (2) a class action lawsuit that was filed in the Saskatchewan Court of Queen's Bench on Sept. 7, 2004; (3) a $425,000,000 fraud and damage suit filed in the State of Illinois by International; (4) a lawsuit seeking enforcement of a Nov. 15, 2003, restructuring proposal to uphold a Shareholders' Rights Plan, a declaration that corporate by-laws were invalid and to prevent the closing of a certain transaction; (5) a lawsuit filed by International seeking injunctive relief for the return of documents of which it claims ownership; (6) a $5,000,000 damage action commenced by a lessor of an aircraft lease, in which Hollinger was the guarantor; (7) an action commenced by the United States Securities and Exchange Commission on Nov. 15, 2004, seeking injunctive, monetary and other equitable relief; and (8) investigation by the enforcement division of the OSC. HOVNANIAN ENTERPRISES: Warns of Losses in 2006 Fourth Quarter ------------------------------------------------------------- Hovnanian Enterprises, Inc., disclosed preliminary operating results for the fourth quarter and fiscal year ended Oct. 31, 2006. The Company delivered 5,490 homes in the fourth quarter, bringing total deliveries in fiscal 2006 to 20,208 homes, including 2,261 homes in unconsolidated joint ventures. Net contracts for the quarter were 3,100, excluding unconsolidated joint ventures, a decrease of 36% from last year's fourth quarter. These results reflect a continued high level of contract cancellations, driven in part by the inability of buyers to sell their existing homes. Cancellations for the fourth quarter were 35% of gross contracts, an increase from a cancellation rate of 25% in last year's fourth quarter and a slight increase from the 33% reported in the third quarter of 2006. Although the analysis of land related charges for the fourth quarter is not completed, the Company is providing an early indication of the magnitude of such charges it anticipates for the quarter. The Company estimates that it will incur pretax inventory impairment charges and land option deposit write-off charges totaling approximately $300 million, with about 50% of the charges associated with inventory impairments. Prior to the effect of these additional charges, fully diluted earnings for fiscal 2006 are expected to be in the range of $4.85 - $5.25 per common share, near the lower end of the Company's prior guidance of $5.00 to $5.75 per common share. Net of these charges, the Company expects to report a net loss for the fourth quarter. Despite the charge-offs and the net loss for the quarter, the Company expects to report a pretax profit in the range of $215 million to $255 million for the year and to end the year with total shareholder's equity in excess of $1.9 billion, an 8% increase from October 31, 2005. "Our financial results for the fourth quarter continued to be negatively impacted by high cancellation rates and increased use of concessions and incentives, particularly on the resale of those homes which experienced contract cancellations," commented Ara Hovnanian, President and Chief Executive Officer of Hovnanian Enterprises, Inc. "As we begin fiscal 2007, we are optimistic that some of our more challenging markets will begin to experience decreasing cancellations and an improved sales pace. However, we have not seen signs of such improvement to date, despite reasonably healthy levels of buyer traffic at many of our communities." "We have successfully renegotiated a large number of our land option contracts in the third and fourth quarters of fiscal 2006, and we have also walked away from our deposits and pre-development costs on many other option contracts where it did not make economic sense to proceed," Mr. Hovnanian continued. "Although it is painful to incur these non-cash charges, we believe it is much better than proceeding to build-out these communities at very low returns or losses over the coming years. We are continuing to focus on conservative balance sheet management during this slowdown, and we ended the year with a zero outstanding balance on our $1.5 billion unsecured revolving credit facility. This leaves us well-positioned to contract for new land opportunities at discounted prices as our markets begin to adjust, and to further accelerate our recent market share gains by rebuilding our inventory of land held under option contracts," Mr. Hovnanian said. The Company ended the year with approximately 427 active communities, which is below its prior estimate of 440 communities as a result of walking away from certain options and negotiating delays in the takedown on other communities. About Hovnanian Enterprises Headquartered in Red Bank, New Jersey, Hovnanian Enterprises, Inc., is a homebuilder with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. The Company's homes are marketed and sold under the trade names K. Hovnanian Homes, Matzel & Mumford, Forecast Homes, Parkside Homes, Brighton Homes, Parkwood Builders, Windward Homes, Cambridge Homes, Town & Country Homes, Oster Homes, First Home Builders of Florida and CraftBuilt Homes. * * * As reported in the Troubled Company Reporter on June 8, 2006, Fitch Ratings assigned a 'BB+' rating to Hovnanian Enterprises, Inc.'s $250 million senior unsecured notes due 2017. Fitch affirmed Hovnanian's Issuer Default Rating of 'BB+', senior unsecured debt and unsecured bank credit facility ratings. Fitch affirmed the 'BB-' senior subordinated notes rating. The series A noncumulative perpetual preferred stock rating of 'B+' is also affirmed. IMMUNE RESPONSE: Issues 13 Million Common Shares for PR Services ---------------------------------------------------------------- The Immune Response Corporation, on Oct. 26, 2006, issued 10,000,000 shares of its common stock as part of the consideration for a commitment to provide U.S. domestic investor and public relations services pursuant to a six-month contract for the services. The Company estimates the value of the services attributable to the stock payment to be equal to $180,000. Also on Oct. 26, 2006, the Company issued 3,000,000 shares of common stock as part of the consideration for a commitment to provide European investor and public relations services pursuant to a three-month contract for the services. Estimated value of the services attributable to the stock payment is equal to $54,000. The 13,000,000 shares were issued pursuant to the Securities Act Section 4(2) registration exemption. Headquartered in Carlsbad, California, The Immune Response Corporation (OTCBB:IMNR) -- http://www.imnr.com/-- is an immuno-pharmaceutical company focused on developing products to treat autoimmune and infectious diseases. The Company's lead immune-based therapeutic product candidates are NeuroVax(TM) for the treatment of multiple sclerosis and IR103 for the treatment of Human Immunodeficiency Virus infection. Both of these therapies are in Phase II clinical development and are designed to stimulate pathogen-specific immune responses aimed at slowing or halting the rate of disease progression. Going Concern Doubt As reported in the Troubled Company Reporter on June 8, 2006, Levitz, Zacks & Ciceric expressed substantial doubt about The Immune Response's ability to continue as a going concern after auditing the company's financial statements for the years ended Dec. 31, 2005 and 2004. The auditing firm pointed to the Company's stockholders' deficit and comprehensive loss for each of the years in the two-year period ended Dec. 31, 2005. INT'L FINANCIAL: Case Summary & Three Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: International Financial Tower, Inc. 4001 Presidential Parkway, Suite 1506 Atlanta, GA 30340 678-855-5856 Bankruptcy Case No.: 06-74370 Debtor-affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Total Financial Center 06-74371 Buford, LLC Total Financial Center 06-74373 South Main Street, LLC Total Financial Center 06-74375 726 Jesse Jewel, LLC Chapter 11 Petition Date: November 6, 2006 Court: Northern District of Georgia (Atlanta) Judge: James Massey Debtors' Counsel: Rodney L. Eason, Esq. The Eason Law Firm Suite 200, 6150 Old National Highway College Park, GA 30349-4367 Tel: (770) 909-7200 Fax: (770) 909-0644 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million A. Total Financial Center Buford, LLC's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Gwinnet County Tax Comm. 2006 Property Tax $4,379 75 Bangley Drive Lawrencville, GA 30045 B. Total Financial Center South Main Street, LLC does not have any creditors who are not insiders. C. Total Financial Center 726 Jesse Jewel, LLC's Two Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ City of Gainesville Tax Comm. 2006 Property Tax $36,300 P.O. Box 2496 Gainesville, GA 30503 Hall County Tax Comm. 2006 Property Tax $8,800 P.O. Box 1579 Gainesville, GA 30503 JETBLUE AIRWAYS: Moody's Rates Class B-1 Certificates at Ba3 ------------------------------------------------------------ Moody's Investors Service assigned an Aaa rating to the Class G-1 Certificates and a Ba3 rating to the Class B-1 Certificates of JetBlue Airways Corporation's Spare Parts Pass Through Certificates. The Aaa rating of the Class G-1 Certificates is based on a Financial Guarantee Insurance Policy issued by MBIA Insurance Corporation. The Policy guarantees the timely payment of interest when due and the ultimate payment of principal at the January 2016 final maturity date only for the Class G-1 Certificates. Moody's rates the Insurance Financial Strength of MBIA at Aaa. In addition, a liquidity facility supports eight quarterly payments for the Class G-1 Certificates in the event of a payment default on the underlying equipment notes by JetBlue. There is no equivalent policy in place for the Class B-1 Certificates, nor is there any liquidity facility for the Class B-1 Certificates. Both the Class G-1 and the Class B-1 Certificates are secured by substantially all of JetBlue's eligible aircraft spare parts inventory, excluding engines, provided the collateral is located in certain Designated Locations. However, the Class B-1 Certificates are subordinate to the Class G-1 Certificates in right of payment. The Ba3 rating of the Class B-1 Certificates is based on the structure of the SP Certificates, particularly the benefits to the certificate holders from Section 1110 of the US Bankruptcy Code, the quality of the collateral, and the underlying rating of JetBlue Airways Corporation. EETC Structure: The structure of the SP Certificates is similar to typical Enhanced Equipment Trust Certificate financings for aircraft, including that the trustee will benefit from the provisions of Section 1110 of the US Bankruptcy Code. The primary differences are: (a) that the collateral is the spare parts for aircraft rather than the aircraft themselves; (b) the notes are effectively cross collateralized since there is only a single pool of collateral; (c) a semi-annual appraisal is required; and, (d) importantly, a mechanism is in place to maintain the Loan to Value ratio at or below 45% for the Class G-1 Certificates and at or below 75% for the Class B-1 Certificates. Should the collateral value decline such that the LTV exceeds these specified amounts, JetBlue is required to add collateral, repay debt or add cash to an escrow account sufficient to achieve the LTV threshold. Cash and certain other collateral may not be Section 1110 eligible. The SP Certificates structure also includes a mechanism for JetBlue to issue additional equipment notes and pass through certificates secured on a pari-passu basis with the initial issuance of debt in the future. Rating agency affirmation that issuing additional certificates will not affect the rating of the Class G-1 or Class B-1 certificates, among other conditions, would be needed. Collateral Discussion: Moody's ratings considered the quality of JetBlue's spare parts inventory in light of the company's relatively young fleet, including its Airbus A320 aircraft and the new Embraer 190 aircraft now being introduced. A320 aircraft are in particularly high demand at this time, and the parts could also benefit somewhat from this high demand with a robust valuation. Additionally, the Embraer 190 model is early in deployment and, while having a number of favorable operating characteristics, there is no secondary market at this time from which to assess the current market value of the aircraft or the parts. Consequently, any incremental benefit from having a comparatively newer fleet would be captured in the appraised value of the associated parts, in Moody's view. Finally, Moody's note that as a point-to-point carrier, JetBlue's parts inventory is located in more locations than traditional hub and spoke carriers. This wide distribution could limit recovery value should the parts need to be liquidated for cash, although an estimate of the added costs from the identification, collection and delivery of the parts has been considered as part of the valuation process. JetBlue Airlines Corporation underlying rating: The B2 Corporate Family Rating (Negative outlook) reflects JetBlue's position as a highly leveraged airline, but growing rapidly with a strong brand name and appealing product. Debt continues to increase as the company finances delivery of aircraft as part of its growth plan. The company has considerable forward purchase commitments implying further indebtedness. Rapid growth has resulted in weak credit metrics, with debt to EBITDA of 15.8x and EBIT to interest expense of 0.2x. "JetBlue has taken appropriate actions recently to stabilize its financial position by deferring near-term aircraft deliveries" according to Bob Jankowitz, Senior Vice President at Moody's Investors Service. Still, the target for 14-18% growth in 2007 ASMs is a considerable multiple above the growth plans of most other North American carriers. As well, JetBlue introduced various revenue management programs to increase passenger yield, which has had some success over recent months. Finally, the comparatively young age of the fleet and the forward order book, likely at attractive delivery prices, is a competitive advantage in the current high-demand operating environment for passenger travel. The young fleet is fuel efficient with low maintenance expenses, at least for the near term. "[t]he outlook reflects Moody's concern that JetBlue will likely face considerable challenges over the longer term to increase and then sustain profitability, particularly given the difficult operating environment of high fuel prices and increasing competition in JetBlue's east coast markets" according to Bob Jankowitz at Moody's. JetBlue is likely to increase debt considerably over the next several years as it takes delivery of more aircraft to expand operations. Spare Parts EETC's compared to Aircraft EETC's: "In the event of reorganization, JetBlue would be required to continue payments on the entire transaction in order to retain access to any of its spare parts covered by the SP Certificates, which are necessary to keep its aircraft operating", noted Bob Jankowitz at Moody's Investors Service. Unlike EETC transactions for aircraft in which the airline can accept or reject individual aircraft, the documentation requires JetBlue to accept or reject the entire spare parts collateral pool. Under Section 1110 of the US Bankruptcy Code, if JetBlue fails to pay its obligations under the SP Certificates, the collateral trustee would have the right to repossess the spare parts. Without access to these parts, or a similar pool, JetBlue could not continue to effectively fly its fleet. The collateral includes substantially all of the eligible spare parts located in the United States in JetBlue's inventory for Airbus A320 and Embraer 190 model aircraft. Liquidity Facility for the Class G-1 Certificates: If JetBlue were to fail to make interest payments as scheduled, a liquidity facility for eight quarterly interest payments defers a default on the Class G-1 Certificates only. The Primary Liquidity Provider is Landesbank Hessen--Th�ringen Girozentrale and the Above-Cap Liquidity Provider is Morgan Stanley Capital Services, Inc. whose obligations will be unconditionally guaranteed by Morgan Stanley. The Primary Liquidity Provider has a priority claim on proceeds from liquidation ahead of any of the holders of the SP Certificates, and is also the controlling party following default. Under certain default circumstances, LIBOR used to calculate the floating interest on the SP Certificates will be capped at 10% plus the Class G-1 pricing margin; however the above-cap liquidity facility ensures payment of the full, uncapped interest due. Moody's also notes that the Above-Cap Liquidity Provider does not have a claim on the collateral. Ratings assigned: -- JetBlue Airways Spare Parts Pass Through Certificates Class G-1 at Aaa, Class B-1 at Ba3. -- JetBlue Airways Corporation is headquartered in Forest Hills, New York. JLG INDUSTRIES: Launches 8-1/4% Sr. Notes Offers & Solicitations ---------------------------------------------------------------- JLG Industries Inc. commenced offers to purchase for cash any and all of its outstanding 8-1/4% Senior Notes due 2008 in an aggregate principal amount of $89,545,000 and 8-3/8% Senior Subordinated Notes due 2012 in an aggregate principal amount of $113,750,000. In connection with the offers, holders of the Notes are being solicited to provide consents to certain amendments to the indentures for the Notes that would eliminate most of the restrictive covenants and events of default contained in the indentures. JLG is making the offers as required by the Agreement and Plan of Merger dated Oct. 15, 2006, by and among JLG, Oshkosh Truck Corporation and Steel Acquisition Corp. The consent solicitations will expire at 5:00 p.m., New York City time, on Nov. 20, 2006, and the offers will expire at midnight, New York City time, on Dec. 5, 2006, in each case unless extended or earlier terminated by JLG. As described in more detail in the Offer to Purchase and Consent Solicitation Statement dated November 6, 2006, a copy of which will be distributed to noteholders promptly, the total consideration for each $1,000 principal amount of Notes validly tendered and accepted for purchase by JLG will be calculated based upon a fixed spread of 50 basis points over the bid side yield on the 4.875% U.S. Treasury Note due Apr. 30, 2008, in the case of the 2008 Notes, and the 3.5% U.S. Treasury Note due May 31, 2007, in the case of the 2012 Notes. The foregoing total consideration for the Notes includes a consent payment equal to $30 per $1,000 principal amount of Notes tendered. Holders must validly tender their Notes on or before the Consent Deadline in order to be eligible to receive the total consideration, which includes the consent payment. Holders who validly tender their Notes after the Consent Deadline and before the expiration of the offers will only be eligible to receive an amount equal to the total consideration minus the consent payment. Additionally, holders whose Notes are purchased pursuant to the offers will receive any accrued but unpaid interest for the period up to but not including the payment date for the Notes. JLG Industries, Inc. -- http://www.jlg.com/-- produces access equipment (aerial work platforms and telehandlers) and highway- speed telescopic hydraulic excavators. JLG's manufacturing facilities are located in the United States, Belgium, and France, with sales and service operations on six continents. * * * As reported in the Troubled Company Reporter on May 24, 2006, Moody's Investors Service upgraded the debt ratings of JLG Industries, Inc. -- Corporate Family Rating to Ba3 from B1, Senior Unsecured Notes to B1 from B2, and Senior Subordinate Notes to B2 from B3. The outlook is changed to stable from positive. KB HOME: U.S. Bank Issues Notice of Default on Senior Notes ----------------------------------------------------------- KB Home reported that it has received letters from U.S. Bank stating that they are in default with respect to its 7-1/4% Senior Notes due 2018, 6-1/4% Senior Notes due 2015, 5-7/8% Senior Notes due 2015, and 5-3/4% Senior Notes due 2014 and with respect to KB Home's 8-5/8% Senior Subordinated Notes due 2008, 7-3/4% Senior Subordinated Notes due 2011, and 9-1/2% Senior Subordinated Notes due 2011 on Nov. 2, 2006. U.S. Bank states in the letters that it is the successor trustee under the indentures for each of the foregoing Senior and Senior Subordinated Notes. The letters state that KB Home is in default under the indentures because it has not delivered to the trustee a copy of KB Home's Quarterly Report on Form 10-Q for the quarter ended Aug. 31, 2006. KB Home is reviewing the letters, as well as other similar letters the Company has previously received, and is considering their validity as notices of default. Under the indentures, if KB Home fails to cure a default within the 60 days after notice is effectively given, the default could become an "event of default," allowing the trustee or the holders of at least 25% in aggregate outstanding principal amount of a series of notes issued under such indenture to accelerate the maturity of such series. As previously announced, KB Home is soliciting consents from the holders of record as of 5:00 p.m. on Oct. 24, 2006 of its Senior Notes, to approve a proposed amendment to the indenture for its Senior Notes to extend the time for the Company to file the Third Quarter 10-Q no later than Feb. 23, 2007. The consent solicitation expired at 5:00 p.m. on Nov. 7, 2006. As previously described in the Company's Form 12b-25 filed with the Securities and Exchange Commission on Oct. 10, 2006, the Company has not yet filed with the SEC the Third Quarter 10-Q in order to allow additional time to complete an internal review of its historical stock option grants and related accounting. Although there can be no assurance that the Company will meet this schedule, the Company intends to file the Third Quarter 10-Q and to provide copies of that report to the trustee under the indentures on or before Dec. 24, 2006, which would be in time to cure any default that might be declared under the indentures as a result of the delayed filing of the Third Quarter 10-Q. Headquartered in Los Angeles, California, KB Home (NYSE: KBH) -- http://www.kbhome.com/-- is a homebuilder with domestic operating divisions in some of the fastest-growing regions and states: West Coast-California; Southwest-Arizona, Nevada and New Mexico; Central-Colorado, Illinois, Indiana and Texas; and Southeast-Florida, Georgia, North Carolina and South Carolina. Kaufman & Broad S.A., the Company's publicly traded French subsidiary, a homebuilding company in France. It also operates KB Home Mortgage Company, a full-service mortgage company for the convenience of its buyers. * * * As reported in the Troubled Company Reporter on Oct. 27, 2006, Standard & Poor's Ratings Services placed its BB+ corporate credit, BB+ senior unsecured, and BB- senior subordinated debt ratings on KB Home on CreditWatch with negative implications. The CreditWatch listings affect $1.65 billion of senior notes and $750 million of senior subordinated notes. As reported in the Troubled Company Reporter on Sept. 15, 2006, Fitch Ratings affirmed and revised the Rating Outlook to Stable from Positive for KB Home's Issuer Default Rating 'BB+', Senior unsecured debt and revolving credit facility 'BB+' and Senior subordinated debt 'BB-'. As reported in the Troubled Company Reporter on July 14, 2006, Moody's Investors Service affirmed all of the ratings of KB Home, including its Corporate Family Rating of Ba1, senior debt rating of Ba1, and senior subordinated debt rating of Ba2. The rating outlook is revised to stable, from positive. KIRKLAND KNIGHTSBRIDGE: Wants MacConaghy as Bankruptcy Counsel -------------------------------------------------------------- Kirkland Knightsbridge LLC asks permission from the United States Bankruptcy Court for the Northern District of California to employ MacConaghy & Barnier, PLC as bankruptcy counsel, nunc pro tunc to Sept. 21, 2006. Kirkland Knightsbridge will: a) advise the Debtor regarding matters of bankruptcy law; b) represent the Debtor in proceeding or hearing in the Bankruptcy Court; c) assist the Debtor in the preparation and litigation of appropriate applications, motions, and other legal papers; d) advise the Debtor concerning the requirements of the Bankruptcy Code and Rules relating to the administration of the case and the operation of the Debtor's business; e) assist the Debtor in the negotiation, preparation, confirmation, and implementation of a plan of reorganization; and f) perform all other legal services as may be necessary. John H. MacConaghy, a principal at MacConaghy & Barnier, assures the Court that his firm is a disinterested person pursuant to Section 101(13) of the Bankruptcy Code. Compensation For its services, the firm will bill the Debtor at their normal hourly rates, in addition to a retainer of $10,000 as well actual and necessary expenses. Mr. MacConaghy charges $350 per hour for his services, while Jean Barnier charges $225 per hour. Mr. MacConaghy and Jean Barnier are the primary professionals in this engagement. About Kirland Knightbridge Kirkland Knightsbridge LLC dba Kirkland Ranch Winery -- http://www.kirklandranchwinery.com/-- operates vineyards and wineries in the Napa Valley region and breeds cattle for commercial consumption. The company filed a chapter 11 petition on September 21, 2006 (U.S. Bankr. N.D. Calif. Case No. 06-10628). The company's debtor-affiliate, Kirkland Cattle Company, filed a separate chapter 11 petition in the same court under Case No. 06-10630. John H. MacConaghy, Esq. at MacConaghy and Barnier, PLC represents the Debtors in their restructuring efforts. When the Debtors sought protection from their creditors, they listed assets and debts between $10 million to $100 million. KIRKLAND KNIGHTSBRIDGE: Selects Sugarman as Special Accountant -------------------------------------------------------------- Kirkland Knightbridge LLC asks permission from the U.S. Bankruptcy Court for the Northern District of California to employ Sugarman & Co. LLP as special accountant. Sugarman will: a) perform certain forensic accountancy services in connection with the Debtor's various disputes with 360 Global Wine Company Inc. and its affiliates; and b) perform other accountancy services for the estate as may be necessary. Compensation Terms The Debtors has agreed to provide Sugarman a $5,000 interim retainer. Sugarman's professionals and their hourly rates are: Position Hourly Rate -------- ----------- Partner $250 - $400 Manager $225 - $325 Administrative $50 - $100 Randy Sugarman, a principal at Sugarman & Co. LLP, assures the Court that his firm does not hold any interest adverse to the estate. About Kirland Knightbridge Kirkland Knightsbridge LLC dba Kirkland Ranch Winery -- http://www.kirklandranchwinery.com/-- operates vineyards and wineries in the Napa Valley region and breeds cattle for commercial consumption. The company filed a chapter 11 petition on September 21, 2006 (U.S. Bankr. N.D. Calif. Case No. 06-10628) The company's debtor-affiliate, Kirkland Cattle Company, filed a separate chapter 11 petition in the same court under Case No. 06-10630. John H. MacConaghy, Esq. at MacConaghy and Barnier, PLC represents the Debtors in their restructuring efforts. When the Debtors sought protection from their creditors, they listed assets and debts between $10 million to $100 million. KRATON POLYMERS: 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 U.S. chemical and allied products sectors, the rating agency confirmed its B1 Corporate Family Rating for Kraton Polymers LLC. 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 ---------- ------- ------- ------ ---------- $385 Million Graduated Senior Secured Term Loan Due May 2013 B1 Ba3 LGD3 34% $75 Million Graduated Senior Secured Revolving Credit Facility Due May 2011 B1 Ba3 LGD3 34% $200 Million 8.125% Graduated Subordinate Unsec. Notes Due Jan 2014 B3 B3 LGD5 85% 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 Houston, Texas, Kraton Polymers -- http://www.kraton.com/ -- is a manufacturer of styrenic block copolymers. KRONOS INTERNATIONAL: Moody's Assigns Loss-Given-Default Rating --------------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. chemical and allied products sectors, the rating agency confirmed its B1 Corporate Family Rating for Kronos International, Inc. as well as the B2 rating on the Company's EUR400 million Senior Secured Notes due 2013. Moody's also assigned an LGD5 rating to those debentures, suggesting noteholders will experience a 75% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Dallas, Texas, Kronos International is engaged in European value-added titanium dioxide pigments operations. L'EAU LLC: Involuntary Chapter 11 Case Summary ---------------------------------------------- Alleged Debtor: L'Eau LLC 1937 East Calle de Arcos Tempe, AZ 85281 Case Number: 06-03714 Involuntary Petition Date: November 7, 2006 Chapter: 11 Court: District of Arizona (Phoenix) Petitioners' Counsel: Don C. Fletcher, Esq. The Cavanagh Law Firm 1850 North Central Avenue, Suite 2400 Phoenix, AZ 85004 Tel: (602) 322-4000 Fax: (602) 322-4100 -- and -- Crowley & Crowley 20 North Park Place Morristown, NJ 07960 Tel: (973) 829-0550 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ W. Scott Stornetta, Jr. Outstanding Loans $376,952 3 Peachtree and unpaid salary plus interest Morristown, NJ 07960 Wakefield Stornetta Outstanding Loans $205,500 1524 Circle Drive plus interest Annapolis, MD 21401 David Heslington Outstanding Loans $8,000 278A Street plus interest Salt Lake City, UT 84103 Larry Sampson Outstanding Loans $7,000 15 Vale Road plus interest Whippany, NJ 07981 LB-UBS: Moody's Affirms Junk Rating on $3.9MM Class N Certificates ------------------------------------------------------------------ Moody's Investors Service upgraded the ratings of seven classes and affirmed the ratings of eight classes of LB-UBS Commercial Mortgage Trust 2000-C3, Commercial Mortgage Pass-Through Certificates, Series 2000-C3: Class A-1, $51,825,594, Fixed, affirmed at Aaa Class A-2, $641,288,000, Fixed, affirmed at Aaa Class X, Notional, affirmed at Aaa Class B, $71,813,000, Fixed, affirmed at Aaa Class C, $48,964,000, Fixed, upgraded to Aaa from Aa1 Class D, $19,585,000, Fixed, upgraded to Aaa from Aa3 Class E, $13,057,000, WAC, upgraded to Aa2 from A2 Class F, $13,057,000, WAC, upgraded to A1 from Baa1 Class G, $11,751,000, WAC, upgraded to A2 from Baa2 Class H, $20,891,000, Fixed, upgraded to Baa2 from Ba1 Class J, $16,322,000, Fixed, upgraded to Ba1 from Ba2 Class K, $9,792,000, Fixed, affirmed at Ba3 Class L, $10,466,000, Fixed, affirmed at B1 Class M, $11,751,000, Fixed, affirmed at B2 Class N, $3,917,000, Fixed, affirmed at Caa1 As of the Oct. 17, 2006 distribution date, the transaction's aggregate certificate balance has decreased by approximately 27.0% to $952.6 million from $1.31 billion at securitization. The Certificates are collateralized by 141 mortgage loans ranging in size from less than 1.0% of the pool to 12.0% of the pool, with the top 10 loans representing 44.5% of the pool. The pool is comprised of an investment grade loan component, a conduit component and a credit tenant lease component. Twenty-seven loans, representing 21.5% of the pool balance, have defeased and are collateralized by U.S. Government securities. Ten loans have been liquidated from the trust, resulting in realized losses of approximately $5.2 million. Currently there are three loans, representing 1.3% of the pool, in special servicing. Moody's has estimated losses of approximately $1.8 million for all of the specially serviced loans. Thirty- seven loans, representing 17.2% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2005 operating results for approximately 97.0% of the pool, excluding the CTL and defeased loans. Moody's loan to value ratio for the conduit component is 83.7%, compared to 85.0% at Moody's last full review in July 2005 and compared to 84.5% at securitization. Moody's is upgrading Classes C, D, E, F, G, H and J due to increased subordination levels, defeasance and stable overall pool performance. Classes C, D and E were upgraded on Aug. 2, 2006 and placed on review for further possible upgrade based on a Q tool based portfolio review. The pool contains three investment grade shadow rated loans. I The largest shadow rated loan is the Annapolis Mall Loan ($114.6 million - 12.0%), which is secured by a 1.1 million square foot regional mall located in Annapolis, Maryland. The mall is anchored by Nordstrom, Lord & Taylor, Hecht's, Sears and J.C. Penney, which collectively occupy 700,000 square feet. Occupancy is 98.0%, compared to 95.0% at last review. Average sales for in- line tenants for calendar year 2005 were $600 per square foot, compared to $525 at last review and compared to $435 at securitization. The loan sponsor is Westfield America Inc., a publicly traded REIT. The property is also encumbered by a $21.1 million B Note, which is held outside the trust. Moody's current shadow rating is Aa2, compared to Aa3 at last review and compared to A2 at securitization. II The second shadow rated loan is the Westfield Portfolio Loan ($91.6 million - 8.1%), which is secured by two properties - Downtown Plaza (70% allocated loan balance) located in downtown Sacramento, California and Eastland Shopping Center (30.0%) located in West Covina, California. Downtown Plaza is a mixed use complex consisting of a 900,000 square foot regional shopping center and three office buildings totaling 300,000 square feet. The retail component is anchored by Macy's and Macy's Men's and Home Store. The property's overall occupancy is 81.5%, compared to 84.5% at last review and compared to 94.2% at securitization. Eastland Shopping Center consists of a 586,000 square foot power center anchored by Target, Mervyn's and Burlington Coat Factory; a 90,000 square foot convenience center anchored by Lucky's Supermarket and Longs Drugs and an 185,000 square foot outparcel. The property is 100% occupied, compared to 97.0% at last review. The loan sponsor is Westfield America Inc., a publicly traded REIT. The portfolio is also encumbered by a $30.1 million B Note, which is held outside the trust. Moody's current shadow rating is A1, the same as at last review and compared to Aa3 at securitization. III The third shadow rated loan is the Sangertown Square Loan ($58.3 million - 6.1%), which is secured by a 855,000 square foot regional mall located in New Hartford, New York. The mall is anchored by Sears, J.C. Penney, Kaufmann's and Target, which collectively occupy 527,000 square feet. Occupancy is 94.1%, essentially the same as at last review. The property's performance has been impacted by increased expenses. The loan sponsor is Pyramid Companies. The property is also encumbered by a $14.1 million B Note, which is held outside the trust. Moody's current shadow rating is A2, compared to A1 at last review and at securitization. The top three non-defeased conduit loans represent 11.3% of the outstanding pool balance. I The largest conduit loan is the Deposit Guaranty Portfolio Loan ($51.3 million - 5.4%), which consists of three cross- collateralized loans secured by four office properties totaling 1.0 million square feet. Two properties are located in Shreveport, Louisiana and two are located in Jackson, Miss. The portfolio's overall occupancy is 92.8%, compared to 91.7% at last review. AmSouth Bank, d/b/a Deposit Guaranty leases space in each of the buildings comprising approximately 31% of the entire premises. Moody's LTV is 82.9%, compared to 85.1% at last review. II The second largest conduit loan is the Southern Company Center Loan ($33.9 million - 3.6%), which is secured by a 336,000 square office building located in downtown Atlanta, Georgia. The property's occupancy has dropped to 51.0% as of January 2006 from 88.0% at last review due to the largest tenant, Southern Company Service, vacating the premises at lease expiration. Moody's LTV is in excess of 100.0%, compared to 88.6% at last review. III The third largest conduit loan is the Cedarbrook Corporation Center Building 5 Loan ($21.8 million - 2.3%), which is secured by a 182,000 square foot office/R&D building located in Cranbury, New Jersey. The property is 100% leased, compared to 90% at last review. Moody's LTV is 61.4%, compared to 65.9% at securitization. The CTL component includes 7 loans secured by properties under bondable leases. The weighted average shadow rating for the CTL component is Baa3, compared to Baa2 at last review and compared to A2 at securitization. LEESA NASCIMENTO: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Leesa Nascimento 8710 Memorial Drive Houston, TX 77024 Bankruptcy Case No.: 06-36243 Chapter 11 Petition Date: November 7, 2006 Court: Southern District of Texas (Houston) Judge: Karen K. Brown Debtor's Counsel: Margaret Maxwell McClure, Esq. 909 Fannin, Suite 1580 Houston, TX 77010 Tel: (713) 659-1333 Fax: (713) 658-0334 Estimated Assets: $1 Million to $10 Million Estimated Debts: Unknown The Debtor did not file a list of its 20 largest unsecured creditors. LYONDELL CHEMICAL: 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 U.S. chemical and allied products sectors, the rating agency confirmed its Ba3 Corporate Family Rating for Lyondell Chemical Company. Additionally, Moody's revised or affirmed 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 ---------- ------- ------- ------ ---------- $800 Million Graduated Senior Secured Revolving Credit Facility Due Aug. 2011 Ba3 Ba2 LGD2 28% $1,775 Million Graduated Senior Secured Term Loan Loan Due Aug. 2013 Ba3 Ba2 LGD2 28% $430 Million 9.5% Graduated Senior Secured Global Notes Due Dec.12, 2008 Ba3 Ba2 LGD2 28% $849 Million 9.625% Senior Secured Notes Series A Due May 2007 Ba3 Ba2 LGD2 28% $325 Million 10.5% Graduated Senior Secured Global Notes Due June 2013 Ba3 Ba2 LGD2 28% $278 Million 11.125 Graduated Senior Secured Notes Due July 2012 Ba3 Ba2 LGD2 28% $875 Million 8% Graduated Senior Unsecured Notes Due Sept. 2014 B1 B1 LGD5 73% $900 Million 8.25% Graduated Senior Unsecured Notes Due Sept. 2016 B1 B1 LGD5 73% $100 Million 10.25% Senior Unsecured Debentures Due Nov. 2010 B1 B1 LGD5 73% $225 Million 9.8% Senior Unsecured Debentures Due Feb. 2020 B1 B1 LGD5 73% $500 Million 10.875% Senior Subordinate Notes Due May 2009 B2 B2 LGD6 95% Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Houston Texas, Lyondell Chemical Company is a chemical company that manufactures and markets a variety of basic chemicals and gasoline-blending components. MAIN STREET: Chapter 11 Trustee Hires Berger Singerman as Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida allowed Lewis B. Freeman, the chapter 11 Trustee appointed in Main Street USA Inc. and its debtor-affiliates' cases, to employ Paul Steven Singerman, Esq., and his firm Berger Singerman, P.A., as his counsel. Berger Singerman will advise and represent the Trustee in the Debtors' chapter 11 cases. Paul Steven Singerman, Esq., and Brian G. Rich, Berger Singerman shareholders, will serve as primary attorneys for the Trustee. Each attorney will receive an hourly rate of $450 and $345, respectively. The firm's other professionals bill: Designation Hourly Rate ----------- ----------- Associate Attorneys $220 - $450 Legal Assistants & Paralegals $65 - $145 Mr. Rich assures the Court that Berger Singerman is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Kissimmee, Florida, Main Street USA Inc. and its debtor-affiliates filed for chapter 11 protection on Sept. 29, 2006 (Bankr. M.D. Fl. Case No. 06-02582). On Oct. 13, 2006, Lewis B. Freeman was appointed as the Debtors' chapter 11 Trustee. Brian G. Rich, Esq., at Berger Singerman, P.A., represents the Trustee. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. MAIN STREET: Meeting of Creditors Scheduled on December 4 --------------------------------------------------------- The U.S. Trustee for Region 21 will convene a meeting of Main Street USA Inc. and its debtor-affiliates' creditors on Dec. 4, 2006, 10:00 a.m., at 6th Floor, 135 West Central Blvd., Suite 610, in Orlando, Florida. This is the first meeting of creditors required under Section 341(a) of the U.S. Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Kissimmee, Florida, Main Street USA Inc. and its debtor-affiliates filed for chapter 11 protection on Sept. 29, 2006 (Bankr. M.D. Fl. Case No. 06-02582). On Oct. 13, 2006, Lewis B. Freeman was appointed as the Debtors' chapter 11 Trustee. Brian G. Rich, Esq., at Berger Singerman, P.A., represents the Trustee. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. MATRIA HEALTH: Successfully Amends First Lien Credit Facility ------------------------------------------------------------- Matria Healthcare Inc. has successfully amended its First Lien credit facility. The facility has been expanded by $65 million, the proceeds of which were used to prepay the Company's Second Lien facility. Pricing on the First Lien facility was unchanged. Bank of America was the lead arranger on the transaction. "As mentioned at the beginning of the year, our focus was to de-lever the balance sheet after capturing the synergies from the integration of CorSolutions, and selling Facet Technologies and Dia Real," said Parker H. Petit, Chairman and Chief Executive Officer. "This transaction is a testament to the bank group's confidence in Matria's performance and the ability to execute its operating plan. We are pleased with the successful expansion of our existing First Lien facility to fund the prepayment of our Second Lien facility," said Jeff Hinton, Senior Vice President and Chief Financial Officer. "To date, we have prepaid $165 million of the $175 million we expect to prepay this year. These prepayments, by virtue of interest rate swaps, the interest rate on over 70% of our debt essentially will be fixed, giving improved visibility to the interest expense line," added Mr. Hinton. As a result of prepaying the Second Lien facility, the transaction will produce interest savings of $.01 and $.09 per diluted share during the fourth quarter of 2006 and fiscal 2007, respectively. The fourth quarter impact of the $.01 interest savings was included in the Company's guidance issued on October 26, 2006. "Our transition is now complete, and we will enter fiscal 2007 as a disease management pure play with a simplified and efficient capital structure," added Mr. Hinton. Based in Marietta, Georgia, Matria Healthcare Inc. -- http://www.matria.com/-- provides health enhancement, disease management and high-risk pregnancy management programs and services through its Health Enhancement and Women's and Children's Health divisions. The company aids employers, health plans and the government's healthcare programs in the task of transforming he healthcare system from within by developing better educated, motivated and self-enabled consumers. * * * Nov. 7, 2006, Standard & Poor's Ratings Services revised its loan and recovery ratings on Matria Healthcare Inc.'s secured first- lien debt due to the company's proposed $65 million term loan add- on. The first-lien financing will now consist of a $279 million term loan B and a $30 million revolving credit facility. The loan rating on the first-lien debt has been lowered to 'B+' from 'BB-', and the recovery rating was revised to '2', indicating the expectation for substantial (80%-100%) recovery of principal in the event of a payment default, from '1'. MAYCO PLASTICS: Ct. OKs Kurtzman Carson as Claims & Noticing Agent ------------------------------------------------------------------ The Honorable Phillip J. Shefferly of the U.S. Bankruptcy Court for the Eastern District of Michigan in Detroit authorized Mayco Plastics Inc. and Stonebridge Industries Inc. to employ Kurtzman Carson Consultants LLC as their claims, noticing, and balloting agent. The United States Trustee for Region 9 and McDonald Hopkins Co. LPA, the Debtors' bankruptcy counsel, agreed and stipulated on Kurtzman Carson's employment. Judge Shefferly authorized Kurtzman Carson's employment provided that the indemnification provisions contained within Section IX of the Kurtzman Carson Agreement for services will not be part of the terms of the Debtors' employment of AlixPartners LLC and will not be enforceable. Kurtzman Carson will: a. serve as the Court's noticing agent to mail notices to certain of the Debtors' creditors and other parties-in-interest; b. provide computerized claims, objection, and balloting database services; and c. provide expertise and consultation and assistance in claim and ballot processing and with the dissemination of other administrative information related to the Debtors' chapter 11 cases. Specifically, Kurtzman Carson will: a. prepare and serve required notices in the Debtors' chapter 11 cases, including: 1. a notice of the commencement of the Debtors' chapter 11 cases and the initial meeting of creditors under Section 341(a) of the Bankruptcy Code; 2. a notice of the claims bar date; 3. notices of objections to claims; 4. notices of any hearings on a disclosure statement and confirmation of a plan of plans of reorganization or liquidation; and 5. other miscellaneous notices as the Debtors or Court may deem necessary or appropriate for an orderly administration of the Debtors' chapter 11 cases; b. within five business days after the service of a particular notice, file with the Clerk's Office a certificate or affidavit of service that includes: 1. a copy of the notice served; 2. an alphabetical list of persons on whom the notice was served, along with their addresses; and 3. the date and manner of service; c. maintain official claims registers in the Debtors' cases by docketing all proofs of claim and proofs of interest in a claims database that includes information for each claim or interest asserted: 1. the name and address of the claimant or interest holder and any agent, if the proof of claim or proof of interest was filed by an agent; 2. the date the proof of claim or proof of interest was received by the Claims Agent or the Court; 3. the claim number assigned on the proof of claim or proof of interest; and 4. the asserted amount and classification of the claim. e. implement necessary security measures to ensure the completeness and integrity of the claims registers; f. transmit to the Clerk's Office a copy of the claims registers on a weekly basis, unless requested by the Clerk's Office on a more or less frequent basis; g. maintain an up-to-date mailing list for all entities that have filed proofs of claims or proofs of interest and make that list available upon request to the Clerk's Office or any party-in-interest; h. provide access to the public for examination of the proofs of claim or proofs of interest filed in the Debtors' cases without charge during regular business hours; i. record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and provide notice of those transfers as required by Bankruptcy Rule 3001(e), if directed to do so by the Court; j. comply with applicable federal, state, municipal, and local statutes, ordinances, rules, regulations, orders, and other requirements; k. provide temporary employees to process claims, as necessary; l. promptly comply with further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; and m. provide other claims processing, noticing, balloting, and relating administrative services as may be requested from time to time by the Debtors. In addition, Kurtzman Carson will assist: a. in the preparation of theDebtors' schecdules, statements of financial affairs, and master creditor list, and any amendments; b. in the reconciliation and resolution of claims c. in the preparation, mailing, and tabulation of ballots of certain creditors for the purpose of voting to accept or reject a plan or plans of reorganization or liquidation. James Le, the vice president for restructuring, disclosed that the Firm would receive a $25,000 retainer. Mr. Le assured the Court that Kurtzman Carson holds no interest adverse to the Debtors and is disinterested pursuant to Section 101(14) of the Bankruptcy Code. Headquartered in Sterling Heights, Michigan Mayco Plastics Inc. -- http://www.mayco-mi.com/-- is an automotive supplier of injection molded plastics. Stonebridge Industries Inc., the majority shareholder and parent of Mayco Plastics, is an investment firm that acquires companies and helps them grow their business in order to increase shareholder value. Mayco and Stonebridge filed for chapter 11 protection on Sept. 12, 2006 (Bankr. E.D. Mich. Case Nos. 06-52727 & 06-52743). Stephen M. Gross, Esq., and Jeffrey S. Grasl, Esq., at McDonald Hopkins Co. LPA represent the Debtors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $50 million and $100 million. MCKESSON CORP: To Acquire Per-Se Technologies for $1.8 Billion -------------------------------------------------------------- McKesson Corporation and Per-Se Technologies Inc. have signed a definitive agreement under which McKesson will acquire, under the terms of the agreement, all of the outstanding shares of Per-Se for $28 per share in cash. In total, including Per-Se's outstanding debt, the transaction is valued at approximately $1.8 billion. By the third year, McKesson expects to realize pre- tax synergies of at least $50 million to $75 million. The acquisition is expected to close in the first quarter of 2007, McKesson's fourth fiscal quarter, subject to customary conditions, including regulatory review. While synergies will begin to be realized in the first year, McKesson expects to invest immediately in the future growth of the businesses being acquired. Excluding special items and including anticipated synergies, the acquisition is expected to be neutral to marginally dilutive to McKesson's EPS in Fiscal 2008 and accretive thereafter. Headquartered in San Francisco, California, McKesson Corp. (NYSE: MCK) -- http://www.mckesson.com/-- is a Fortune 15 healthcare services and information technology company dedicated to helping its customers deliver high-quality healthcare by reducing costs, streamlining processes and improving the quality and safety of patient care. Over the course of its 172-year history, McKesson has grown by providing pharmaceutical and medical-surgical supply management across the spectrum of care; healthcare information technology for hospitals, physicians, homecare and payors; hospital and retail pharmacy automation; and services for manufacturers and payors designed to improve outcomes for patients. MCKESSON CORP: $1.8-Bil. Buyout Cues Moody's to Affirm CFR at B1 --------------------------------------------------------------- Moody's Investors Service affirmed McKesson Corporation's Baa3 and Prime-3 ratings after the company's report that it plans to acquire Per-Se Technologies, Inc. - a healthcare information services and systems provider - for total consideration of $1.8 billion. The rating outlook is stable. At the same time, Moody's affirmed Per-Se's corporate family and bank debt ratings, which are expected to be withdrawn at the close of this transaction. Moody's anticipates that Per-Se's existing bank debt will be refinanced at closing. Moody's expects this transaction will close in March 2007, subject to regulatory approvals. Ratings affirmed: * McKesson Corporation -- Senior unsecured notes at Baa3 -- Senior unsecured MTN at Baa3 -- Junior subordinated notes at Ba1 -- Short-term rating at Prime-3 -- Backed IRB/PC at Baa3 -- Sr. shelf at (P) Baa3 -- Sr. subordinated shelf at (P) Ba1 -- Subordinated shelf at (P) Ba1 -- Junior subordinated shelf at (P) Ba1 -- Preferred shelf at (P)Ba1 * Medis Health & Pharma Services -- Short term rating at Prime- 3 * Per Se Technologies, Inc. -- Corporate family rating at B1 -- Probability of default rating at B1 -- Senior secured revolver maturing 2010 at Ba3, LGD3, 36% -- Senior secured term loan due 2012 at Ba3, LGD3, 36% Moody's affirmation of McKesson's ratings is based on the expectation that: (a) although Per-Se's cash flow levels are weak relative to the price of the transaction, McKesson's currently strong liquidity profile and steady free cash flow generation should provide sufficient flexibility for an acquisition of this size; (b) McKesson's cash flow to debt measures will remain consistent with an investment grade rated company even after working capital needs reach sustained levels; and (c) Per-Se should enhance the company's position with its customers, particularly physicians and pharmacists. Over the past 2 years, McKesson has made significant strides in reducing its cash conversion cycle, thus freeing up significant cash for other discretionary spending. However, we believe that certain components of working capital improvement -- particularly those associated with the transition to fee-for-service model - will not be recurring over future periods. Our current ratings and stable outlook assume that the company will continue to maintain cash flow to debt metrics that are consistent with an investment grade rating even after cash flow levels decline to more sustainable levels. Since settling shareholder litigation last year, McKesson's growth strategy has involved several more moderate-sized acquisitions and buyback initiatives, which could largely be funded with balance sheet cash and cash flow. While we believe that the company will likely consider additional initiatives aimed at improving shareholder value, including share buybacks, the stable outlook assumes that the Per-Se transaction will temper large future initiatives. The stable rating outlook is supported by our expectation that McKesson will be able to maintain metrics that are consistent with an investment grade rating even as its cash flow returns to more sustainable levels. Any future rating changes would consider the company's ongoing growth strategy and changes to its capital structure as well as levels of sustainable cash flow. If McKesson is able to achieve free cash flow to adjusted debt ratios that are sustained above 20-25%, the outlook or ratings could improve. If future acquisitions or buybacks raise leverage such that the company is unable to sustain free cash flow to adjusted debt ratios at or above 15%, the ratings could see downward pressure. McKesson Corporation, located in San Francisco, California, is a leading distributor, with a focus on pharmaceutical distribution and related services. Its information systems business provides software and hardware support to a large portion of the nation's hospitals. Per-Se Technologies, an Atlanta-based provider of financial and administrative technology products and services, has a current customer base including about 100,000 physicians in small practices, 17,000 hospital-affiliated physicians, 3,000 hospitals and 50,000 retail pharmacies. MORGAN STANLEY: S&P Puts 'BB' Ratings on Positive Creditwatch ------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on six subordinate notes from Morgan Stanley Auto Loan Trust's series 2004 HB-1 and 2004 HB-2 on CreditWatch with positive implications. The CreditWatch placements primarily reflect the strong performance of the underlying collateral pool of auto loan receivables originated by The Huntington National Bank. With current pool factors of 26.79% and 39.13%, current cumulative net losses are 1.39% and 1.16%, respectively, which are below Standard & Poor's initial expectations. Ninety-plus-day delinquencies, expressed as a percentage of the current pool balances, are 0.18% for series 2004 HB-1 and 0.16% for series 2004 HB-2. The cumulative recovery rates are 45.78% and 46.48%. The class B and C notes from both transactions benefit from a concurrent pay structure that maintains hard credit support, which consists of subordination and overcollateralization, at their target levels. While overcollateralization provides hard credit support to all of the classes, it is the only source of hard credit support for class D from series 2004 HB-1 and for class E from series 2004 HB-2. Overcollateralization has reached its floor in both transactions and is growing as a percentage of each deal's current pool balance. Over the next one to two months, Standard & Poor's will review the performance of the collateral pools and the remaining credit enhancement of each transaction and determine whether further rating actions are warranted. Ratings Placed On Creditwatch Positive Morgan Stanley Auto Loan Trust 2004 HB-1 Rating ------ Class To From ----- -- ----- B A+/Watch Pos A+ C BBB/Watch Pos BBB D BB/Watch Pos BB Morgan Stanley Auto Loan Trust 2004 HB-2 Rating ------ Class To From ----- -- ---- B A+/Watch Pos A+ C BBB+/Watch Pos BBB+ MOSAIC COMPANY: Fitch Rates Proposed Senior Unsecured Notes at BB ----------------------------------------------------------------- Fitch assigns a 'BB' rating to The Mosaic Company's proposed senior unsecured notes due 2014 and 2016 and a 'BB+' rating to the company's proposed senior secured term loans. These ratings affect approximately $950 million of new senior notes and $1.05 billion of new term loans. Mosaic's ratings remain on Rating Watch Evolving, where they were originally placed in July 2006 in anticipation of a potential change in capital structure associated with the credit facility's 2008 Senior Notes Refinancing Condition. The ratings will remain on Evolving Watch until the closing of Mosaic's refinancing transactions, at which time Fitch would likely affirm and remove Mosaic's 'BB-' Issuer Default Rating from Watch. The Rating Outlook would then be Stable. Specifically, Fitch anticipates that the following ratings changes would be necessary upon the closing of the refinancing. -- Affirm The Mosaic Company IDR at 'BB-' -- Affirm The Mosaic Company senior secured revolver rating at 'BB+' -- Affirm Mosaic Global Holdings IDR at 'BB-' -- Affirm Mosaic Global Holdings senior unsecured notes and debentures (without subsidiary guarantees) rating at 'BB-' -- Withdraw Mosaic Global Holdings senior secured term loan rating of 'BB+' -- Withdraw Mosaic Global Holdings senior unsecured notes (with subsidiary guarantees) rating of 'BB' -- Withdraw Phosphate Acquisition Partnership LP IDR of 'BB-' -- Withdraw Phosphate Acquisition Partnership LP senior secured note rating of 'BB-' -- Assign The Mosaic Company senior secured term loans rating at 'BB+' -- Assign The Mosaic Company senior unsecured notes (with subsidiary guarantees) rating at 'BB' -- Assign Mosaic Colonsay ULC IDR at 'BB-' -- Assign Mosaic Colonsay ULC senior secured term loan rating at 'BB+'. The refinancing, once complete, is expected to simplify the debt structure, reduce annual cash interest expense, extend maturities, and remove the possibility of default related to the credit facility's 2008 Senior Notes Refinancing Condition. However, senior secured bank debt and total debt are expected to increase as a result of the refinancing transactions. An IDR of 'BB-' for Mosaic and its issuing subsidiaries reflects the company's good market positions in the global potash and phosphate markets; and its improving earnings profile. However, the ratings continue to be tempered by Mosaic's high debt level and modest cash flow. Due to low free cash flow, Mosaic has not been able to reduce debt since the combination of IMC Global Inc. with Cargill's crop nutrition business in 2004. Mosaic's debt level stood at nearly $2.6 billion at the end of August 2006. Fitch anticipates an improvement in cash flow over the following twelve months as changes to the phosphate cost structure become apparent; however, the amount of cash flow improvement is uncertain. Additionally, market dynamics are favoring an increase in domestic fertilizer demand next spring while tightening global potash supply could support higher pricing. These factors could boost Mosaic's earnings and cash flow near-term. Fitch forecasts that Mosaic's operating EBITDA-to-gross interest expense could remain just under 4.0 times (x) while total debt-to-operating EBITDA declines to 3.5x for its fiscal year 2007 with modest earnings improvement, stronger cash flow and some debt reduction. The 'BB+' rating on Mosaic's proposed senior secured term loans reflects the superior collateral coverage and likelihood of principal recovery in a liquidation scenario. The rating is equal to that of Mosaic's existing revolver that would share in the same collateral package. The 'BB' rating on Mosaic's proposed senior unsecured notes is one notch higher that the IDR of 'BB-' due primarily to the notes' guarantees from domestic and certain foreign subsidiaries. The proposed rating also reflects the new notes senior unsecured position relative to a substantial amount of senior secured debt upon the closing of the refinancing. The IDR of 'BB-' at Mosaic Colonsay reflects its position as a wholly-owned subsidiary of Mosaic. The 'BB+' rating on Mosaic Colonsay's existing term loan reflects its collateral position. This term loan would share the credit facility collateral with the revolver and new term loans at parent Mosaic. The ratings could change if the final terms of the amended and restated credit agreement and new senior notes differ materially from the preliminary terms and conditions considered for the ratings. The Mosaic Company is one of the largest global suppliers of phosphate and potash fertilizers. Mosaic earned approximately $655.9 million in EBITDA on $5.2 billion in revenue LTM Aug. 31, 2006; the company had $2.6 billion in debt at that time. MOSAIC COMPANY: Moody's Places B1 Rating on Proposed $1BB Loan -------------------------------------------------------------- Moody's Investors Service assigned Ba1 ratings to The Mosaic Company's proposed new $1.05 billion guaranteed senior secured credit facilities. Moody's also assigned B1 ratings to $900 million of proposed senior unsecured debt. Mosaic's Ba3 corporate family rating was affirmed but the ratings of the existing revolver and the term loan A were downgraded to Ba1 from Baa3 and those of the existing senior unsecured debt lowered to B1 from Ba3 in accordance with the LGD methodology. The ratings outlook is stable. Proceeds of the new debt will be used to refinance a portion of currently outstanding bank facilities as well as existing high coupon debt obligations. The new senior credit facilities consist of a $250 million five-year term loan A-1 and an $800 million seven-year term loan B. The new and existing credit facilities are guaranteed by substantially all domestic subsidiaries, certain foreign subsidiaries, and also secured by a substantial pool of assets. Mosaic is a public company, owned approximately 65% by Cargill Inc. and 35% by public shareholders. The new bank and public debt ratings are contingent upon the facilities closing in a timely fashion and that these facilities remain structured as represented with no material changes in terms or conditions. The two key rating factors that drive the Ba3 CFR are the company's exposure to the historically volatile crop nutrient markets combined with a material amount of legacy debt that current management has said publicly that it desires to reduce. Moody's estimates that Mosaic will be slightly more leveraged after the proposed refinancing program. Still, Moody's views the transaction as a positive development for bondholders as it will reduce cash interest, further reduce structural impediments to business operations, extend maturities and eliminate near term required payments, and allow for the efficient repayment of bank debt as cash flows permit. As a function of applying our new LGD methodology to Mosaic's proposed capital structure a number of Moody's ratings were lowered. These changes were prompted by the material increase in the proportion of its secured bank debt relative to the unsecured debt of $900 million. The proposed changes in capital structure result in modest one notch downgrades of Mosaic's existing bank ratings, to Ba1 from Baa3, and some of its senior unsecured ratings, to B1 from Ba3. New Ratings Assigned: * The Mosaic Company -- $250 Million Graduated Sr. Sec Term Loan A-1 due 2011, Ba1, LGD2, 27% -- $800 Million Graduated Sr. Sec Term Loan B due 2013, Ba1, LGD2, 27% -- $475 Million Graduated Global Notes due 2014, B1, LGD5, 76% -- $475 Million Graduated Global Notes due 2016, B1, LGD5, 76% Ratings Downgraded: * The Mosaic Company -- $450 Million Graduated Sr. Sec. Revolving Credit Facility due Feb. 2010, Baa3 downgraded to Ba1, LGD2, 27% -- $50 Million Graduated Sr. Sec. Term Loan A due Feb. 2010, Baa3 downgraded to Ba1, LGD2, 27% -- $347 Million Graduated Sr. Sec. Term Loan B due Feb. 2012, Baa3 downgraded to Ba1, LGD2, 27% * * Mosaic Global Holdings Inc. -- $400 Million 10.875% Graduated Global Notes due June 2008, Ba3 downgraded to B1, LGD5, 76% * -- $104 Million 11.25% Graduated Global Notes Series B due June 2011, Ba3 downgraded to B1, LGD5, 76%* -- $300 Million 11.25% Graduated Global Notes Series B due June 2011, Ba3 downgraded to B1, LGD5, 76%* -- $395 Million 10.875% Graduated Global Notes due Aug. 2013, Ba3 downgraded to B1, LGD5, 76% * Ratings Affirmed: * Mosaic Global Holdings -- $150 Million 6.875% Sr. Unsec. Debentures due July 2007, B2, LGD6, 94%* -- $150 Million 7.30% Notes due Jan. 2028, B1 --> B2, LGD6, 94% -- $19 Million 9.45% Sr. Debentures due 12/15/2011, B1 --> B2, LGD6, 94% -- $90 Million 7.375% Debentures due Aug. 2018, B1 --> B2, LGD6, 94% Phosphate Acquisition Partners L.P. -- $150 Million 7% Sr. Unsec. Notes due Feb. 2008, Ba3 --> B2, LGD6, 97%* *Ratings will be withdrawn upon successful refinancing The Mosaic Company, headquartered in Plymouth, Minnesota, produces phosphate and potash fertilizers and animal feed ingredients. Moody's believes that Mosaic generated annual revenues of about $5.2 billion for the 12 months ending Aug. 31, 2006. MRS. FIELDS: 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 Restaurant sector, the rating agency revised its Caa1 Corporate Family Rating to B3 for Mrs. Fields Famous Brands. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bonds: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $115 Million Senior Secured 11.5% Notes Due March 2011 Caa1 Caa1 LGD4 66% $80.7 Million Senior Secured 9% Notes Due March 2011 Caa1 Caa1 LGD4 66% 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 Salt Lake City, Utah, Mrs. Fields Famous Brands -- http://www.mrsfieldsfranchise.com/-- franchises and licenses 2,479 baked goods and frozen yogurt retail locations under the brand names "Mrs. Fields", "Great American Cookies Company", "Pretzel Time", "Pretzelmaker" and "TCBY" at Dec. 31, 2005. Mrs. Fields also operates a gifts business, which accounted for approximately 35% of 2005 sales. Total revenues for fiscal 2005 were approximately $88 million. NANTUCKET CBO: Moody's Junks Rating on $57 Million Senior --------------------------------------------------------- Moody's Investors Service downgraded the rating on the notes issued in 1998 by Nantucket CBO, Ltd, a managed high yield structured finance collateralized bond obligation issuer: * The $57,000,000 Million Senior Secured Notes Due 2010 -- Prior Rating: Ba1, on watch for possible downgrade -- Current Rating: Caa3 The rating action reflects deteriorating par coverage due to principal proceeds being diverted to pay interest on the Second Priority Notes, as specified in the operating documents. NATHAN MCMULLEN: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Nathan J. McMullen Stephanie McMullen dba McMullen Muddy Bayou Farms 1732 Riverside Avenue Clarksdale, MS 38614 Bankruptcy Case No.: 06-12909 Chapter 11 Petition Date: November 7, 2006 Court: Northern District of Mississippi (Aberdeen) Debtor's Counsel: Melanie T. Vardaman, Esq. Harris Jernigan & Geno, PLLC P.O. Box 3380 Ridgeland, MS 39158-3380 Tel: (601) 427-0048 Fax: (601) 427-0050 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million The Debtors did not file a list of their 20 largest unsecured creditors. NATIONSLINK FUNDING: Moody's Rates $15-Mil. Class J Certs at B3 --------------------------------------------------------------- Moody's Investors Service upgraded the ratings of four classes and affirmed the ratings of six classes of NationsLink Funding Corporation, Commercial Mortgage Pass-Through Certificates, Series 1999-1: Class A-2, $574,859,681, Fixed, affirmed at Aaa Class X, Notional, affirmed at Aaa Class B, $64,162,635, Fixed, affirmed at Aaa Class C, $61,107,271, Fixed, affirmed at Aaa Class D, $67,217,999, Fixed, upgraded to Aaa from Aa3 Class E, $33,608,999, Fixed, upgraded to Aa2 from A2 Class F, $51,941,181, Fixed, upgraded to Baa1 from Baa3 Class G, $9,166,090, Fixed, upgraded to Baa3 from Ba2 Class H, $30,553,635, Fixed, affirmed at B2 Class J, $15,276,817, Fixed, affirmed at B3 As of the Oct. 20, 2006 distribution date, the transaction's aggregate certificate balance has decreased by approximately 23.6% to $933.8 million from $1.2 billion at securitization. The Certificates are collateralized by 311 mortgage loans ranging in size from less than 1.0% of the pool to 5.2% of the pool, with the top 10 loans representing 30.9% of the pool. Sixty three loans, representing 20.1% of the pool, have defeased and have been replaced with U.S. Government securities. Five loans have been liquidated from the pool, resulting in aggregate realized losses of approximately $4.8 million. Two loans, representing 1.2% of the pool, are currently in special servicing. Moody's has projected minimal losses for the specially serviced loans. Forty seven loans, representing 21.2% of the pool, are on the master servicer's watchlist. Moody's was provided with full year 2005 and partial year 2006 operating results for approximately 98.7% and 73.1% respectively, of the performing loans. Moody's loan to value ratio is 75.1%, compared to 79.8% at Moody's last full review in May 2004 and compared to 88.7% at securitization. Moody's is upgrading Classes D, E, F and G due to increased subordination levels, improved overall pool performance and defeasance. Classes C, D and E were upgraded on August 2, 2006 and Classes D and E were placed on review for further possible upgrade based on a Q tool based portfolio review. The top three loan exposures represent 16.7% of the outstanding pool balance. I The largest exposure consists of the RFS Hotel Note B Loan ($48.5 million - 5.2%) and the RFS Hotel Note A Loan ($5.3 million - 3.8%). These two cross collateralized notes are secured by 10 hotels. The hotels are located in seven states with the largest concentration in California. The portfolio's RevPAR for calendar year 2005 was $66.30, compared to $57.90 at last review. The portfolio's performance has been impacted by increased expenses resulting in a significant decline in net cash flow. The loans are on the master servicer's watchlist due to a decline in debt service coverage. The loans have amortized by approximately 12.4% since securitization. Moody's LTV is 97.5%, compared to 77.2% at last review. II The second largest exposure consists of the Eagle Trace Apartments Loan ($40.2 million - 4.3%) and the Breakers Apartments Loan ($16.6 million - 1.8%), which are two cross collateralized loans secured by two multifamily properties located in Las Vegas, Nevada. The two properties total 1,384 units. The portfolio's overall occupancy is 90.2%, compared to 91.4% at last review. The financial performance of the portfolio has improved due to increased rental rates, a decline in expenses and loan amortization. The loan has amortized by approximately 8.5% since securitization. Moody's LTV is 83.9%, compared to 92.4% at last review. III The third largest loan is the Lodge at Woodcliff Loan ($14.7 million - 1.6%), which is secured by a 244-unit full service hotel located approximately 11 miles southeast of Rochester in Fairport, New York. The hotel's RevPAR for calendar year 2005 was $64.75, compared to $60.16 at last review; however financial performance has been impacted by increased expenses. The loan is on the master servicer's watchlist due to low debt service coverage. The loan has amortized by approximately 14.1% since securitization. Moody's LTV is 99.1%, compared to 89.6% at last review. The pool's collateral is a mix of multifamily, U.S. Government securities, retail, lodging, office, industrial and self storage, healthcare and other. The collateral properties are located in 31 states. NEW YORK RACING: Gets Court's Initial OK on Weil Gotshal Retention ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York gave New York Racing Association Inc. permission, on an interim basis, to employ Weil Gotshal & Manges LLP, as its bankruptcy attorneys. The firm will: a) take all necessary action to protect and preserve the estate of the Debtor, including the prosecution of actions on the Debtor's behalf, the defense of any actions commenced against the Debtor, the negotiation of disputes in which the Debtor is involved, and the preparation of objections to claims filed against the Debtor's estate; b) prepare on behalf the Debtor, as debtor-in-possession, all necessary motions, applications, answers, orders, reports, and other papers in connections with the administration of the Debtor's estate; c) negotiate and prepare on behalf of the Debtor a plan of reorganization and all related documents thereto; and d) perform all other necessary legal services in connection with the prosecution of this chapter 11 case. Weil Gotshal's billing rates are: Designation Hourly Rate ----------- ----------- Member and Counsel $550-$890 Counsel $550-$890 Associates $310-$560 Paraprofessionals and Staff $140-$240 Brian S. Rosen, Esq., a member of the firm, assured the Court that his firm does not hold any interest adverse and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About New York Racing Based in Jamaica, New York, The New York Racing Association Inc. aka NYRA -- http://www.nyra.com/-- operates racing tracks in Aqueduct, Belmont Park and Saratoga. The company filed a chapter 11 petition on November 2, 2006 (U.S. Bankr. S.D.N.Y. Case No. 06-12618) Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP represents the Debtor in its restructuring efforts. When the Debtor sought protection from its creditors, it listed more than $100 million of total assets and more than $100 million of total debts. NEW YORK RACING: Taps Hinman Straub as Special Legislative Counsel ------------------------------------------------------------------ The New York Racing Association Inc. asks the U.S. Bankruptcy Court for the Southern District of New York for authority to employ Hinman Straub P.C. as special legislative and regulatory counsel. Hinman Straub is expected to perform necessary legislative and regulatory services, including providing consultation or advise, from time to time, to Weil, Gotshal & Manges LLP, the Debtor's primary restructuring and bankruptcy counsel; and Dewey Ballantine LLP, the Debtor's special counsel, with regard to the matters on which Weil Gotshal and Dewey Ballantine are representing the Debtor. Hinman will be compensated pursuant to an existing legislative retainer filed with the New York Temporary State Commission on Lobbying and by a general retainer to be compensated in accordance with Hinman's normal hourly rates for regulatory matters in effect when services are rendered and normal reimbursement policies. For the period of Jan. 1, 2006, through Oct. 26, 2006, Hinman received $382,479 from the Debtor in connection with Hinman's representation of the Debtor. Hinman has $8,678 in the Debtor's account to be credited towards future professional services and expenses. Hinman expects to bill the Debtor for the period between Oct. 27, 2006, and the commencement date for services rendered and expenses incurred on behalf of the Debtor. William Y. Crowell, III, a member of Hinman Straub P.C., assures the Court that his firm does not hold any material interest adverse to the estate, and as special counsel for a specific purpose, is not required to be disinterested persons, in accordance with Section 327(e) of the Bankruptcy Code. About New York Racing Based in Jamaica, New York, The New York Racing Association Inc. aka NYRA -- http://www.nyra.com/-- operates racing tracks in Aqueduct, Belmont Park and Saratoga. The company filed a chapter 11 petition on November 2, 2006 (U.S. Bankr. S.D.N.Y. Case No. 06-12618) Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP represents the Debtor in its restructuring efforts. When the Debtor sought protection from its creditors, it listed more than $100 million of total assets and more than $100 million of total debts. NOMURA ASSET: S&P Puts B-Rated Class 1-B-5 Loan on CreditWatch -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on class 1- B-5 from Nomura Asset Acceptance Corp. Alternative Loan Trust's series 2005-AP1 and class B-3 from series 2005-S2 on CreditWatch with negative implications. At the same time, the ratings on various classes of mortgage- backed securities issued by Nomura Asset Acceptance Corp. Alternative Loan Trust, Nomura Asset Securities Corp., and Nomura Home Equity Loan Inc. Home Equity Loan Trust are affirmed. The CreditWatch negative placements reflect our expectation that additional losses may result from high delinquencies for these classes. As of the September 2006 distribution date, total delinquencies, as a percentage of the current pool principal balances, were 5.58% for series 2005-AP1 and 10.71% for series 2005-S2, with 4.19% and 3.65% categorized as seriously delinquent. Standard & Poor's will continue to closely monitor the performance of these transactions. If the delinquent loans translate into realized losses, the rating agency may take additional rating actions, depending on the size of the losses and the remaining credit support. In contrast, if the delinquencies decrease and do not cause significant additional losses, Standard & Poor's will affirm the current ratings and remove them from CreditWatch. The affirmations reflect loss coverage percentages that meet or exceed the levels necessary to maintain the current ratings. Credit enhancement for series 1994-1, 1994-3, 2003-A1, and 2003-A2 is provided through subordination of the junior classes. All of the other series use overcollateralization and excess spread in addition to subordination as forms of credit enhancement. In addition, classes A-4, A-5A, and A-6 from series 2004-AP3 benefit from bond insurance policies provided by Ambac Assurance Corp. The underlying collateral for these certificates consists of first-lien, fixed-rate, 30-year residential mortgage loans. Ratings Placed On Creditwatch Negative Nomura Asset Acceptance Corp. Alternative Loan Trust Rating Series Class To From ------ ----- -- ---- 2005-AP1 1-B-5 B/Watch Neg B 2005-S2 B-3 BB/Watch Neg BB Ratings Affirmed Nomura Asset Securities Corp. Series Class Rating ------ ----- ------ 1994-1 A-6, A-11, A-12, A-13 AAA 1994-3 IO, PO AAA 1994-3 M-3 AA- Nomura Asset Acceptance Corp. Alternative Loan Trust Series Class Rating ------ ----- ------ 2003-A1 A-1, A-2, A-3, A-4, A-5 AAA 2003-A1 A-6, A-7, A-IO, APO AAA 2003-A1 M AA 2003-A1 B-1 A 2003-A1 B-2 BBB 2003-A1 B-3 BB 2003-A1 B-4 B 2003-A2 A1, A3, AI0-2, M1, M2, B1, B2, B3 AAA 2003-A2 B-4 AA+ 2003-A2 B-5 AA 2003-A2 B-6 A 2003-A3 A-1 AAA 2003-A3 M-1 AA+ 2003-A3 M-2 A 2003-A3 B-1 BBB 2004-AP1 A-3, A-4A, A-4B, A-5, A-6 AAA 2004-AP1 M-1 AA 2004-AP1 M-2 A 2004-AP1 M-3 BBB 2004-AP2 A-3A, A-3B, A-4, A-5, A-6 AAA 2004-AP2 M-1 AA 2004-AP2 M-2 A 2004-AP2 M-3 BBB 2004-AP3 A-3, A-4, A-5A, A-5B, A-6, A-IO AAA 2004-AP3 M-1 AA+ 2004-AP3 M-2 A+ 2004-AP3 M-3 BBB+ 2004-AR1 I-A, II-A, III-A, IV-A, IV-X, VA1, VA3 AAA 2004-AR1 C-B-1, V-M-1 AA 2004-AR1 C-B-2, V-M-2 A+ 2004-AR1 V-M-3 A- 2004-AR1 C-B-3 BBB 2004-AR1 C-B-4 BB 2004-AR1 C-B-5 B 2004-AR2 I-A, II-A, III-A-1, III-A-2, III-A-3 AAA 2004-AR2 M-1 AA 2004-AR2 M-2 A+ 2004-AR2 M-3 A- 2004-AR2 M-4 BBB+ 2004-AR3 I-A-1, I-A-2, II-A, III-A-1, III-A-2 AAA 2004-AR3 III-A-3,III-A-4, III-A-5 AAA 2004-AR3 M-1 AA 2004-AR3 M-2 A+ 2004-AR3 M-3 A- 2004-AR3 M-4 BBB+ 2004-AR4 I-A-1, I-A-2, II-A-1, II-A-2 AAA 2004-AR4 II-A-3, II-A-4, II-A-5, II-A-6 AAA 2004-AR4 III-A-1, III-A-2 AAA 2004-AR4 M-1 AA 2004-AR4 M-2 A+ 2004-AR4 M-3 A- 2004-AR4 M-4 BBB+ 2004-AR4 M-5 BBB- 2005-AP1 I-A-1, II-A-2, II-A-3, II-A-4 AAA 2005-AP1 II-A-5, II-A-IO AAA 2005-AP1 I-B-1, II-M-1 AA 2005-AP1 I-B-2, II-M-2 A 2005-AP1 I-B-3, II-M-3 BBB 2005-AP1 I-B-4 BB 2005-AP2 A-1, A-2, A-3, A-4, A-5, A-IO AAA 2005-AP2 M-1 AA 2005-AP2 M-2 A 2005-AP2 M-3 BBB 2005-AP3 A-1, A-2, A-3, A-4, A-5, A-IO AAA 2005-AP3 M-1 AA 2005-AP3 M-2 A 2005-AP3 M-3 BBB 2005-AP3 M-4 BBB- 2005-AR1 I-A-1, I-A-2, II-A-1, II-A-2, II-A-3 AAA 2005-AR1 M-1 AA 2005-AR1 M-2 A+ 2005-AR1 M-3 A- 2005-AR1 M-4 BBB+ 2005-AR1 M-5 BBB- 2005-AR2 1-A, II-A-1, II-A-2, III-A-1, III-A-2 AAA 2005-AR2 III-A-3, IV-A-1, IV-A-2 AAA 2005-AR2 M-1 AA 2005-AR2 M-2 A+ 2005-AR2 M-3 A- 2005-AR2 M-4 BBB+ 2005-AR2 M-5 BBB- 2005-AR4 1-A, II-A, III-A-1, III-A-2, IV-A-1 AAA 2005-AR4 IV-A-2, V-A-1, V-A-2, V-A-3, V-A-4 AAA 2005-AR4 M-1 AA 2005-AR4 M-2 A+ 2005-AR4 M-3 A- 2005-AR4 M-4 BBB+ 2005-AR4 M-5 BBB- 2005-AR5 IA1, IA2, IIA1, IIA2, IIIA1, IIIA2 AAA 2005-AR5 IIIA3, IIIA4 AAA 2005-AR5 M-1 AA 2005-AR5 M-2 A+ 2005-AR5 M-3 A- 2005-AR5 M-4 BBB+ 2005-AR5 M-5 BBB- 2005-AR6 1-A, II-A-1, II-A-2, III-A-1, III-A-2 AAA 2005-AR6 IV-A-1, IV-A-2 AAA 2005-AR6 M-1 AA 2005-AR6 M-2 A+ 2005-AR6 M-3 A- 2005-AR6 M-4 BBB+ 2005-AR6 M-5 BBB- 2005-S1 A-1, A-IO AAA 2005-S1 M-1 AA 2005-S1 M-2 A 2005-S1 B-1 BBB 2005-S1 B-2 BBB- 2005-S1 B-3 BB 2005-S2 A-1, A-IO AAA 2005-S2 M-1 AA 2005-S2 M-2 A 2005-S2 B-1 BBB 2005-S2 B-2 BBB- 2005-S3 A-1, A-2, A-3, A-IO AAA 2005-S3 M-1 AA 2005-S3 M-2 A 2005-S3 B-1 BBB+ 2005-S3 B-2 BBB 2005-S3 B-3 BBB- 2005-S3 B-4-IO, B-4-PO BB 2005-S4 A-1, A-2, A-3, A-IO AAA 2005-S4 M-1 AA+ 2005-S4 M-2 AA 2005-S4 M-3 AA- 2005-S4 M-4 A+ 2005-S4 M-5 A 2005-S4 M-6 A- 2005-S4 B-1 BBB+ 2005-S4 B-2 BBB 2005-S4 B-3 BBB- 2005-S4 B-4 BB+ 2005-S4 B-5 BB 2005-WF1 I-A, II-A-1A, II-A-1B, II-A-2, II-A-3 AAA 2005-WF1 II-A-4, II-A-5 AAA 2005-WF1 M-1 AA 2005-WF1 M-2 A 2005-WF1 M-3 BBB 2006-WF1 A-1, A-2, A-3, A-4, A-5, A-6 AAA 2006-WF1 M-1 AA+ 2006-WF1 M-2 AA 2006-WF1 M-3 A+ 2006-WF1 M-4 A- 2006-AF1 I-A-1A, I-A-1B, I-A-2, I-A-3, I-A-4 AAA 2006-AF1 I-A-5, I-A-IO, II-A, III-A-1, III-A-2 AAA 2006-AF1 IV-A-1, IV-A-2, V-A AAA 2006-AF1 I-M-1, C-B-1 AA 2006-AF1 I-M-2, C-B-2 A 2006-AF1 I-M-3 BBB+ 2006-AF1 C-B-3 BBB 2006-AF1 C-B-4 BB 2006-AF1 C-B-5 BB- 2006-AF2 I-A-1, I-A-2, I-A-3, I-A-4, I-A-5 AAA 2006-AF2 I-A-6, II-A, III-A-1, III-A-2, IV-A AAA 2006-AF2 V-A-1, V-A-2 AAA 2006-AF2 I-M-1, C-B-1, V-M-1 AA 2006-AF2 V-M-2 AA- 2006-AF2 I-M-2, V-M-3 A+ 2006-AF2 C-B-2, V-M-4 A 2006-AF2 I-M-3, C-B-3, V-M-5 BBB+ 2006-AF2 C-B-4 BB 2006-AF2 C-B-5 B 2006-AP1 A-1, A-2, A-3, A-4, A-5, A-IO AAA 2006-AP1 M-1 AA 2006-AP1 M-2 A 2006-AP1 M-3 BBB 2006-AR1 1-A, II-A-1, II-A-2, II-A-3, II-X AAA 2006-AR1 III-A, IV-A, V-A-1, V-A-2 AAA 2006-AR1 B-1, V-M-1 AA 2006-AR1 B-2, V-M-2 A+ 2006-AR1 V-M-3 A- 2006-AR1 V-M-4 BBB+ 2006-AR1 B-3 BBB 2006-AR1 V-M-5 BBB- 2006-AR1 B-4 BB 2006-AR1 B-5 BB- 2006-AR2 1-A, II-A-1, II-A-2, II-A-3, II-X AAA 2006-AR2 III-A-1, III-A-2 AAA 2006-AR2 C-B-1, III-M-1 AA 2006-AR2 C-B-2, III-M-2 A+ 2006-AR2 III-M-3 A- 2006-AR2 III-M-4 BBB+ 2006-AR2 C-B-3 BBB 2006-AR2 III-M-5 BBB- 2006-AR2 C-B-4 BB+ 2006-AR2 C-B-5 BB 2006-AR3 A-1A, A-1B, A2, A-3A, A-3B, A-4A, A-4B AAA 2006-AR3 M-1 AA 2006-AR3 M-2 AA- 2006-AR3 M-3 A 2006-AR3 M-4 A- 2006-AR3 M-5 BBB 2006-S1 A-1, A-2, A-3, A-IO AAA 2006-S1 M-1 AA+ 2006-S1 M-2 AA 2006-S1 M-3 AA- 2006-S1 M-4 A+ 2006-S1 M-5 A 2006-S1 M-6 A- 2006-S1 B-1 BBB+ 2006-S1 B-2 BBB 2006-S1 B-3 BBB- 2006-S1 B-4 BB+ 2006-S1 B-5 BB 2006-S2 A-1, A-2, A-3, A-IO AAA 2006-S2 M-1 AA+ 2006-S2 M-2 AA 2006-S2 M-3 AA- 2006-S2 M-4 A+ 2006-S2 M-5 A 2006-S2 M-6 A- 2006-S2 B-1 BBB+ 2006-S2 B-2 BBB 2006-S2 B-3 BBB- 2006-S2 B-4 BB+ 2006-S2 B-5 BB 2006-S3 A-1, A-IO AAA 2006-S3 M-1 AA+ 2006-S3 M-2 AA 2006-S3 M-3 AA- 2006-S3 M-4 A+ 2006-S3 M-5 A 2006-S3 M-6 A- 2006-S3 B-1 BBB+ 2006-S3 B-2 BBB 2006-S3 B-3 BBB- 2006-S3 B-4 BB+ 2006-S3 B-5 BB 2006-S4 A-1, A-IO AAA 2006-S4 M-1 AA+ 2006-S4 M-2 AA 2006-S4 M-3 AA- 2006-S4 M-4 A+ 2006-S4 M-5 A 2006-S4 M-6 A- 2006-S4 B-1 BBB+ 2006-S4 B-2 BBB 2006-S4 B-3 BBB- 2006-S4 B-4 BB+ Nomura Home Equity Loan Inc. Home Equity Loan Trust Series Class Rating ------ ----- ------ 2005-FM1 I-A-1, I-A-2, II-A-1, II-A-2, II-A-3 AAA 2005-FM1 M-1 AA+ 2005-FM1 M-2 AA 2005-FM1 M-3 AA- 2005-FM1 M-4 A+ 2005-FM1 M-5 A 2005-FM1 M-6 A- 2005-FM1 M-7 BBB+ 2005-FM1 M-8 BBB 2005-FM1 M-9 BBB- 2005-FM1 B-1, B-2 BB+ 2005-FM1 B-3A, B-3B BB 2005-HE1 I-A-1, I-A-2, II-A-1, II-A-2, II-A-3 AAA 2005-HE1 M-1 AA+ 2005-HE1 M-2 AA 2005-HE1 M-3 AA- 2005-HE1 M-4 A+ 2005-HE1 M-5 A 2005-HE1 M-6 A- 2005-HE1 M-7 BBB+ 2005-HE1 M-8 BBB 2005-HE1 M-9 BBB- 2005-HE1 B-1 BB+ 2005-HE1 B-2 BB+ 2006-FM1 I-A, II-A-1, II-A-2, II-A-3, II-A-4 AAA 2006-FM1 M-1, M-2 AA+ 2006-FM1 M-3 AA 2006-FM1 M-4 AA- 2006-FM1 M-5 A+ 2006-FM1 M-6 A 2006-FM1 M-7 A- 2006-FM1 M-8 BBB+ 2006-FM1 M-9 BBB 2006-FM1 B-1 BBB- 2006-FM1 B-2 BB+ 2006-HE1 A-1, A-2, A-3, A-4 AAA 2006-HE1 M-1 AA+ 2006-HE1 M-2 AA 2006-HE1 M-3 AA- 2006-HE1 M-4 A+ 2006-HE1 M-5 A 2006-HE1 M-6 A- 2006-HE1 M-7 BBB+ 2006-HE1 M-8 BBB 2006-HE1 M-9 BBB- 2006-HE1 B-1 BB+ 2006-HE1 B-2 BB 2006-HE2 A-1, A-2, A-3, A-4 AAA 2006-HE2 M-1 AA+ 2006-HE2 M-2, M-3 AA 2006-HE2 M-4 AA- 2006-HE2 M-5 A+ 2006-HE2 M-6 A 2006-HE2 M-7 A- 2006-HE2 M-8 BBB+ 2006-HE2 M-9 BBB 2006-HE2 B-1 BBB- 2006-HE2 B-2 BB+ 2006-HE3 I-A-1, II-A-1, II-A-2, II-A-3, II-A-4 AAA 2006-HE3 M-1 AA+ 2006-HE3 M-2, M-3 AA 2006-HE3 M-4 AA- 2006-HE3 M-5 A+ 2006-HE3 M-6 A 2006-HE3 M-7 A- 2006-HE3 M-8 BBB+ 2006-HE3 M-9 BBB 2006-HE3 B-1 BBB- 2006-HE3 B-2 BB+ 2006-WF1 A-1, A-2, A-3, A-4 AAA 2006-WF1 M-1 AA+ 2006-WF1 M-2, M-3 AA 2006-WF1 M-4 AA- 2006-WF1 M-5 A+ 2006-WF1 M-6 A 2006-WF1 M-7 A- 2006-WF1 M-8 BBB+ 2006-WF1 M-9 BBB 2006-WF1 B-1 BBB- 2006-WF1 B-2 BB+ NORTEL NETWORKS: Appoints Dr. Kristina M. Johnson to Board ---------------------------------------------------------- Nortel Networks Corporation reported that Dr. Kristina M. Johnson, dean of Duke University's Edmund T. Pratt, Jr., School of Engineering, has been appointed to the Company's Board of Directors, effective immediately. Dr. Johnson has been with Duke University since 1999. As dean of the Pratt School of Engineering, she oversees more than 1100 undergraduates, 440 graduate students and 120 tenure track and non-tenure track faculty. She joined Duke from the University of Colorado, where she served as a professor of Electrical and Computer Engineering from 1985-1999. Dr. Johnson has helped start several companies including ColorLink, Inc., and sits on several corporate Board of Directors including Mineral Technologies Inc., Boston Scientific Corporation, and AES Corporation. She also currently serves on the advisory boards of the Colorado School of Mines, the Georgia Institute of Technology School of Engineering, the Duke Childrens' Classic, and the Institute for Emerging Issues. Dr. Johnson received her B.S., M.S. (with distinction) and Ph.D. in electrical engineering from Stanford University. She completed a NATO post-doctoral fellowship at Trinity College in Dublin, Ireland, and was a Fulbright Fellow in 1991. Johnson has published more than 140 refereed papers and proceedings, holds forty-three patents, and has pioneered work in liquid crystal-on- silicon microdisplays, a marriage of LC electro-optic materials and VLSI technology. "I am pleased to announce Dean Johnson's appointment," said Harry Pearce, chairman of Nortel's Board of Directors. "Her insight and experience will greatly benefit Nortel and contribute to our focus on innovation and R&D effectiveness." Dr. Johnson has also been appointed to the Nortel Networks Limited Board of Directors. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. * * * As reported in the Troubled Company Reporter on Oct. 5, 2006, Moody's Investors Service upgraded its B3 Corporate Family Rating for Nortel Networks Corp. to B2. As reported in the Troubled Company Reporter on July 10, 2006, Dominion Bond Rating Service confirmed the long-term ratings of Nortel Networks Capital Corporation, Nortel Networks Corporation, and Nortel Networks Limited at B (low) along with the preferred share ratings of Nortel Networks Limited at Pfd-5 (low). All trends are Stable. DBRS confirmed B (low) Stb Senior Unsecured Notes; B (low) Stb Convertible Notes; B (low) Stb Notes & Long-Term Senior Debt; Pfd-5 (low) Stb Class A, Redeemable Preferred Shares; and Pfd-5 (low) Stb Class A, Non-Cumulative Redeemable Preferred Shares. Standard & Poor's also affirmed its 'B-' long-term and 'B-2' short-term corporate credit ratings on the company, and assigned its 'B-' senior unsecured debt rating to the company's proposed $2 billion notes. The outlook is stable. NORTEL NETWORKS: Posts $99 Million Net Loss in 2006 Third Quarter ----------------------------------------------------------------- Nortel Networks Corp. reported a $99 million net loss in the third quarter of 2006, compared to a net loss of $136 million in the third quarter of 2005 and net earnings of $366 million in the second quarter of 2006. Revenues were $2.96 billion for the third quarter of 2006 compared to $2.52 billion for the third quarter of 2005 and $2.74 billion for the second quarter of 2006. Net loss in the third quarter of 2006 included a benefit of approximately $43 million related to the announced changes to the North American employee benefit plans, a gain of $16 million on the sale of assets, a shareholder litigation expense of $38 million reflecting a mark-to-market adjustment of the share portion of the global class action settlement and special charges of $25 million for restructuring. The net loss in the third quarter of 2005 included special charges of $39 million related to restructuring activities and a net charge of $20 million related to the re-filing of the Company's tax returns as a result of the financial restatements. Net earnings in the second quarter of 2006 included a shareholder litigation recovery of $510 million reflecting a mark-to-market adjustment of the share portion of the global class action settlement, special charges of $45 million for restructuring and a loss of $10 million on the sale of assets. Cash balance at the end of the third quarter of 2006 was $2.60 billion, up from $1.90 billion at the end of the second quarter of 2006. This increase in cash was primarily driven by cash received upon the closing of the offering of $2 billion aggregate principal amount of senior notes, less cash used of $1.3 billion to repay the $1.3 billion one-year credit facility that was entered into in February 2006, partially offset by a cash outflow from operations of $46 million. "I am pleased with our overall revenue growth and, in particular, in our focus areas of next generation mobility, enterprise and related services, and metro optical. I am also pleased with the 270 basis points operating margin improvement versus the third quarter of 2005. However, we should and will be moving faster. Pricing pressures and the speed at which our revenues are shifting to next generation, early cycle products is increasing our challenge to drive profitability improvements," said Mike Zafirovski, president and chief executive officer, Nortel. "The management team and I are resolute in achieving a globally competitive cost structure and we are accelerating and enhancing our Business Transformation and Lean Six Sigma programs to close this gap and achieving double digit operating margins in 2008. I believe recent steps of establishing the Microsoft alliance, divesting our UMTS access business, and increasingly shifting resources to lower cost centers are indicative of our resolve." Nine-Month 2006 Results For the first nine months of 2006, revenues were $8.08 billion compared to $7.53 billion for the same period in 2005. The Company reported net earnings for the first nine months of 2006 of $100 million, compared to a net loss of $273 million for the same period in 2005. Net earnings in the first nine months of 2006 included a shareholder litigation recovery of $453 million reflecting mark- to-market adjustments of the share portion of the global class action settlement, special charges of $75 million related to restructuring activities, a benefit of approximately $43 million related to the announced changes to the North American employee benefit plans and a benefit of $41 million related to the sale of assets. The first nine months of 2005 results included special charges of $145 million related to restructuring activities and $36 million of costs related to the sale of businesses and assets. Outlook Commenting on the Company's financial expectations, Peter Currie, executive vice president and chief financial officer, Nortel, said, "For the fourth quarter of 2006, we expect revenue growth in the mid to high single digits compared to the fourth quarter of 2005, gross margin to be between 38 and 39 as a percentage of revenue and spending to be approximately flat compared to the fourth quarter of 2005. Based on this fourth quarter outlook, we now expect mid to high single digit revenue growth for the full year 2006 compared to 2005, full year gross margin to be between 38 and 39 as a percentage of revenue, and we continue to expect operating expenses to be flat to up slightly from 2005." Share Consolidation Nortel also disclosed the planned consolidation of the Company's common shares as approved at the Company's annual and special meeting of shareholders held on June 29, 2006. The consolidation is expected to be effective on December 1, 2006 at a ratio of one consolidated share for every 10 pre-consolidation shares, as approved by the Company's board of directors. The consolidation is expected to increase investors' visibility into the Company's profitability on a per share basis, reduce share transaction fees for investors and certain administrative costs for Nortel, and broaden interest to institutional investors and investment funds. "True shareholder value will be driven by ongoing progress and Company performance, but this step helps create a better foundation on which to build," said Peter Currie, Nortel's executive vice president and chief financial officer. Registered shareholders of the Company will receive instructions by mail on how to obtain a new share certificate representing their consolidated common shares. Upon implementation of the consolidation, the Company's 4.25 percent convertible senior notes due September 1, 2008 will be convertible by holders into common shares of Nortel Networks Corporation at a new conversion price of $100 per common share. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. * * * As reported in the Troubled Company Reporter on Oct. 5, 2006, Moody's Investors Service upgraded its B3 Corporate Family Rating for Nortel Networks Corp. to B2. As reported in the Troubled Company Reporter on July 10, 2006, Dominion Bond Rating Service confirmed the long-term ratings of Nortel Networks Capital Corporation, Nortel Networks Corporation, and Nortel Networks Limited at B (low) along with the preferred share ratings of Nortel Networks Limited at Pfd-5 (low). All trends are Stable. DBRS confirmed B (low) Stb Senior Unsecured Notes; B (low) Stb Convertible Notes; B (low) Stb Notes & Long-Term Senior Debt; Pfd-5 (low) Stb Class A, Redeemable Preferred Shares; and Pfd-5 (low) Stb Class A, Non-Cumulative Redeemable Preferred Shares. Standard & Poor's also affirmed its 'B-' long-term and 'B-2' short-term corporate credit ratings on the company, and assigned its 'B-' senior unsecured debt rating to the company's proposed $2 billion notes. The outlook is stable. NORTH AMERICAN: Extends 9% Senior Notes Offering to November 24 --------------------------------------------------------------- North American Energy Partners Inc. extended the expiration date of its tender offer and consent solicitation for its 9% Senior Secured Notes due 2010 (CUSIP No. 656844 AE 7) to 5:00 p.m., New York City time, on Nov. 24, 2006, unless further extended or earlier terminated. Based on this new expiration date, the dealer manager and solicitation agent will determine the actual pricing for Notes validly tendered and accepted for payment today, Nov. 9, 2006. The Company will publicly announce the pricing information by issuing a news release prior to 9:00 a.m. New York City time on the day following the price determination date. The Notes are being tendered pursuant to the Company's Offer to Purchase and Consent Solicitation Statement, dated Sept. 8, 2006, which more fully sets forth the terms and conditions of the cash tender offer to purchase any and all of the outstanding principal amount of the Notes as well as the consent solicitation to eliminate substantially all of the restrictive covenants and certain events of default contained in the indenture governing the Notes. The Company expects to pay for any Notes purchased pursuant to the tender offer and consent solicitation on a date promptly following the expiration of the tender offer. The Company may accept and pay for any Notes at any time after the consent date, in its sole discretion. The obligation of the Company to accept for payment and purchase the Notes in the tender offer, and pay for the related consents, is conditioned on, among other things, the Company's proposed amalgamation with its parent corporations and completion of the subsequent initial public offering of common shares of the amalgamated company, as described in more detail in the Offer to Purchase. The Company has retained Credit Suisse Securities (USA) LLC to serve as the dealer manager for the tender offer and the solicitation agent for the consent solicitation. Questions regarding the tender offer and the consent solicitation may be directed to Credit Suisse Securities (USA) LLC at (800) 820-1853 (toll free) or (212) 538-0652 (collect). Requests for documents in connection with the tender offer and the consent solicitation may be directed to D. F. King & Co., Inc., the information agent for the tender offer and the consent solicitation, at (800) 431- 9633. About North American Energy Headquartered in Edmonton, Alberta, North American Energy Partners Inc. -- http://www.naepi.ca/-- provides mining and site preparation, piling and pipeline installation services in western Canada. The Company specializes in providing services for the Canadian oil sands. * * * As reported in the Troubled Company Reporter on Oct. 5, 2006, in connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the oilfield service and refining and marketing sectors last week, the rating agency confirmed its B3 Corporate Family Rating for North American Energy Partners Inc. NORTHWEST AIRLINES: Bombardier & Embraer Aircraft Purchase Okayed ----------------------------------------------------------------- The Honorable Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York overrules all objections and grants Northwest Airlines Corp. and its debtor-affiliates' Motions. Judge Gropper authorizes the Debtors to implement the agreements and transactions, including, without limitation to: -- use the property of Northwest's estate to purchase Embraer 175 aircraft pursuant to the Purchase Agreement and to purchase spare engines pursuant to the Spare Engine Agreement; -- to obtain secured postpetition financing pursuant to the Financing Agreement in connection with the purchase of Embraer 175 aircraft and to grant security interests and liens provided that the definitive loan documentation will be subject to final Court approval on 15 days' notice, and provided further, however, that the Court's failure to approve any definitive loan documentation will not otherwise affect or relieve Debtors or Empresa Brasileira de Aeronautica S.A of their obligations under the Agreements; -- to make all payments under the Agreements as an administrative expense under Section 503 of the Bankruptcy Code; -- to enter into amended leases for certain CRJ aircraft as provided in the Restructuring Agreements with Bombardier, Inc., et al.; -- to assume each and every aircraft lease for each CRJ aircraft and their corresponding ancillary agreements, as may be amended pursuant to the Restructuring Agreements; -- to reinstate leases for CRJ aircraft that were previously rejected in the Debtors' Chapter 11 cases as well as any related agreements ancillary to the Reinstated CRJ Leases and the Assumed CRJ Leases that are not executory contracts; -- to enter into and perform their obligations under the Purchase Agreement and to use property of the estate to purchase CRJ900 aircraft; -- to obtain secured postpetition financing pursuant to the terms and conditions of the Financing Support Agreement, the Purchase Agreement and the PDP Financing Agreement in connection with the purchase of CRJ900 aircraft, and to grant security interests, liens, and administrative expense claims; -- to enter into amended indentures and any related loan documentation for each of the Mortgaged Aircraft as provided in the Restructuring Agreements; -- to assume the existing purchase agreement for CRJ200/440 aircraft between Northwest and Bombardier as it relates to aircraft that have been delivered; -- to allow certain claims against Northwest's estate, as provided in the Restructuring Agreements; and -- to modify the procedures applicable to the trading of certain claims by Export Development Canada. The Court further orders that the provisions of Section 362 of the Bankruptcy Code are modified and will not stay Embraer or its affiliates from exercising any remedy and giving any notice pursuant to the terms of the Agreements and applicable non- bankruptcy law. Judge Gropper clarifies that nothing in the Court Orders, the Agreements or in any Documents, will grant or be deemed to grant a superpriority claim with priority senior to, or pari passu with, the superpriority claim granted to Citicorp U.S.A., Inc. and the lenders under the Credit Agreement referenced in a Court Order dated Aug. 8, 2006, authorizing the Debtors to obtain secured postpetition financing on a super-priority basis. The Court also authorizes the Debtors to file the Agreements and definitive loan documents under seal. Objections Wachovia Financial Services, Inc., and First Union Commercial Leasing Group LLC complained that have not contacted them with respect to the contents of the Restructuring Agreements and the Transactions with General Electric Capital Corp. et al., even though aircraft leases, in which they are owner participants, are being assumed as part of the Agreement. Wachovia and First Union are not parties to the Restructuring Agreements and have not seen them as they are filed under seal. They object to the Debtors' request unless a statement is made on the record that the leases of CRJ Aircraft are being assumed in full without modification along with all ancillary agreements, including the Guarantee of Northwest Airlines Corp. and the Tax Indemnity Agreement associated with each CRJ Lease. In addition, Wachovia and First Union request a statement on the record that nothing contained in the Debtors' request affects their rights under any of the Tax Indemnity Agreements. They ask the Court to deny the Debtors' requests. Debtors' Motion The Debtors asked the Court to: (a) purchase at least 36 new Embraer 175 aircraft pursuant to a purchase agreement dated Oct. 5, 2006, between Northwest Airlines, Inc., and Empresa Brasileira de Aeronautica S.A.; (b) obtain secured financing in connection with the Embraer aircraft purchases pursuant to a financing letter of agreement between Northwest and Embraer; (c) purchase 10 spare engines pursuant to certain agreements between Northwest and General Electric Company; and (d) implement the transactions and agreements contemplated in Restructuring Agreements dated Oct. 5, 2006, among Northwest, General Electric Capital Corporation, Export Development Canada, Her Majesty in Right of Canada, and Bombardier, Inc. The Debtors also sought the Court's permission to file the Agreements under seal to protect confidential information. Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. (Northwest Airlines Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) NORTHWEST AIRLINES: Wants to File Microsoft Accord Under Seal ------------------------------------------------------------- Northwest Airlines Corp. and its debtor-affiliates seek consent from the U.S. Bankruptcy Court for the Southern District of New York to assume a Microsoft Enterprise Agreement, as modified, and to file the modified agreement under seal to protect the parties from disclosing confidential commercial information. The Debtors and Microsoft Licensing GP, an affiliate of Microsoft Corp., entered into an Enterprise Agreement and various other related agreements on Feb. 21, 2003, pursuant to which MLGP provides the Debtors various products, including software licenses, maintenance and upgrades. The Enterprise Agreement expires by its terms on Dec. 31, 2006. After filing for bankruptcy, the Debtors and MLGP negotiated the Modified Enterprise Agreement, which continues the Debtors' enrollment with respect to the use of Microsoft software under the Enterprise Agreement through Dec. 31, 2008. The effectiveness of the Modified Enterprise Agreement is conditioned upon the entry of a final and non-appealable Court order authorizing the Debtors' assumption of the Modified Enterprise Agreement. The parties have agreed that in connection with the assumption of the Modified Enterprise Agreement, MLGP will be entitled to, among other things: (a) a $475,000 renewal fee to be paid on or before Jan. 1, 2007; and (b) three annual installment payments -- a $1,656,446 initial installment due within 14 days from the date the Court approves the request, and two additional installments in the amount of $1,740,464 to be paid on Jan. 1, 2007, and Jan. 1, 2008. The parties have further agreed that all monetary defaults under the Enterprise Agreement will be cured through, (i) an administrative claim for $355,267 to be paid no later than contemporaneously with the payment of the initial installment; and (ii) an allowed general unsecured claim for $1,029,586. The parties agreed that all cure obligations that the Debtors may owe MLGP under Section 365 in connection with prepetition defaults under the Enterprise Agreement, if any, are deemed satisfied in full through payment of the Administrative Claim and allowance of the General Unsecured Claim. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, tells the Court that the Modified Enterprise Agreement is a valuable asset of the Debtors' estates because the goods and services provided by MLGP are important to the Debtors' operations. The Debtors will realize significant cost savings by continuing their contractual relationship with MLGP, Mr. Petrick adds. Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. (Northwest Airlines Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) NRG ENERGY: S&P Affirms B+ Corp. Credit Rating with Stable Outlook ------------------------------------------------------------------ Standard & Poor's Rating Services affirmed its 'B+' corporate credit on NRG Energy Inc. The outlook is stable. Princeton, N.J.-based NRG is an owner and operator of power generating facilities, thermal production and resource recovery facilities, and various international independent power producers. The rating affirmation follows the company's announced plan to issue $1.1 billion of additional unsecured debt, a 30% addition to the outstanding $3.6 billion of unsecured debt. The proceeds of the planned $1.1 billion unsecured debt issuance, together with approximately $250 million of cash on hand, will be paid to counterparties on existing hedges to reset those hedges to current market prices. The resetting of the hedges to today's market prices, together with the upsizing of credit facilities, will cancel the company's currently substantial collateral requirements and create capacity for new, longer-term hedges under the company's second lien pledged to counterparties. "Although the reset will add significant debt, the new hedges that we expect to simultaneously be executed with the debt issuance will result in greater stability--and possible strengthening--of cash flows through 2010," Standard & Poor's credit analyst David Bodek said. The stable outlook reflects Standard & Poor's view that NRG's near-term credit quality should benefit from the stability provided by additional hedging arrangements and a commitment to increased levels of secured debt reduction. ONEIDA LTD: July 29 Balance Sheet Upside-Down by $58.5 Million -------------------------------------------------------------- Oneida Ltd. incurred a $15.5 million net loss on $73.2 million of net revenues for the three months ended July 29, 2006, compared to a $6.7 million net loss on $78.6 million of net revenues for the same period in 2005, the Company disclosed in its second quarter financial statements on Form 10-Q to the Securities and Exchange Commission. As of July 29, 2006, the Company's balance sheet showed $296.5 million in total assets and $355 million in total debts resulting in a $58.5 million stockholders' deficit. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?14a5 Headquartered in Oneida, New York, Oneida Ltd. (OTC: ONEI) -- http://www.oneida.com/-- manufactures stainless steel and silverplated flatware for both the Consumer and Foodservice industries, and supplies dinnerware to the foodservice industry. Oneida also supplies a variety of crystal, glassware and metal serveware for the tabletop industries. The Company and eight debtor-affiliates filed for Chapter 11 protection on March 19, 2006 (Bankr. S.D. N.Y. Case Nos. 06-10489 through 06-10496). Douglas P. Bartner, Esq., at Shearman & Sterling LLP represents the Debtors. Credit Suisse Securities (USA) LLC is the Debtors' financial advisor. Scott L. Hazan, Esq., and Lorenzo Marinuzzi, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represent the Official Committee of Unsecured Creditors. Robert J. Stark, Esq., at Brown Rudnick Berlack Israels LLP represents the Official Committee of Equity Security Holders. When the Debtors filed for protection from their creditors, they listed $305,329,000 in total assets and $332,227,000 in total debts. On May 12, 2006, Judge Gropper approved the Debtors' disclosure statement. The pre-negotiated plan of reorganization of Oneida Ltd. was confirmed, on Aug. 31, 2006. The Company emerged from Chapter 11 on Sept. 15, 2006, as a privately held company. PANAVISION INC: AFM Buyout Cues Moody's to Affirm B2 Rating ----------------------------------------------------------- Moody's Investors Service affirmed Panavision Inc.'s B2 Corporate family rating after the company's disclosure to upsize its first lien and second lien facility by $25 million and $10 million respectively to fund the acquisition of AFM Group Limited which is expected to close in the next several months. Previously, Panavision had upsized its first lien facility by $30 million to fund the acquisition of Plus 8 and repay borrowings under its revolving credit facility in Sept. 2006. The outlook is stable. The B2 Corporate family rating reflects Panavision's high debt to EBITDA leverage, uncertain asset coverage and the company's dependence on the number of film starts and scripted television programming. The ratings are supported by the company's strong brand image and industry leading market share in the feature film and episodic television segment. The ratings and stable outlook reflect Moody's expectation that the company's capital investment will yield the expected growth in asset utilization, revenues and EBITDA and that the company will start generating positive free cash flow in 2006 on a pro-forma basis, which will grow to meaningful levels over the intermediate term. Moody's has taken these rating actions: * Issuer: Panavision Inc. -- Corporate Family Rating affirmed at B2 -- Probability of Default Rating affirmed at B2 -- $35 million revolving credit facility affirmed at Ba3; LGD3, 31% -- $250 million first lien term loan affirmed at Ba3; LGD3, 31% -- $125 million second lien term loan affirmed at Caa1; LGD5, to 82% from 83% Headquartered in Woodland Hills, California, Panavision manufactures and rents camera systems and lighting equipment to motion picture and television producers worldwide. PBG AIRCRAFT: S&P Pares Rating on Class B Notes to B From BB ------------------------------------------------------------ Standard & Poor's Ratings Services lowered ratings on aircraft notes issued by PBG Aircraft Trust and removed the ratings from CreditWatch, where they were placed with negative implications Aug. 16, 2002. The rating on the Class A aircraft notes was lowered to 'BB-' from 'BBB-', and the rating on the Class B aircraft notes lowered to 'B' from 'BB'. "The downgrade was based on reduced cash flows and collateral coverage available to PBG Aircraft Trust, a securitization of finance leases to U.S. airlines," said Standard & Poor's credit analyst Philip Baggaley. "The cumulative effect of bankruptcies of United Air Lines Inc. [B/Stable/--] and Northwest Airlines Inc. [rated 'D'] on the securitization, and renegotiation of leases to American Airlines Inc. [B/Stable/--] in 2003 has left PBG Aircraft Trust vulnerable to any further airline defaults. In particular, a large concentration of six MD80 series aircraft leased to American presents a risk should that airline enter bankruptcy." PBG Aircraft Trust is a Delaware trust formed in 1998 by PBG Capital Partners LLC, which was in turn owned equally by units of Pitney Bowes Credit Corp. and GATX Capital Corp. GATX's current aircraft leasing operation acts as remarketing agent for the Trust, and those duties may be assumed by Macquarie. The original 14 aircraft, owned directly or indirectly by PBG Aircraft Trust, were acquired in 1986-1989 by PBCC and were leased to five U.S. airlines, a U.S. airline holding company which subleased to a U.S. airline, and a unit of debis AirFinance N.V., which in turn leases that aircraft to a seventh U.S. airline. Of the original planes in the portfolio, two United aircraft and the Air Wisconsin plane were repossessed and sold, and obligations on a regional aircraft leased to Horizon Air Industries Inc. was fully repaid. Remaining aircraft consist of four MD83 and two MD82 planes leased to American, a B757-200 leased to Northwest, an A320-200 leased through AerCap to America West Airlines Inc., and two B737-300s leased to Southwest Airlines Co. Standard & Poor's reviewed the effect of an American bankruptcy as the potentially most damaging credit event, due to the large concentration of rentals (about 40% of the remaining total), and weak values and lease rates of those models. The most likely outcome in such a scenario would be a further negotiated reduction in rentals. In such a scenario, Class A noteholders would more likely than not be fully repaid, but the outcome would depend on the timing of the bankruptcy, recovery on unsecured claims for the amount of forgone rentals, and other factors. The Class B noteholders would have a somewhat more uncertain prospect of full recovery in that scenario. PER-SE: McKesson Buyout Offer Cues Moody's to Affirm Rating at B1 ----------------------------------------------------------------- Moody's Investors Service affirmed McKesson Corporation's Baa3 and Prime-3 ratings after the company's report that it plans to acquire Per-Se Technologies, Inc. - a healthcare information services and systems provider - for total consideration of $1.8 billion. The rating outlook is stable. At the same time, Moody's affirmed Per-Se's corporate family and bank debt ratings, which are expected to be withdrawn at the close of this transaction. Moody's anticipates that Per-Se's existing bank debt will be refinanced at closing. Moody's expects this transaction will close in March 2007, subject to regulatory approvals. Ratings affirmed: * McKesson Corporation -- Senior unsecured notes at Baa3 -- Senior unsecured MTN at Baa3 -- Junior subordinated notes at Ba1 -- Short-term rating at Prime-3 -- Backed IRB/PC at Baa3 -- Sr. shelf at (P) Baa3 -- Sr. subordinated shelf at (P) Ba1 -- Subordinated shelf at (P) Ba1 -- Junior subordinated shelf at (P) Ba1 -- Preferred shelf at (P)Ba1 * Medis Health & Pharma Services -- Short term rating at Prime- 3 * Per Se Technologies, Inc. -- Corporate family rating at B1 -- Probability of default rating at B1 -- Senior secured revolver maturing 2010 at Ba3, LGD3, 36% -- Senior secured term loan due 2012 at Ba3, LGD3, 36% Moody's affirmation of McKesson's ratings is based on the expectation that: (a) although Per-Se's cash flow levels are weak relative to the price of the transaction, McKesson's currently strong liquidity profile and steady free cash flow generation should provide sufficient flexibility for an acquisition of this size; (b) McKesson's cash flow to debt measures will remain consistent with an investment grade rated company even after working capital needs reach sustained levels; and (c) Per-Se should enhance the company's position with its customers, particularly physicians and pharmacists. Over the past 2 years, McKesson has made significant strides in reducing its cash conversion cycle, thus freeing up significant cash for other discretionary spending. However, we believe that certain components of working capital improvement -- particularly those associated with the transition to fee-for-service model - will not be recurring over future periods. Our current ratings and stable outlook assume that the company will continue to maintain cash flow to debt metrics that are consistent with an investment grade rating even after cash flow levels decline to more sustainable levels. Since settling shareholder litigation last year, McKesson's growth strategy has involved several more moderate-sized acquisitions and buyback initiatives, which could largely be funded with balance sheet cash and cash flow. While we believe that the company will likely consider additional initiatives aimed at improving shareholder value, including share buybacks, the stable outlook assumes that the Per-Se transaction will temper large future initiatives. The stable rating outlook is supported by our expectation that McKesson will be able to maintain metrics that are consistent with an investment grade rating even as its cash flow returns to more sustainable levels. Any future rating changes would consider the company's ongoing growth strategy and changes to its capital structure as well as levels of sustainable cash flow. If McKesson is able to achieve free cash flow to adjusted debt ratios that are sustained above 20-25%, the outlook or ratings could improve. If future acquisitions or buybacks raise leverage such that the company is unable to sustain free cash flow to adjusted debt ratios at or above 15%, the ratings could see downward pressure. McKesson Corporation, located in San Francisco, California, is a leading distributor, with a focus on pharmaceutical distribution and related services. Its information systems business provides software and hardware support to a large portion of the nation's hospitals. Per-Se Technologies, an Atlanta-based provider of financial and administrative technology products and services, has a current customer base including about 100,000 physicians in small practices, 17,000 hospital-affiliated physicians, 3,000 hospitals and 50,000 retail pharmacies. PETER LOMBARDI: Case Summary & Five Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Peter Lombardi 3090 Northeast 44 Street Fort Lauderdale, FL 33308 Bankruptcy Case No.: 06-15742 Type of Business: The U.S. Securities and Exchange Commission had agreed to accept a $25 million settlement on Dec. 1, 2005, in its federal civil action against Joel and Leslie Steinger, and Peter Lombardi, former principals of the viatical company Mutual Benefits Corporation. The SEC alleged that the principals carried out over $1 billion in fraudulent sales of viatical settlements from 1994 to 2004. According to the SEC, the principals violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934. The principals had agreed to submit themselves to an injunction barring them from committing future acts of fraud and violations of federal securities laws. Chapter 11 Petition Date: November 8, 2006 Court: Southern District of Florida (Fort Lauderdale) Judge: John K. Olson Debtor's Counsel: Sherri B. Simpson, Esq. Sherri B. Simpson, P.A. 517 Southwest 1 Avenue Fort Lauderdale, FL 33301 Tel: (954) 524-4141 Fax: (954) 763-5117 Estimated Assets: $1 Million to $100 Million Estimated Debts: $More than $100 Million Debtor's Five Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ United States of America Restitution per $965,000,000 c/o U.S. Attorney plea agreement, 99 Northeast 4 Street Case No. 06-cr- Miami, FL 33132 20665-PCH-ALL Ferrel Law, P.A. Attorney's Fees $3,000,000 201 South Biscayne Boulevard 34th Floor, Miami Center Miami, FL 33131 Robert Martinez Lombardi's $1,500,000 Receiver for MBC and obligation pursuant Viatical Benefactors, LLC to stipulation in Colson Hicks Eidson class action 255 Aragon Avenue, 2nd Floor Miami, FL 33134 Internal Revenue Service Townhome at 5555 $425,480 Centralized Insolvency North Ocean Secured: Operations Boulevard, Suite 63 $370,000 P.O. Box 21126 Fort Lauderdale, FL Philadelphia, PA 19114 Legal: Condominium Unit #63, Ocean Bay Club Condominium Citi Gold Advantage Credit Card $16,819 P.O. Box 6500 Sioux Falls, SD 37117 PIERRE FOODS: Buys Zartic Inc.'s Assets for $94 Million ------------------------------------------------------- Pierre Foods, Inc., has entered into an agreement to purchase substantially all of the assets of Zartic, Inc. and its affiliated distribution company, Zar Tran, Inc. The aggregate preliminary purchase price is $94 million plus the assumption of certain liabilities, subject to certain post-closing adjustments. The Company expects to finance the purchase through an amendment to its existing Credit Agreement. About Zartic Headquartered in Rome, Georgia, Zartic, Inc., manufactures, sells, delivers and distributes a variety of food items including packaged beef, poultry, pork, and veal products. About Pierre Foods Headquartered in Cincinnati, Ohio, Pierre Foods, Inc., manufactures and markets differentiated processed food solutions, focusing on formed, pre-cooked protein products and hand-held convenience sandwiches. * * * As reported in the Troubled Company Reporter on Nov. 8, 2006, Moody's Investors Service affirmed the B1 corporate family rating of Pierre Foods, Inc. and concurrently placed all instrument ratings on review for possible downgrade. In addition, Standard & Poor's Ratings Services assigned its 'B+' bank loan rating, the same as the corporate credit rating, and '2' recovery rating, to processed food manufacturer and marketer Pierre Foods Inc.'s $100 million add-on to its senior secured term loan, indicating expectation for substantial recovery of principal in the event of a payment default. The $100 million will increase the size of the company's outstanding aggregate $131 million term loan B. PORTRAIT CORP: Creditors' Panel Hires Stroock & Stroock as Counsel ------------------------------------------------------------------ The Honorable Adlai S. Hardin, Jr., of the U.S. Bankruptcy Court for the Southern District of New York authorized the Official Committee of Unsecured Creditors appointed in Portrait Corporation of America, Inc., and its debtor-affiliates' bankruptcy cases to retain Stroock & Stroock & Lavan LLP as its counsel, nunc pro tunc to Sept. 11, 2006. In this engagement, Stroock & Stroock will: a) assist, advise and represent the Committee with respect to the administration of the Chapter 11 Cases, as well as issues arising from or impacting the Debtors, the Committee or the Chapter 11 Cases; b) provide all necessary legal advice with respect to the Committee's powers and duties; c) assist the Committee in maximizing the value of the Debtors' assets for the benefit of all creditors; d) pursue confirmation of a plan of reorganization; e) investigate, as the Committee deems appropriate, among other things, the assets, liabilities, financial condition and operations of the Debtors; f) commence and prosecute necessary and appropriate actions or proceedings on behalf of the Committee that may be relevant to the Chapter 11 Cases; g) review, analyze or prepare, on behalf of the Committee, all necessary applications, motions, answers, orders, reports, schedules and other legal papers; h) communicate with the Committee's constituents and others as the Committee may consider desirable in furtherance of its responsibilities; i) appear before this Court to represent the interests of the Committee; j) confer with professional advisors retained by the Committee so as to more properly advise the Committee; and k) perform all other legal services for the Committee that are appropriate and necessary in the Chapter 11 Cases. Kristopher M. Hansen, Esq., and Michael J. Sage, Esq., will lead Stroock & Stroock's engagement by the Committee. They will be assisted by Karyn B. Zeldman, Esq. (Financial Restructuring Special Counsel), Irina Gomelskaya, Esq. (Financial Restructuring Associate), James Gutierrez, Esq. (Financial Restructuring Associate) and Sayan Bhattacharyya, Esq. (Financial Restructuring Associate). The current standard hourly rates for the bankruptcy attorneys who are expected to render services to the Committee are: Professional Hourly Rate ------------ ----------- Michael J. Sage, Esq. $825 Kristopher M. Hansen, Esq. $675 Karyn B. Zeldman, Esq. $575 Irina Gomelskaya, Esq. $395 James Gutierrez, Esq. $355 Sayan Bhattacharyya, Esq. $280 The hourly rates for the firm's other professionals are: Designation Hourly Rate ----------- ----------- Partners $575 to $825 Associates/Special Counsel $260 to $600 Paraprofessionals $185 to $260 Mr. Hansen assures the Court that his firm is a "disinterested person" within the meaning of section 101(14) of the Bankruptcy Code. Stroock & Stroock can be reached at: Stroock & Stroock & Lavan LLP Attn: Michael J. Sage, Esq. 180 Maiden Lane New York, NY 10038-4982 Phone: 212.806.5400 About Portrait Corporation Portrait Corporation of America, Inc. -- http://pcaintl.com/-- provides professional portrait photography products and services in North America. The Company operates portrait studios within Wal-Mart stores and Supercenters in the United States, Canada, Mexico, Germany and the United Kingdom. The Company also operates a modular traveling business providing portrait photography services in additional retail locations and to church congregations and other institutions. Portrait Corporation and its debtor-affiliates filed for Chapter 11 protection on Aug. 31, 2006 (Bankr S.D. N.Y. Case No. 06-22541). John H. Bae, Esq., at Cadwalader Wickersham & Taft LLP, represents the Debtors in their restructuring efforts. Berenson & Company LLC serves as the Debtors' Financial Advisor and Investment Banker. At June 30, 2006, the Debtor had total assets of $153,205,000 and liabilities of $372,124,000. PORTRAIT CORP: Panel Hires Peter Solomon Co. as Financial Advisor ----------------------------------------------------------------- The Honorable Adlai S. Hardin, Jr., of the U.S. Bankruptcy Court for the Southern District of New York authorized the Official Committee of Unsecured Creditors appointed in Portrait Corporation of America, Inc., and its debtor-affiliates' bankruptcy cases to retain Peter J. Solomon Company as its financial advisor, nunc pro tunc to Sept. 11, 2006. PJSC is expected to: a) evaluate the assets and liabilities of the Debtors; b) analyze and review the financial and operating statements of the Debtors; c) analyze the business plan and financial results of the Debtors; d) review all aspects of debtor in possession financing (if any), cash collateral usage and adequate protection and any exit financing in connection with the Debtors' joint plan of reorganization and any related budgets; e) provide specific valuation or other financial analyses as the Committee may require in connection with the Chapter 11 Cases; f) help with the claim resolution process and distributions relating thereto; g) prepare, analyze and explain the Plan to various constituencies; h) provide testimony in court on behalf of the Committee, if necessary or as reasonably requested by the Committee; and i) provide other financial advisory services as PJSC, the Committee and/or counsel to the Committee may, from time to time agree in writing and which are consistent with PJSC's capabilities. PJSC will be entitled to receive, as compensation for its services, a $125,000 monthly advisory fee plus the reimbursement of all reasonable and actual out of pocket expenses. Prior the Debtors' bankruptcy filing, PJSC has received advance payments, aggregating $407,300, comprised of: -- $400,000 for monthly advisory fees, and -- $7,300.71 for reimbursement of out-of-pocket expenses. Anders J. Maxwell, at PJSC, assures the Court that his firm does not hold 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. PJSC can be reached at: Peter J. Solomon Company Attn: Anders J. Maxwell 520 Madison Avenue New York, NY 10022 Telephone: (212) 508-1600 Fax: (212) 508-1633 About Portrait Corp Portrait Corporation of America, Inc. -- http://pcaintl.com/-- provides professional portrait photography products and services in North America. The Company operates portrait studios within Wal-Mart stores and Supercenters in the United States, Canada, Mexico, Germany and the United Kingdom. The Company also operates a modular traveling business providing portrait photography services in additional retail locations and to church congregations and other institutions. Portrait Corporation and its debtor-affiliates filed for Chapter 11 protection on Aug. 31, 2006 (Bankr S.D. N.Y. Case No. 06-22541). John H. Bae, Esq., at Cadwalader Wickersham & Taft LLP, represents the Debtors in their restructuring efforts. Berenson & Company LLC serves as the Debtors' Financial Advisor and Investment Banker. At June 30, 2006, the Debtor had total assets of $153,205,000 and liabilities of $372,124,000. PROBUILT CONSTRUCTION: Case Summary & 3 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: ProBuilt Construction, Inc. 886 Highway 229 Covington, GA 30015 Bankruptcy Case No.: 06-74442 Chapter 11 Petition Date: November 7, 2006 Court: Northern District of Georgia (Atlanta) Judge: Paul W. Bonapfel Debtor's Counsel: Louis G. McBryan, Esq. Macey Wilensky Kessler Howick & Westfall LLP Suite 600, Marquis Two Tower 285 Peachtree Center Avenue Northeast Atlanta, GA 30303-1229 Tel: (404) 584-1200 Fax: (404) 681-4355 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's Three Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Geheber Lewis & Assoc., LLC $77,000 1122 West Peachtree Street Atlanta, GA 30309 Jon Benson & Assoc., Inc. $40,000 700 Galleria Parkway Southeast, Suite 400 Atlanta, GA 30339-5943 Newton County Tax Comm. $20,000 1105 Usher Street Northeast Covington, GA 30014 PSYCHIATRIC SOLUTIONS: FHC Deal Cues Moody's to Affirm CFR at B1 ---------------------------------------------------------------- Moody's Investors Service affirmed the B1 Corporate Family Rating for Psychiatric Solutions, Inc. after the October 30, 2006 disclosure that it had amended and restated its prior purchase agreement with FHC Health Systems, Inc. Psychiatric intends to acquire Alternative Behavioral Services, Inc. from FHC for a cash purchase price of $210 million. Under the new agreement, FHC will dismiss its lawsuit against Psychiatric while Psychiatric is expected to withdraw its demand for payment for termination fees and other expenses. The deal is expected to close on December 1, 2006. The outlook remains stable. On May 30, 2006, Psychiatric reported that it had signed an agreement to purchase ABS, a provider of specialty behavioral treatment for children and adults for $250 million. Subsequently, Psychiatric indicated that it has identified and has been unable to resolve certain issues with ABS, and terminated the initial agreement to acquire ABS on October 10, 2006. FHC, in response, subsequently filed a lawsuit to compel Psychiatric to complete the acquisition of ABS. The affirmation of Psychiatric's Corporate Family Rating considers the company's ability to generate high single digit revenue growth and the expansion of margins at its existing facilities, its leading market share in the markets it serves and a proven track record of successfully integrating prior acquisitions. The company also benefits from these positive industry trends: -- a strong and growing demand for inpatient psychiatric services; -- increased occupancy and a stable length of stay; -- improving private and Medicare reimbursement rates; and, -- a reduction in supply of beds and facilities. Moody's notes, however, that Psychiatric's ratings are constrained by the company's use of debt to finance its acquisitions of other psychiatric facilities. Moody's notes that long-term debt has increased from $154 million at the end of 2004 to $485 million as of June 30, 2006. Moody's expects that Psychiatric will finance this acquisition by increasing its existing revolving credit facility capacity from $150 million to $250 million, $80 million of which is expected to be drawn to fund the acquisition. In addition, Moody's anticipates that the company will add $150 million to its current Term Loan, bringing the total balance to $350 million. Based on the increase in long-term debt under the company's existing senior secured credit facility, Moody's downgraded the rating of the senior secured credit facility to Ba3 from Ba2, reflecting an LGD-3 loss given default assessment between 30% and 49% as this facility is secured by a pledge of substantially all of the company's domestic assets. The debt is guaranteed by all of domestic subsidiaries of the borrower excluding the HUD Financing Subsidiary and PSI Surety, Inc. The rating also reflects how the facility benefits from the structural subordination of the senior subordinated notes, which make up a significant amount of the company's capital structure, and is not expected to change even with the acquisition. These ratings were downgraded: -- Senior Secured Term Loan B due 2012, downgraded to Ba3, LGD3, 31%, from Ba2, LGD2, 24% -- Senior Secured Guaranteed Revolver due 2009, downgraded to Ba3, LGD3, 31%, from Ba2, LGD2, 24% These ratings were affirmed: -- Corporate Family Rating, B1 -- Probability of Default Rating, B1 -- Senior Subordinated Notes, due 2014, B3, LGD5, 87% -- Senior Subordinated Notes, due 2013, B3, LGD5, 87% The outlook is stable. Psychiatric Solutions, Inc., headquartered in Franklin, Tennessee, provides a continuum of behavioral health programs to critically ill children, adolescents and adults through its operation of 59 owned or leased freestanding psychiatric inpatient facilities. Psychiatric also manages free-standing psychiatric inpatient facilities for government agencies and psychiatric inpatient units within medical and surgical hospitals owned by others. The company reported approximately $730 million in total revenue during 2005. PSYCHIATRIC SOLUTIONS: S&P Rates Amended $650 MM Sec. Debts at B+ ----------------------------------------------------------------- Standard & Poor's Rating Services assigned its loan and recovery ratings to Psychiatric Solutions Inc.'s amended and restated $650 million senior secured loan facilities, consisting of a $300 million revolving credit facility due 2009 and a $350 million term loan B due 2012. The facilities are rated 'B+' (at the same level as the 'B+' corporate credit rating on PSI) with a recovery rating of '2', indicating the expectation for substantial (80%-100%) recovery of principal in the event of a payment default. Proceeds of about $150 million from the term loan and some borrowings under the revolver will be used to finance the acquisition of Alternative Behavioral Services for $210 million. At the same time, Standard & Poor's affirmed its existing ratings on PSI, including the 'B+' corporate credit rating. The rating outlook on PSI is negative. The ABS acquisition encompasses the behavioral health care facilities division of FHC Health Systems. ABS consists of nine facilities with more than 1,000 beds in six different U.S. states and territories. While PSI was successful in renegotiating the purchase price down to $210 million from $250 million after discovering an adverse change at one of the facilities, the purchase multiple still increases leverage from existing levels. However, credit metrics are still within the 'B+' rating category. In addition, the company has proven an ability to improve financial performance at acquired facilities, which alleviates some concern related to the increased leverage resulting from the acquisition. "The rating on PSI continues to reflect the company's significant debt burden, the risks associated with its acquisition strategy, and the challenge of managing a much larger entity," Standard & Poor's credit analyst Alain Pelanne said. "PSI is also exposed to potential government reimbursement changes. These concerns are partially offset by the company's position as one of the largest providers in the highly fragmented behavioral health industry and its history of successful acquisitions since 2003." After the ABS acquisition, PSI will provide behavioral health programs through 70 owned or leased inpatient psychiatric facilities, which have more than 7,500 licensed beds. The company also provides management services for psychiatric inpatient units. RADIATION THERAPY: 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 Healthcare Service and Distribution sectors, the rating agency downgraded its B1 Corporate Family Rating for Radiation Therapy Services Inc to B2. 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 ---------- ------- ------- ------ ---------- Secured Secured Revolving Credit Facility due 2010 B1 B1 LGD3 31% Senior Secured Term Loan due 2012 B1 B1 LGD3 31% 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 its 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%). Radiation Therapy Services, Inc. -- http://www.rtsx.com/-- which operates radiation treatment centers primarily under the name 21st Century Oncology, is a provider of radiation therapy services to cancer patients. The Company's 68 treatment centers are clustered into 22 local markets in 14 states, including Alabama, Arizona, California, Delaware, Florida, Kentucky, Maryland, Massachusetts, Nevada, New Jersey, New York, North Carolina, Rhode Island and West Virginia. The Company is headquartered in Fort Myers, Florida. RADIOLOGIX INC: Moody's Assigns Loss-Given-Default Rating --------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the Healthcare Service and Distribution sectors, the rating agency confirmed its B2 Corporate Family Rating for Radiologix, Inc. and upgraded its B3 rating on the Company's 7-yr Senior Unsecured Notes due 2008 to B2. In addition, Moody's assigned an LGD4 rating to notes, suggesting noteholders will experience a 52% 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 its 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%). Radiologix, Inc. (AMEX:RGX) -- http://www.radiologix.com/-- provides diagnostic imaging services, owning and operating multi- modality diagnostic imaging centers that use advanced imaging technologies such as positron emission tomography, magnetic resonance imaging, computed tomography and nuclear medicine, as well as x-ray, general radiography, mammography, ultrasound and fluoroscopy. Radiologix owns or operates 70 diagnostic imaging centers located in 7 states. RADNET MANAGEMENT: 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 Healthcare Service and Distribution sectors, the rating agency confirmed its B3 Corporate Family Rating for Radnet Management, Inc. Additionally, Moody's revised and 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 ---------- ------- ------- ------ ---------- 5-yr Revolver due 2011 B3 Ba3 LGD2 22% 5-yr Term Loan B due 2011 B3 Ba3 LGD2 22% 6.5-yr 2nd Lien Term Loan due 2012 Caa1 Caa1 LGD5 71% 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 its 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 Los Angeles, California, RadNet Management, Inc., the primary operating division of Primedex Health Systems, Inc., provides high quality, cost-effective diagnostic imaging services through a network of fully owned and operated outpatient-imaging centers. The Company also provides the necessary equipment, space and personnel for the operations of its 55 facilities, as well as financial and administrative management services. RAIT CRE: Fitch Rates $35 Mil. Class J Floating Rate Notes at BB ---------------------------------------------------------------- Derivative Fitch assigns these ratings to RAIT CRE CDO I, Ltd. and RAIT CRE CDO I, LLC: -- $200,000,000 class A-1A First Priority Senior Secured Floating Rate Notes Due November 2046 'AAA'; -- $275,000,000 class A-1B First Priority Senior Secured Revolving Floating Rate Notes Due November 2046 'AAA'; -- $90,000,000 class A-2 Second Priority Senior Secured Floating Rate Notes Due November 2046 'AAA'; -- $110,000,000 class B Third Priority Senior Secured Floating Rate Notes Due November 2046 'AA'; -- $41,500,000 class C Fourth Priority Mezzanine Deferrable Floating Rate Notes Due November 2046 'A+'; -- $25,000,000 class D Fifth Priority Mezzanine Deferrable Floating Rate Notes Due November 2046 'A'; -- $16,000,000 class E Sixth Priority Mezzanine Deferrable Floating Rate Notes Due November 2046 'A-'; -- $22,000,000 class F Seventh Priority Subordinate Deferrable Floating Rate Notes Due November 2046 'BBB+'; -- $20,500,000 class G Eighth Priority Subordinate Deferrable Floating Rate Notes Due November 2046 'BBB'; -- $18,000,000 class H Ninth Priority Subordinate Deferrable Floating Rate Notes Due November 2046 'BBB-'; -- $35,000,000 class J Tenth Priority Subordinate Deferrable Floating Rate Notes Due November 2046 'BB'. REAL MEX: 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 restaurant sector, the rating agency held its B2 Corporate Family Rating for Real Mex Restaurants, Inc., and revised its B2 rating to Ba3 on the company's $105 million Senior Secured 10% Notes due on 2010. In addition, Moody's assigned an LGD2 rating to those bonds, suggesting noteholders will experience a 29% 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%). Based in Cypress, California, Real Mex Restaurants Inc. operates and franchises about 250 Mexican restaurants in California and more than a dozen other states. Its flagship El Torito chain has about 70 locations offering full-service Mexican dining, while its 100 Chevys restaurants provide a more laid-back, Cantina atmosphere. Real Mex also operates about 35 full-service Acapulco restaurants featuring California-Mexican cuisine. In addition, the company has more than a dozen restaurants operating under such names as Casa Gallardo, GuadalaHarrys, and Las Brisas. Real Mex was acquired by private equity firm Sun Capital Partners in 2006. RES-CARE 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 Healthcare Service and Distribution sectors, the rating agency confirmed its BA3 Corporate Family Rating for Res-Care, Inc. Additionally, Moody's revised and 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 ---------- ------- ------- ------ ---------- Sr. Sec. Revolving Credit Facility due 2010 Ba2 Ba1 LGD2 16% Sr. Unsec. Notes due 2013 B1 B1 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 its 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 Louisville, Kentucky, ResCare, Inc. (NASDAQ/NM: RSCR) -- http://www.rescare.com/-- ResCare is a human service company that provides residential, therapeutic, job training and educational supports to people with developmental or other disabilities, to youth with special needs and to adults who are experiencing barriers to employment. Founded in 1974, the Company provides services in 36 states, Washington, D.C., Puerto Rico and Canada. ROTECH HEALTHCARE: 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 Healthcare Service and Distribution sectors, the rating agency confirmed its Caa2 Corporate Family Rating for Rotech Healthcare, Inc. Additionally, Moody's revised and 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 ---------- ------- ------- ------ ---------- Sr. Sec. Revolver due 2007 B2 B1 LGD2 11% Senior Term Loan due 2008 B2 B1 LGD2 11% Sr. Sub. Notes due 2012 Caa3 Caa3 LGD4 67% 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 its 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 Orlando, Florida, Rotech Healthcare, Inc. (NASDAQ:ROHI) -- http://www.rotech.com/-- provides home respiratory care and durable medical equipment and services to patients with breathing disorders such as chronic obstructive pulmonary diseases. The Company provides its equipment and services in 48 states through approximately 485 operating centers, located principally in non- urban markets. The Company's local operating centers ensure that patients receive individualized care, while its nationwide coverage allows the Company to benefit from significant operating efficiencies. ROWE COMPANIES: Selects Tyler Bartl as Conflicts Counsel -------------------------------------------------------- The Rowe Companies and its debtor-affiliates ask permission from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Tyler, Bartl, Gorman & Ramsdell PLC as their conflicts counsel, nunc pro tunc to Sept. 18, 2006. Tyler Bartl will handle matters that cannot be handled by Wiley Rein & Fielding LLP, the Debtors' general bankruptcy counsel, or other counsel to the Debtors, because of actual or potential conflict of interest issues or, alternatively, which the Debtors or Wiley Rein requests be handled by Tyler Bartl. Thomas P. Gorman, Esq., a member of Tyler Bartl and the lead attorney in this engagement, discloses that he will charge $295 per hour for his services. Tyler Bartl's current hourly rates for its other attorneys range from $150 to $325 per hour. Mr. Gorman assures the Court that Tyler Bartl does not hold any interest adverse to the estate and is disinterested pursuant to Sec. 101(14) of the Bankruptcy Code. About The Rowe Companies Headquartered in McLean, Virginia, The Rowe Companies -- http://www.therowecompanies.com/-- manufactures upholstered retail home and office furniture, interior decorations, tableware, lighting fixtures, and other interior design accessories. The company owns 100% of stock of manufacturing and retail subsidiaries, Rowe Furniture -- http://www.rowefurniture.com/-- and Storehouse, Inc. -- http://www.storehousefurniture.com/ The company and its two of its debtor-affiliates filed for chapter 11 protection on Sept. 18, 2006 (Bank. E.D. Va. Case Nos. 06-11142 to 06-11144). Dylan G. Trache, Esq., H. Jason Gold, Esq., and Valerie P. Morrison, Esq., at Wiley Rein & Fielding LLP, represent the Debtors. When the Debtors filed for protection from their creditors, The Rowe Companies listed total assets of $130,779,655 and total debts of $93,262,974; Rowe Furniture estimated assets between $50 million and $100 million and debts between $10 million and $50 million; and Storehouse, Inc. estimated assets and debts between $10 million and $50 million. The Debtors' exclusive period to file a chapter 11 plan expires on Jan. 16, 2007. SAGITTARIUS RESTAURANTS: Moody's Assigns LGD Ratings ---------------------------------------------------- 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 Sagittarius Restaurants. 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 ---------- ------- ------- ------ ---------- $60 Million Guaranteed Senior Secured Revolver Due March 2012 B1 Ba3 LGD2 26% $295 Million Guaranteed Senior Secured Term Loan B Due March 2013 B1 Ba3 LGD2 26% 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%). SAINT VINCENTS: Court Approves Venable as Special Counsel --------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District authorizes Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates to employ Venable LLP as their special counsel, nunc pro tunc to Sept. 29, 2006. Venable's fees will be capped at $25,000, without prejudice to the Debtors' right to seek an increase of that cap or modify the scope of Venable's employment. The Debtors' senior management and Board of Directors determined they need a special counsel experienced in the identification of professional malpractice, breach of duty, and related claims to work with Togut Segal to conclude the investigation of any affirmative claims against McDermott Will & Emery LLP. In this engagement Venable will: (a) investigate McDermott's representation of the Debtors in their Chapter 11 cases by: * reviewing and analyzing documents, communications, and other information related to McDermott's engagement as bankruptcy counsel for the Debtors; * reviewing and analyzing documents produced and deposition transcripts arising out of discovery for the evidentiary hearing on McDermott's fee application; and * interviewing the Debtors' management and other parties with knowledge regarding the McDermott issue; (b) research and evaluate potential claims the Debtors may have against McDermott for, among other things, breach of fiduciary duty, breach of loyalty and professional malpractice; (c) provide the Debtors and the Board with an assessment, jointly with Togut Segal, of possible claims against McDermott; and (d) provide other services related to the investigation of potential claims against McDermott. Venable will paid based on the firm's current hourly billing rates: Partners $275 to $500 Counsel $275 to $350 Associates $185 to $310 Paraprofessionals $120 to $170 Michael Schatzow, Esq., a partner at Venable, said his firm contemplates that G. Stewart Webb, Jr., will be the primary attorney for the Debtors. Mr. Webb's hourly rate is $500. Mr. Schatzow assures the Court his firm is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code. Venable does not hold or represent an interest adverse to the Debtors or their estates, Mr. Schatzow says. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 38 Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SAINT VINCENTS: Tort Panel Wants Godward Kronish as Counsel ----------------------------------------------------------- Pursuant to Section 327 of the Bankruptcy Code and Rule 2014 of the Federal Rules of Bankruptcy Procedure, the Official Committee of Tort Claimants appointed in Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates bankruptcy cases, seek authority from the U.S. Bankruptcy Court for the Southern District of New York to: * retain Cooley Godward Kronish LLP as substitute counsel; and * terminate the employment of Kronish Lieb Weiner & Hellman LLP, nunc pro tunc to October 1, 2006. Resham Singh, chairperson of the Tort Committee, tells the Court that CGK is well qualified to represent the Committee because the firm: -- is familiar with the case through Kronish Lieb's prior involvement in the Debtors' Chapter 11 case; and -- has extensive and diverse experience obtained through prior representations of various committees in large Chapter 11 cases and other debt-restructuring scenarios in the Southern District of New York as well as throughout the United States. Consistent with the type of services previously rendered by Kronish Lieb, CGK will: a. investigate, monitor, negotiate and assist in the global resolution of medical malpractice claims; b. investigate, monitor, negotiate and assist in the resolution of any requests by holders of Medical Malpractice Claims for relief from the automatic stay to pursue Medical Malpractice Claims; c. investigate, monitor, negotiate and assist the holders of Medical Malpractice Claims with respect to the Debtors' highly complex set of insurance policies; d. investigate, monitor, negotiate and assist the holders of Medical Malpractice Claims with respect to all proposed procedures relating to pooling of insurance proceeds and the treatment of the Debtors' employees in the context of the commencement or continuation of a proceeding with respect to a Medical Malpractice Claim; e. monitor the disposition of otherwise unencumbered assets of the Debtors' estates that may be available for distribution to holders of Medical Malpractice Claims; f. communicate with holders of Medical Malpractice Claims regarding the progress of the Debtors' Chapter 11 cases generally and any specific issues or motions affecting the treatment of Medical Malpractice Claims, as distinct from prepetition general unsecured claims; and g. participate in the formulation of any plan of liquidation or reorganization for any of the Debtors solely to review and negotiate the classification of Medical Malpractice Claims in that plan; review whether a plan that separately classifies Medical Malpractice Claims discriminates or is equitable with respect to that class; and advise holders of Medical Malpractice Claims of the Tort Committee's determination as to that plan. CGK will be paid based on its professionals' hourly rates: Professional Status Hourly Rate ------------ ------ ----------- James A. Beldner Partner $650 Richard S. Kanowitz Partner $585 Jeffrey L. Cohen Associate $380 Seth Van Aalten Associate $290 Brian W. Byun Associate $245 The firm will also be reimbursed for its reasonable out-of-pocket expenses. Richard S. Kanowitz, Esq., a member of CGK, assures the Court that his firm represents no interest adverse to the Tort Committee, the Debtors, or their estates. CGK has no connection with the US Trustee or any other person and entities who are defined as not disinterested persons in Section 101(14) of the Bankruptcy Code, Mr. Kanowitz says. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 38 Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SASKATCHEWAN WHEAT: Offers Merger Deal to Agricore United --------------------------------------------------------- Saskatchewan Wheat Pool Inc. intends to make a formal offer for Agricore United's outstanding Limited Voting Common Shares, Series A Convertible Preferred Shares, and its Unsecured Subordinated Convertible Debentures. Saskatchewan Wheat Pool's offer would bring the country's two leading agricultural companies together in an effort to create a strong Canadian agri-business and drive significant new value for shareholders, farm customers and destination customers. "Our proposal would give Saskatchewan Wheat Pool and Agricore a stronger and more diversified presence amidst the growing demands of a highly competitive marketplace. We are attempting to create a significant agri-business with decades of expertise, superior assets and a truly unique home grown Canadian advantage. By combining operations we will create the scale and scope of operations to enhance Western Canada's position in a global environment," said Saskatchewan Wheat Pool President and CEO Mayo Schmidt. Saskatchewan Wheat Pool's offer, if accepted would see a merger of the two companies, with benefits including: -- The establishment of a lower cost service model through the achievement of significant efficiencies including estimated synergies of $60 million per annum on estimated, combined and adjusted EBITDA of approximately $215 million for the 12-month period ending July 31, 2006; -- Enhanced customer services through combined operational expertise including transportation, logistical services and marketing; -- Strong geographic representation and diversification in each of the Prairie provinces to reduce the risk of adverse weather conditions that can affect crop quality, production volumes and agri-product sales; -- The deployment of assets to maximize returns by significantly improving the overall efficiency of grain flow from the Prairies to export position; -- Enhanced liquidity with an expected market capitalization in excess of $1.2 billion; -- The creation of a robust governance structure aligned with best practices of the market and that also ensures a role for farm producers based on the successful Western Farm Leadership Co-operative model adopted by Saskatchewan Wheat Pool in 2005; and -- Meaningful operations in Winnipeg and Regina, with an additional office in Alberta. "We believe that the complementary strengths of a united Saskatchewan Wheat Pool and Agricore would result in enormous advantages for customers and shareholders alike, and the market in which we operate. This is an exciting opportunity to address a chronic problem of over-capacity in the industry and bring new efficiencies to western Canadian agriculture. Saskatchewan Wheat Pool, with its excellent balance sheet, is very strongly positioned to be a catalyst for this change," Mr. Schmidt added. Under the Offer, the Pool would merge with Agricore on the basis of each outstanding Limited Voting Common Shares of Agricore being exchanged for 1.35 common shares of Saskatchewan Wheat Pool, each outstanding $1,000 principal of Convertible Unsecured Subordinated Debentures of Agricore being exchanged for 180 common shares of Saskatchewan Wheat Pool and each outstanding Series A Convertible Preferred Share being acquired for $24.00 in cash. The Limited Voting Common Share exchange ratio, based on trading prices at the close of business on November 7, 2006, represents a premium of approximately 13% to Agricore shareholders. In addition to the premium offered directly to Agricore shareholders and the proportionate sharing of synergies, Agricore would significantly de-lever its balance sheet. Based on each company's 12-month results for the period ending July 31, 2006, adjusted to account for one-time items and an estimate for Agricore's recent acquisition of Hi-Pro, it is expected that the two companies would have generated pro forma Earnings Before Interest, Taxes, Depreciation and Amortization or EBITDA of $215 million. Agricore's total debt/EBITDA would decrease from current levels of about 4.4x to approximately 2.4x pro forma the transaction and including realization of expected synergies. Similarly, interest coverage would increase to approximately 3.4x. "We are presenting this offer directly to Agricore security holders for their consideration. We believe strongly in the significant benefits this transaction will provide for our respective farmers and destination customers, the industry and our respective shareholders. We believe the advantages are simply too important to ignore," said Pool Board Chairman Terry Baker, who actively farms in West Central Saskatchewan. "Saskatchewan Wheat Pool's Board of Directors fully supports this initiative," added Baker. "This is an excellent opportunity to bring greater value to farm customers and to shareholders of both companies. Industry fundamentals are improving and the timing is right to take the steps necessary to embrace new solutions that will create a positive and enduring economic climate for all agricultural participants." Saskatchewan Wheat Pool presented the offer to Agricore's Chief Executive Officer and Chairman of the Board on October 24, and followed a second letter in pursuit of a supported transaction. Saskatchewan Wheat Pool would welcome an Agricore Board supported transaction and looks forward to working with them to deliver the significant value that is inherent in the proposed combination. Saskatchewan Wheat Pool intends to mail the formal offers (which will contain the detailed terms and conditions of the offer) as soon as is reasonably possible following the receipt of the security holder lists from Agricore. About Agricore United Headquartered in Winnipeg, Manitoba, Agricore United Limited (TSX: AU.LV, TSE: AU) -- http://www.agricoreunited.com/-- is an agri- business with extensive operations and distribution capabilities across western Canada. The Company's operations are diversified into sales of crop inputs and services, grain merchandising, livestock production services and financial services. About Saskatchewan Wheat Based in Regina, Saskatchewan Wheat Pool Inc. (TSX:SWP) -- http://www.swp.com/-- is a publicly traded agribusiness. Anchored by a prairie-wide grain handling and agri-products marketing network, the Pool channels Prairie production to end-use markets in North America and around the world. * * * Dominion Bond Rating Service placed Saskatchewan Wheat Pool Inc.'s ratings, "Under Review with Positive Implications" including Senior Secured Debt -- Under Review, Positive B (high); Senior Subordinated Notes -- Under Review, Positive B; and Senior Unsecured Notes -- Under Review, Positive B. SBARRO 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 Restaurant sector, the rating agency held its Caa1 Corporate Family Rating for Sbarro, Inc., and held its Caa1 rating on the company's $255 million Guaranteed 11% Senior Unsecured Notes due on September 2009. Moody's also assigned an LGD4 rating to those bonds, suggesting noteholders will experience a 53% 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%). Sbarro, Inc. -- http://www.sbarro.com/-- headquartered in Melville, New York, is a leading quick service restaurant chain that serves Italian specialty foods. As of April 23, 2006, the company owned and operated 482 and franchised 491 restaurants worldwide under brand names such as "Sbarro,", "Umberto's," and "Carmela's Pizzeria". Total revenues for fiscal 2005 were approximately $348 million. SCALES FISHOUSE: Case Summary & 18 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Scales Fishouse & Steaks, LLC fdba Wild Iron Chop House & Piano Bar P.O. Box 444 Whitehall, MI 49461 Bankruptcy Case No.: 06-05671 Type of Business: The Debtor operates a restaurant and entertainment center. Chapter 11 Petition Date: November 7, 2006 Court: Western District of Michigan (Grand Rapids) Debtor's Counsel: Louis R. Lint, Esq. Louis R. Lint, P.C. Muskegon Bankruptcy Clinic 433 Seminole Road, Suite 200A Muskegon, MI 49444-3743 Tel: (231) 739-1200 Total Assets: $140,870 Total Debts: $1,387,538 Debtor's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Crosswinds Restaurant, Inc. Office Equipment $280,000 302 South Lake Street Secured: Whitehall, MI 49461 $400 Equipment $280,000 Secured: $85,000 Tim Hall $210,000 3358 Cheyenne Grandville, MI 49418 Internal Revenue Service W/H Taxes $137,767 Chief Special Procedures P.O. Box 330500 Stop 15 Detroit, MI 48232 State of Michigan W/H Taxes $93,785 Department of Treasury 350 Ottawa, Northwest, Suite 17 Grand Rapids, MI 49503 Jene/William/Ellen Ryan $40,000 22358 Fairway Drive, South Woodhaven, MI 48183 Paul Mark Keck Cash Advance from $35,000 Insider and Uncashed Payroll checks Rewards Network $33,000 Nick Thrasher $30,000 Stephen J. Landstra Cash Advance $28,835 Jeff Thon $25,000 Bruce & Pat Cheadle $20,000 William & Ellen Ryan $20,000 Tim & Cindy Westra $20,000 Vernon & Carol Hoffman $15,000 Aaron Tyler $15,000 Harold C. Osborne Contractor $13,000 Bill Parsons $10,000 John Gerig $10,000 STANDARD PARKING: Earns $4.5 Million in Third Quarter 2006 ---------------------------------------------------------- Standard Parking Corporation reported revenue for the third quarter of 2006, excluding reimbursed management contract expense, increased by approximately 4% to $65.7 million from $63 million in the year ago period. Excluding New Orleans, revenue from same locations increased by 7% as compared with the third quarter of 2005. Gross profit in the third quarter 2006 increased by more than 10% to $19.2 million from $17.4 million in the 2005 third quarter. Third quarter 2006 gross profit included $200,000 realized from the integration of the Sound Parking portfolio. Operating income for the third quarter increased more than 30%, to $7.4 million versus $5.7 million in the year ago quarter. Free cash flow for the third quarter was $9.5 million as compared with $8.6 million a year ago, which was used primarily to reduce borrowings. Consequently, total debt was $77.3 million at the end of the 2006 third quarter, down $25.8 million from $103.1 million a year ago. Net income for the 2006 third quarter was $4.5 million, versus $4.2 million, a year ago. James A. Wilhelm, president and chief executive officer, said, "We are very pleased with this quarter's results as the business continues to execute on all levels. We added 23 net new locations during the quarter and now exceed 2,000 total locations. At the same time, we maintained our 92% retention rate for existing business for the twelve months ended September 30, 2006." Year-to-Date Results Revenue for the first nine months of 2006, excluding reimbursed management contract expense, increased by more than 4% to $194.2 million from $186 million in the first nine months of 2005. Gross profit for the first nine months of 2006 increased over 11% to $56.8 million from $51 million in the year ago period. The Sound Parking contract portfolio in Seattle, acquired earlier in the year, generated $600,000 of gross profit in the first nine months of 2006. Operating income for the first nine months of 2006 increased almost 25% to $21.3 million from $17.1 million in the first nine months of 2005. Pre-tax income for the first nine months of 2006 was $14.8 million, an increase of over 49% compared with the same period last year. The Company generated $20.3 million of free cash flow during the first nine months of 2006 as compared with $17.3 million during the first nine months of 2005. Mr. Wilhelm concluded, "With the significant free cash flow generated by the Company, we are increasingly investing in information technology with the goal of reducing overhead and improving our processes and efficiency. We have upgraded and standardized all of the desktops and laptops used throughout the organization. We have also made network enhancements that allow for more efficient communication between the Chicago support office and our various regional offices and site locations. Other initiatives underway are the development of monthly parker, tenant lease management and workforce management systems that will not only benefit our clients by improving revenue controls and operating efficiency, but also will support the Company's long- term goal of reducing G&A as a percentage of gross profit to below 50%." Based on the year-to-date results, the Company is reaffirming its free cash flow expectation of $20 million or higher in 2006. Standard Parking Corporation -- http://www.standardparking.com/-- provides parking facility management services. The Company provides on-site management services at multi-level and surface parking facilities for all major markets of the parking industry. The Company manages over 1,900 parking facilities, containing over one million parking spaces in more than 300 cities across the United States and Canada, including parking-related and shuttle bus operations serving more than 60 airports. * * * Standard & Poor's Ratings Services raised Standard Parking Corp.'s corporate credit and senior secured debt ratings to 'B+' from 'B', and raised the senior subordinated debt rating to 'B-' from 'CCC+'. SUPERIOR ENERGY: Earns $55.2 Million in 2006 Second Quarter ----------------------------------------------------------- Superior Energy Services, Inc., reported net income of $55.2 million, on revenues of $290.5 million during the third quarter of 2006, as compared to net income of $9.4 million on revenues of $184.1 million for the third quarter of 2005. As compared to the second quarter of 2006, revenues increased 11%, operating income increased 16% and earnings per share increased 42%. Terence Hall, Chairman and CEO of Superior, commented, "Our third quarter results were outstanding and all business units performed very well. We also made tremendous strides in executing our growth strategy during the quarter. In July, we announced multiple international contracts totaling more than $100 million as part of our international expansion initiatives. In September, we agreed to acquire Warrior Energy Services Corporation which will significantly expand our U.S. onshore operational footprint. "Once the Warrior transaction is closed, we will have operations in virtually all major oil and gas basins in the lower 48 states and an excellent platform to drive our continued growth. Both these international and U.S. onshore activities increase our ability to cross sell services, open up additional opportunities to further export our portfolio of products and services, and expand our customer base. We believe shareholders will benefit from our expansion activities in 2007 and well beyond." For the nine months ended Sept. 30, 2006, revenues were $774.7 million and net income was $126.1 million, as compared to revenues of $547.3 million and net income of $51.6 million for the nine months ended Sept. 30, 2005. Well Intervention Group Segment Third quarter revenues for the Well Intervention Group were a record $122.2 million, a 9% increase from the second quarter of 2006 and a 42% increase from the third quarter of 2005. The biggest activity increases were in coiled tubing, engineering and project management services, well control, mechanical wireline and plug and abandonment services. These increases reflect continued high demand for production-enhancement activities, increased well abandonment work in the Gulf of Mexico and the company's continued involvement in providing hurricane-recovery project management and services. Rental Tools Segment Revenues for the Rental Tools segment were a record $98.3 million, 13% higher than the second quarter of 2006 and a 59% increase from the third quarter of 2005. Operating income was $35.1 million, or 36% of segment revenue, up from $29.4 million, or 34% of segment revenue in the second quarter of 2006. The primary factors leading to the record quarter were increased rentals of on-site accommodations, stabilizers, drill collars, specialty tubulars, drill pipe and associated handling tools across all geographic markets. Marine Segment Superior's marine revenues were $36 million, a 6% increase over the second quarter of 2006 and a 95% increase from the third quarter of 2005. Operating income was $16.2 million, or 45% of segment revenue, up from $15.3 million, or 45% of segment revenue in the second quarter of 2006. Oil and Gas Segment Oil and gas revenues were $38.2 million, a 14% increase over second quarter 2006 levels and a 76% improvement over the third quarter of 2005. Operating income was $8.1 million, or 21% of segment revenue, up from $5.5 million, or 16% of segment revenue, in the second quarter of 2006. About Superior Energy Headquartered in Harvey, Louisiana, Superior Energy Services, Inc. -- http://www.superiorenergy.com/-- provides specialized oilfield services and equipment focused on serving the production-related needs of oil and gas companies primarily in the Gulf of Mexico and the drilling-related needs of oil and gas companies in the Gulf of Mexico and select international market areas. * * * As reported in the Troubled Company Reporter on Nov. 6, 2006, Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating and its 'BB-' senior unsecured rating on Superior Energy Services Inc., and also assigned its 'BB+' senior secured rating and '1' recovery rating to Superior's $200 million term loan B. The outlook is stable. As reported in the Troubled Company Reporter on Sept. 28, 2006, Moody's Investors Service affirmed SESI, L.L.C.'s ratings (Ba3 Corporate Family Rating and B1 rated $300 million senior unsecured notes guaranteed by Superior Energy Services, Inc. (Superior)) and changed the rating outlook to negative from stable following Superior's announcement that it had signed a merger agreement to acquire Warrior Energy Services Corporation (Warrior) for $175 million in cash and 5.3 million shares of common stock, with debt accounting for approximately 56% of the acquisition cost (based on the Sept. 22, 2006 closing price). TECHNICAL OLYMPIC: Balks at Deutsche's Guaranties Payment Demand ---------------------------------------------------------------- In response to demand for payment under certain limited guaranties provided by Technical Olympic USA, Inc. in connection with the financing of the Transeastern Joint Venture, the Company informed Deutsche Bank Trust Company America, the administrative agent for the lenders, that it does not believe that its obligations pursuant to the Guarantees have been triggered. TOUSA has formally disputed the assertion and is in discussions with the Administrative Agent and the lenders concerning this situation. In a letter dated Nov. 6, 2006 to Deutsche Bank, TOUSA asserted that the "problems" being experienced by the Transeastern Joint Venture have not been caused by the actions of TOUSA. The letter stated that the Transeastern Joint Venture's problems are a direct result of the highly leveraged capital structure of the transaction together with adverse market conditions, which will prevent the Joint Venture from achieving the anticipated 3,500 to 4,000 annual deliveries. The letter further stated that Deutsche Bank's assertion that TOUSA has an obligation to "undertake funding initiatives to stabilize the borrower" is not a requirement of either guaranty. Since Sept. 21, 2006, TOUSA and the Joint Venture's lenders have been working together with financial consultants to produce a global solution for all parties involved, including TOUSA and the Joint Venture's lenders and land bankers. This process is ongoing, but is still not sufficiently complete to produce the facts necessary to permit meaningful analysis of a potential solution to the situation or to determine TOUSA's exposure, if any, under the Guaranties. "We fully intend to honor whatever obligations we may have under the loan guaranties," stated Antonio B. Mon, President and Chief Executive Officer of TOUSA. "However, our analysis of the facts is not complete and we believe that we have yet to uncover all relevant issues that might factor into any ultimate resolution. As such, any demands being placed on TOUSA at this stage of the review are clearly premature. It is our belief that the circumstances being experienced by the Transeastern Joint Venture today are clearly a reflection of the Joint Venture's inability to sell and deliver the volume of homes necessary to support the capital structure due to the downturn in the Florida housing market. Furthermore, we continue to believe in the quality of the Joint Venture's assets and look forward to reaching a solution for all parties." The Demand Letters allege that the Joint Venture has failed to comply with certain of its obligations pursuant to the Credit Agreements and as a result multiple potential defaults and events of default have occurred which allegedly have triggered the obligations pursuant to the Guarantees, and that TOUSA pay its obligations under the Guaranties. TOUSA has rejected such demands because the letters contain no factual allegations, which would support such demand for payment. Filing of Quarterly Report TOUSA expects to file a Form 12b-25, Notification of Late Filing, with the Securities and Exchange Commission, in order to extend the filing due date for its Quarterly Report on Form 10-Q for the third quarter ended Sept. 30, 2006. This filing extends the Nov. 9, 2006 filing due date for up to five days under SEC rules. TOUSA requires additional time to file its Form 10-Q due to the change in its financial statements presentation to provide segment information and the anticipation that it will report a significant change in its results of operations for the three months ended Sept. 30, 2006 from the corresponding period for the previous fiscal year due to asset impairment charges. About TOUSA Headquartered in Hollywood, Florida, Technical Olympic USA, Inc. (NYSE:TOA) -- http://www.tousa.com/-- is a homebuilder in the United States, operating in various metropolitan markets in 10 states located in four major geographic regions: Florida, the Mid- Atlantic, Texas, and the West. TOUSA designs, builds, and markets high-quality detached single-family residences, town homes, and condominiums to a diverse group of homebuyers, such as "first- time" homebuyers, "move-up" homebuyers, homebuyers who are relocating to a new city or state, buyers of second or vacation homes, active-adult homebuyers, and homebuyers with grown children who want a smaller home. It also provides financial services to its homebuyers and to others through its subsidiaries, Preferred Home Mortgage Company and Universal Land Title, Inc. * * * As reported in the Troubled Company Reporter on Oct. 30, 2006, Fitch Ratings has revised the ratings of Technical Olympic USA, Inc.'s revolving credit facility, senior unsecured notes and senior subordinated notes to reflect the changes in priority of debt repayments following TOA's $800 million revolving credit facility being changed from an unsecured facility to a secured facility. The company's Issuer Default Rating remains at 'B+' and TOA's ratings remain on Rating Watch Negative. Ratings revised by Fitch include the company's secured revolving credit facility changed to 'BB' from 'BB-'; senior unsecured notes changed to 'B' from 'BB-' and senior subordinated debt changed to 'CCC+' from 'B-'. TELCOM USA: Proofs of Claim Filing Period Ends on November 13 ------------------------------------------------------------- Creditors of Telcom USA, Inc., have until Nov. 13, 2006, to file an Assent and Proof of Claim form to PMCM, LLC, the Creditors' Representative. Telcom USA had entered into an Assignment for the Benefit of Creditors dated Oct. 10, 2006 with PMCM, LLC. The company informs that a creditor is invited to become a party to the Assignment Agreement as an Assenting Creditor if it asserts a claim allowable against the company's estate when Telcom commenced a case under the Bankruptcy Code on the date of the Assignment Agreement. The creditor has to execute an Assent and Proof of Claim in the form attached to the Assignment Agreement and returning the document to the Creditors' Representative on Nov. 13, 2006. Creditors may obtain the Assignment Agreement, the Assent and Proof of Claim, and explanatory letters by sending a written request by mail or fax to the Creditors' Representative counsel: Daniel C. Cohn, Esq. Scott L. Dildine, Esq. Cohn Whitesell & Goldberg, LLP 101 Arch Street, 16th Floor Boston, MA 02210 Fax: (617) 951-0679 The Creditors' Representative may grant an extension if the creditor is unable to timely complete and return the documents. Assets for Sale Telcom USA utilized a rotational molding process to manufacture plastic flower pots. Through the Creditors' Representative, Telcom USA will sell rotational mold machines and molds, as well as other factory equipment and inventory, along with furniture, accounts receivable, miscellaneous assets, and an 85,000 square foot facility in Lawrence, Massachusetts. Further information on the assets is available by contacting the Creditors' Representative: PMCM, LLC c/o Phoenix Management Services, Inc. 225 Franklin Street, 26th Floor Boston, MA 02110 Attn: Brian F. Gleason Fax: (617) 217-2001 Based in Lawrence, Massachusetts, Telcom USA, Inc. sells lawn machinery and equipment. The company also manufactures garden flowerpots and accessories. THOMPSON & WALTERS: Selling Nursery Grounds on November 17 ---------------------------------------------------------- Thompson & Walters Nursery, LLC will sell its 357-acre nursery grounds in an auction sale on Nov. 17, 2006. The nursery grounds consist of 357 acres of fully developed container nursery and in-ground production property with full water rights and complete water reclamation, nursery office, propagation, and outbuilding facilities. The company filed for Chapter 11 protection on Oct. 5, 2006 to complete a timely sale of all assets and facilities, including the real property, and to allow the potential buyer to fully position mature and maturing product for the spring of 2007 and forward orders. The Debtor informs that the qualifying bids must be received by the sale director, Inverness Group LLC, at 3:00 p.m., on Monday, Nov. 13, 2006. For additional information on the sale, contact: John Davidson Inverness Group LLC Tel: (503) 922-1220 www.invernessgroupllc.com Headquartered in Cornelius, Oregon, Thompson & Walters Nursery LLC wholesales and retails nursery stock. The Company filed for chapter 11 protection on Oct. 5, 2006 (Bankr. D. Or. Case No. 06- 33096). Jeanette L. Thomas, Esq., at Perkins Cole LLP represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets of 24,538,461 and debts of $27,187,244. TRIBUNE CO: Ousts LA Times Editor Dean Baquet --------------------------------------------- Tribune Co. replaced Los Angeles Times editor Dean Baquet with James E. O'Shea, managing editor of the Chicago Tribune, after Mr. Baquet resisted pressure to cut jobs, Andy Fixmer and Leon Lazaroff reports for Bloomberg News. Mr. Baquet's departure follows that of Jeff Johnson, who resigned as publisher and chief executive officer of the LA Times on Oct. 5, 2006. David D. Hiller replaced Mr. Johnson. In a company statement, Mr. Hiller said "I want to thank Dean for all of his contributions and leadership during the past six years." "He is a great editor and journalist. But, after considerable discussion during the past several weeks, Dean and I concluded that we have significant differences on the future direction of The Times." According to Bloomberg News, Messrs. Johnson and Baquet were replaced after they refused to fire more people at the LA Times. Tribune is cutting jobs in an effort to reduce expenses. In September, Tribune established an independent special committee to oversee the exploration of alternatives for creating additional value for its shareholders. The company's board expects to complete the process by the end of 2006. In May this year, Tribune disclosed a performance improvement plan that is expected to include at least $500 million in asset sales. About Tribune Headquartered in Chicago, Illinois, Tribune Company (NYSE: TRB) -- http://www.tribune.com/-- is a media company, operating businesses in publishing and broadcasting. In publishing, Tribune operates 11 leading daily newspapers including the Los Angeles Times, Chicago Tribune and Newsday, plus a wide range of targeted publications. The company's broadcasting group operates 26 television stations, Superstation WGN on national cable, Chicago's WGN-AM and the Chicago Cubs baseball team. * * * As reported in the Troubled Company Reporter on Sept. 26, 2006, Moody's Investors Service changed the Tribune Company's rating outlook to negative from stable in connection with the company's announcement that its board of directors has formed a special committee to oversee management's exploration of alternatives for creating additional shareholder value. Moody's affirmed the current Ba1 Corporate Family and senior unsecured ratings, and the Ba2 senior subordinate ratings. As reported in the Troubled Company Reporter on June 1, 2006, Fitch Ratings downgraded Tribune Co.'s Issuer Default Rating to 'BBB-' from 'A-'. The Rating Outlook is Negative. Approximately $3.2 billion of outstanding senior unsecured and subordinated debt on the balance sheet as of March 31, 2006 was affected by this action. The rating action included the downgrade of the company's subordinated exchangeable debentures due 2029 to BB+ from BBB+. TRW AUTOMOTIVE: Fitch Says Low-B Ratings Unaffected by Stock Deals ------------------------------------------------------------------ The announcement of certain common stock transactions by TRW Automotive Holdings Corp does not impact the current ratings or Rating Outlook. The transactions, resulting in a net share repurchase of approximately $55 million, include the issuance of 6.7 million shares of common stock for approximately $155 million and the simultaneous repurchase of common share held by Northrop Grumman for approximately $210 million. TRW's existing cash portfolio of approximately $369 million and positive cash flow provide adequate liquidity to absorb the transactions within the existing rating category. TRW's ratings are: -- Issuer Default Rating (IDR) 'BB'; -- Senior secured bank lines 'BB+'; -- Senior unsecured notes 'BB-'; -- Senior subordinated unsecured notes 'B+'. The Rating Outlook is Stable. Fitch views the timing of the stock repurchase as less than optimal, given the decline in fourth quarter domestic original equipment makers' production schedules and the stresses in the automotive supply industry. However, Fitch expects TRW to remain free cash flow positive for 2006 and 2007 and recognizes TRW's more than adequate liquidity to complete the repurchase. The fourth calendar quarter is generally a positive working capital cash flow period for most automotive suppliers. Last year, TRW produced $104 million in positive working capital cash flow and had free cash flow of $158 million. For the third quarter ended Sept. 30, 2006, TRW had cash and marketable securities of $369 million and $956 million in revolver availability. TWC HOLDINGS: S&P Junks Corporate Credit Rating ----------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Wornick Co. (The) and its parent, TWC Holdings LLC. The corporate credit rating on both entities was lowered to 'CCC+' from 'B'. The CreditWatch implications have been revised to developing from negative; ratings were initially placed on CreditWatch on Aug. 17, 2006. "The downgrade reflects uncertainty regarding the company's ability to receive a waiver from covenant violations that are likely at the end of the year, as well as very weak profitability, cash generation, and liquidity," Standard & Poor's credit analyst Christopher DeNicolo said. A violation of the covenant in the unrated credit facility, if not waived, would also be an event of default under the company's $125 million secured notes. If Wornick is able to get the likely covenant violation waived or the facility is replaced and an adequate level of liquidity is restored, ratings could be raised modestly. In the first six months of 2006, Wornick reported an $8 million operating loss despite a 15% increase in revenue. The loss was due to costs related to consolidation efforts and new products, inefficiencies in the co-manufacturing business, and lower margins on certain military ration sales. Free cash flow was negative in the first half of 2006 due to the losses and higher working capital. Subsequent to the end of the quarter, the company made its scheduled coupon payment on the $125 million secured notes and had further working capital investments, resulting in zero cash balances and borrowings of $12 million on the $15 million revolver. Although the company is expected to repay most revolver drawings by the end of the year, a $6.8 million interest payment is due on Jan. 15, 2007. Therefore, liquidity is expected to remain constrained through at least the first part of 2007. Overall, Wornick's financial profile is likely remain very weak due to high debt leverage and poor, albeit improving, profitability. Wornick specializes in the production, packaging, and distribution of shelf-life, shelf-stable, and frozen foods in flexible pouches and semi-rigid products. The firm's two main lines of business are military rations (approximately 70% of revenues) and co-manufacturing for leading food brands (30%). The company produces both individual (including Meals Ready to Eat or MRE) and group rations (including Unitized Group Rations-A or UGR-A) for the U.S. military. MREs comprise about 65% of military revenues. In the most recent MRE contract award, Wornick received the lowest share of the three approved suppliers. The high number and increasing tenor of overseas troop deployment and the replenishment of war reserves is likely to sustain demand for MREs in the intermediate term, although sales in the near term are likely to decline from unusually high levels in late 2005 and early 2006. UNO RESTAURANT: 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 Restaurant sector, the rating agency held its B3 Corporate Family Rating for Uno Restaurant Holdings Corporation, and lowered its B3 rating to Caa1 on the company's $142 million, 10% Second Lien Notes due on 2011. Additionally, Moody's assigned an LGD4 rating to those bonds, suggesting noteholders will experience a 60% 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%). Based in Boston, Massachusetts, Uno Restaurant Holdings Corporation -- http://www.unos.com/-- franchises and operates over 200 restaurants. Uno Chicago Grill restaurants are located in 32 states, the District of Columbia, Puerto Rico, South Korea and the United Arab Emirates. The company also operates a consumer foods division, which supplies airlines, movie theaters, hotel restaurants and supermarkets with both frozen and refrigerated private label foods and branded Uno products. U.S. ENERGY: Denies Countryside Canada's Default Claims ------------------------------------------------------- U.S. Energy Biogas Corp. received notices from Countryside Canada Power Inc. on October 3, 2006 and October 12, 2006 claiming that USEB had failed to provide certain financial reporting documentation to Countryside as required by a certain Loan Agreement and claiming that, as a result, an Event of Default exists under the agreement. USEB, Avon Energy Partners, LLC, and Countryside Canada, as trustee, are parties to an April 2004 Note Purchase Agreement. As of September 30, 2006, the principal amount outstanding under the Loan Agreement was approximately $92 million. Though USEB is current in its payment of principal and interest and no monetary default exists or is alleged by Countryside, the Loan Agreement provides that upon an Event of Default under the circumstances alleged by Countryside the lender may, upon written notice to USEB, declare the entire unpaid principal and all accrued interest due and payable. USEB has responded to Countryside's notices and takes the position that no Event of Default exists. As of November 2, Countryside has not indicated that it intends to seek to accelerate the loan. USEB says that its assets and cash flow would not be sufficient to repay the amounts outstanding under the Loan Agreement if the lenders decide to accelerate repayment of the loan. USEB is engaged in negotiations with Countryside regarding a potential restructuring of the Loan Agreement. Based in Avon, Connecticut, U.S. Energy Biogas Corp. -- http://www.usenergysystems.com/-- owns and operates 23 landfill- gas-to-energy projects with 52MW of generating capacity. Power is sold primarily to local utilities under long-term contracts in Arizona, Illinois, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Texas, Vermont and Virginia. U.S. Energy Systems, Inc. owns 54.26% of USEB and Cinergy Energy, a wholly owned subsidiary of Cinergy Corp., owns the remaining 45.74%. VESTA INSURANCE: Committee Seeks Court's OK on Salary Reduction --------------------------------------------------------------- The Official Committee of Unsecured Creditors of Vesta Insurance Group, Inc., asks the U.S. Bankruptcy Court for the Northern District of Alabama to reduce the compensation of certain members of the senior management of VIG, nunc pro tunc Oct. 1, 2006. Colin M. Bernardino, Esq., at KilPatrick Stockton LLP, in Atlanta, Georgia, informs Judge Bennett that Vesta is currently paying David Lacefield, an executive at Vesta and J. Gordon Gaines, Inc., $37,500 per month despite the fact that he provides little, if any, benefit to Vesta's estate. "There should be little question that Mr. Lacefield's salary is excessive and entirely unreasonable in the context of a Debtor whose business has all but discontinued and which is about to liquidate," says Mr. Bernardino. The excessive compensation paid to Mr. Lacefield only unnecessarily reduces the Debtor's limited resources to the detriment of its creditors. Furthermore, the fact that Mr. Lacefield is an insider of the Debtor necessitates a review and reduction of Mr. Lacefield's salary, Mr. Bernardino adds. Mr. Bernardino relates that the Committee has expressed its concerns and has requested the Debtor to contemplate reducing Mr. Lacefield's salary as part of the Debtor's cost-reduction measures related to its wind down and liquidation. Vesta has not made any changes. The Committee believes that given Mr. Lacefield's current limited responsibilities, his salary should be reduced to no more than $10,000 per month. The Committee also asks the Court to authorize the Debtor to recover or set off against any future postpetition obligations to Mr. Lacefield any amounts paid to Mr. Lacefield for payroll purposes on or after October 1, 2006, in excess of the proposed amount. Lacefield Responds Tom E. Ellis, Esq., at Ellis & Boom LLC, in Birmingham, Alabaman, relates that VIG has an executory contract with Mr. Lacefield that governs his compensation. VIG relied on that contract to require Mr. Lacefield's services. Moreover, VIG has accepted Mr. Lacefield's services and arranged to make payment for those services as provided under the contract. Mr. Ellis states that Mr. Lacefield's current daily activities involve significant effort at maximizing value of the Debtor's estates. Mr. Lacefield monitors the activities of the Receivers daily and brings challenges as appropriate, like intercession in the sale of The Hawaiian Insurance & Guaranty Corporation, Ltd. Mr. Lacefield is also currently working on the Receiver's activities related to Florida Select Insurance Agency, where it is believed substantial assets should be available to the estate if the Receiver does not squander them. VIG recently received an offer to buy the book of business of Florida Select Insurance Agency, of which Mr. Lacefield is president. After making a few phone calls, Mr. Lacefield obtained an additional offer that is 10% higher than the first one. Mr. Ellis also informs the Court that there will be considerable value to be realized from Vesta Fire Insurance Corp., given the Receiver's actions to cut off any loss payments under the intercompany quota share. Additionally, Vesta Insurance Corp. is not in liquidation and continues to hold licenses in more than 30 states; this is an asset that has considerable value and VIG needs to ensure the Receiver does not encumber it. Mr. Lacefield is the only remaining executive officer that is an officer and director of the subsidiary insurance companies, and is the only person standing to intervene in the Receiver's activities, Mr. Ellis says. Mr. Ellis also notes that Mr. Lacefield must take steps to protect potential claims the estate may have, as well as deal with and make day to day business decisions concerning accounting and record keeping, personnel assignments to the Special Deputy Receiver, and minute business judgments on varying topics, Mr. Ellis tells the Court. Mr. Lacefield asks the Court to deny the VIG Committee's request to reduce his compensation as outside the authority of the Court to intervene in the business judgments of the Debtor as to his appropriate compensation for services rendered and anticipated to the Debtor to date and in accomplishment of the Plan. Mr. Lacefield also asks the Court to approve the transfer of funds to J. Gordon Gaines to continue the compensation due under his employment contract. Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc. (Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding company for a group of insurance companies that primarily offer property insurance in targeted states. Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership III, L.P., filed an involuntary chapter 7 petition against the Company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517). The case was converted to a voluntary chapter 11 case on Aug. 8, 2006 (Bankr. N.D. Ala. Case No. 06-02517). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor. R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, represents the petitioning creditors. In its schedules of assets and liabilities, Vesta listed $14,919,938 in total assets and $214,278,847 in total liabilities. J. Gordon Gaines, Inc., is a Vesta Insurance-owned unit that manages the company's numerous insurance subsidiaries and employs the headquarters workers. The Company filed for chapter 11 protection on Aug. 7, 2006 (Bankr. N.D. Ala. Case No. 06-02808). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represent the Debtor in its restructuring efforts. In its schedules of assets and liabilities, Gaines listed $19,818,094 in total assets and $16,046,237 in total liabilities. On Aug. 1, 2006, the District Court of Travis County, Texas entered the Order appointing the Texas Commissioner of Insurance as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries: Vesta Fire Insurance Corporation; The Shelby Insurance Company; Shelby Casualty Insurance Corporation; Texas Select Lloyds Insurance Company; and Select Insurance Services, Inc. (Vesta Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). VESTA INSURANCE: Gaines to Execute Non-Insider Worker Bonus ----------------------------------------------------------- Vesta Insurance Group, Inc., and J. Gordon Gaines, Inc., ask the U.S. Bankruptcy Court for the Northern District of Alabama to: 1. authorize Gaines to implement a limited incentive bonus program for key non-insider employees; and 2. establish a procedure for Gaines to include additional key non-insider employees in the limited incentive bonus plan without further court order with the consent of the creditors committees in the Debtors' Chapter 11 cases and the Bankruptcy Administrator. As previously reported, at the close of business on Aug. 4, 2006, without assurances of a source of revenue from which to pay its employees, Gaines was forced to terminate substantially all of its employees based in locations outside of Birmingham, Alabama, and a substantial number of its workforce in Birmingham, Alabama, leaving Gaines with approximately 190 employees to service the needs of any area of the Vesta Insurance Group. To date, approximately 80 employees remain. On Oct. 10, 2006, each of the Debtors filed a disclosure statement and plan of liquidation, providing for an orderly wind-down and liquidation of the Debtors' affairs. To maintain operations in the near term and to maximize the potential recovery for creditors in the Debtors' Chapter 11 cases, Vesta and Gaines must maintain sufficient skilled, experienced employees with knowledge and experience in the Debtors' businesses. A skilled, core group of employees is vital to the success of the Plans. Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs LLP, in Atlanta, Georgia, informs the Court that the Debtors -- in consultation with their interim financial manager, Kevin O'Halloran -- have initially identified four non-insider, non- management employees whose training, skills, and experience make them essential to the companies' operations and whose retention is critical to maximize returns. Norman Gayle, president of Gaines, attests that none of the Incentive Plan Employees is an officer or director of Vesta or Gaines, and none qualifies as an "insider" as defined in Section 101(31) of the Bankruptcy Code. The Plans contemplate that the Debtors' business operations will wind down possibly as soon as December 2006 at which time virtually all of the Debtors' employees may be terminated, giving the Incentive Plan Employees reason to seek employment elsewhere during the critical time. If these employees resign, attracting new trained, qualified individuals to fill the positions at the same salary and benefit level currently being paid to the Incentive Plan Employees will be virtually impossible, Mr. Anderson tells the Court. To preserve and foster high morale among the Debtors' remaining employees, the identities, terms of compensation, and proposed bonuses of the Incentive Plan Employees have not been publicly disclosed. The Debtors sought and obtained the Court's permission to file the proposed "Bonus Plan Term Sheets" and the Gayle Declaration under seal. Given the Incentive Plan Employees' critical role in the continued operation and orderly winding down of Vesta and Gaines' affairs, and the successful consummation of the Plans, the Debtors assert that the payments and terms proposed in the proposed incentive plan are justified by the facts and circumstances of their cases and should, therefore, be permitted to be paid pursuant to Section 503(c)(3). Consistent with the Debtors' current practice with respect to payroll and related costs, the additional employee cost associated with the proposed incentive bonus plan will be shared equally between the Vesta and Gaines estates without prejudice to the rights of either estate to seek a reallocation. The Debtors believe future circumstance may dictate that additional Gaines employees be afforded similar incentive bonus to continue their employment and perform their duties through the successful confirmation and consummation of the Plans. Mr. Anderson relates that approval of the Procedures will expedite the process and minimize time, expense and judicial resources associated with providing the incentive bonus to additional employees. In the event that the Debtors, in their business judgment, determine additional employees should be provided with incentive bonuses and other employment terms similar to those provided to the Incentive Plan Employees: a) The Debtors will deliver confidential term sheets identifying the employees and the proposed economic and employment terms to the Bankruptcy Administrator and counsel for each of the creditors' committees. b) Each of the creditors' committees and the Bankruptcy Administrator will have five business days, after receipt of the request, to notify the Debtors' counsel of any objection to the inclusion of the particular employee, in which the Debtors may either request a hearing before the Court or withdraw the request. c) If neither of the creditors' committees nor the Bankruptcy Administrator notifies the Debtors' counsel in writing of any objection, then, upon the expiration of the five business day notice period, the proposed incentive plan terms for the additional employees will be deemed approved by the Court. Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc. (Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding company for a group of insurance companies that primarily offer property insurance in targeted states. Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership III, L.P., filed an involuntary chapter 7 petition against the Company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517). The case was converted to a voluntary chapter 11 case on Aug. 8, 2006 (Bankr. N.D. Ala. Case No. 06-02517). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor. R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, represents the petitioning creditors. In its schedules of assets and liabilities, Vesta listed $14,919,938 in total assets and $214,278,847 in total liabilities. J. Gordon Gaines, Inc., is a Vesta Insurance-owned unit that manages the company's numerous insurance subsidiaries and employs the headquarters workers. The Company filed for chapter 11 protection on Aug. 7, 2006 (Bankr. N.D. Ala. Case No. 06-02808). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represent the Debtor in its restructuring efforts. In its schedules of assets and liabilities, Gaines listed $19,818,094 in total assets and $16,046,237 in total liabilities. On Aug. 1, 2006, the District Court of Travis County, Texas entered the Order appointing the Texas Commissioner of Insurance as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries: Vesta Fire Insurance Corporation; The Shelby Insurance Company; Shelby Casualty Insurance Corporation; Texas Select Lloyds Insurance Company; and Select Insurance Services, Inc. (Vesta Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). VICORP RESTAURANTS: 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 Restaurant sector, the rating agency confirmed B2 Corporate Family Rating for Vicorp Restaurants, Inc., and held its B3 rating on the company's $126.5 million, Guaranteed 10.5% Senior Unsecured Notes due on April 2011. Additionally, Moody's assigned an LGD4 rating to those bonds, suggesting noteholders will experience a 62% 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%). Based in Denver, Colorado, Vicorp Restaurants, Inc. -- http://www.vicorpinc.com/-- operates and franchises about 400 family-style, medium-priced restaurants in the US -- mainly in Arizona, California, Florida, the Rocky Mountain region, and the upper Midwest. Its restaurant chains include Village Inn, known primarily for its breakfast menu and pies, and Bakers Square, serving lunch and dinner and emphasizing fresh-baked pies. The company makes all of its pies through VICOM, its bakery production division, which operates three baking plants. About 95 of the restaurants are run by franchisees. The company is majority owned by Chicago-based investment firm Wind Point Partners. VOLUME SERVICES: 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 Restaurant sector, the rating agency held its B3 Corporate Family Rating for Volume Services America, Inc. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these debentures: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $107.5 Million Senior Secured Term Loan B Due 2010 B2 B2 LGD3 34% $107.5 Million Senior Secured Revolver Due 2010 B2 B2 LGD3 34% Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Volume Services America, Inc., along with Volume Services, Inc. and Service America Corporation, are subsidiaries of Centerplate, Inc., based in Spartanburg, South Carolina. Through its subsidiaries, Centerplate operates concession, catering and merchandising services at sports facilities, convention centers and other entertainment venues across the United States. Revenues for fiscal 2005 totaled approximately $643 million. WASHINGTON MUTUAL: Moody's Rates Class B Certificates at Ba1 ------------------------------------------------------------ Moody's Investors Service assigned a Aaa rating to the senior certificates issued by Washington Mutual Asset-Backed Certificates, WMABS Series 2006-HE4 Trust, and ratings ranging from Aa1 to Ba1 to the subordinate certificates in the deal. The securitization is backed by CIT Group/Consumer Finance, Inc., Meritage Mortgage Corporation, LIME Financial Services, LTD, Sebring Capital Partners, Limited Partnership (13.2%), and other originators' originated adjustable-rate and fixed-rate subprime mortgage loans. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization, excess spread and an interest rate swap agreement provided by The Bank of New York. Moody's expects collateral losses to range from 5.20% to 5.70%. Washington Mutual Bank will service the loans. Moody's has assigned Washington Mutual Bank its servicer quality rating of SQ2 as a servicer of subprime mortgage loans. These are the rating actions: * Washington Mutual Asset-Backed Certificates, WMABS Series 2006-HE4 Trust Class I-A, Assigned Aaa Class II-A-1, Assigned Aaa Class II-A-2, Assigned Aaa Class M-1, Assigned Aa1 Class M-2, Assigned Aa2 Class M-3, Assigned Aa3 Class M-4, Assigned A1 Class M-5, Assigned A2 Class M-6, Assigned A3 Class M-7, Assigned Baa1 Class M-8, Assigned Baa2 Class M-9, Assigned Baa3 Class B, Assigned Ba1 The Class B certificates were sold in privately negotiated transactions without registration under the Securities Act of 1933 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under Rule 144A. WAVE WIRELESS: Wants to Sell Repair Business Assets for $150,000 ---------------------------------------------------------------- Wave Wireless Corporation asks the U.S. Bankruptcy Court for the District of Delaware for authority to sell substantially all of its assets in its repair and maintenance business to United Repair Services Ltd. for $150,000 in cash and the assumption of certain liabilities. The Debtor's repair and maintenance business line provided repair and maintenance services to microwave cellular phone towers and systems. The services were performed through pre-earned revenue contract, whereby the Debtor would be paid at the beginning of a fiscal quarter for services to be performed through that time period. The Debtor tells the Court that technology the repair and maintenance business services is several generations old, and increasingly, customers were simply replacing the systems as they fail with more modern technology. Accordingly, the Debtor views the repair and maintenance business line as a rapidly decreasing source of revenues. Headquartered in San Jose, California, Wave Wireless Corporation fka PCom Inc. is a wireless broadband developer. The company filed a chapter 11 petition on October 31, 2006 (U.S. Bankr. Del. Case No. 06-11267) Anthony M. Saccullo, Esq. and Neal J. Levitsky, Esq., at Fox Rothschild LLP represent the Debtor. When the Debtor sought protection from its creditors, it listed $1,000,000 in total assets and $5,000,000 in total debts. WAVE WIRELESS: Wants to Use Cash Collateral to Pay Operation Costs ------------------------------------------------------------------ Wave Wireless Corporation asks the U.S. Bankruptcy Court for the District of Delaware for authority to use the cash collateral securing repayment of its obligations to SDS Capital Group SPC LTD through SDS Management LLC in an amount not to exceed $50,000. The Debtor needs immediate use of the cash collateral to pay essential operating costs. The Debtor also asks the Court to schedule a final hearing on their request. The Debtor will be submitting a cash collateral budget approved by SDS prior to the final hearing. Headquartered in San Jose, California, Wave Wireless Corporation fka PCom Inc. is a wireless broadband developer. The company filed a chapter 11 petition on October 31, 2006 (U.S. Bankr. Del. Case No. 06-11267) Anthony M. Saccullo, Esq. and Neal J. Levitsky, Esq., at Fox Rothschild LLP represent the Debtor. When the Debtor sought protection from its creditors, it listed $1,000,000 in total assets and $5,000,000 in total debts. WINSTAR COMMS: Chapter 7 Trustee Wants to Hire ESB as Accountants ----------------------------------------------------------------- Christine C. Shubert, the Chapter 7 Trustee of the estates of Winstar Communications, Inc., seeks the authority of the U.S. Bankruptcy Court for the District of Delaware to employ Executive Sounding Board Associates, Inc., as her accountants. ESB will be working with Parente Consulting, the Chapter 7 Trustee's other accountant. The Trustee wants to hire ESB to avail of the services of Stephen J. Scherf, a principal and primary accountant at Parente, who will be transferring to ESB as managing director. Mr. Scherf possesses specific knowledge and in-depth familiarity with Winstar's cases, Sheldon K. Rennie, Esq., at Fox Rothschild LLP, in Wilmington Delaware, tells the Court. Mr. Scherf's services while at Parente were crucial to the multi- million dollar lawsuit against Lucent Technologies Inc., Mr. Rennie notes. With Mr. Scherf, the Trustee achieved more than $300,000,000 in the Lucent suit, which is currently on appeal. The Trustee adds she does not want to terminate Parente's services. According to Mr. Rennie, the accountants at Parente, specifically Charles Persing, who is also a former executive of the Debtors, have specific knowledge and skills required to administer Winstar's estate. The Trustee anticipates that Parente and Mr. Persing will continue providing services in line with those performed by Mr. Scherf on behalf of the estate while at Parente. The Trustee also anticipates there may be matters where both firms need to be involved, like in connection with the Lucent Appeal. The Trustee assures the Court there will no duplication of work between Parente and ESB. As the Trustee's accountant, ESB will: (a) perform general accounting and tax advisory services regarding the administration of the bankruptcy estate; (b) review and assist in preparing and filing tax returns, and existing or future IRS examinations, among others; (c) analyze and advise on additional accounting, financial, valuation and related issues that may arise in Winstar's cases; (d) assist the Trustee's counsel in preparing and evaluating any potential litigation; (e) provide testimony on various matters; and (f) perform other appropriate services for the Trustee as requested. ESB will be paid on an hourly basis at its normal and customary hourly rates, plus reimbursement of actual, necessary expenses and other charges incurred: Professional Hourly Rate ------------ ----------- Stephen J. Scherf $395 Staff through Managing Directors $150 - $425 Mr. Scherf attests that ESB does not 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 New York, New York, Winstar Communications, Inc., provides broadband services to business customers. The Company and its debtor-affiliates filed for chapter 11 protection on April 18, 2001 (Bankr. D. Del. Case Nos. 01-01430 through 01-01462). The Debtors obtained the Court's approval converting their case to a chapter 7 liquidation proceeding in January 2002. Christine C. Shubert serves as the Debtors' chapter 7 trustee. When the Debtors filed for bankruptcy, they listed $4,975,437,068 in total assets and $4,994,467,530 in total debts. (Winstar Bankruptcy News, Issue No. 75; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) WORNICK CO: Uncertainty Over Waiver Cues S&P to Junk Rating ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Wornick Co. (The) and its parent, TWC Holdings LLC. The corporate credit rating on both entities was lowered to 'CCC+' from 'B'. The CreditWatch implications have been revised to developing from negative; ratings were initially placed on CreditWatch on Aug. 17, 2006. "The downgrade reflects uncertainty regarding the company's ability to receive a waiver from covenant violations that are likely at the end of the year, as well as very weak profitability, cash generation, and liquidity," Standard & Poor's credit analyst Christopher DeNicolo said. A violation of the covenant in the unrated credit facility, if not waived, would also be an event of default under the company's $125 million secured notes. If Wornick is able to get the likely covenant violation waived or the facility is replaced and an adequate level of liquidity is restored, ratings could be raised modestly. In the first six months of 2006, Wornick reported an $8 million operating loss despite a 15% increase in revenue. The loss was due to costs related to consolidation efforts and new products, inefficiencies in the co-manufacturing business, and lower margins on certain military ration sales. Free cash flow was negative in the first half of 2006 due to the losses and higher working capital. Subsequent to the end of the quarter, the company made its scheduled coupon payment on the $125 million secured notes and had further working capital investments, resulting in zero cash balances and borrowings of $12 million on the $15 million revolver. Although the company is expected to repay most revolver drawings by the end of the year, a $6.8 million interest payment is due on Jan. 15, 2007. Therefore, liquidity is expected to remain constrained through at least the first part of 2007. Overall, Wornick's financial profile is likely remain very weak due to high debt leverage and poor, albeit improving, profitability. Wornick specializes in the production, packaging, and distribution of shelf-life, shelf-stable, and frozen foods in flexible pouches and semi-rigid products. The firm's two main lines of business are military rations (approximately 70% of revenues) and co-manufacturing for leading food brands (30%). The company produces both individual (including Meals Ready to Eat or MRE) and group rations (including Unitized Group Rations-A or UGR-A) for the U.S. military. MREs comprise about 65% of military revenues. In the most recent MRE contract award, Wornick received the lowest share of the three approved suppliers. The high number and increasing tenor of overseas troop deployment and the replenishment of war reserves is likely to sustain demand for MREs in the intermediate term, although sales in the near term are likely to decline from unusually high levels in late 2005 and early 2006. XM SATELLITE: Posts $84 Mil. Net Loss in Quarter Ended Sept. 30 --------------------------------------------------------------- XM Satellite Radio Holdings Inc. disclosed Monday that third quarter 2006 revenue increased by 57% year over year to approximately $240 million. Net loss for the quarter reduced 36% to $84 million from the third quarter 2005. XM ended the third quarter with 7.185 million subscribers, an increase of 43% over the prior year's third quarter. "The more than 2.8 million gross subscriber additions year to date underscore the demand for XM," said Hugh Panero, CEO, XM Satellite Radio. "With significant growth in revenue and narrowing losses we are on track for positive cash flow from operations in the fourth quarter of this year." XM reported revenue of approximately $240 million, an increase of 57% from the $153 million reported in the third quarter 2005. This increase in revenue was driven by subscriber growth year over year, and increases in average revenue per subscriber. XM's net loss for the third quarter of 2006 was $84 million compared to a net loss of $132 million during the third quarter of 2005, a 36% improvement. For the third quarter of 2006, the adjusted EBITDA loss substantially improved to a loss of just $2 million versus an adjusted EBITDA loss of $70 million in the third quarter of 2005. The primary differences between net loss and adjusted EBITDA are non-operating amounts and certain operating non-cash charges. For the third quarter 2006, XM recorded gross subscriber additions of 868,007 and net subscriber additions of 286,002. XM finished the third quarter 2006 with a total of 7,185,873 subscribers, representing a 43% increase over the 5,034,642 subscribers at the end of the third quarter 2005. XM Year-End 2006 Guidance XM projects that it will end the year with total subscribers of between 7.7 million and 7.9 million, which is within the previously announced guidance range. XM expects to achieve positive cash flow from operations for the fourth quarter 2006. Consistent with the above range of subscribers, 2006 subscription revenue is expected to be in the $810 million to $815 million range and adjusted EBITDA Loss is expected to be in the $205 million to $215 million range. XM will provide 2007 guidance, including subscribers, subscription revenues, EBITDA and cash flows, when it provides full year 2006 results. About XM Satellite Headquartered in Washington, D.C., XM Satellite Radio Inc. (Nasdaq: XMSR) -- http://www.xmradio.com/-- is a wholly owned subsidiary of XM Satellite Radio Holdings Inc. XM has been publicly traded on the NASDAQ exchange since Oct. 5, 1999. XM's 2006 lineup includes more than 170 digital channels of choice from coast to coast: the most commercial-free music channels, plus premier sports, talk, comedy, children's and entertainment programming; and 21 channels of the most advanced traffic and weather information. XM has broadcast facilities in New York and Nashville, and additional offices in Boca Raton, Florida; Southfield, Michigan; and Yokohama, Japan. At June 30, 2006, XM Satellite Radio Inc.'s balance sheet showed a stockholders' deficit of $358,079,000, compared to a deficit of $362,713,000, at Dec. 31, 2005. * * * As reported in the Troubled Company Reporter on April 21, 2006, Standard & Poor's Ratings Services assigned its 'CCC' rating to XM Satellite Radio Inc.'s proposed $600 million senior unsecured notes. The senior unsecured notes are rated one notch below the corporate credit rating because of the sizable amount of secured debt in the company's capital structure relative to its asset base. At the same time, Standard & Poor's assigned its 'B-' rating and recovery rating of '1' to XM's proposed $250 million first-lien secured revolving credit facility, indicating an expectation of full recovery of principal in the event of a payment default. ZIFF-DAVIS: Moody's Affirms Corporate Family Rating at Caa1 ----------------------------------------------------------- Moody's Investors Service has downgraded Ziff-Davis Media, Inc.'s speculative grade liquidity rating to SGL - 4 from SGL - 2, reflecting an expectation of weak near-term liquidity. The rating action is as follows: * Ziff-Davis Media, Inc. -- Speculative Grade Liquidity Rating downgraded to SGL - 4 from SGL - 2 Moody's expects Ziff-Davis, Corporate Family Rating at Caa1, to post significant free cash flow losses that will largely deplete liquidity by the end of December 2007, primarily due to the higher interest expense associated with the senior subordinated compounding notes that turn cash pay in February 2007. Ziff-Davis' sole source of liquidity is represented by $11 million of cash recorded at the end of Sept. 2006; the company does not have a revolving credit facility. The downgrade of the SGL rating largely reflects Moody's concern regarding the sufficiency of Ziff-Davis' liquidity to support cash interest payments on its long-term debt estimated at over $40 million in fiscal 2007. However, Moody's recognizes that the company has low capital spending requirements and no near-term mandatory debt amortization as the bonds do not mature until 2009 and beyond. Ziff-Davis does not have any maintenance financial covenants. The company's $205 million floating rate notes are secured by a first priority security interest in substantially all existing and future assets of the company. Under the indentures to the floating rate notes, Ziff-Davis is allowed to sell assets as long as the proceeds are re-invested in the business or used to redeem debt. Ziff Davis Media Inc., headquartered in New York, New York, is a leading integrated media company focusing on the technology, videogame and consumer lifestyle markets. Total revenues for fiscal year 2005 were approximately $188 million. * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ------------------------------------------------------------- Recent chapter 11 cases filed with assets and liabilities below $1,000,000: In re Sassafras Fork, Inc. Bankr. S.D.N.Y. Case No. 06-12559 Chapter 11 Petition filed October 30, 2006 See http://bankrupt.com/misc/nysb06-12559.pdf In re A C Rentals, Inc. Bankr. W.D. Okla. Case No. 06-12907 Chapter 11 Petition filed October 31, 2006 See http://bankrupt.com/misc/okwb06-12907.pdf In re Mid-Indiana Mortgage, Inc. Bankr. S.D. Ind. Case No. 06-06848 Chapter 11 Petition filed October 31, 2006 See http://bankrupt.com/misc/insb06-06848.pdf In re Rodrigo Falla Rojas Bankr. D. S.C. Case No. 06-04873 Chapter 11 Petition filed October 31, 2006 See http://bankrupt.com/misc/scb06-04873.pdf In re SWAC of Oklahoma Bankr. W.D. La. Case No. 06-12360 Chapter 11 Petition filed October 31, 2006 See http://bankrupt.com/misc/lawb06-12360.pdf In re A 1 Mortgage and Financial Services, LLC Bankr. W.D. Pa. Case No. 06-25420 Chapter 11 Petition filed November 1, 2006 See http://bankrupt.com/misc/pawb06-25420.pdf In re J. Carlton Enterprises, LLC Bankr. D. N.M. Case No. 06-12029 Chapter 11 Petition filed November 1, 2006 See http://bankrupt.com/misc/nmb06-12029.pdf In re Acculab Laboratories, Inc. Bankr. M.D. Fla. Case No. 06-06155 Chapter 11 Petition filed November 2, 2006 See http://bankrupt.com/misc/flmb06-06155.pdf In re Child Support Network, Inc. Bankr. D. Ariz. Case No. 06-03643 Chapter 11 Petition filed November 2, 2006 See http://bankrupt.com/misc/azb06-03643.pdf In re Hani, Inc. Bankr. W.D. Wash. Case No. 06-13899 Chapter 11 Petition filed November 2, 2006 See http://bankrupt.com/misc/wawb06-13899.pdf In re Rosendean, LLC Bankr. W.D. Ky. Case No. 06-33014 Chapter 11 Petition filed November 2, 2006 See http://bankrupt.com/misc/kywb06-33014.pdf In re Stars Casino, LLC Bankr. W.D. Wash. Case No. 06-13901 Chapter 11 Petition filed November 2, 2006 See http://bankrupt.com/misc/wawb06-13901.pdf In re Linda Moore-Lanning Bankr. D. Ariz. Case No. 06-03676 Chapter 11 Petition filed November 3, 2006 See http://bankrupt.com/misc/azb06-03676.pdf In re Royal American Insurance Education LLC Bankr. D. Utah Case No. 06-24277 Chapter 11 Petition filed November 3, 2006 See http://bankrupt.com/misc/utb06-24277.pdf In re Sun of a Beach, Inc. Bankr. D. Maine Case No. 06-20557 Chapter 11 Petition filed November 3, 2006 See http://bankrupt.com/misc/meb06-20557.pdf In re Young Again Nutrition, LLC Bankr. S.D. Tex. Case No. 06-35903 Chapter 11 Petition filed November 3, 2006 See http://bankrupt.com/misc/txsb06-35903.pdf In re Alakazoom LLC Bankr. C.D. Calif. Case No. 06-13293 Chapter 11 Petition filed November 6, 2006 See http://bankrupt.com/misc/cacb06-13293.pdf In re Clean Up, Inc. Bankr. N.D. Ga. Case No. 06-74335 Chapter 11 Petition filed November 6, 2006 See http://bankrupt.com/misc/ganb06-74335.pdf In re Ronald David Pike Bankr. D. Ariz. Case No. 06-03700 Chapter 11 Petition filed November 6, 2006 See http://bankrupt.com/misc/azb06-03700.pdf In re Sunrise Adult Day Care Services Bankr. D. Colo. Case No. 06-18099 Chapter 11 Petition filed November 6, 2006 See http://bankrupt.com/misc/cob06-18099.pdf In re UJT Development, Inc. Bankr. S.D. Tex. Case No. 06-10759 Chapter 11 Petition filed November 6, 2006 See http://bankrupt.com/misc/txsb06-10759.pdf In re Datatek-USA, Inc. Bankr. N.D. Ala. Case No. 06-82370 Chapter 11 Petition filed November 7, 2006 See http://bankrupt.com/misc/alnb06-82370.pdf In re Gathman Ag Systems, Inc. Bankr. C.D. Ill. Case No. 06-71589 Chapter 11 Petition filed November 7, 2006 See http://bankrupt.com/misc/ilcb06-71589.pdf In re Phyllis Reese, Inc. Bankr. W.D. Pa. Case No. 06-25627 Chapter 11 Petition filed November 7, 2006 See http://bankrupt.com/misc/pawb06-25627.pdf In re R & D Productions, LLC Bankr. M.D. Tenn. Case No. 06-06531 Chapter 11 Petition filed November 7, 2006 See http://bankrupt.com/misc/tnmb06-06531.pdf In re River Falls Ace Hardware, Inc. Bankr. W.D. Wis. Case No. 06-12896 Chapter 11 Petition filed November 7, 2006 See http://bankrupt.com/misc/wiwb06-12896.pdf ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Marie Therese V. Profetana, Robert Max Victor M. Quiblat II, Shimero R. Jainga, Joel Anthony G. Lopez, Melvin C. Tabao, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, Ronald C. Sy, Jason A. Nieva, Lucilo M. Pinili, Jr., Tara Marie A. Martin, and Peter A. Chapman, Editors. Copyright 2006. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $725 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***