/raid1/www/Hosts/bankrupt/TCR_Public/061117.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, November 17, 2006, Vol. 10, No. 274
Headlines
ABITIBI-CONSOLIDATED: Weak Operations Cue S&P's Negative Outlook
ACANDS INC: Wants Removal Period Extended to March 5
ADELPHIA COMMS: Judge Gerber Overrules Objections to Asset Sales
ADELPHIA COMMS: Resolves California & Washington Sales Tax Issues
ADVENTURE PARKS: Court Okays Vanek Vickers as Special Counsel
AIRBORNE HEALTH: Moody's Rates Proposed $160MM Term Loan at B2
AIRBORNE HEALTH: S&P Rates Proposed $160 Mil. Senior Loan at 'B'
ALASKA AIR: Posts $17.4 Mil. Net Loss in 2006 Third Fiscal Quarter
ALERIS INTERNATIONAL: Posts $24.2 Mil. Net Loss in Third Quarter
AMERICAN REAL: Earns $103 Million in 2006 Third Quarter
AMERISOURCEBERGEN: Completes New $750 Million Credit Facility
APOGENT TECH: Thermo Merger Cues Moody's to Lift Ba1 Ratings
APPTIS INC: S&P Rates Proposed $180 Mil. Senior Facility at 'B+'
ASARCO LLC: Court Approves Modified Final Cash Collateral Order
ASARCO LLC: Wants to Purchase Equipment from BofA for $2.04 Mil.
ASSOCIATED ESTATES: Strong Core Market Cues S&P's Positive Outlook
ATARI INC: Earns $311,000 in Second Quarter Ended September 30
BOYD GAMING: Posts $12.9 Million Net Loss in 2006 Third Quarter
CALPINE CORP: Appoints Larry Leverett as Senior VP for Gas Trading
CALPINE CORP: Ct. Defers Canadian Claims Stay Hearing to Dec. 20
CALPINE CORP: Earns $1.7 Million in 2006 Third Quarter
CDC MORTGAGE: Projected Losses Cue Moody's to Downgrade 12 Certs.
CHAMPION ENTERPRISES: Moody's Holds Rating on $89MM Notes at B1
CHAMPION ENTERPRISES: Moody's Holds B1 Rating on $200MM Sr. Loan
CLEAR CHANNEL: Accepts Bain Capital's $26.7 Billion Buyout Offer
CLEAR CHANNEL: $26.7 Billion Buyout Cues S&P to Cut Ratings to BB+
CLEAR CHANNEL: $26.7 Billion Buyout Prompts Fitch to Cut Ratings
CLECO CORPORATION: Earns $28 Million in 2006 Third Quarter
CMS ENERGY CORP: Posts $101 Mil. Net Loss in 2006 Third Quarter
CNET NETWORKS: Faces Nasdaq Delisting Due to 10-Q Filing Delay
COLLINS & AIKMAN: Still Unable to File Financial Reports with SEC
COMMUNICATIONS CORP: Excl. Plan-Filing Period Stretched to Jan. 31
COMMUNICATIONS CORP: Hires Greenberg Traurig as Special Counsel
COMPLETE PRODUCTION: Launches $600-Million Senior Notes Placement
COMPLETE PRODUCTION: Moody's Rates New $600 Mil. Sr. Notes at B2
CONSUMERS ENERGY: Earns $99 Million in Third Quarter of 2006
COSINE COMM: Posts $225,000 Net Loss in 2006 Third Quarter
CREATIVE BUILDING: Chapter 15 Petition Summary
DANA CORP: Trade Creditors Sell 109 Claims Totaling $11,922,884
DAVID GIANCOLA: Case Summary & Six Largest Unsecured Creditors
DELTA AIR: Earns in $52 Million in Quarter Ended September 30
DIGITAL LIGHTWAVE: Posts $2 Million Net Loss in Third Quarter
DONALD STARK: Voluntary Chapter 11 Case Summary
ENDOCARE INC: Inks $16 Mil. Common Stock Purchase Pact with Fusion
ENDOCARE INC: Posts $2.149 Mil. Net Loss in Third Quarter of 2006
ENERGY PARTNERS: Exploring Strategic Alternatives Including Sale
ENERGY PARTNERS: Posts $25.2 Mil. Net Loss in 2006 Third Quarter
ENRON CORP: Judge Harmon Sentences Director to 2 Yrs. Probation
ENRON CORP: SEC Charges Three Former Enron Execs. Of Aiding Fraud
ENTERGY NEW ORLEANS: Files Amended Plan & Disclosure Statement
ERICO INT'L: Proposed Recapitalization Cues S&P's CreditWatch
FERTINITRO FINANCE: Moody's Puts B3 Rating on Review for Downgrade
FOCUS CORPORATION: Moody's Withdraws B3 Rating on CDN$70MM Loan
FINOVA GROUP: Wants Ch. 11 Case Re-Opened & Thaxton Pact Approved
FISHER SCIENTIFIC: Thermo Merger Cues Moody's to Lift Ba2 Rating
FLYI INC: Bridge Associates to Assist in Wind-Down Process
GENERAL CABLE: Selling $355 Million Senior Convertible Notes
GMAC LLC: Moody's Expects to Confirm Ba1 Long-Term Ratings
GOODYEAR TIRE: Steelworkers Blast $1 Billion Senior Notes Offer
HOLLINGER INTERNATIONAL: Names Cyrus Freidheim as New CEO
INLAND FIBER: Posts $6.6 Million Net Loss in 2006 Second Quarter
INNOVATIVE COMMS: Proofs of Claim due by December 22
INSIGHT HEALTH: S&P Slashes Corp. Credit Rating to 'CCC' from 'B'
INTERPUBLIC GROUP: Moody's Rates $400MM Senior Notes at Ba3
KANA SOFTWARE: Sept. 30 Balance Sheet Upside-Down by $4.5 Million
KRISPY KREME: Posts $135.8MM Net Loss in Year Ended January 2006
LANGUAGE LINE: Improved Operations Cue S&P's Revised Outlook
LIMITED BRANDS: Moody's Holds Preferred Shelf Rating at Ba1
LOM HOLDINGS: Case Summary & Three Largest Unsecured Creditors
MAYCO PLASTICS: Hires Plunkett & Cooney as Special Labor Counsel
MGM MIRAGE: Earns $156.2 Million in Quarter Ended September 30
NATIONAL ENERGY: To Appeal Bankr. Court's Claim Inclusion Order
NBS TECHNOLOGIES: Inks $3.6MM Going Private Deal with Brookfield
NEXMED INC: Applies for Listing on Nasdaq Capital Market
NEW RIVER: Court Okays Pact on Woodland's Request to Dismiss Case
NORTHWEST AIRLINES: Can Assume Modified Microsoft Licensing Pact
NORTHWEST AIRLINES: Wants to Enter into Revised CBA with AMFA
OIKOS COMMUNITY: Case Summary & Six Largest Unsecured Creditors
OMNICARE INC: UnitedHealth Rift Cues Moody's to Lower Ratings
OWENS CORNING: Reaches Pact Resolving Heart & Degginger Claims
OWENS CORNING: Settles Over $4MM in Claims With Ellison Windows
PENSION BENEFIT: Annual Report Shows $18 Bil. Deficit at Sept. 30
PETALS DECORATIVE: Most & Co. Raises Going Concern Doubt
PILGRIM'S PRIDE: Posts $7.5MM Net Loss in 4th Qtr. Ended Sept. 30
PINE VALLEY: Retains Financial Advisor to Assist in CCAA Process
PORTRAIT CORP: Inks Premium Financing Pact with First Insurance
PORTRAIT CORPORATION: Has Access to $45-Million DIP Loan Facility
PROVIDIAN GATEWAY: Moody's Lifts Ba1 Rating on $68MM Class E Notes
RAILAMERICA TRANSPORTATION: Fortress Offer Cues Moody's Review
READERS DIGEST: Inks $2.4 Billion Merger Pact with Ripplewood
READERS DIGEST: Posts $26.7 Mil. Net Loss in Qtr. Ended Sept. 30
REFCO INC: Courts Sets Protocol on Plan Confirmation Discovery
REFCO INC: GAIN Capital Buys Refco FX's Customer & Marketing List
RENT-A-CENTER: Completes Rent-Way Acquisition & Debt Refunding
RESIDENTIAL CAPITAL: GMAC Sale May Cues Moody's to Hold Ba1 Rating
SEA CONTAINERS: Taps Kirkland As Special Conflicts Counsel
SEA CONTAINERS: Wants to Employ PWC as Investment Banker
SG MORTGAGE: Poor Performance Prompt S&P's Negative CreditWatch
SILICON GRAPHICS: 2006 First Quarter Revenue Rises to $122 Mil.
SPECIALTY UNDERWRITING: Moody's Reviews Ba2 Rated Class B-3 Cert.
TENFOLD CORP: Posts $2 Million Net Loss in Quarter Ended Sept. 30
THERMO FISCHER: Moody's Cuts $125-Mil Debentures' Rating to Ba1
TOTAL INDUSTRIAL: Voluntary Chapter 11 Case Summary
TOTAL SAFETY: S&P Assigns B- Corporate Credit Rating
TRANSWITCH CORP: Accumulated Deficit Tops $319.2 Mil. at Sept. 30
UNIVERSITY HEIGHTS: Section 341(a) Meeting Scheduled on Nov. 20
UNIVERSITY HEIGHTS: Taps McNamee Lochner as Bankruptcy Counsel
US AIRWAYS: Proposed Delta Merger Cues S&P's CreditWatch
USEC INC: Earns $9.9 Million in Quarter Ended September 30
WILCOX PRESS: Case Summary and 20 Largest Unsecured Creditors
WORLDCOM INC: Court OKs Pact Settling Dist. of Columbia's Claims
WORNICK COMPANY: Moody's Slashes and Reviews CFR to Caa1 from B2
* LeClair Ryan Lawyers Selected Best Lawyers in America for 2007
* BOOK REVIEW: Crafting Solutions for Troubled Businesses: A
Disciplined Approach to Diagnosing and Confronting
Management Challenges
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ABITIBI-CONSOLIDATED: Weak Operations Cue S&P's Negative Outlook
----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Abitibi-
Consolidated Inc. to negative from stable. At the same time, the
ratings on the company, including the long-term corporate credit
rating, were affirmed at 'B+'.
"The outlook revision reflects continuing weakness in the
company's core paper and lumber operations," said Standard &
Poor's credit analyst Donald Marleau.
"In addition, profitability continues to be hampered by the strong
Canadian dollar and higher fiber and energy input costs,"
Mr. Marleau added.
The ratings on Abitibi reflect its high leverage, heavy exposure
to cyclical commodity-oriented groundwood papers and lumber, and
weak profitability. These risks are partially offset by the
company's leading market share position in newsprint and
groundwood papers.
The outlook is negative.
North American newsprint demand continues to decline slowly, and
although good industry supply discipline supports solid pricing,
volume declines, higher cost inputs, and the strong Canadian
dollar are expected to continue to pressure Abitibi's operating
margins.
The company's debt level is high, and notwithstanding some debt
reduction initiatives like the monetization of its Ontario
hydroelectric assets in early 2007, the ratings on Abitibi will be
lowered unless it improves its profitability and cash flow. This
improvement is heavily dependent on improving newsprint or
commercial paper fundamentals and the alleviation of
cost pressures.
For the ratings on Abitibi to be maintained, the company must
improve its operating income and free cash flow that would
contribute to a sustainable reduction in leverage.
ACANDS INC: Wants Removal Period Extended to March 5
----------------------------------------------------
ACandS Inc. asks the U.S. Bankruptcy Court for the District of
Delaware to further extend until March 5, 2007, or the effective
date of its Plan of Reorganization, the period within which it can
file notices of removal with regard to pending civil actions.
The Court previously extended the Debtor's removal period to
Nov. 3, 2006.
Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young Jones &
Weintraub, P.C., informs the Court that the Debtor and its
professionals have been:
a) focusing on various litigation matters;
b) compiling enormous amount of information necessary to
complete the schedules and statements dealing with
approximately 300,000 asbestos claims; and
c) working upon the Court's approval of a disclosure statement
and Plan, including substantial time in seeking confirmation
of the Plan.
The extension, the Debtor says, will give it more time to make
fully informed decisions concerning removal of each prepetition
action and will assure that the Debtor does not forfeit valuable
rights under Section 1452 of the Bankruptcy Code.
Headquartered in Lancaster, Pennsylvania, ACandS, Inc., was an
insulation contracting company, primarily engaged in the
installation of thermal and mechanical insulation. In later
years, the Debtor also performed a significant amount of asbestos
abatement and other environmental remediation work. The Company
filed for chapter 11 protection on Sept. 16, 2002 (Bankr. Del.
Case No. 02-12687). Laura Davis Jones, Esq., at Pachulski Stang
Ziehl Young Jones & Weintraub, P.C., represents the Debtor in its
restructuring efforts. Kathleen Campbell Davis, Esq., and Marla
Rosoff Eskin, Esq., at Campbell & Levine, LLC, represent the
Official Committee of Asbestos Personal Injury Claimants. When
the Company filed for protection from its creditors, it estimated
debts and assets of over $100 million.
Chapter 11 Plan Update
The Hon. Judith K. Fitzgerald approved the adequacy of the
Debtor's Amended Disclosure Statement explaining their proposed
Plan of Reorganization on Oct. 3, 2003. On Jan. 26, 2004, Judge
Fitzgerald entered Proposed Findings of Fact and Conclusions of
Law Re Chapter 11 Plan Confirmation (Doc. 979), recommending that
the U.S. District Court deny confirmation of the Debtor's Plan.
On Feb. 5, 2004, the Debtor and the Creditors Committee jointly
filed with the U.S. District Court for the District of Delaware an
objection to the Bankruptcy Court's Proposed Findings. In that
filing, the Debtor and the Committee asked the District Court to
reject the Bankruptcy Court's Findings and Conclusions and confirm
the proposed chapter 11 plan.
ADELPHIA COMMS: Judge Gerber Overrules Objections to Asset Sales
----------------------------------------------------------------
The Honorable Robert E. Gerber of the U.S. Bankruptcy Court for
the Southern District of New York, overruled any and all
objections of the City of Martinsville, Martinsville Cable and
Henry County to the Adelphia Communications Corporation Debtors'
Sale Transaction and to the ACOM Debtors' proposed assumption and
assignment of the Franchise Agreements, other than the objections
related to the cure of defaults under the franchise.
Judge Gerber rules that the Sale Order dated June 28, 2006, is
deemed applicable with respect to the City, Henry County, and all
physical and other assets to which the Franchise Agreements
relate.
Martinsville Cable, Inc., previously, filed a lawsuit pending in
the United States District Court for the Western District of
Virginia, seeking, among other things, a declaratory judgment with
respect to its rights regarding cable television system
distribution facilities and related assets operated by the Company
in the city of Martinsville and Henry County in Virginia pursuant
to franchise agreements.
On Aug. 24, 2006, the District Court ruled that as a matter of
law:
(i) the City had failed to take the steps necessary to
properly exercise its rights;
(ii) Henry County is not permitted to purchase, own, or operate
a cable system under Virginia law; and
(iii) neither the City nor Henry County had acted in accordance
with applicable cable ordinances or met the requirements
in denying the applications to transfer their Franchise
Agreements.
On Aug. 29, 2006, the Martinsville City Council voted unanimously
not to appeal the District Court Order.
Based in Coudersport, Pa., Adelphia Communications Corporation
(OTC: ADELQ) -- http://www.adelphia.com/-- is the fifth-largest
cable television company in the country. Adelphia serves
customers in 30 states and Puerto Rico, and offers analog and
digital video services, high-speed Internet access and other
advanced services over its broadband networks. The Company and
its more than 200 affiliates filed for Chapter 11 protection in
the Southern District of New York on June 25, 2002. Those cases
are jointly administered under case number 02-41729. Willkie Farr
& Gallagher represents the ACOM Debtors. PricewaterhouseCoopers
serves as the Debtors' financial advisor. Kasowitz, Benson,
Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP
represent the Official Committee of Unsecured Creditors.
Adelphia Cablevision Associates of Radnor, L.P., and 20 of its
affiliates, collectively known as Rigas Manged Entities, are
entities that were previously held or controlled by members of the
Rigas family. In March 2006, the rights and titles to these
entities were transferred to certain subsidiaries of Adelphia
Cablevision, LLC. The RME Debtors filed for chapter 11 protection
on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through
06-10642). Their cases are jointly administered under Adelphia
Communications and its debtor-affiliates chapter 11 cases.
(Adelphia Bankruptcy News, Issue No. 150; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
ADELPHIA COMMS: Resolves California & Washington Sales Tax Issues
-----------------------------------------------------------------
The Adelphia Communications Corporation Debtors, Time Warner NY
Cable LLC, Comcast Corporation, the state of Washington, and the
state of California have entered into a Court-approved
stipulation.
The Honorable Robert E. Gerber of the U.S. Bankruptcy Court for
the Southern District of New York, previously ruled that the issue
of whether California and Washington state sales taxes are "stamp
or similar taxes" subject to the exemption under Section 1146(c)
of the Bankruptcy Code will be subject to further Court decision.
In their stipulation, the parties agree that:
(a) the state sales taxes of California and Washington are not
"stamp or similar taxes," for purposes of Section 1146(c)
and will not be exempted; and
(b) any and all objections of Washington and California to the
Section 363 Sale Motion are withdrawn with prejudice.
Based in Coudersport, Pa., Adelphia Communications Corporation
(OTC: ADELQ) -- http://www.adelphia.com/-- is the fifth-largest
cable television company in the country. Adelphia serves
customers in 30 states and Puerto Rico, and offers analog and
digital video services, high-speed Internet access and other
advanced services over its broadband networks. The Company and
its more than 200 affiliates filed for Chapter 11 protection in
the Southern District of New York on June 25, 2002. Those cases
are jointly administered under case number 02-41729. Willkie Farr
& Gallagher represents the ACOM Debtors. PricewaterhouseCoopers
serves as the Debtors' financial advisor. Kasowitz, Benson,
Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP
represent the Official Committee of Unsecured Creditors.
Adelphia Cablevision Associates of Radnor, L.P., and 20 of its
affiliates, collectively known as Rigas Manged Entities, are
entities that were previously held or controlled by members of the
Rigas family. In March 2006, the rights and titles to these
entities were transferred to certain subsidiaries of Adelphia
Cablevision, LLC. The RME Debtors filed for chapter 11 protection
on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through
06-10642). Their cases are jointly administered under Adelphia
Communications and its debtor-affiliates chapter 11 cases.
(Adelphia Bankruptcy News, Issue No. 154; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
ADVENTURE PARKS: Court Okays Vanek Vickers as Special Counsel
-------------------------------------------------------------
The Honorable John T. Laney III of the U.S. Bankruptcy Court for
the Middle District of Georgia in Valdosta authorized Adventure
Parks Group LLC and its debtor-affiliates to employ Vanek, Vickers
& Masini P.C. as their special counsel, nunc pro tunc to
Sept. 11, 2006.
Vanek Vickers will continue prosecuting the claims of Cypress
Gardens Adventure Park LLC, as plaintiff against Landmark American
Insurance Company and J. Smith Lanier & Co., as defendants.
The case is pending in the Circuit Court of the Tenth Judicial
Circuit in Polk County, Florida, Case No. 53-2005-CA-003549,
Division 8.
The case involves recovery on insurance contracts issued by
Landmark American Insurance through J. Smith Lanier, an insurance
broker.
In the complaint, there is also a claim against J. Smith Lanier
having to do with a failure to obtain adequate insurance coverage
for the Cypress location. The losses involved result from damage
by three separate hurricanes, which caused damage to the property
of Cypress.
Thomas A. Vickers, Esq., a partner at Vanek Vickers, disclosed
that the Firm's hourly rates are:
Designation Hourly Rate
----------- -----------
Partners $180.00
Associates $112.50
Paralegals $70.00
Mr. Vickers assured the Court that Vanek, Vickers & Masini P.C.
does not hold nor represent any interest adverse to the Debtors.
Headquartered in Valdosta, Georgia, Adventure Parks Group LLC is
the holding company of Wild Adventures and Cypress Gardens. Wild
Adventures operates an amusement park in Valdosta, Georgia, while
Cypress operates an amusement park in Winter Haven, Florida. The
Company, along with Wild Adventures and Cypress Gardens, filed for
chapter 11 protection on Sept. 11, 2006 (Bankr. M.D. Ga. Case Nos.
06-70659 through 06-70661). George H. McCallum, Esq., James P.
Smith, Esq., and Ward Stone, Jr., Esq., at Stone & Baxter, LLP,
represent the Debtors. Mark J. Wolfson, Esq., at Foley & Lardner
LLP and James C. Frenzel, Esq., at James C. Frenzel P.C. in
Georgia represent the Official Committee of Unsecured Creditors.
When the Debtors filed for protection from their creditors, they
estimated assets and debts between $50 million and $100 million.
AIRBORNE HEALTH: Moody's Rates Proposed $160MM Term Loan at B2
--------------------------------------------------------------
Moody's Investors Service assigned a rating of B2 to the proposed
$180 million first-lien bank loan of Airborne Health, Inc. The
company intends to use proceeds from the new bank loan to
refinance existing debts and to fund a shareholder dividend that
represents a substantial part of the original investment. A group
led by the private equity firm Summit Partners purchased a
controlling interest in May 2005. This is the first time that
Moody's has rated Airborne.
Ratings assigned:
-- $20 million 1st-Lien secured revolving credit facility at
B2, LGD3, 35%;
-- $160 million 1st-Lien secured term loan at B2, LGD3, 35%;
-- Corporate family rating at B2;
-- Probability of Default rating at B3.
The rating outlook is stable.
The corporate family rating of B2 reflects the balance of key
quantitative and qualitative credit metrics, overweighing key
considerations such as the company's small size, limited history,
and undiversified product offering. As measured by Moody's rating
methodology for the Global Consumer Packaged Goods Industry, the
company's small scale and undiversified product offering, both of
which have Caa attributes, hold down the ratings. The company's
bargaining power relative to much larger retail customers and the
use of loan proceeds to pay a sizable dividend are characteristic
of B-rating levels.
However, partially offsetting these credit risks are low
investment grade or high non-investment grade elements such as
solid post-transaction credit metrics for leverage, interest
coverage, funds from operation to debt, and return on assets as
well as recent operating performance with rapid revenue growth and
high profitability and cash flow margins.
The stable rating outlook reflects Moody's expectations that sales
will not decline from current levels and that the company will use
the bulk of free cash flow for conservative purposes such as
repaying debt ahead of schedule. Given the nature of the
company's business model in which intangibles provide most of the
collateral value, Moody's expects stronger credit metrics than for
similarly-rated consumer products companies. Ratings are unlikely
to increase for at least the next two years.
However, Moody's believes that Airborne is comfortably positioned
within its rating category. Important components of an eventual
upgrade would be a lengthier track record of sustained sales, a
broadening of the product offering, and a history of using
discretionary free cash flow to pay down debt. Negative trends in
unit sales, margin pressures from the company's much larger retail
customers, or another shareholder enhancement activity could cause
ratings to be lowered. Deterioration in debt protection measures
such as debt to EBITDA near 4 times, EBIT to interest expense
below 2.5 times, or free cash flow to debt less than 5% also would
place downward pressures on the ratings.
Airborne Health, Inc, headquartered in Bonita Springs, Florida,
markets the "Airborne" effervescent health formula that is
designed to strengthen the immune system. The company's products
are distributed nationwide through about 70,000 supermarkets,
drugstores, discounters, club stores, and other retail locations.
Airborne generated net revenue of $136 million for the twelve
months ending July 31, 2006.
AIRBORNE HEALTH: S&P Rates Proposed $160 Mil. Senior Loan at 'B'
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to Bonita Springs, Florida-based over-the-counter
consumer health care marketer Airborne Health, Inc.
At the same time, Standard & Poor's assigned its 'B' bank loan
ratings and '5' recovery ratings to the company's proposed
$160 million senior secured first lien term loan due 2012 and
$20 million revolving credit facility due 2012.
"The ratings are based on preliminary terms, subject to review
upon final documentation," said Standard & Poor's credit analyst
Bea Chiem.
Net proceeds from the credit facility will be used to repay
$83 million existing senior secured debt and to finance a
$73.5 million dividend to shareholders.
The outlook is stable.
Pro forma for the transaction, Airborne will have $160 million in
total debt outstanding.
The ratings on Airborne reflect its moderately leveraged financial
profile, extremely narrow product focus, customer concentration,
small size, aggressive financial policy, and the segment's
vulnerability to adverse publicity.
Airborne is a narrowly focused company that develops, markets and
distributes "Airborne"-branded effervescent health formula
products, for the over-the-counter consumer health care market.
The primary products are effervescent tablets marketed as dietary
supplements formulated from herbal extracts, antioxidants,
electrolytes and amino acids.
With more than $138 million of net sales in fiscal 2006 and about
seven SKUs, Airborne is a very small participant in the
$4.5 billion OTC cold/allergy/sinus tablet category.
Airborne is positioned as a preventative product in the cough/cold
section of retailers and is covered by the Dietary Supplement
Health and Education Act guidelines within the FDA. Sales
typically increase from Oct. though April, which corresponds to
the cough/cold season. There is some customer concentration as
the company's largest customer accounted for about 17% of fiscal
2006 sales.
ALASKA AIR: Posts $17.4 Mil. Net Loss in 2006 Third Fiscal Quarter
------------------------------------------------------------------
Alaska Air Group, Inc. filed its third quarter financial
statements for the quarterly period ended Sept. 30, 2006, with the
Securities and Exchange Commission on Nov. 3, 2006.
The company reported a $17,400,000 net loss on $935,700,000 of
revenues for the quarterly period ended Sept. 30, 2006, against
$90,200,000 million of net income for the third quarter of 2005.
The company relates that the current third quarter loss is driven
principally by fleet transition costs, restructuring charges, and
the downward mark-to-market adjustment of their fuel hedge
portfolio as a result of declining oil prices.
At Sept. 30, 2006, the Company's balance sheet showed
$4,139,000,000 in total assets, $3,174,700,000 in total
liabilities, and $965,000,000 in stockholders' equity.
Full-text copies of the Company's financial statements for the
quarterly period ended Sept. 30, 2006, are available for free at:
http://researcharchives.com/t/s?14fd
Seattle, Wash.-based Alaska Air Group, Inc. (NYSE: ALK) --
http://alaskaair.com/-- is a holding company with two principal
subsidiaries, Alaska Airlines, Inc. and Horizon Air Industries,
Inc. Alaska operates an all-jet fleet with an average passenger
trip length of 1,009 miles. Alaska principally serves
destinations in the state of Alaska and North/South service
between cities in the Western United States, Canada, and Mexico.
Horizon operates jet and turboprop aircraft with average passenger
trip of 382 miles. Horizon serves 40 cities in seven states and
six cities in Canada.
* * *
As reported in the Troubled Company Reporter on Nov. 6, 2006,
Moody's Investors Service affirmed the corporate family rating of
Alaska Air Group, Inc. and the Equipment Trust Certificate rating
of Alaska Airlines, Inc. at B1, and changed the outlook to stable
from negative.
ALERIS INTERNATIONAL: Posts $24.2 Mil. Net Loss in Third Quarter
----------------------------------------------------------------
Aleris International, Inc. reported a $24.2 million net loss on
$1.4 billion of revenues for the third quarter ended
Sept. 30, 2006, compared with a $31.5 million of net income earned
on $554.9 million of revenues for the same period in 2005.
Consolidated revenues for the three months ended Sept. 30, 2006
increased $840.1 million as compared to the three months ended
Sept. 30, 2005. The acquired operations of Corus Aluminum, ALSCO,
Tomra Latasa, Alumitech and the acquired assets of Ormet accounted
for an estimated $578.5 million of this increase. The impact of
rising primary aluminum prices and higher shipment levels were
partially offset, however, by slightly lower rolling margins.
At Sept. 30, 2006, the company's balance sheet showed $3.3 billion
in total assets, $2.8 billion in total liabilities, and
$452.8 million in total stockholders' equity.
Full-text copies of the company's third quarter financial
statements are available for free at:
http://researcharchives.com/t/s?14f3
Headquartered in Beachwood, Ohio, a suburb of Cleveland, Aleris
International, Inc. -- http://www.aleris.com/-- manufactures
aluminum rolled products and extrusions, aluminum recycling and
specification alloy production. The company is also a recycler of
zinc and a leading U.S. manufacturer of zinc metal and value-added
zinc products that include zinc oxide and zinc dust.
On Aug. 1, 2006, the company acquired the aluminum business of
Corus Group plc for a cash purchase price of approximately
$885.7 million. The acquisition included Corus Group plc's
aluminum rolling and extrusions business but did not include
Corus's primary aluminum smelters.
Along with company's aluminum recycling operations in Germany, the
United Kingdom, Mexico and Brazil and magnesium recycling
operations in Germany and the Netherlands, with the Corus Aluminum
acquisition, the company now has rolled products and extrusions
operations in Germany, Belgium, Canada and China. In addition, the
company is in the process of constructing a zinc recycling
facility in China.
* * *
As reported in the Troubled Company Reporter on Oct. 13, 2006,
Moody's Investors Service confirmed its B1 Corporate Family Rating
for Aleris International, Inc. and its Ba3 rating on the company's
$400 million issue of senior secured term loan, in connection with
Moody's implementation of its new Probability-of-Default and Loss-
Given-Default rating methodology. Moody's also assigned an LGD3
rating to those loans, suggesting noteholders will experience a
32% loss in the event of a default.
AMERICAN REAL: Earns $103 Million in 2006 Third Quarter
-------------------------------------------------------
American Real Estate Partners, LP, earned $103.1 million of net
income on $373.3 million of revenues for the third quarter ended
Sept. 30, 2006, compared with a $126.1 million net loss on
$289.4 million of revenues for the same period in 2005.
The partnership recorded a net income in the current quarter,
compared to a net loss in the same period last year, due to the
recognition of an income from discontinued operations, net of
taxes, of $98 million in 2006, compared to a loss from
discontinued operations of $99.1 million in 2005.
Revenues from the partnership's three business segments in the
third quarter of 2006 improved as compared to the same period in
2005, with $56.8 million of the $83.8 million increase being
accounted for by the Home Fashion segment. The partnership still
posted an operating loss of $13.4 million in the third quarter,
compared to an operating income of $11 million in the third
quarter of 2005, due mainly to higher costs from the Home Fashion
segment which accounted for 68.5% of the total expenses of all
three segments in the current quarter.
At Sept. 30, 2006, the partnership's balance sheet showed
$4.1 billion in total assets, $2.1 billion in total liabilities,
$266.3 million in minority interests, and $1.7 billion in
partners' equity.
Full-text copies of the company's consolidated financial
statements are available for free at:
http://researcharchives.com/t/s?14f5
About American Real
American Real Estate Partners, LP -- http://www.areplp.com/--
a master limited partnership, is a diversified holding company
engaged in a variety of businesses. The company's businesses
currently include gaming, oil and gas exploration and production,
real estate and home fashion. The company is in the process of
divesting its Oil and Gas operating unit and their Atlantic City
gaming property.
The company owns a 99% limited partnership interest in American
Real Estate Holdings Limited Partnership. Substantially all of
the assets and liabilities are owned by AREH and substantially all
of the company's operations are conducted through AREH and its
subsidiaries. American Property Investors, Inc., or API, owns a
1% general partnership interest in both the company and AREH,
representing an aggregate 1.99% general partnership interest in
the company and AREH. API is owned and controlled by Mr. Carl C.
Icahn.
* * *
As reported in the Troubled Company Reporter on Aug. 28, 2006,
Standard & Poor's Rating Services raised its ratings on senior
debt issued by American Real Estate Partners L.P. to 'BB+' from
'BB.' The outlook is stable.
AMERISOURCEBERGEN: Completes New $750 Million Credit Facility
-------------------------------------------------------------
AmerisourceBergen Corporation completed a new $750 million
multi-currency revolving credit facility, replacing three existing
credit facilities, and the amendment of its $700 million
securitization facility, which lowered the amount available under
that facility to $500 million. The Company improved terms and
conditions in both financings.
"Our new financings reflect both our lower working capital needs
and the opportunity to consolidate our revolvers to better
facilitate our international activities," said Michael D.
DiCandilo, Executive Vice President and Chief Financial Officer of
AmerisourceBergen. "The result will be lower interest expense and
greater financial flexibility in the future."
The Company has completed the arrangement of a five-year,
$750 million senior unsecured multi-currency revolving credit
facility that replaces three senior unsecured revolving credit
facilities totaling approximately $858 million which were set to
expire in 2009. The new facility was arranged with improved terms
and conditions and will expire on Nov. 14, 2011.
The Company has also completed the amendment of its securitization
program for AmerisourceBergen Drug Corporation's trade
receivables. The amended program provides for a reduction to
$500 million from $700 million and extends the maturity to
Nov. 13, 2009. The amended program improves the terms and
conditions under the original program.
Valley Forge, Pa.-based AmerisourceBergen Corp. (NYSE: ABC) --
http://www.amerisourcebergen.com/-- is a pharmaceutical
services company in the United States and Canada. Servicing
pharmaceutical manufacturers and healthcare providers in the
pharmaceutical supply channel, the Company provides drug
distribution and related services designed to reduce costs and
improve patient outcomes. The Company employs more than 13,000
people and is ranked #27 on the Fortune 500 list.
* * *
As reported in the Troubled Company Reporter on Nov. 7, 2006,
Moody's Investors Service confirmed AmerisourceBergen Corp.'s Ba1
Corporate Family Rating in connection with the rating agency's
implementation of its new Probability-of-Default and Loss-Given-
Default rating methodology.
APOGENT TECH: Thermo Merger Cues Moody's to Lift Ba1 Ratings
------------------------------------------------------------
Moody's Investors Service concludes the rating review for possible
downgrade initiated on May 8, 2006 for Thermo Electron
Corporation, which is the surviving entity whose name has changed
to Thermo Fisher Scientific Inc., as a result of the report that
the merger between it and Fisher Scientific International Inc. has
been finalized. The ratings for Thermo have been downgraded and
concurrently the ratings for Fisher Scientific International Inc.
were upgraded.
The companies combined in a tax-free, stock-for-stock transaction
following its recently received anti-trust clearance which
completed the merger.
The Baa2 senior unsecured debt rating for the combined entity,
Thermo Fisher, reflects a capital structure, financial leverage
and cash flow coverage of debt indicative of an investment grade
issuer. Moody's expects that Thermo Fisher will yield a range in
operating cash flow to adjusted debt of 27% to 31% with adjusted
free cash flow to adjusted debt of 19% to 23% in 2006. Moody's
also expects that the company will pay down debt over the same
time period, from approximately $3 billion pro-forma as of
Dec. 31, 2005, to $2.6 billion and $2.3 billion at the end of 2006
and 2007, respectively.
Moody's believes that the merger between the two companies will
offer these benefits:
-- greater scale and a broad portfolio of products and
services;
-- the ability to offer an end to end solution for laboratory
customers, including equipment, software, reagents,
consumables and services; and,
-- a more diverse geographic, product and customer mix.
Moody's also expects that the combination could result in cost
synergies and revenue synergies of approximately $150 million and
$50 million, respectively, over the next few years. Moody's also
views the two companies as highly complimentary.
Fisher has a strong supply chain management with distribution
capabilities, multiple sales channels, as well as significant
sales and marketing resources. Thermo, on the other hand, has
strong production innovation, intellectual property, research and
development, as well as a solid global manufacturing footprint and
expertise. Thermo has also been quite successful in penetrating
Asia and other emerging markets, offering potentially greater
access for Fisher.
Moody's believes that the unsecured senior debt of Thermo Fisher
will be structurally subordinated to the current debt at Fisher,
as well as the $1 billion senior unsecured guaranteed credit
facility for the combined entity. Moody's assessment reflects the
fact that the proposed credit facility should benefit from a
guarantee from Fisher while the existing Fisher debt benefits from
a co-obligation from the parent.
Moody's, however, did not view technical structural subordination
as a major constraint to Thermo Fisher's current senior unsecured
notes and bonds at the Baa2 senior unsecured rating for the
combined company. Moody's notes that this subordination issue
could become more material if the combined company's rating were
at a lower level.
Moody's ratings do consider the major risks in combining both
companies, specifically the integration of the two company's
systems, operations and cultures. While Moody's notes that both
companies have acquired other life science firms in the past few
years, Moody's expects the combined company to focus on internal
growth and cost synergies in the short-term prior to resuming to
acquiring additional companies.
These ratings of Thermo Fischer Scientific Inc. (formerly Thermo
Electron Corporation) were downgraded:
-- $150 million senior unsecured notes, due 2008, downgraded
to Baa2 from Baa1
-- $250 million 5% Senior Global Notes, due 2015, downgraded
to Baa2 from Baa1
-- $125 million convertible subordinated debentures due 2007,
downgraded to Ba1 from Baa3
These ratings were withdrawn for Thermo Fischer Scientific Inc.:
-- Senior Unsecured Shelf Rating, rated (P) Baa1
-- Subordinated Shelf Rating, rated (P) Baa2
These ratings of Fisher Scientific International, Inc. were
upgraded:
-- $300 million 2.50% senior unsecured convertible notes, due
2023, upgraded to Baa2 from Ba1
-- $330 million 3.25% senior subordinated convertible notes
due 2024, upgraded to Baa3 from Ba2
-- $300 million 6.75% senior subordinated notes, due 2014,
upgraded to Baa3 from Ba2
-- $500 million 6 1/8% senior subordinated notes, due 2015,
upgraded to Baa3 from Ba2
These ratings of Fisher Scientific International, Inc. were
withdrawn:
-- Corporate Family Rating
-- $500 million Senior Secured Guaranteed Revolver due 2009
-- $250 million Senior Secured Guaranteed US Dollar Term Loan
A due 2009
These ratings of Apogent Technologies, Inc. (a wholly-owned
subsidiary of Fisher) were upgraded:
-- $345 million floating rate senior convertible contingent
notes due 2033 upgraded to Baa2 from Ba1
The ratings outlook is stable.
Thermo Fisher Scientific Inc., based in Waltham, Massachusetts,
with annual sales of more than $9 billion, serves over 350,000
customers within pharmaceutical and biotech companies, hospitals
and clinical diagnostic labs, universities, research institutions
and government agencies, as well as environmental and industrial
process control settings. Thermo Scientific offers customers a
complete range of high-end analytical instruments as well as
laboratory equipment, software, services, consumables and reagents
to enable integrated laboratory workflow solutions.
APPTIS INC: S&P Rates Proposed $180 Mil. Senior Facility at 'B+'
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' debt rating
and '3' recovery rating to Apptis Inc.'s proposed $180 million
senior secured bank facility. The proposed facility will consist
of a $30 million five-year revolver and a $150 million six-year
term loan. The bank loan rating is 'B+', the same as the
corporate credit rating, along with the '3' recovery rating,
reflect our expectation of meaningful (50%-80%) recovery of
principal by creditors in the event of a payment default.
At the same time, Standard & Poor's affirmed its 'B+' corporate
credit rating and negative outlook on Chantilly, Virginia-based
Apptis.
Proceeds from the proposed bank facility will be used to repay
existing debt, including an existing credit facility, $50 million
of senior subordinated cash pay notes, a portion of Apptis' senior
subordinated Holdco payment-in-kind notes, and accrued PIK
interest. Standard & Poor's ratings affirmation reflects the fact
that this transaction is strictly a refinancing, and does not
meaningfully impact Apptis' financial profile.
ASARCO LLC: Court Approves Modified Final Cash Collateral Order
---------------------------------------------------------------
In a stipulation approved by the U.S. Bankruptcy Court for the
Southern District of Texas, ASARCO LLC and Mitsui & Co. (U.S.A.),
Inc., modifies the Final Cash Collateral Order to provide that:
1. The Final Cash Collateral Order will continue in effect as
originally entered, except as modified, pending further
Court order.
2. ASARCO may withdraw approximately $3,501,620 from the
Mitsui Cash Collateral Account so that the Account will
have a remaining balance of $17,544,848.
3. The Withdrawal Proceeds represent the proceeds of all
silver, which was not in ASARCO's possession on the
Petition Date, as represented in ASARCO's silver sales
reports, but was nonetheless deposited into the Mitsui Cash
Collateral Account in error.
4. The Mitsui Security Amount -- the remaining $17,544,848 in
the Mitsui Cash Collateral Account -- represents the
proceeds of all silver, which was in ASARCO's possession on
the Petition Date, other than 190,363 ounces of unsold
silver at the El Paso Facility and 96,245 ounces of unsold
silver at the East Helena Facility.
5. If ASARCO sells, trades, or otherwise disposes of the El
Paso or the East Helena Silvers, all of their proceeds will
be promptly deposited into the Mitsui Cash Collateral
Account.
6. Unless the Court determines that Mitsui's security interest
is not valid or is subject to avoidance, Mitsui will be
deemed to be secured by the Mitsui Security Amount, plus
the El Paso and East Helena Silvers and additional silver,
if any, which Mitsui is able to show is subject to its
security interest.
7. ASARCO had an interest in 1,702,124 troy ounces of silver
on the Petition Date. If ASARCO held an interest in
additional silver or held additional silver on its premises
on the Petition Date other than the Petition Date Silver,
Mitsui reserves its right to argue that any additional
silver is subject to its security interest.
8. Other than any proceeds of the El Paso and East Helena
Silver, if and when sold, and any proceeds of additional
silver, which Mitsui is able to show is subject to its
security interest, if and when sold, ASARCO need not
deposit any additional silver proceeds into the Mitsui Cash
Collateral Account.
9. ASARCO may invest the corpus of the Mitsui Cash Collateral
Account in investments consistent with Section 345 of the
Bankruptcy Code, including Certificates of Deposit,
provided that before any change in the type of investments,
ASARCO must obtain Mitsui's prior written consent or Court
approval upon motion and hearing.
10. The Financial Reporting provisions of the Final Cash
Collateral Order are no longer in effect. ASARCO will
provide Mitsui with monthly bank statements and statements
of accounts for the Mitsui Cash Collateral Account.
11. Other than the bank statements and statements of accounts,
ASARCO is not required to provide Mitsui with any other
reports or information, including but not limited to silver
sales, inventory, or other silver-related reports.
About ASARCO LLC
Tucson, Ariz.-based ASARCO LLC -- http://www.asarco.com/-- is an
integrated copper mining, smelting and refining company. Grupo
Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company
filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex.
Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq.,
and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel
Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble,
Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the
Debtor in its restructuring efforts. Lehman Brothers Inc.
provides the ASARCO with financial advisory services and
investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee. When the Debtor filed for protection
from its creditors, it listed $600 million in total assets and
$1 billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No.
05-21346) also filed for chapter 11 protection, and ASARCO has
asked that the three subsidiary cases be jointly administered
with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case
was converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7
Trustee. (ASARCO Bankruptcy News, Issue No. 32; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/
or 215/945-7000).
ASARCO LLC: Wants to Purchase Equipment from BofA for $2.04 Mil.
---------------------------------------------------------------
ASARCO LLC seeks authority from the U.S. Bankruptcy Court for the
Southern District of Texas in Corpus Christi to:
(a) assume the equipment lease from Banc of America Leasing &
Capital LLC,
(b) pay the cure amounts and purchase price, and
(c) exercise its purchase option.
Banc of America Leasing & Capital, LLC, formerly known as Fleet
Capital Corporation, leases three haul trucks, a dozer, a haul
tractor, and various other mining equipment to ASARCO LLC.
ASARCO utilizes the Equipment at its Ray and Mission mines.
James R. Prince, Esq., at Baker Botts L.L.P., in Dallas, Texas,
contends that the Equipment is indispensable to the company's
successful operation of its mines and contributes to increased
production and, therefore, revenue.
The Lease, which expires on Dec. 30, 2007, includes an early
purchase option provision that must be exercised by Dec. 30,
2006.
Mr. Prince says that if ASARCO does not exercise its purchase
option, it could continue to pay the quarterly rents through the
Lease expiration date and purchase the Equipment at a later date
for its fair market value at the time of purchase.
The present value of the Equipment plus rent payments is
estimated to be approximately $3,000,000. If the Debtors
purchase the Equipment now, they can save more than $500,000,
Mr. Prince says.
Under the Lease, ASARCO must first cure all defaults to be able
to exercise the contractual purchase option.
To cure its defaults under the Lease, ASARCO will pay BofA:
-- $280,930 as rent for the last quarter,
-- $133,251 as cure amount, and
-- $2,044,746 as purchase price for the Equipment.
Mr. Prince says approximately $14,669 will be delivered to BofA
to be held in a trust as security for ASARCO's obligation to pay
the 2006 property taxes due and owing for the Equipment. The
Security Amount will be returned to ASARCO with accrued interest,
if any, on written proof of payment of the taxes.
About ASARCO LLC
Tucson, Ariz.-based ASARCO LLC -- http://www.asarco.com/-- is an
integrated copper mining, smelting and refining company. Grupo
Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company
filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex.
Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq.,
and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel
Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble,
Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the
Debtor in its restructuring efforts. Lehman Brothers Inc.
provides the ASARCO with financial advisory services and
investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee. When the Debtor filed for protection
from its creditors, it listed $600 million in total assets and
$1 billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No.
05-21346) also filed for chapter 11 protection, and ASARCO has
asked that the three subsidiary cases be jointly administered
with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case
was converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7
Trustee. (ASARCO Bankruptcy News, Issue No. 32; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/
or 215/945-7000).
ASSOCIATED ESTATES: Strong Core Market Cues S&P's Positive Outlook
------------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
Associated Estates Realty Corp. to positive from stable.
Concurrently, the 'B' corporate credit rating and the 'CCC'
preferred stock rating are affirmed. Roughly $58 million
in rated preferred stock is affected.
"The outlook revision reflects strengthening in the company's core
markets, our expectation for stronger debt protection measures,
and an improving portfolio and balance sheet," explained Standard
& Poor's credit analyst Tom Taillon.
"The existing ratings acknowledge a concentration in weaker
multifamily markets and an aggressive financial profile
characterized by weak coverage measures, high leverage, limited
financial flexibility, and a high level of encumbered assets."
Expected stronger cash flow measures through operational
improvements and reductions in interest expenses and principal
amortization support the positive outlook. If the company
demonstrates stable cash flow and continues to manage its balance
sheet prudently, a one-notch upgrade may be warranted.
Conversely, the rating agency will revise the outlook back to
stable should the company's Midwestern markets begin to
deteriorate beyond some expected seasonal weakness over the winter
months or if management increases leverage through aggressive
share repurchases.
ATARI INC: Earns $311,000 in Second Quarter Ended September 30
--------------------------------------------------------------
Atari Inc. filed financial results for the fiscal 2007-second
quarter ended Sept. 30, 2006, with the Securities and Exchange
Commission on Nov. 9, 2006.
Net revenue for the quarter ended Sept. 30, 2006, was
$28.6 million versus $38.4 million in the comparable year-earlier
period.
Publishing net revenue was $23.1 million versus $22.6 million in
the prior year period, while distribution revenue was $5.5 million
versus $15.8 million in the comparable year-earlier period.
Net income for the fiscal 2007 second quarter was $311,000
compared with a net loss of $25.211 million in the year-earlier
period.
Loss from continuing operations for the second quarter of fiscal
2007 was $9.5 million compared with a loss from continuing
operations of $22.3 million in the second quarter of fiscal 2006.
Net revenue for the six-month period ended Sept. 30, 2006, was
$48.1 million versus $62.2 million in the comparable year-earlier
period.
Publishing net revenue was $32.9 million versus $35 million in the
prior six-month period, while distribution revenue was
$15.2 million versus $27.2 million in the comparable year-earlier
period.
Net loss for the six-month period was $6.8 million compared with
net loss of $58 million in the year-earlier period. Loss from
continuing operations for the six-month period of fiscal 2007 was
$14.1 million compared with a loss of $52.5 million in the six-
month period of fiscal 2006.
At Sept. 30, 2006, the Company's balance sheet showed
$116.250 million in total assets, $49.136 million in total
liabilities, and $67.114 million in total stockholders' equity.
"Atari continues to execute on its plans," Atari president and
chief executive officer David Pierce stated.
"First and foremost, we have secured a three year $15 million
credit facility with Guggenheim Corporate Funding, LLC, a
prestigious financial partner.
"This facility will provide Atari with flexibility on our short-
term working capital needs. Secondly, with the sale of the Shiny
development studio, we have completed the divesture of our
internal development studios streamlining our development
operations.
"Finally, we are realizing the results of our previously announced
cost reduction plans as general and administrative expenses are
down 31%."
Mr. Pierce continued, "As we enter into our holiday season, Atari
continues to deliver by releasing high-quality products to our
consumers that utilize next-generation capabilities.
"We look forward to launching new products such as Dragon Ball Z:
Budokai Tenkaichi 2 for Nintendo Wii and continuing to build on
the world-wide success of Test Drive Unlimited and Never Winter
Nights 2, both of which take advantage of opportunities on-line.
"Atari is focused on growing shareholder value."
Atari's product lineup for the remainder of fiscal 2007 is
expected to include:
-- Arthur and the Invisibles (PlayStation(R)2 computer
entertainment system, Nintendo DS(TM), Game Boy(R) Advance
and Windows),
-- Bullet Witch(TM) (Xbox 360(TM) video game and entertainment
system from Microsoft),
-- Dragon Ball Z(R): Budokai Tenkaichi(TM) 2 (Nintendo(R) Wii),
-- DUNGEONS & DRAGONS(R): Tactics(TM) (PSP(R) (PlayStation(R)
Portable) system), and
-- HOT PXL (PSP(R) (PlayStation(R) Portable) system), among
others.
Full-text copies of the Company's second fiscal quarter financials
are available for free at http://ResearchArchives.com/t/s?1527
Going Concern Doubt
As reported in the Troubled Company Reporter on July 3, 2006,
Deloitte & Touche LLP expressed substantial doubt about Atari,
Inc.'s ability to continue as a going concern after auditing the
Company's financial statements for the for the fiscal years ended
March 31, 2006 and 2005. The auditing firm pointed to Atari's
significant operating losses and the expiration of its line of
credit facility.
About Atari Inc.
New York-based Atari, Inc. (Nasdaq: ATAR) -- http://www.atari.com/
-- develops interactive games for all platforms and is one of the
largest third-party publishers of interactive entertainment
software in the U.S. The Company's 1,000+ titles include
franchises such as The Matrix(TM) (Enter The Matrix and The
Matrix: Path of Neo), and Test Drive(R); and mass-market and
children's franchises such as Nickelodeon's Blue's Clues(TM) and
Dora the Explorer(TM), and Dragon Ball Z(R). Atari Inc. is a
majority-owned subsidiary of France-based Infogrames Entertainment
SA (Euronext - ISIN: FR-0000052573), an interactive games
publisher in Europe.
BOYD GAMING: Posts $12.9 Million Net Loss in 2006 Third Quarter
---------------------------------------------------------------
Boyd Gaming Corp. reported a $12.9 million net loss on
$530.7 million of revenues for the third quarter ended
Sept. 30, 2006, compared with $32.9 million of net income earned
on $523.5 million of revenues for the same period in 2005.
The company recognized a $41 million loss from discontinued
operations, net of taxes, in the third quarter of 2006, due to the
sale of the company's South Coast Hotel and Casino on
Oct. 25, 2006. This accounted for the net loss of $12.9 million
in the third quarter of 2006. Although the sale was consummated
after Sept. 30, 2006, the company met all the criteria required to
classify certain of the assets and liabilities of South Coast as
held for sale on the company's balance sheet, at Sept. 30, 2006.
These assets were measured at the lower of their carrying amount
or fair value less cost to sell. This resulted in an estimated
non-cash, pretax impairment charge of $65 million during the three
months ended Sept. 30, 2006, as the fair value of the assets were
less than their carrying value.
At Sept. 30, 2006, the company's balance sheet showed $4.4 billion
in total assets, $3.4 billion in total liabilities, and $1 billion
in total stockholders' equity.
Full-text copies of the company's consolidated financial
statements for the third quarter ended Sept. 30, 2006 are
available for free at:
http://researcharchives.com/t/s?14fa
Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD)
-- http://www.boydgaming.com/-- is an owner and operator of 16
gaming entertainment properties located in Nevada, New Jersey,
Mississippi, Illinois, Indiana and Louisiana and one joint-venture
property. The company is also developing Echelon Place, a world-
class destination on the Las Vegas Strip, expected to open in
early 2010.
On Oct. 25, 2006, pursuant to the terms of the Unit Purchase
Agreement that the company entered into to sell South Coast to
Michael J. Gaughan, the company received approximately
$401 million, which was used to repay a portion of the outstanding
balance on the company's revolving credit facility.
* * *
As reported in the Troubled Company Reporter on Aug. 22, 2006,
Fitch Ratings affirmed Boyd Gaming's Issuer Default Rating at
'BB-', Senior Secured Credit Facility at 'BB', and Senior
Subordinated Debt at 'B+'. The Rating Outlook remains Stable.
CALPINE CORP: Appoints Larry Leverett as Senior VP for Gas Trading
------------------------------------------------------------------
Larry B. Leverett has joined Calpine Corporation as Senior
Vice President, Gas Trading, responsible for managing natural
gas positions and risk management strategies for Calpine's
25,100-megawatt gas-fired power portfolio.
"Calpine is one of North America's largest gas-fired power
producers, which makes us one of the country's largest natural gas
end-users and traders," Thomas N. May, Calpine's Executive Vice
President, Commercial Operations, stated. "Larry's proven track
record for leading successful gas and power trading and risk
management initiatives will enhance our commercial operations --
creating value for both our customers and Calpine -- and help
position the new Calpine for profitable growth."
Mr. Leverett brings to Calpine in-depth experience in both gas and
power trading and related risk management programs. He has served
as Senior Vice President - Wholesale Markets for TXU Portfolio
Management LP, where he managed a diverse portfolio, including
power generation, power load and tolling transactions; in addition
to wholesale power, natural gas, ancillary services and emission
credits. He served in senior management positions with Avista
Energy and El Paso Energy. Most recently, he was a senior
consultant for PNM Resources, leading commercial and operational
management for its Southwest gas and power businesses.
About Calpine Corp.
Headquartered in San Jose, California, Calpine Corporation
(OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies
customers and communities with electricity from clean, efficient,
natural gas-fired and geothermal power plants. Calpine owns,
leases and operates integrated systems of plants in 21 U.S. states
and in three Canadian provinces. Its customized products and
services include wholesale and retail electricity, gas turbine
components and services, energy management and a wide range of
power plant engineering, construction and maintenance and
operational services.
The Company filed for chapter 11 protection on Dec. 20, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq.,
Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G.
Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their
restructuring efforts. Michael S. Stamer, Esq., at Akin Gump
Strauss Hauer & Feld LLP, represents the Official Committee of
Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed
$26,628,755,663 in total assets and $22,535,577,121 in total
liabilities.
CALPINE CORP: Ct. Defers Canadian Claims Stay Hearing to Dec. 20
----------------------------------------------------------------
The Hon. Burton R. Lifland adjourns the hearing to consider the
request of Calpine Corp. and its debtor-affiliates to stay
litigation of the Canadian Debtors' Claims to Dec. 20, 2006.
On Dec. 20, 2005, Calpine Canada Energy Ltd., Calpine Canada
Energy Finance ULC, Calpine Canada Power Ltd., Calpine Canada
Power Services Ltd., Calpine Canada Resources Company, Calpine
Energy Services Canada Ltd., 3094479 Nova Scotia Company,
Calpine Natural Gas Services Limited, Calpine Canada Energy
Finance II ULC, Calpine Energy Services Canada Partnership,
Calpine Canada Natural Gas Partnership, Calpine Canadian Saltend,
L.P., Calpine Island Cogeneration Project, Inc., and Calpine
Greenfield Ltd. commenced proceedings in Canada under the
Companies' Creditors Arrangement Act.
David R. Seligman, Esq., at Kirkland & Ellis LLP, in New York,
relates that the Canadian Debtors are not operating entities, but
are tax-efficient investment vehicles created to raise funds for,
and make investments on behalf of, Calpine Corporation and certain
of its U.S. subsidiaries in Canada, the United Kingdom and other
foreign jurisdictions.
The ULC Bonds
In 2001, Calpine Canada Energy Finance ULC and Calpine Canada
Energy Finance II ULC issued several series of unsecured public
bonds totaling approximately $2.5 billion. Calpine Corp.
guaranteed those bonds.
Between 2003 and 2005, the U.S. Debtors repurchased approximately
$708,000,000 of the ULC Bonds on the open market. In 2004, the
U.S. Debtors transferred approximately $564,000,000 of those
bonds to certain of their Canadian subsidiaries who are now
Canadian Debtors. The Canadian Debtors still held the bonds at
the time they commenced the Canadian Cases.
Currently, the U.S. Debtors are, among other things, investigating
whether the transfer of the ULC Bonds to the Canadian Debtors may
constitute avoidable preferences or fraudulent transfers.
Intercompany Claims
On Aug. 1, 2006, the indenture trustees for the ULC Bondholders
filed claims for at least $2.5 billion in the U.S. Cases based on
Calpine Corp.'s alleged guarantee of the ULC Bonds.
In addition, the Canadian Debtors asserted hundreds of millions of
dollars of intercompany claims against the U.S. Debtors. The
Canadian Debtors have asserted an additional $564 million of
intercompany claims against the U.S. Debtors based on the
repurchased ULC Bonds.
"Bond Differentiation Claims" Issue
The Canadian Debtors believe that their intercompany claims
against the U.S. Debtors are their largest asset, Mr. Seligman
tells the Court, and they wish to sell those claims to third
parties.
In August 2006, the Canadian Debtors sought and obtained the
Canadian Court's authority to begin marketing the bonds. The
Canadian Court, however, did not prospectively approve any sale
of the bonds, but reserved that issue for a later hearing.
The Canadian Court later ruled that all "Bond Differentiation
Claims" must be identified to Ernst & Young, as Canadian Monitor,
or be forever barred.
The Canadian Court defines "Bond Differentiation Claims" as:
All claims properly filed in advance of the claims bar
date of Aug. 1, 2006, or not subject to the Claims Bar
Date, that in any way purport to differentiate the rights,
privileges and entitlements associated with the CCRC ULC I
Senior Notes from any other ULC I Senior Notes are reserved
pending further order of the Canadian Court, the order to be
obtained on or before October 31, 2006, or at later date as
the Canadian Court may order.
The U.S. Debtors, the Official Committee of Unsecured Creditors
and the Ad Hoc Second Lienholders Committee complained that the
Canadian Court's orders were broadly worded.
The U.S. Debtors have informed the Canadian Debtors that while it
was appropriate for them to assert any "Bond Differentiation
Claims" seeking affirmative recoveries from the Canadian Debtors
in the Canadian Cases, any issue relating to proofs of claim
asserted in the U.S. Cases by the ULC indenture trustees and any
defenses to those claims are core U.S. proceedings that should be
addressed in the U.S. Bankruptcy Court.
But the Canadian Debtors and the Canadian Monitor asserted that
the U.S. Debtors have to raise all legal theories or have those
claims barred forever, Mr. Seligman relates.
The U.S. Debtors have asked the Canadian Court to clarify its
Order to limit "Bond Differentiation Claims" to affirmative in
rem "claims" against the Canadian Debtors, which could not be
satisfied from the proceeds of the sale of the ULC Bonds and thus
may cloud title to those bonds. The U.S. Debtors also asked the
Canadian Court to amend its Order to direct all parties to start
engaging in a good faith discussion to develop a protocol for the
resolution of cross-border issues between the two estates. The
Canadian Debtors, as well as most of the major stakeholders in
Canadian Cases, objected to the U.S. Debtors' request, Mr.
Seligman says.
After hearing the parties' argument, in a ruling from the bench,
the Canadian Court declined to amend or clarify its Order.
According to Mr. Seligman, the U.S. Debtors do not object to the
Canadian Debtors' intent to sell their intercompany ULC Bond
claims. The U.S. Debtors, however, are concerned that the
Canadian Debtors want more than that. The Canadian Debtors may
want to maximize their potential sale price by eliminating right
now any litigation risk discount, Mr. Seligman says.
The U.S. Debtors believe that it is inappropriate for them to
defend in a foreign jurisdiction against any particular creditor,
especially when they have barely started the claims adjudication
and avoidance action investigation processes, and especially when
they have so many other restructuring responsibilities.
Accordingly, the Debtors requested that the Court:
(a) hold that any creditor of the U.S. Debtors, who seeks to
force the U.S. Debtors to defend any proof of claim in any
forum other than the U.S. Bankruptcy Court, without leave
to do so, is in violation of the automatic stay;
(b) hold that absent further order of the U.S. Court, the
U.S. Debtors' failure to assert in the Canadian Court
defenses to proofs of claim filed in the U.S. Cases does
not bar the U.S. Debtors from raising those defenses in
the future as part of the U.S. claims adjudication
process; and
(c) require the U.S. Debtors, the Canadian Debtors, and the
ULC Indenture Trustees to negotiate a form of cross-border
protocol to advance international cooperation and
coordination and mutual respect for the independent
jurisdiction of the U.S. Court and the Canadian Court,
taking into account the particular circumstances of the
U.S. and Canadian Cases.
Canadian Debtors Respond
The Canadian Debtors assert that the U.S. Debtors have had notice
of the Bond Differentiation Claims process, which commenced in
July 2006. In fact, the U.S. Debtors have filed numerous proofs
of claim against the Canadian Debtors before the Aug. 1, 2006,
Bar Date, and have appeared before the Canadian Court several
times in connection with the Bond Differentiation Claims process,
Jay A. Carfagnini, Esq., at Goodmans, LLP, in Toronto, Ontario,
relates.
Thus, the U.S. Debtors must identify, by the Canadian Court-
ordered deadline, which portion of their claims, if any,
constitute a Bond Differentiation Claim, as must all other
creditors of the Canadian Debtors, Mr. Carfagnini contend.
The Canadian Debtors maintain that the U.S. Debtors' principal
complaint -- that they should not be required to file any Bond
Differentiation Claims with the Canadian Court as that will
ultimately lead to those issues necessarily being determined by
the Canadian Court -- has been addressed.
The Canadian Court has made it clear that all parties will be in
a better position to consider any jurisdictional issues raised by
any Bond Differentiation Claims, including whether or not those
Claims or issues be addressed by the U.S. Court or the Canadian
Court, once the Bond Differentiation Claims are filed and
defined, Mr. Carfagnini relates.
The Canadian Court has put in place a legitimate and important
Bond Differentiation Claims process to deal with certain of the
Canadian estates' most significant assets, including the Canadian
Debtors' Senior Notes. The process is fair and reasonable and
does not pre-judge any potential jurisdictional issues, Mr.
Carfagnini asserts.
Mr. Carfagnini argues that the Canadian Court is well within its
jurisdiction to conduct the Bond Differentiation Claims process
as it relates directly to:
-- proofs of claim filed in the CCAA proceedings;
-- likely the largest asset of the Canadian estates; and
-- likely the largest obligations of the Canadian Debtors.
Mr. Carfagnini says that the Canadian Debtors are not opposed to
a protocol. The Canadian Debtors, however, agree with the
Canadian Court that the issue of a protocol and its type is
better addressed after the Bond Differentiation Claims have been
filed and any associated jurisdictional issues.
About Calpine Corp.
Headquartered in San Jose, California, Calpine Corporation
(OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies
customers and communities with electricity from clean, efficient,
natural gas-fired and geothermal power plants. Calpine owns,
leases and operates integrated systems of plants in 21 U.S. states
and in three Canadian provinces. Its customized products and
services include wholesale and retail electricity, gas turbine
components and services, energy management and a wide range of
power plant engineering, construction and maintenance and
operational services.
The Company filed for chapter 11 protection on Dec. 20, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq.,
Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G.
Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their
restructuring efforts. Michael S. Stamer, Esq., at Akin Gump
Strauss Hauer & Feld LLP, represents the Official Committee of
Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed
$26,628,755,663 in total assets and $22,535,577,121 in total
liabilities. (Calpine Bankruptcy News, Issue No. 29; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
CALPINE CORP: Earns $1.7 Million in 2006 Third Quarter
------------------------------------------------------
Calpine Corp. reported a $1.7 million net income on $2.16 billion
of revenues for the third quarter ended Sept. 30, 2006, compared
with a $216.7 million net loss on $3.28 billion of revenues for
the same period in 2005.
Total revenues for the third quarter of 2006 decreased by
$1.12 billion compared with the same period in 2005 mainly due to
a $837 million decrease in sales of purchased power and gas, and a
$253.7 million decrease in electricity and steam revenues. Costs
incurred to generate said revenues, however, decreased by
$1.29 billion, allowing the company to show a gross profit of
$409.6 million in the current quarter, compared with a lower gross
profit of $239.1 million for the same quarter in 2005.
This was however offset by higher interest expense charges and
reorganization items of $227.7 million and $145.3 million,
respectively, dragging down net income for the quarter to $1.7
million. Of the $145.3 million expense recorded as reorganization
items, $96.6 million are non-cash charges representing company's
current estimate of the expected allowed claims related to certain
gas and transportation and power transmission contracts which have
been determined as no longer providing any benefit to U.S. Debtors
and which have either been repudiated, rejected or terminated.
At Sept. 30, 2006, the company's consolidated balance sheet showed
$19.2 billion in total assets, $25.8 billion in total liabilities
and $270.7 million in minority interests, resulting in a $6.8
billion stockholders' deficit. At Sept. 30, 2006, accumulated
deficit stood at $10 billion.
The company's consolidated balance sheet at Sept. 30, 2006, also
showed strained liquidity with $3.4 billion in total current
assets, available to pay $5.3 billion in total current
liabilities.
Full-text copies of the company's consolidated financial
statements for the third quarter ended Sept. 30, 2006, are
available for free at: http://researcharchives.com/t/s?152b
About Calpine Corp.
Headquartered in San Jose, California, Calpine Corporation
(OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies
customers and communities with electricity from clean, efficient,
natural gas-fired and geothermal power plants. Calpine owns,
leases and operates integrated systems of plants in 21 U.S. states
and in three Canadian provinces. Its customized products and
services include wholesale and retail electricity, gas turbine
components and services, energy management and a wide range of
power plant engineering, construction and maintenance and
operational services.
The company previously produced a portion of its fuel consumption
requirements from its own natural gas reserves. However, in July
2005, the company sold substantially all of its remaining domestic
oil and gas assets to Rosetta Resources Inc.
The company filed for chapter 11 protection on Dec. 20, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq.,
Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G.
Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their
restructuring efforts. Michael S. Stamer, Esq., at Akin Gump
Strauss Hauer & Feld LLP, represents the Official Committee of
Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed
$26,628,755,663 in total assets and $22,535,577,121 in total
liabilities. (Calpine Bankruptcy News, Issue No. 30; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
CDC MORTGAGE: Projected Losses Cue Moody's to Downgrade 12 Certs.
-----------------------------------------------------------------
Moody's Investors Service downgraded twelve classes of
certificates and placed under review for possible downgrade one
class of certificates from seven CDC Mortgage Capital Trust deals
issued in 2001, 2002 and 2003. The transactions consist of
primarily first-lien, adjustable and fixed-rate subprime mortgage
loans.
All of the transactions have multiple originators. The loans in
the 2001-HE1, 2002-HE2, 2003-HE2, 2003-HE3, and 2003-HE4 deals are
serviced by Ocwen Federal Bank, FSB and the loans in the 2002-HE3
and 2003-HE1 deals are serviced by Fairbanks Capital Corp.
The subordinate certificates are being downgraded or reviewed for
possible downgrade based on the fact that existing credit
enhancement levels are low given the current projected losses on
the underlying pools.
As of the Oct. 25, 2006 reporting date, the overcollateralization
in the 2001-HE1, 2002-HE2, 2002-HE3, 2003-HE1 and 2003-HE2 deals
were well below their 50 bp floors and future losses for all deals
could cause further erosion of the overcollateralization and put
pressure on the most subordinate tranches. Although the deals are
performing within Moody's original expectations, the current
credit support deterioration can be attributed to the deals
passing performance triggers and therefore releasing large amounts
of overcollateralization.
These are the rating actions:
* Issuer: CDC Mortgage Capital Trust
Series 2002-HE2, Class B-1, downgraded from Ba2 to B2
Series 2002-HE2, Class B-2, downgraded from B2 to C
Series 2002-HE3, Class B-1, downgraded from Baa2 to B3
Series 2002-HE3, Class B-2, downgraded from B1 to C
Series 2003-HE1, Class B-1, downgraded from Baa2 to Ba1
Series 2003-HE1, Class B-2, downgraded from Baa3 to B3
Series 2003-HE2, Class B-2, downgraded from Baa2 to Ba1
Series 2003-HE2, Class B-3, downgraded from Baa3 to B1
Series 2003-HE3, Class B-2, downgraded from Baa2 to Ba1
Series 2003-HE3, Class B-3, downgraded from Baa3 to B2
Series 2003-HE4, Class B-2, downgraded from Baa2 to Ba2
Series 2003-HE4, Class B-3, downgraded from Baa3 to B1
* Review for Downgrade:
-- Series 2001-HE1, Class B, current rating B3, under review
for possible downgrade.
CHAMPION ENTERPRISES: Moody's Holds Rating on $89MM Notes at B1
---------------------------------------------------------------
Moody's Investors Service changed Champion Enterprises' ratings
outlook to stable from positive due primarily to Moody's concerns
surrounding the industry outlook and the decision that an upgrade
of Champion's ratings in the next six months is unlikely. The
company's speculative grade liquidity rating was downgraded to
SGL-3 from SGL-2 while Moody's affirmed all of Champion's other
ratings.
The downgrade of the SGL rating reflects Moody's opinion that the
company's liquidity profile, while adequate, has weakened.
Moody's downgraded this rating at Champion Enterprises, Inc.:
-- Speculative Grade Liquidity Rating, downgraded to SGL-3
from SGL-2.
Moody's has affirmed these ratings at Champion Enterprises, Inc.:
-- $89 million 7.625% senior notes, due 2009, rated B1,
LGD4, 54%;
-- Corporate Family Rating, rated B1;
-- Probability of default, rated B1;
-- $400 million multiple seniority shelf registration, rated
(P)B3/(P)B3/(P)B3.
Moody's has affirmed these ratings at Champion Home Builders Co.:
-- $200 million senior secured term loan facility, due 2012,
rated B1, LGD4, 54%;
-- $40 million senior secured revolving credit facility, due
2010, rated B1, LGD4, 54%;
-- $60 million senior secured synthetic letter-of-credit
back-up facility, due 2012, rated B1, LGD4, 54%.
The slowing homebuilding industry could have an impact on the
company's profitability and cash flow generation although
historically the correlation between the company's earnings and
new home construction has been relatively low. The slowdown in
homebuilding could affect certain regional economies and thereby
cause individuals that may have purchased a Champion home to seek
other housing alternatives. Moody's currently expects the
company's profitability and cash flow generation to weaken in
2007.
In contrast to traditional homebuilders, Champion's cash flow
generation is not likely to benefit to a great extent from
decreasing inventories as the company's inventories days on hand
is substantially lower when compared to the traditional
homebuilders. For FYE 2007, Moody's projects the company's free
cash flow generation to be slightly positive. In terms of
profitability, Moody's anticipates the company's margins to come
under pressure.
Given the level of uncertainty, expected low free cash flow
generation, and anticipated margin pressure, Moody's believes an
upgrade of the company's ratings in the near future is unwarranted
and therefore believes that a stable outlook is more appropriate
given the rating agency's expectation for the company's financial
and operating performance.
The affirmation of the company's corporate family, credit
facilities, and senior notes ratings reflects the company's still
low debt leverage. The company's adjusted debt to EBITDA is
expected to be around 3.1 times for FYE 2006.
Moody's downgraded the company's SGL rating to SGL-3 from SGL-2
indicating that the company's liquidity position for the next 12
months is expected to be adequate. The SGL rating takes into
consideration internal and external liquidity, covenant
compliance, and the availability of alternate liquidity sources.
Moody's projects Champion's cash flow from operations to be
sufficient to cover the majority of its working capital needs. The
company's cash position is expected to be ample. The company has
access to a $40 million revolving credit facility and a
$60 million L/C facility.
Moody's expects the company to have no borrowings under its
revolving credit facility but utilize almost all of its
$60 million L/C facility. The leverage covenant of the company's
credit facilities is projected to be rather tight during the next
six to twelve months. Moody's notes: the company does not have
any unencumbered assets that could be sold to raise cash in a
short period of time.
The ratings and outlook may improve if the company's annual free
cash flow to debt increases above 13% on a prospective basis. The
ratings may decline if the outlook for free cash flow to debt were
expected to decline to below 8% for two consecutive quarters. A
meaningful debt financed acquisition could also result in adverse
ratings action. An increase in inventory levels, trends
suggesting higher industry wide foreclosures, or a tightening of
credit to the company's customer base could pressure the rating
and/or outlook.
Headquartered in Auburn Hills, Mich., Champion Enterprises, Inc.
is the manufactured housing industry's leading producer, with 2005
revenues of $1.3 billion.
CHAMPION ENTERPRISES: Moody's Holds B1 Rating on $200MM Sr. Loan
----------------------------------------------------------------
Moody's Investors Service changed Champion Enterprises' ratings
outlook to stable from positive due primarily to Moody's concerns
surrounding the industry outlook and the decision that an upgrade
of Champion's ratings in the next six months is unlikely. The
company's speculative grade liquidity rating was downgraded to
SGL-3 from SGL-2 while Moody's affirmed all of Champion's other
ratings.
The downgrade of the SGL rating reflects Moody's opinion that the
company's liquidity profile, while adequate, has weakened.
Moody's downgraded this rating at Champion Enterprises, Inc.:
-- Speculative Grade Liquidity Rating, downgraded to SGL-3
from SGL-2.
Moody's has affirmed these ratings at Champion Enterprises, Inc.:
-- $89 million 7.625% senior notes, due 2009, rated B1,
LGD4, 54%;
-- Corporate Family Rating, rated B1;
-- Probability of default, rated B1;
-- $400 million multiple seniority shelf registration, rated
(P)B3/(P)B3/(P)B3.
Moody's has affirmed these ratings at Champion Home Builders Co.:
-- $200 million senior secured term loan facility, due 2012,
rated B1, LGD4, 54%;
-- $40 million senior secured revolving credit facility, due
2010, rated B1, LGD4, 54%;
-- $60 million senior secured synthetic letter-of-credit
back-up facility, due 2012, rated B1, LGD4, 54%.
The slowing homebuilding industry could have an impact on the
company's profitability and cash flow generation although
historically the correlation between the company's earnings and
new home construction has been relatively low. The slowdown in
homebuilding could affect certain regional economies and thereby
cause individuals that may have purchased a Champion home to seek
other housing alternatives. Moody's currently expects the
company's profitability and cash flow generation to weaken in
2007.
In contrast to traditional homebuilders, Champion's cash flow
generation is not likely to benefit to a great extent from
decreasing inventories as the company's inventories days on hand
is substantially lower when compared to the traditional
homebuilders. For FYE 2007, Moody's projects the company's free
cash flow generation to be slightly positive. In terms of
profitability, Moody's anticipates the company's margins to come
under pressure.
Given the level of uncertainty, expected low free cash flow
generation, and anticipated margin pressure, Moody's believes an
upgrade of the company's ratings in the near future is unwarranted
and therefore believes that a stable outlook is more appropriate
given the rating agency's expectation for the company's financial
and operating performance.
The affirmation of the company's corporate family, credit
facilities, and senior notes ratings reflects the company's still
low debt leverage. The company's adjusted debt to EBITDA is
expected to be around 3.1 times for FYE 2006.
Moody's downgraded the company's SGL rating to SGL-3 from SGL-2
indicating that the company's liquidity position for the next 12
months is expected to be adequate. The SGL rating takes into
consideration internal and external liquidity, covenant
compliance, and the availability of alternate liquidity sources.
Moody's projects Champion's cash flow from operations to be
sufficient to cover the majority of its working capital needs. The
company's cash position is expected to be ample. The company has
access to a $40 million revolving credit facility and a
$60 million L/C facility.
Moody's expects the company to have no borrowings under its
revolving credit facility but utilize almost all of its
$60 million L/C facility. The leverage covenant of the company's
credit facilities is projected to be rather tight during the next
six to twelve months. Moody's notes: the company does not have
any unencumbered assets that could be sold to raise cash in a
short period of time.
The ratings and outlook may improve if the company's annual free
cash flow to debt increases above 13% on a prospective basis. The
ratings may decline if the outlook for free cash flow to debt were
expected to decline to below 8% for two consecutive quarters. A
meaningful debt financed acquisition could also result in adverse
ratings action. An increase in inventory levels, trends
suggesting higher industry wide foreclosures, or a tightening of
credit to the company's customer base could pressure the rating
and/or outlook.
Headquartered in Auburn Hills, Mich., Champion Enterprises, Inc.
is the manufactured housing industry's leading producer, with 2005
revenues of $1.3 billion.
CLEAR CHANNEL: Accepts Bain Capital's $26.7 Billion Buyout Offer
----------------------------------------------------------------
Clear Channel Communications Inc. accepted the $26.7 billion
buyout offer from a consortium led by Bain Capital and Thomas H.
Lee, The Independent reports.
The deal was priced at a 10% premium to Wednesday's share price
with an intense competition from a group of investors led by
Kohlberg Kravis Roberts and Blackstone Group. The deal, which
values the equity at $19 billion, includes about $8 billion in
debt, Stephen Foley of The Independent relates.
As reported in the Troubled Company Reporter on Nov. 15, 2006, the
Company received a takeover bid from a set of investors consisting
of Blackstone Group LP, Kohlberg Kravis Roberts & Co., and
Providence Equity Partners Inc., and an opposing bid from a
leverage buyout group consisting of Bain Capital LLC and Thomas H.
Lee Partners LP.
According to data compiled by The Independent, the Company's
founder Lowry Mays, and his sons, Mark and Randall, stand to net
$1.3 billion. They will keep the business operations in the
private arena, shutting it on 22 years as a publicly traded
Company.
Pursuant to the deal, the Mays family agreed to reduce the
incentive scheme payments they could have receive from a change in
control. Lowry Mays will receive more than $23 million while Mark
and Randall, who will be joint chief executives under the new
owners, will receive $14 million. They will reinvest some of the
windfall from their shares in the new consortium, Mr. Foley says.
The Independent states Clear Channel was selling for a compelling
price. "The only thing that can be a concern is that Thomas Lee
is involved in a lot of other media properties, so closing could
take longer than expected. I can't imagine that they didn't vet
this with regulators though", citing RBC Capital Markets analyst
David Bank as saying.
The Company also disclosed its plan to sell 448 of its 1,150 radio
stations and its 42-station Television Group, to concentrate on
those in the biggest U.S. markets. These properties contributed
less than 10% of the company's revenues last year. The radio
stations scheduled for sale are located in 90 markets outside of
the top-100 Arbitron Metros. The television stations are located
in 24 small and mid-sized markets throughout the country.
Speculation occurred that the new owners might also hope to sell
the Company's controlling stake in Clear Channel Outdoor Holdings.
Jean-Charles Decaux, the founder and chairman of advertising rival
JC Decaux, hinted his interest and had already approached the
private equity consortium. "It won't be a cheap deal," Mr. Decaux
said during an investor conference hosted by Morgan Stanley. "But
we think we are quite a natural buyer for most of the assets, if
they are for sale. This is a deal that makes a lot of sense from
a strategic viewpoint."
JC Decaux is an outdoor advertising company, with about a 10%
market share behind Clear Channel's 12%. The combined market
capitalisations of the two companies is about $15 billion of
which, JC Decaux accounts for $6.2 billion. Their combined sales
would be about $5 billion.
San Antonio, Tex.-based Clear Channel Communications, Inc.
(NYSE: CCU) -- http://www.clearchannel.com/-- is a media and
entertainment company specializing in "gone from home"
entertainment and information services for local communities and
premiere opportunities for advertisers. The company's businesses
include radio, television and outdoor displays.
CLEAR CHANNEL: $26.7 Billion Buyout Cues S&P to Cut Ratings to BB+
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and senior unsecured debt ratings on Clear Channel Communications
Inc. to 'BB+' from 'BBB-'. The ratings remain on CreditWatch with
negative implications, where they were placed on Oct. 26, 2006,
following the company's announcement that it was exploring
strategic alternatives to enhance shareholder value.
The downgrade and continuing CreditWatch status followed its
announcement of a definitive agreement to be acquired in an LBO by
a group of investors led by Bain Capital Partners LLC and Thomas
H. Lee Partners L.P. for $36.70 a share, or approximately
$18.7 billion. The total value of the transaction is approximately
$26.7 billion, including the assumption of the company's
outstanding $8 billion of net debt.
The merger is subject to the agreement of Clear Channel's
shareholders and regulatory approval.
"Although the company has not announced specific financing terms
of the new capital structure, we would expect a marked increase in
leverage, which is likely to result in even further ratings
downside potential," said Standard & Poor's credit analyst Michael
Altberg. "Even if the deal does not close, which we believe is a
relative low probability at this juncture, Clear Channel has
demonstrated an appetite for a higher level of risk."
Accordingly, S&P's financial policy expectations have changed,
warranting a lower corporate credit rating. The acquisition
announcement comes on the heels of a number of shareholder-
favoring initiatives undertaken by Clear Channel. Standard &
Poor's will review its ratings on Clear Channel when the new
capital structure is announced and we can gain greater clarity on
the amount of equity that investors would contribute in financing
the proposed acquisition.
CLEAR CHANNEL: $26.7 Billion Buyout Prompts Fitch to Cut Ratings
----------------------------------------------------------------
Fitch Ratings has downgraded Clear Channel Communications Inc.'s
ratings as:
-- Issuer Default Rating to 'BB-' from 'BBB-';
-- Senior unsecured to 'BB-' from 'BBB-'.
The ratings remain on Rating Watch Negative.
The rating action reflects [Thurs]day's announcement that Clear
Channel has executed a definitive merger agreement with a group
led by Thomas H. Lee Partners, L.P. and Bain Capital Partners,
LLC, pursuant to which the group will acquire Clear Channel in a
transaction with a total value of approximately $26.7 billion,
including the assumption or repayment of approximately $8 billion
of net debt.
Given the information currently available and some uncertainty
regarding shareholder approval of the transaction, insider votes
account for less ten percent, Fitch believes that the long term
rating will be no higher than 'BB-'. The current valuation,
anticipated financing and proforma credit metrics are indicative
of an IDR in the 'B' rating category and if the transaction
announced today is ultimately approved, Fitch would lower the
rating to that level. The resolution of Fitch's Rating Watch will
be determined by an evaluation of to Clear Channel's strategic
direction, ultimate transactions including the use of proceeds
from recently announced radio and TV divestitures, as well as pro
forma credit metrics and overall financial policies.
The Clear Channel Indenture does not provide any material
restrictions related to additional debt, change of control or sale
of assets, nor does it contain any cross-default or cross-
acceleration provisions. Clear Channel's bank facility contains a
maximum leverage ratio of 5.25 times (x) and minimum interest
coverage ratio of 2.50x, as well as a change of control provision.
Fitch notes that the Clear Channel Indenture does contain a
limitation of secured debt which provides some level of protection
for bondholders. However, given actions that some other companies
across the corporate space have taken recently to subvert certain
protections, Fitch is generally skeptical regarding the potential
effectiveness of some covenants in corporate bond indentures.
Clear Channel's AMFM (fka Chancellor Media) subsidiary notes due
2008, which make-up less than 10% of total debt, contain change of
control and sale of asset provisions. These notes also contain a
7.0x leverage covenant, however Fitch believes that this leverage
test is only applicable to the AMFM subsidiary and would not be
triggered should the parent company (Clear Channel) exceed such
threshold.
As part of its rating evaluation, Fitch anticipates reviewing the
company's strategy with Clear Channel's management.
CLECO CORPORATION: Earns $28 Million in 2006 Third Quarter
----------------------------------------------------------
Cleco Corp. posted $28 million of net income on $294.1 million of
revenues for the third quarter ended Sept. 30, 2006, compared with
$150.4 million of net income on revenues of $283.7 million for the
same period in 2005.
At Sept. 30, 2006, the company's balance sheet showed $2.4 billion
in total assets, $1.5 billion in total liabilities, and
$901.1 million in total stockholders' equity.
Consolidated net income decreased mainly due to the absence in
2006 of the sale of Midstream's Perryville Power Station and the
sale of the Mirant bankruptcy damage claims, which were
reintegrated on Cleco Corp.'s consolidated statement of income
during the 3rd quarter of 2005. Also contributing to the decrease
was lower earnings at Cleco Power. Revenues increased
$10.4 million, or 3.7%, in the third quarter of 2006 compared to
the same period of 2005 largely as a result of higher base and
fuel cost recovery revenue at Cleco Power.
Operating expenses increased $18.5 million, or 7.8%, in the third
quarter of 2006 compared to the third quarter of 2005 primarily
due to deferred fuel costs and higher costs of fuel used for
electric generation.
Equity income from investees decreased $185.8 million, or 92.4%,
in the third quarter of 2006 compared to the same period of 2005
primarily due to decreased equity earnings at Perryville Energy
Partners LLC, in addition to decreases at Acadia Power Holdings
LLC, and Cleco Evangeline LLC. Perryville Energy, Acadia Power
and Cleco Evangeline are all subsidiaries of Cleco Midstream
Resources LLC.
Full-text copies of the company's consolidated financial
statements are available for free at:
http://researcharchives.com/t/s?1536
* * *
Headquartered in Pineville, Louisiana, Cleco Corp. --
http://www.cleco.com/-- is a regional energy services holding
company that conducts substantially all of its business operations
through its two principal operating business segments:
Cleco Power, an integrated electric utility services subsidiary
which also engages in energy management activities, and
Cleco Midstream , a merchant energy subsidiary that owns and
operates a merchant generation station, invests in a joint venture
that owns and operates a merchant generation station, and owns and
operates transmission interconnection facilities.
In March 2003, Moody's Investors Service assigned a Ba2 rating to
Cleco Corp.'s Preferred Stock.
CMS ENERGY CORP: Posts $101 Mil. Net Loss in 2006 Third Quarter
---------------------------------------------------------------
CMS Energy Corp. reported a $101 million net loss on $1.46 billion
of revenues for the third quarter ended Sept. 30, 2006, compared
with a $263 million net loss on $1.3 billion of revenues for the
same period in 2005. The decreased net loss primarily reflects a
lower asset impairment charge in 2006 versus 2005.
At Sept. 30, 2006, the company's balance sheet showed $15 billion
in total assets, $12.1 in total liabilities, $344 million in
Minority interests, and $2.6 billion in total stockholders'
equity.
Full-text copies of the company's consolidated financial
statements for the third quarter ended Sept. 30, 2006 are
available for free at:
http://researcharchives.com/t/s?14ac
Factors Affecting Liquidity
Liquidity remains a challenge in view of the continuing volatility
of natural gas prices. Although recoverable from the company's
utility customers, higher priced natural gas stored as inventory
affect the company's working capital and cash resources.
The historically high natural gas prices have caused the MCV
Partnership to review the feasibility of operating the MCV
Partnership and to record an impairment charge in 2005. If gas
price increases continue, it could result in a further impairment
of the company's interest in the MCV Partnership.
Due to the impairment of the MCV Facility and operating losses
from mark-to-market adjustments on derivative instruments, the
equity held by a Consumers' subsidiary and the other minority
interest owners in the MCV Partnership has decreased significantly
and is now negative. As the MCV Partnership recognizes future
losses, the company will assume an additional seven percent
of the MCV Partnership's negative equity, which is a portion of
the limited partners' negative equity, in addition to the
company's proportionate share.
In July 2006, the company agreed to sell their interests in the
MCV Partnership and the FML Partnership. If after securing
regulatory approvals and the sale is consummated by the end of
2006, it will have a $56 million positive impact on the company's
2006 cash flow. The company will use the proceeds to reduce
utility debt. If the sale is not completed, then the viability of
the MCV Facility will continue to be a problem.
The company continues to pursue value enhancing beneficial asset
sales and development opportunities. In October 2006, the company
agreed with Peabody Energy to co-develop, construct, operate, and
indirectly own 15 percent of the Prairie State Energy Campus, a
1,600 MW power plant and coal mine in southern Illinois, which is
expected to enhance future earnings.
The company still faces a sluggish Michigan economy with negative
developments in Michigan's automotive industry and limited growth
in the non-automotive sectors of the state's economy.
These negative developments are expected to be offset to some
extent by the reduction in ROA load expected in the company's
service territory. At Sept. 30, 2006, alternative electric
suppliers were providing 308 MW of generation service to ROA
customers. This represents a decrease of 60 percent of ROA load
compared to the end of September 2005.
CMS Energy Corporation -- http://www.cmsenergy.com-- is a
Michigan-based company that has as its primary business operations
an electric and natural gas utility, natural gas pipeline systems,
and independent power generation. Through its regulated utility
subsidiary, Consumers Energy Co., the company provides natural gas
and electricity to almost 60% of nearly 10 million customers in
Michigan's lower-peninsula counties.
* * *
As reported in the Troubled Company Reporter on Oct. 16, 2006,
Moody's Investors Service lowered its Corporate Family Rating for
CMS Energy Corp. to Ba2 from Ba1, in connection with its new
Probability-of-Default and Loss-Given-Default rating methodology.
CNET NETWORKS: Faces Nasdaq Delisting Due to 10-Q Filing Delay
--------------------------------------------------------------
CNET Networks Inc. received a Nasdaq Staff Determination notice on
Nov. 13, 2006 stating that the company was not in compliance with
Nasdaq Marketplace Rule 4310(c)(14). The letter, which was
expected, was issued in accordance with Nasdaq procedures due to
the company's failure to timely file its Form 10-Q with the
Securities and Exchange Commission for its fiscal quarter ended
Sept. 30, 2006.
In response to a similar letter the company received in August
2006 following the company's failure to file its Form 10-Q for the
quarter ended June 30, 2006, the company requested and was granted
a hearing on September 26, 2006 with the Nasdaq Listing
Qualifications Panel. The Nov. 13, 2006 Nasdaq notice states that
the September 30, 2006 10-Q filing delinquency will serve as an
additional basis for delisting the company's securities on the
Nasdaq Global Market and that the Nasdaq Listing Qualifications
Panel will consider this matter in rendering a determination
regarding the company's continued listing on the Nasdaq Global
Market. Pending a decision by the hearing panel, CNET Networks'
common stock will continue to be listed on the Nasdaq Global
Market. There can be no assurance that the hearing panel will
grant the company's request for continued listing.
The company previously announced that a Special Committee
of the company's Board of Directors completed an independent
review of CNET Networks' past stock option practices and related
accounting. Management expects that CNET Networks will restate
its historical financial statements to record non-cash charges for
compensation expense relating to past stock option grants. The
company is in the process of preparing its restated financial
statements which the company expects to file with the Securities
and Exchange Commission along with its delinquent Form 10-Qs as
soon as practicable.
Headquartered in San Francisco, California, CNET Networks, Inc.
(Nasdaq: CNET) -- http://www.cnetnetworks.com/-- is an
interactive media company that builds brands for people and the
things they are passionate about, such as gaming, music,
entertainment, technology, business, food, and parenting. The
Company's leading brands include CNET, GameSpot, TV.com,
MP3.com, Webshots, CHOW, ZDNet and TechRepublic. Founded in
1993, CNET Networks has a strong presence in the US, Asia and
Europe including Russia, Germany, Switzerland, France and the
United Kingdom.
* * *
On Oct. 23, 2006, Standard & Poor's Ratings Services lowered its
ratings on CNET Networks Inc., including lowering the corporate
credit rating to 'CCC+' from 'B', and placed the ratings on
CreditWatch with developing implications.
COLLINS & AIKMAN: Still Unable to File Financial Reports with SEC
-----------------------------------------------------------------
Stacy Fox, executive vice president, chief administrative officer
and general counsel for Collins & Aikman Corp., reports in a
regulatory filing with the Securities and Exchange Commission
That the company is unable to file its Form 10-Q with financial
statements at this time and its former independent auditors, KPMG
LLP, are unable to complete their audits of the company's 2004 and
2005 financial statements and review of subsequent interim
financial statements because:
-- of the ongoing independent investigation of controls over
financial reporting and review of certain accounting issues
that are expected to require a restatement of certain
previously reported periods; and
-- of the company's bankruptcy filing.
Collins & Aikman has not filed its Form 10-K for the fiscal years
ended Dec. 31, 2004, and Dec. 31, 2005, and Form 10-Q for
the fiscal quarters ended March 31, 2005, June 30, 2005,
September 30, 2005, March 31, 2006, and June 30, 2006.
Collins & Aikman, Ms. Fox relates, anticipates changes in its
results of operations based on the impact of the accounting
issues. In addition, and in light of its Chapter 11 filing,
Collins & Aikman anticipates that there will be a significant
change in the results of operations from the corresponding period
for the prior year, but is unable to currently assess the amount
of the change as a result of the ongoing restructuring process.
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. 45; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
COMMUNICATIONS CORP: Excl. Plan-Filing Period Stretched to Jan. 31
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Louisiana
extended until Jan. 31, 2007, Communications Corporation of
America, White Knight Holdings Inc. and their debtor-affiliates'
exclusive period to file a Chapter 11 Plan of Reorganization.
The Court also extended the Debtors' period to solicit acceptances
of their Plan 60 days from the exclusive plan-filing period
termination or April 1, 2007.
As reported in the Troubled Company Reporter on Nov. 14, 2006, the
Debtors asked the Court to extend their exclusive plan-filing
period to Feb. 28, 2007. The Debtors said a February 28 extension
is warranted because:
a) the Debtors have spent weeks in litigation over the use of
cash collateral and their initial request for an extension
of exclusivity. The protracted litigation has negatively
affected the Debtors' ability to develop a plan.
b) the Debtor anticipates obtaining more information about
its efforts to secure offers for certain selected assets.
This information is expected to inform the Debtors'
strategy and help the court guide the plan process; and
c) the extension will give the Debtors sufficient time, free
of the diversion of discovery and litigation, to
concentrate on a reorganization plan.
About White Knight
Headquartered in Lafayette, Louisiana, White Knight Holdings,
Inc., is a media, television and broadcasting company.
White Knight entered into commercial inventory agreements, joint
sales agreements, and shared services agreements with
Communications Corporation of America. However, both entities are
independent companies and are not affiliates of each other. Along
with Communications Corp., White Knight operates around 23 TV
stations.
White Knight and five of its affiliates filed for chapter 11
protection on June 7, 2006 (Bankr. W.D. La. Case Nos. 06-50422
through 06-50427). R. Patrick Vance, Esq., and Matthew T. Brown,
Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
LLP, represents White Knight and its debtor-affiliates in their
restructuring efforts. White Knight and its debtor-affiliates'
chapter 11 cases are jointly administered under Communication
Corporation of America's chapter 11 case.
When White Knight and its debtor-affiliates filed for protection
from their creditor, they estimated less than $50,000 in assets
and estimated debts between $100,000 and $500,000.
About Communications Corp.
Headquartered in Lafayette, Louisiana, Communications Corporation
of America, is a media and broadcasting company. Along with media
company White Knight Holdings, Inc., it owns and operates around
23 TV stations in Indiana, Texas and Louisiana. Communications
Corporation and 10 of its affiliates filed for bankruptcy
protection on June 7, 2006 (Bankr. W.D. La. Case Nos. 06-50410
through 06-50421). Douglas S. Draper, Esq., William H. Patrick
III, Esq., and Tristan Manthey, Esq., at Heller, Draper, Hayden,
Patrick & Horn, LLC, represents Communications Corporation and its
debtor-affiliates. When Communications Corporation and its
debtor-affiliates filed for protection from their creditors, they
estimated assets and debts of more than $100 million.
COMMUNICATIONS CORP: Hires Greenberg Traurig as Special Counsel
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Louisiana
has authorized Communications Corporation of America and its
debtor-affiliates to employ Greenberg, Traurig, LLP, as their
special counsel.
Greenberg Traurig will:
a) advise and represent the Debtors with respect to all
aspects of securities, general corporate, finance, and
other business matters;
b) advise and represent the Debtors with respect to related
matters as they arise at the Debtors' request; and
c) assist the Debtors' reorganization attorneys from time to
time.
As reported in the Troubled Company Reporter on Nov. 1, 2006, the
hourly rates for Greenberg Traurig's professionals are:
Professionals Designation Hourly Rate
------------- ----------- -----------
James S. Altenbach, Esq. Shareholder $435
Stacey O. Gallant, Esq. Shareholder $425
Alexander McCain, Esq. Associate $220
Sandra Blake, Esq. Paralegal $160
James S. Altenbacg, Esq., a shareholder at Greenberg Traurig,
assured the Court that his firm does not hold any interest adverse
to the Debtors, its estate and creditors.
Headquartered in Lafayette, Louisiana, Communications Corporation
of America, is a media and broadcasting company. Along with media
company White Knight Holdings, Inc., it owns and operates around
23 TV stations in Indiana, Texas and Louisiana. Communications
Corporation and 10 of its affiliates filed for bankruptcy
protection on June 7, 2006 (Bankr. W.D. La. Case Nos. 06-50410
through 06-50421). Douglas S. Draper, Esq., William H. Patrick
III, Esq., and Tristan Manthey, Esq., at Heller, Draper, Hayden,
Patrick & Horn, LLC, represents Communications Corporation and its
debtor-affiliates. When Communications Corporation and its
debtor-affiliates filed for protection from their creditors, they
estimated assets and debts of more than $100 million.
COMPLETE PRODUCTION: Launches $600-Million Senior Notes Placement
-----------------------------------------------------------------
Complete Production Services Inc. has commenced a private
placement of $600 million of Senior Notes due 2016. The notes
will be offered and sold in the United States only to qualified
institutional buyers pursuant to Rule 144A under the Securities
Act of 1933, as amended, and in offshore transactions to
non-United States persons in reliance on Regulation S under
the Securities Act.
Complete intends to use the net proceeds of the proposed offering
to retire the outstanding balance of approximately $416 million of
Term B Loans under its secured credit facility, to repay
approximately $30 million of term loans assumed in connection with
the acquisition of Pumpco Services, and to repay a portion of its
borrowings under its revolving credit facility totaling
approximately $143 million.
Complete Production Services, Inc. provides completion, production
and drilling services and products to the oil and gas industry in
many of the most active basins throughout North America.
* * *
As reported on the Troubled Company Reporter, Oct. 6, 2006,
Standard & Poor's Ratings Services raised its corporate credit
rating on oilfield service provider Complete Production Services
to 'B+' from 'B'. The outlook is stable.
COMPLETE PRODUCTION: Moody's Rates New $600 Mil. Sr. Notes at B2
----------------------------------------------------------------
Moody's Investors Service upgraded Complete Production Services,
Inc's Corporate Family Rating to B1.
Concurrently, Moody's upgraded:
-- the probability of default rating to B1;
-- assigned a B2, LGD4, 67% rating to Complete's proposed
offering of $600 million senior unsecured notes; and,
-- upgraded the ratings on Complete's senior secured
$350 million bank facility to Ba1, LGD2, 14%).
The outlook is stable.
Proceeds from the senior unsecured notes will be used to retire
Complete's existing senior secured term loan and pay down amounts
outstanding on the revolving credit facility. Moody's will
withdraw the ratings on the term loan once it has been repaid.
This concludes Moody's review of Complete's ratings.
The upgrade reflects:
-- Complete's progress in integrating the three oilfield
services companies that were combined in Complete's
formation in Sept. 2005;
-- its enhanced scale, geographic and product line
diversification; and,
-- improved leverage metrics even after the largely debt-
funded Pumpco Services, Inc. acquisition which provide
scale and leverage metrics comparable to Ba3 rated peers.
These strengths are offset by Complete's aggressive growth
strategy, which is prone to event and integration risk and may
lead to relatively high leverage in market downturns.
Furthermore, while Complete has achieved significant size and
product line breadth in many major North American producing
basins, it only has leading market positions in a few product
lines in certain basins. Therefore it remains to be seen how well
the company's market position will hold up in the event of a slow
down or significant downturn in drilling and completion activity,
particularly given the company's large exposure to unconventional
natural gas resource plays.
"Complete has scale and certain other characteristics consistent
with a Ba credit profile, but its aggressive growth strategy and
lack of a track record in more challenging market conditions
constrained the rating to B1," Pete Speer, Moody's Vice President
and Senior Analyst commented.
The recent acquisition of Pumpco provides an instructive example
of both Complete's broader potential and its risks. Pumpco was
acquired from SCF Partners, a private equity fund that formed
Complete and still owns approximately 35% of Complete. Pumpco
adds pressure pumping to Complete's suite of services in the
Barnett Shale and while the growth is linked to the drilling and
completion of new wells, this business also increases the
company's exposure to the production cycle of the well life
through re-fracs and re-completions, which is generally more
stable than the drilling and completion cycle.
However, the acquisition was funded nearly 90% with debt and
priced at a multiple of 4.5x estimated 2006 EBITDA that has
benefited from the unprecedented boom in demand for pumping
services in the Barnett. In 2006, Pumpco has increased its frac
fleet from one to three and has a fourth on order for delivery in
the 2nd quarter of 2007. Its cementing assets consist of six
units with four more to be added during 2007. Complete has the
option to order a fifth frac fleet for delivery in the 4th quarter
of 2007. Therefore this acquisition provides Complete with
organic growth opportunities and the potential of expanding this
product line into other unconventional basins where it currently
operates.
With this opportunity comes significant risk. Unconventional
natural gas development is exceptionally vulnerable to lower gas
prices, with some E&P's economics being significantly impaired at
levels beneath the $5-$5.5 range. A price decline could result in
a moderation or significant downturn in activity. This scenario
combined with additional supply being brought on by Pumpco and its
competitors might result in excess capacity that would rapidly
evaporate EBITDA margins. These more difficult market conditions
would test the durability of Pumpco's market position against the
larger and better capitalized major players, a challenge that
Pumpco and Complete have yet to contend with.
The stable outlook reflects Moody's expectation that market
conditions will remain supportive, although they may soften in the
latter half of 2007 depending of natural gas prices.
A positive outlook is possible if Complete utilizes its current
strong operating cash flows or an equity offering to resume
effective de-leveraging. Acquisitions should clearly increase
Complete's market shares in its present basins and be reasonably
priced. Further large acquisitions, particularly ones the size of
Pumpco, should have meaningful equity funding.
Ratings could be pressured if capital spending and acquisitions
were funded through materially increased leverage, if leverage
were allowed to approach 3.0x Debt/EBITDA in top of cycle
conditions or Complete experienced a severe deterioration in
activity while having elevated leverage. Moody's notes that the
recent increase in Complete's senior secured revolver from
$200 million to $350 million provides additional liquidity in the
event of a downturn but also provides significant debt capacity to
fund acquisitions in a market downturn, which could negatively
impact the outlook or ratings.
Complete Production Services, Inc., headquartered in Houston, TX,
is a provider of services and products for oil and gas companies.
CONSUMERS ENERGY: Earns $99 Million in Third Quarter of 2006
------------------------------------------------------------
Consumers Energy Co. earned $99 million of net income on
$1.2 billion of revenues for the third quarter ended
Sept. 30, 2006, compared with a $276 million net loss on
$1 billion of revenues for the same period in 2005.
The increase is primarily due to the absence, in 2006, of a 2005
impairment charge to property, plant, and equipment at the Midland
Cogeneration Venture Partnership to reflect the excess of the
carrying value of these assets over their estimated fair value.
The increase also reflects higher electric utility revenues
primarily due to an electric rate increase authorized in December
2005. Partially offsetting these increases are higher operating
and maintenance costs at the company's electric utility.
At Sept. 30, 2006, the company's balance sheet showed
$12.7 billion in total assets, $9.4 billion in total liabilities,
$252 million in Minority interests, and $3 billion in stockholders
equity.
Full-text copies of the company's consolidated financial
statements for the third quarter ended Sept. 30, 2006, are
available for free at http://researcharchives.com/t/s?14ac
Sale of Interests in MCV Partnership
Historically high natural gas prices caused the MCV Partnership to
reevaluate the economics of operating the MCV Facility and to
record an impairment charge in 2005. If gas prices increase from
their current levels, it could result in a further impairment of
the company's interest in the MCV Partnership.
In July 2006, the company reached an agreement to sell their
interests in the MCV Partnership and the First Midland Limited
Partnership. The sale is subject to various regulatory approvals
including the Michigan Public Service Commission. If the sale
closes by the end of 2006, as expected, it will have a $56 million
positive impact on the company's 2006 cash flow. The sale will
reduce the company's exposure to sustained high natural gas
prices.
Factors Affecting Liquidity
The company's liquidity continue to be a challenge, as natural gas
prices continue to be volatile. Although recoverable from
customers, higher priced natural gas inventories put a strain on
liquidity due to lag in cost recovery. Due to the impairment of
the MCV Facility, and operating losses from mark-to-market
adjustments on derivative instruments, the equity held by a
Consumers' subsidiary and other minority interest owners in the
MCV Partnership has decreased significantly and is now negative.
As the MCV Partnership recognizes future losses, the company will
assume an additional seven percent of the MCV Partnership's
negative equity, which is a portion of the limited partners'
negative equity, in addition to the company's proportionate share.
The company also expects that due to the adverse impact of the MCV
Partnership asset impairment charge recorded in 2005 and the MCV
Partnership fuel cost mark-to-market charges during 2006, the
company's ability to issue First Mortgage Bonds as primary
obligations or as collateral for financing is expected to be
limited to $298 million through Dec. 31, 2006.
About Consumers Energy Company
Headquartered in Jackson, Michigan, Consumers Energy Company --
http://www.consumersenergy.com/-- a wholly owned subsidiary of
CMS Energy Corporation, is a combination of electric and natural
gas utility that serves more than 3.3 million customers in
Michigan's Lower Peninsula.
* * *
Consumers Energy carries Fitch's 'BB' on its LT Issuer Default
Rating, a 'BB+' on its Bank Loan Debt Rating, a 'BB' on its Senior
Unsecured Debt Rating, and a 'BB-' on its Preferred Stock Rating.
Consumers Energy also carries Moody's 'Ba2' on Preferred Stock
Rating. It also carries S&P's 'BB' on both LT Foreign Issuer
Credit and LT Local Issuer Credit Ratings.
COSINE COMM: Posts $225,000 Net Loss in 2006 Third Quarter
----------------------------------------------------------
Cosine Communications Inc. reported a $225,000 net loss on
$134,000 of revenues for the third quarter ended Sept. 30, 2006,
compared with a $31,000 net loss on $785,000 of revenues for the
same period in 2005.
Revenues for the three months ended September 30, 2006 and 2005
consisted entirely of service. The decrease in revenues for the
three months ended Sept. 30, 2006 compared to the three months
ended Sept. 30, 2005 is due to several customers terminating or
reducing their purchase of service contracts. The company expects
that all of their remaining customers will likely terminate their
purchase of service contracts in the period ending December 31,
2006.
At Sept. 30, 2006, the company's balance sheet showed
$23.2 million in total assets, $709,000 in total liabilities, and
$22.5 million in total stockholders' equity. Accumulated deficit
at Sept. 30, 2006, stood at $517 million as the company has
sustained net losses every year since inception.
Full-text copies of the company's third quarter financial
statements are available for free at:
http://researcharchives.com/t/s?14b7
Going Concern Doubt
As reported in the Troubled Company Reporter on April 6, 2006,
Burr, Pilger & Mayer LLP expressed substantial doubt about
Cosine Communications' ability to continue as a going concern
after it audited the company's financial statements for the years
ended Dec. 31, 2005 and Dec. 31, 2004. The auditing firm pointed
to the company's decision to terminate most of its employees and
discontinue production activities in an effort to conserve cash.
About Cosine Communications
Based in San Jose, California, CoSine Communications, Inc. (OTC:
COSN.PK) -- http://www.cosinecom.com/-- used to be a provider of
carrier network equipment products and services, until the fourth
quarter of 2004 when it decided to discontinue these product
lines. The business now consists primarily of a customer support
capability for the company's discontinued products provided by a
third party. The company intends to continue such support
activities through December 31, 2006, depending on customer
demand.
CREATIVE BUILDING: Chapter 15 Petition Summary
----------------------------------------------
Petitioner: Doyle Salewski Inc.
Court-Appointed Interim Receiver
Monitor
Foreign Representative
Debtors: Creative Building Maintenance Inc.
266 Elmwood Avenue, #117
Buffalo, NY 14222
-- and --
Creative Building Maintenance Inc.
2205 Dunwin Drive
Mississauga, NY L5L 1X1
Case No.: 06-03586 and 06-03587
Type of Business: Creative Building Maintenance Inc., provides
cleaning and building maintenance services to
various commercial customers throughout Canada
and the United States. Approximately 88% of the
Debtors' sales resulted from contracts with
PetSmart Inc., The TJX Companies, Inc., and
Michael's Stores, Inc.
Doyle Salewski Inc., filed the petitions to ask
the Court to:
(i) grant recognition of the Canadian
Proceeding and provide for other relief;
(ii) entrust all of the Debtors' assets located
in the United States to the Monitor and
direct all persons or entities in
possession of equipment or other assets of
the Debtors to turn over the same to the
Monitor without prejudice to any liens
that depend upon possession; and
(iii) authorize the Monitor to collect the
Debtors' accounts receivable, including
bringing actions or proceedings on behalf
of the Debtors.
Chapter 15 Petition Date: November 15, 2006
U.S. Court: Western District of New York (Buffalo)
Petitioner's Counsel: Joseph E. Simpson, Esq.
Harter Secrest & Emery
1600 Bausch & Lomb Place
Rochester, NY 14604-2711
Tel: (585) 232-6500
Fax: (585) 232-2152
Estimated Assets: $1 Million to $100 Million
Estimated Debts: $1 Million to $100 Million
DANA CORP: Trade Creditors Sell 109 Claims Totaling $11,922,884
---------------------------------------------------------------
In June 2006, the Clerk of the U.S. Bankruptcy Court for the
Southern District of New York recorded 109 claims transfers in
Dana Corporation and its debtor-affiliates' bankruptcy cases,
totaling $11,922,884, to:
(a) Liquidity Solutions, Inc.
Transferor Claim Amount
---------- ------------
Hellman Worldwide $1,713,030
Defiance Stamping Co. 327,114
V/Gladieux Enterprises 206,928
Kavlico Corporation 93,184
Pontiac Coil, Inc. 90,763
DSM Engineering 78,383
Detroit Handling, LLC 75,179
PR Machine Works 65,131
Cranston Trucking Co. 57,202
Soundwich, Inc. 56,000
Bluegrass & Associates 49,971
Incat Systems 47,365
Metrolift Propane 34,328
Quality Management 31,182
Toolex, Inc. 27,678
Keybase, Inc. 27,137
GBC Scientific Equipment 25,000
Oak Associates, Inc. 23,424
Indy Expecting, Inc. 21,008
Osborn Transportation 19,675
Alabama Bolt & Supply 16,237
Cutting Tools, Inc. 15,717
Ward Trucking Corp. 15,666
B&L Packaging, Inc. 14,468
Kelsan, Inc. 12,630
Specialty Screw Corp. 12,208
Harvest Technologies 10,912
Summit Corp. of America 10,187
ABC Security Guard 9,960
Bluco Corporation 9,709
Dickey & Son Machine 9,500
Pallet Barn 8,668
Sternberg Idealease 8,043
Doll Services & Engineering 7,442
Thompson Emergency 6,706
Wilson Thompson 6,600
United Carbide Industries 6,401
Cassco Seals 5,333
Nippon Express USA 5,258
Winzler Stamping Co. 5,179
Sleight Business 4,491
Seyburn Kahn Ginn Bess 4,454
Scan-Pac Mfg., Inc. 4,203
Butler Snow O Mara 4,167
Epes Express Services 3,923
Crock Construction 3,907
Try Hours, Inc. 3,872
Triangle Sales Co. 3,650
Olofsson, LP 3,510
Envirodyne Tech 3,035
Vander Ziel Machinery 2,750
Servicemaster Priority 2,417
Kamps Pallets, Inc. 1,725
Hitech Automation 1,725
Big 3 LLC 1,624
Special Drill & Reamer 1,589
O&D Manufacturing 1,366
Miller Trucking Co. 1,225
World Thompson Motors 460
(b) Argo Partners
Transferor Claim Amount
---------- ------------
Worldwide Freight Corp. $57,072
Turmatic Systems, Inc. 48,049
Cartruck Packaging 44,753
Berry & Berry 30,866
Summit Steel Corp. 26,021
Pyramid Machine Service, Inc. 21,540
Lucas Cartage & Storage, Inc. 21,001
Wiese Planning & Engineering 20,227
Argus Corp. 20,069
TECR Consulting, Inc. 12,954
Circle Environmental 12,580
Dan's Welding Service 6,231
Argo Partners has offices at 12 West 37th Street, 9th
Floor, in New York. Contact person is Scott Krochek.
(c) Madison Investment Trust
Transferor Claim Amount
---------- ------------
REA Magent Wire Co. $172,817
Logistics Solutions 59,310
Tooling Technologies 58,254
Quincy Resource Group 58,013
Rodison Parks, LLC 27,800
Simma Software 27,437
QHG of Fort Wayne, Inc. 9,026
Print Image, LLC 6,792
BG Technical Services 5,674
(d) Longacre Master Fund
Transferor Claim Amount
---------- ------------
Modern Silicone $511,798
Anca, Inc. 476,430
Zeon Chemicals, L.P. 420,804
C&H Die Casting, Inc. 295,723
Automatic Spring 155,411
Harrison Steel Castings Co. 125,267
Overton Gear & Tool 117,810
Thomas Steel Strip 101,136
Rep Corporation 61,599
(e) JPMorgan Chase Bank, N.A.
Transferor Claim Amount
---------- ------------
UGS Corp. $946,494
The Goodyear Tire & Rubber Co. 863,356
Mestek, Inc. 324,169
Formtek Metal Forming 324,169
Product Action International 164,666
Eclipse Manufacturing 88,615
(f) Hain Capital Holdings, LLC
Transferor Claim Amount
---------- ------------
Miniature Precision $315,689
RMG Foundry, LLC 166,845
Chavira Packaging 156,205
ICSA Software 84,000
Marshall & Melhorn 74,072
(g) Fair Harbor Capital, LLC
Transferor Claim Amount
---------- ------------
Angelo Manufacturing Co., Inc. $10,141
Ruber's Landscaping & Lawncare 3,575
Virginia Beach Electrical 2,828
S&P Sheet Metal 2,223
Palmer Tool Co., Inc. 1,845
Frederick Glass can be contacted for Fair Harbor Capital,
LLC, at 875 Avenue of the Americas, Suite 2305, in New
York.
The Court Clerk also recorded claims transfers to:
Transferee Transferor Claim Amount
---------- -------- ------------
Akebono Corporation Credit Suisse $2,002,447
Kendall Electric Midtown Claims, LLC 42,960
AT&T Corp. Contrarian Funds, LLC 14,491
Top Craft Tool, Inc. Capital Markets 1,031
Dan Sullivan can be contacted for Credit Suisse, at 11 Madison
Avenue, 5th Floor, in New York.
Midtown Claims, LLC, could be reached through Meghan Slow, at 65
East 55th Street, 19th Floor, in New York.
Contrarian Funds, LLC, has offices at 411 West Putnam Avenue,
Suite 225, in Greenwich, Connecticut.
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 GIANCOLA: Case Summary & Six Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: David C. Giancola
442 Setlers Village Circle
Cranberry Twp, PA 16066
Bankruptcy Case No.: 06-25788
Type of Business: The Debtor filed for chapter 11 protection on
September 8, 2006 (Bankr. W.D. Pa. Case No.
06-24415).
Chapter 11 Petition Date: November 16, 2006
Court: Western District of Pennsylvania (Pittsburgh)
Debtor's Counsel: William Weiler, Jr., Esq.
Meyer, Darragh, Buckler, Bebeneck & Eck
600 Grant Street, Suite 4850
Pittsburgh, PA 15219
Tel: (412) 261-6600
Fax: (412) 471-2754
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
------ --------------- ------------
Mars National Bank 2642 Rochester Road $100,000
P.O. Box 927 Cranberry Twp., PA Secured:
Mars, PA 16046 16066, Lot A & B $725,000
Senior Lien:
$450,000
Continental Casualty Company Claim for unpaid $25,000
c/o Avery Lawson, Esq. insurance premiums
312 Boulevard of the Allies
Pittsburgh, PA 15222
Prime Rate Premium Finance Co. Claim for unpaid $25,000
c/o Murray A. Felder, Esq. insurance premiums
Ten Venetian Way
Miami Beach, FL 33139
Internal Revenue Service Employment Taxes $15,000
Special Procedures
P.O. Box 628
Pittsburgh, PA 15230
Chase Manhattan Bank Credit Card for $10,498
c/o Burton Neil & Associates Consumer Purchases
1060 Andrew Drive, Suite 170
West Chester, PA 19380
PA Department of Revenue Unknown
1032 Strawberry Way
Harrisburg, PA 17128
DELTA AIR: Earns in $52 Million in Quarter Ended September 30
-------------------------------------------------------------
Delta Air Lines reported net income of $52 million in the third
quarter ended Sept. 30, 2006, a $1.2 billion improvement over the
same period last year. Excluding the reorganization items the net
loss was $46 million in the third quarter of 2006, a $392 million
improvement compared to the $438 million net loss excluding
reorganization and special items in the third quarter of 2005.
"Delta's accomplishments of the past quarter -- from our second
consecutive quarterly operating profit, to improving our
customers' experience by launching our new domestic
transcontinental product, and completing our goal of fleet
simplification -- are evidence of the continued progress we are
making in transforming our company," said Gerald Grinstein,
Delta's chief executive officer. "Without a doubt, these are
demanding times at Delta, and Delta people are more focused than
ever on our mission to emerge from bankruptcy as a profitable,
competitive, stand-alone airline."
Financial Performance
Third quarter operating revenues increased by 8.1% or $351 million
compared to the third quarter of 2005, despite a 3.4% decrease in
capacity and an estimated $40 million negative impact of increased
security measures after the security threat in London in August.
Passenger unit revenues increased 12.9% compared to the September
2005 quarter due to an 11.5% improvement in passenger mile yield.
Operating expenses for the third quarter of 2006 decreased 1.3%,
or $57 million, from the corresponding period in the prior year,
despite a fuel expense increase of $246 million attributable to
higher fuel prices. Fuel prices rose 20.3% year over year to an
average of $2.19 per gallon, driving a 2.3% increase in
consolidated unit costs. As a result of the cost reduction
initiatives in Delta's restructuring plan, mainline CASM excluding
fuel and special items decreased 4.8% to 6.77 cents.
Restructuring Progress
In September 2005, Delta announced a comprehensive restructuring
plan intended to deliver $3 billion in annual financial benefits
through revenue improvements and cost reductions by the end of
2007. As of September 30, 2006, Delta has achieved 85% of the
targeted benefits under its plan. During the September 2006
quarter, the company took these steps under its restructuring
plan:
* Delta made significant improvements in its unit revenue
performance by restructuring its overall network and
rebalancing the mix of domestic and international flying.
Delta's strategic initiative to shift capacity from
domestic to international flying resulted in year over
year improvements to both domestic and international
PRASM, which increased 18.1 percent and 3.3 percent,
respectively, for the September 2006 quarter. For the
month of September, Delta's PRASM on a length-of-haul
adjusted basis was 92% of industry average, up from 84%
for the same month last year, illustrating the company's
progress in closing the gap to industry standard.
* Through more than 100,000 messages and dozens of visits to
Capitol Hill, employee and retiree grassroots advocacy
pushed pension reform legislation through the legislative
process, culminating in President Bush signing The Pension
Protection Act of 2006 into law. As a result of the law's
enactment, Delta does not intend to terminate the defined
benefit pension plan for its active and retired ground and
flight attendant employees.
* In September, the Bankruptcy Court ruled that Delta met
the financial requirements for a distress termination of
the Delta Pilots Retirement Plan (Pilot Plan).
Unfortunately, the Pension Protection Act of 2006 will not
allow Delta to preserve the Pilot Plan, as it provides no
relief from the unaffordable costs from the Pilot Plan's
lump sum feature. The company is continuing discussions
with the Pension Benefit Guaranty Corporation regarding
termination of the Pilot Plan.
* Delta and its retirees, represented by two committees
created in accordance with Section 1114 of the Bankruptcy
Code, agreed to changes to healthcare benefits for
existing retirees that will result in approximately
$50 million in annual savings for Delta. The changes,
approved by the Bankruptcy Court on October 20, 2006, will
take effect on January 1, 2007.
* Delta achieved its goal of eliminating four aircraft types
from its fleet, reducing its fleet by an additional 17
aircraft during the September 2006 quarter. Since filing
for bankruptcy, Delta has rejected, returned or sold 123
aircraft as of September 30, 2006. As part of its
restructuring, the company intends to reduce its fleet by
at least 20 additional regional aircraft.
"Our restructuring efforts continue to result in significant year-
over-year improvements to both our operating income and margin,"
said Edward H. Bastian, Delta's executive vice president and chief
financial officer. "Despite the nearly $250 million impact of
higher fuel prices, we improved our operating profits by more than
$300 million for the quarter. While we certainly have more work
ahead of us, our business plan is on track and we look to emerge
from bankruptcy in the first half of next year."
Liquidity
At September 30, 2006, the company had $3.9 billion in cash, cash
equivalents and short-term investments, of which $2.8 billion was
unrestricted. Capital expenditures during the September 2006
quarter were $95 million and debt maturity payments were
$181 million. At September 30, 2006, Delta was in compliance with
all of the financial covenants in its post-petition financing
arrangements.
Fuel Hedging
For the September 2006 quarter, Delta hedged approximately 69% of
its fuel consumption. In accordance with SFAS No. 1336, Delta
recognizes certain changes in the fair market values of its
fuel hedge contracts in its Consolidated Statements of Operations,
which in the September 2006 quarter included a $31 million charge
to miscellaneous expense, net to account for the ineffective
portion of hedge contracts in the current and future quarters.
As of October 31, 2006, the company had hedged approximately 71%
of its planned fuel consumption for the December 2006 quarter and
the company is currently forecasting its average fuel price for
the quarter at $2.03 per gallon.
Reorganization and Special Items
In the third quarter of 2006, Delta recorded a $98 million non-
cash gain from reorganization items. These items primarily relate
to a decrease in previously estimated prepetition bankruptcy
claims for the restructuring of aircraft financing arrangements.
In the third quarter of 2005, Delta recorded $692 million in net
charges for reorganization and special items, including (1) a
$607 million charge for reorganization items related to the
rejection of aircraft leases and the write-off of debt issuance
costs and discounts, and (2) an $85 million settlement charge
related to the company's defined benefit pension plan for pilots.
items, the September 2006 net loss was $134 million.
A full-text copy of Delta's Form 10-Q is available for free at:
http://ResearchArchives.com/t/s?14fe
About Delta Air
Headquartered in Atlanta, Georgia, Delta Air Lines (Other OTC:
DALRQ) -- http://www.delta.com/-- is the world's second-largest
airline in terms of passengers carried and the leading U.S.
carrier across the Atlantic, offering daily flights to 502
destinations in 88 countries on Delta, Song, Delta Shuttle, the
Delta Connection carriers and its worldwide partners. The Company
and 18 affiliates filed for chapter 11 protection on Sept. 14,
2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S.
Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in
their restructuring efforts. Timothy R. Coleman at The Blackstone
Group L.P. provides the Debtors with financial advice. Daniel H.
Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss
Hauer & Feld LLP, provide the Official Committee of Unsecured
Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey
Howard & Zukin Capital and James S. Feltman at Mesirow Financial
Consulting, LLC, serve as the Committee's financial advisors. As
of June 30, 2005, the Company's balance sheet showed $21.5 billion
in assets and $28.5 billion in liabilities. (Delta Air Lines
Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
DIGITAL LIGHTWAVE: Posts $2 Million Net Loss in Third Quarter
-------------------------------------------------------------
Digital Lightwave Inc. filed its third quarter financial
statements for the three months ended Sept. 30, 2006, with the
Securities and Exchange Commission on Nov. 7, 2006.
For the three months ended Sept. 30, 2006, the Company incurred a
$2,095,000 net loss on $2,587,000 of net revenues compared to a
$2,083,000 net loss on $4,898,000 of net revenues from the same
period in 2005.
At Sept. 30, 2006, the Company's balance sheet showed $7.3 million
in total assets and $67.8 million in total liabilities, resulting
in a $60.5 million stockholders' deficit. As reported in the
Troubled Company Reporter on Sept. 15, 2006, Digital Lightwave's
balance sheet at June 30, 2006 showed total assets of $6,394,000
and total liabilities of $64,898,000 resulting in a total
stockholders' deficit of $58,504,000.
The Company's Sept. 30 balance sheet also showed strained
liquidity with $7 million in total current assets available to pay
$67.5 million in total current liabilities.
As of Sept. 30, 2006, the Company's unrestricted cash and cash
equivalents totaled approximately $50,000, a decrease of
approximately $621,000 from Dec. 31, 2005. As of Sept. 30, 2006,
the Company's working capital deficit was $60.5 million as
compared to a working capital deficit of $48.8 million at Dec. 31,
2005. The Company had an accumulated deficit of approximately
$148.1 million at Sept. 30, 2006.
A full-text copy of the Company's quarterly report is available
for free at http://researcharchives.com/t/s?1535
Based in Clearwater, Florida, Digital Lightwave Inc. designs,
develops and markets products for installing, maintaining and
monitoring fiber optic circuits and networks. The Company's
product lines include: Network Information Computers, Network
Access Agents, Optical Test Systems, and Optical Wavelength
Managers. The Company's wholly owned subsidiaries are Digital
Lightwave (UK) Limited, Digital Lightwave Asia Pacific Pty, Ltd.,
and Digital Lightwave Latino Americana Ltda.
DONALD STARK: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Donald Bradford Stark, Sr.
1063 Highland Road
Porterville, CA 93257
Bankruptcy Case No.: 06-11966
Type of Business: The Debtor is the president of Millwood Packing,
Inc., which filed for chapter 11 protection on
November 11, 2003 (Bankr. E.D. Calif. Case No.
03-60453).
Chapter 11 Petition Date: November 14, 2006
Court: Eastern District of California (Fresno)
Judge: Whitney Rimel
Debtor's Counsel: David R. Jenkins, Esq.
David R. Jenkins, P.C.
P.O. Box 1406
Fresno, CA 93716
Tel: (559) 264-5695
Fax: (559) 264-5693
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.
ENDOCARE INC: Inks $16 Mil. Common Stock Purchase Pact with Fusion
------------------------------------------------------------------
Endocare Inc. has signed a $16 million Common Stock Purchase
Agreement with Fusion Capital Fund II LLC, a Chicago-based
institutional investor.
Sales of common stock by the Company to Fusion Capital can occur
over a 24-month period after the U.S. Securities and Exchange
Commission has declared effective a registration statement
relating to the transaction.
San Francisco-based Seven Hills Partners LLC acted as the
Company's financial advisor in negotiating the agreement and
evaluating financing alternatives.
The proceeds received by the Company under the agreement will be
used to continue its efforts in prostate and renal cancer
cryoablation and to provide additional capital to further expand
into the interventional radiology and oncology markets treating
cancers of the lung and liver, as well as bone pain associated
with cancer metastases.
Under the agreement, Endocare has the right to sell shares of its
common stock to Fusion Capital from time to time in amounts
between $100,000 and $1 million, depending on certain conditions,
for an aggregate amount of up to $16 million.
The purchase price of the shares will be determined based upon the
market price of the Company's shares at the time of each sale
without any fixed discount, and Endocare will control the timing
and amount of any sales of shares to Fusion Capital.
"We are pleased to have entered into this relationship with a
well-respected institutional investor such as Fusion Capital,
especially since they have expressed a long term partner view,"
Endocare chief executive officer, president and chairman of the
Board Craig T. Davenport said.
"We carefully considered a number of financing alternatives and
concluded that this innovative agreement with Fusion Capital
provides Endocare with excellent terms and flexibility.
"Under this agreement, we can sell shares to Fusion Capital when
we determine the share price is most advantageous for the
Company."
Chief financial officer Michael R. Rodriguez stated, "The Fusion
Capital agreement, along with our available borrowing capacity
under our existing $4 million credit facility with Silicon Valley
Bank, will help provide the Company with the opportunity to use
the most appropriate source of operating and growth capital,
whether debt or equity, if and when we need it.
"As we continue to improve our gross margins and reduce operating
expenses, we expect to continue to invest in cryoablation
opportunities in the interventional radiology and oncology
markets, and growth capital is key to this strategy."
About Fusion Capital
Fusion Capital Fund II LLC is an institutional investor based in
Chicago, Ill., with a fundamental investment approach. Fusion
Capital invests in a wide range of companies and industries
emphasizing life sciences, energy and technology companies. Its
investments range from special situation financing to long-term
strategic capital.
About Endocare
Irvine, Calif.-based Endocare Inc. (OTCBB: ENDO) --
http://www.endocare.com/-- is an innovative medical device
company focused on the development of minimally invasive
technologies for tissue and tumor ablation. Endocare has
initially concentrated on developing technologies for the
treatment of prostate cancer and believes that its proprietary
technologies have broad applications across a number of markets,
including the ablation of tumors in the kidney, lung and liver and
treatment of pain resulting from bone metastases.
Going Concern Doubt
Management says that if the Company fails to adequately address
its liquidity concerns, then its independent auditors may issue a
qualified opinion, to the effect that there is substantial doubt
about the Company's ability to continue as a going concern.
A qualified opinion could itself have a material adverse effect on
its business, financial condition, results of operations and cash
flows.
ENDOCARE INC: Posts $2.149 Mil. Net Loss in Third Quarter of 2006
-----------------------------------------------------------------
Endocare Inc. reported that continued year-over-year growth in
cryoablation procedures and increased gross margins resulted in a
reduction in operating loss from continuing operations in the
third quarter ended Sept. 30, 2006.
Results from continuing operations exclude the results of the Timm
Medical unit, which was divested in February 2006.
For the three months ended Sept. 30, 2006, the Company reported a
$2.149 million net loss compared with $2.890 million net loss in
the same period in 2005.
Third Quarter Results
The estimated number of domestic cryoablation procedures performed
grew 17.3% to 1,883 in the 2006 third quarter from 1,605 in the
prior year period.
Endocare chairman, chief executive officer, and president Craig T.
Davenport said, "As expected, year-over-year procedure growth
remained strong.
"We experienced a sequential decrease in the third quarter
procedures, similar to prior third quarters, which we attribute
partially to seasonality.
"We believe we are positioned well as we move into the fourth
quarter."
Mr. Davenport said, "The Company's migration away from being a
service provider toward a more conventional device sales model
again resulted in improved margins, increased gross profit dollars
and improved bottom line results for the quarter.
"As stated in the past, this revenue mix shift is the result of a
strategic change to the business model that will result in top
line growth that lags procedure growth in the short-term, but
should result in a more scalable and profitable organization in
the long-term following the transition."
Total revenues from continuing operations for the 2006 third
quarter were $6.7 million, compared with $7 million in the 2005
third quarter.
The slight revenue decrease in the face of strong procedural
increases was related to the changing product mix that has the
impact of decreasing revenues per procedure while increasing gross
margin per procedure.
In the 2006 third quarter, sales of disposable products accounted
for 73% of total procedures, up significantly from 40.5% in the
corresponding 2005 period and sequentially up from 66.5% in the
2006-second quarter. Once the transition in the business model is
substantially complete, revenue should track more closely with
procedure growth.
For continuing operations, the transition in mix and reductions in
manufacturing costs continued to have a positive impact on gross
margins, which increased to 60% compared with 45.6% in the 2005
third quarter and up sequentially from 52.9% in the second quarter
of 2006.
Operating expenses from continuing operations for the 2006 third
quarter were $7.5 million, compared with $7.2 million in the 2005
third quarter and $6.5 million in the second quarter of this year.
Loss from continuing operations in the third quarter of 2006 was
$2.1 million. This compares with a loss from continuing
operations of $3.4 million in the corresponding 2005 period.
Adjusted earnings before interest, taxes, depreciation and
amortization (adjusted EBITDA), which excludes FASB 123R stock
compensation expense, was a loss of $3 million for the 2006 third
quarter as compared with a loss of $3.4 million for the third
quarter of 2005.
"Financial metrics again improved in the third quarter as we
continued to find ways to control costs and as our gross margins
reflect the improvements related to a products mix shift that
continues to proceed faster than our initial projections," chief
financial officer Michael R. Rodriguez said.
At Sept. 30, 2006, the Company's balance sheet showed $19.258
million in total asssets, $12.013 million in total liabilities,
and $7.245 million in total stockholders' equity.
The Company had $5.5 million of cash and cash equivalents at
Sept. 30, 2006. Cash used in the 2006 third quarter was
$2.5 million.
Financing Update
Subsequent to the close of the third quarter, the Company
announced on Oct. 30, 2006, that it had signed a $16 million
Common Stock Purchase Agreement with an institutional investor.
The proceeds received by the Company under the agreement will be
used to continue its growth efforts in prostate and renal cancer
cryoablation and to provide additional capital to further expand
into the interventional radiology and oncology markets treating
cancers of the lung and liver.
Full-text copies of the Company's third quarter financials are
available for free at http://ResearchArchives.com/t/s?1528
Going Concern Doubt
Management says that if the Company fails to adequately address
its liquidity concerns, then its independent auditors may issue a
qualified opinion, to the effect that there is substantial doubt
about the Company's ability to continue as a going concern.
A qualified opinion could itself have a material adverse effect on
its business, financial condition, results of operations and cash
flows.
About Endocare
Irvine, Calif.-based Endocare Inc. (OTCBB: ENDO) --
http://www.endocare.com/-- is an innovative medical device
company focused on the development of minimally invasive
technologies for tissue and tumor ablation. Endocare has
initially concentrated on developing technologies for the
treatment of prostate cancer and believes that its proprietary
technologies have broad applications across a number of markets,
including the ablation of tumors in the kidney, lung and liver and
treatment of pain resulting from bone metastases.
ENERGY PARTNERS: Exploring Strategic Alternatives Including Sale
----------------------------------------------------------------
Energy Partners, Ltd. confirmed its commitment to the Company's
exploration of strategic alternatives, including a sale of the
Company, even if ATS Inc., a wholly owned subsidiary of Woodside
Petroleum, Ltd., walks away after the expiration of its self-
imposed deadline.
"We appreciate the support that many of our investors have
expressed for our efforts to maximize value for EPL stockholders
through our exploration of strategic alternatives," Richard A.
Bachmann, EPL's Chairman and Chief Executive Officer, said. "This
process is underway with the multiple parties who have signed
confidentiality agreements and we continue to entertain interest
from others."
EPL's Board of Directors continues to believe that the $23 per
share offered by ATS represents neither the full and fair long-
term value of EPL nor the value potentially obtainable in a
transaction resulting from the Company's current exploration of
strategic alternatives. The Board continues to recommend that EPL
stockholders reject ATS' efforts to replace the Company's
experienced and highly qualified directors with ATS' own hand-
picked nominees, who are committed to fulfilling ATS' agenda of
buying the Company at the lowest price it can.
The nation's two leading independent proxy advisors, Institutional
Shareholder Services and Glass Lewis, agree that the EPL Board is
taking the appropriate actions to maximize value for its
stockholders and have recommended that EPL stockholders reject the
ATS consent solicitation.
Stockholders may show their support for the Board's process to
maximize value by voting AGAINST the ATS proposals on the White
management revocation card. If stockholders have previously
signed a gold consent card sent by Woodside or ATS, they may
revoke that consent by executing and voting the WHITE consent
revocation card sent to them by EPL. Stockholders with questions
or who need assistance may call the Company's proxy solicitor,
MacKenzie Partners, Inc., toll-free at (800) 322-2885 or at 212-
929-5500.
About EPL
Headquartered in New Orleans, Louisiana Energy Partners Ltd.
(NYSE:EPL) -- http://www.eplweb.com/-- is an independent oil and
natural gas exploration and production company. Founded in 1998,
the Company's operations are focused along the U. S. Gulf Coast,
both onshore in south Louisiana and offshore in the Gulf of
Mexico.
* * *
As reported on the Troubled Company Reporter, Oct 17, 2006,
Standard & Poor's Ratings Services 'B+' corporate credit rating
on exploration and production company Energy Partners Ltd.
remained on CreditWatch with developing implications. The ratings
on New Orleans, Louisiana-based Energy Partners were placed on
CreditWatch Developing on Aug. 29, 2006.
ENERGY PARTNERS: Posts $25.2 Mil. Net Loss in 2006 Third Quarter
----------------------------------------------------------------
Energy Partners, Ltd. disclosed financial results for the third
quarter of 2006. EPL reported a net loss to common stockholders
of $25.2 million for the third quarter of 2006 compared to net
income available to common stockholders of $6.5 million for the
third quarter of 2005.
The Company said the net loss for the quarter was primarily
attributed to a total of $54.7 million of pre-tax costs associated
with the termination of the proposed merger with Stone Energy
Corporation (NYSE: SGY) and the unsolicited offer by ATS Inc., a
wholly owned subsidiary of Woodside Petroleum, Ltd. (ASX: WPL) to
acquire EPL. The costs related to the terminated merger agreement
with Stone totaled $46.5 million, of which $43.5 million related
to the fee advanced by the Company to Plains Exploration and
Production Company on behalf of Stone to terminate their merger
agreement, while increased legal and financial advisory costs
amounting to $8.2 million were associated with the unsolicited ATS
offer.
Financial Results
Revenue for the third quarter of 2006 was $107.5 million, a 17%
increase over third quarter 2005 revenues of $92 million. Cash
flow from operating activities in the third quarter of 2006 was
$10.5 million versus $109.1 million in the same quarter a year
ago.
For the nine months ended Sept. 30, 2006, net income available to
common stockholders was $2.1 million. In the same period of 2005,
net income available to common stockholders was $44 million. Cash
flow from operating activities in the first nine months of 2006
was $185.4 million, versus the total of $253.7 million in the same
period of 2005.
As of Sept. 30, 2006, the Company had cash on hand of $8 million,
total debt of $320 million, and a debt to total capitalization
ratio of 43%. The Company also had $55 million of remaining
capacity available under its bank facility as of Sept. 30, 2006,
which has a borrowing base of $225 million.
"Our third quarter financial results were clearly overshadowed by
the expenses we incurred in conjunction with the terminated Stone
transaction and the unsolicited offer from Woodside," Richard A.
Bachmann, EPL's Chairman and CEO, commented. "Looking past those
items, our production volumes met our expectations and our costs
and expenses were at or below the low side of our guidance.
Looking ahead to the fourth quarter, production volumes are rising
and cash flow for the balance of this year looks strong. On a
further positive note, we recently increased our 2006 budget in
large part to fund development costs associated with drilling
successes we have had year-to-date."
About EPL
Headquartered in New Orleans, Louisiana Energy Partners Ltd.
(NYSE:EPL) -- http://www.eplweb.com/-- is an independent oil and
natural gas exploration and production company. Founded in 1998,
the Company's operations are focused along the U. S. Gulf Coast,
both onshore in south Louisiana and offshore in the Gulf of
Mexico.
* * *
As reported on the Troubled Company Reporter, Oct 17, 2006,
Standard & Poor's Ratings Services 'B+' corporate credit rating
on exploration and production company Energy Partners Ltd.
remained on CreditWatch with developing implications. The ratings
on New Orleans, Louisiana-based Energy Partners were placed on
CreditWatch Developing on Aug. 29, 2006.
ENRON CORP: Judge Harmon Sentences Director to 2 Yrs. Probation
---------------------------------------------------------------
The Honorable Melinda Harmon of the U.S. District Court for the
Southern District of Texas sentenced former Enron Corp. managing
director for investor relations and corporate secretary Paula H.
Rieker to two years probation and a $50,000 fine for her role in
illegal activities at Enron that led to its financial collapse
and bankruptcy filing, reports David Rovella and Laurel
Brubaker Calkins of Bloomberg News.
Ms. Rieker received a light sentence as a result of her
cooperation with government prosecutors as a prosecution witness
against other former Enron officials charged with illegal
activities.
As previously reported, Ms. Rieker pleaded guilty in May 2004 to
insider trading and paid disgorgement, prejudgment interest, and
a civil penalty totaling $499,333. As part of her plea bargain
agreement, Ms. Rieker also fully cooperated with the government's
criminal investigation of the collapse of Enron.
About Enron Corp.
Headquartered in Houston, Texas, Enron Corporation filed for
chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case
No. 01-16033) following controversy over accounting procedures,
which caused Enron's stock price and credit rating to drop
sharply. Judge Gonzalez confirmed the Company's Modified Fifth
Amended Plan on July 15, 2004, and numerous appeals followed. The
Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004.
Albert Togut, Esq., at Togut Segal & Segal LLP, Brian S. Rosen,
Esq., Martin Soslan, Esq., Melanie Gray, Esq., Michael P. Kessler,
Esq., Sylvia Ann Mayer, Esq., at Weil, Gotshal & Manges LLP,
Frederick W.H. Carter, Esq., Michael Schatzow, Esq., Robert L.
Wilkins, Esq., at Venable, Baetjer and Howard, LLP, and Mark C.
Ellenberg, Esq., at Cadwalader, Wickersham & Taft, LLP represent
the Debtor. Jeffrey K. Milton, Esq., Luc A. Despins, Esq.,
Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank,
Tweed, Hadley & McCloy LLP represents the Official Committee of
Unsecured Creditors. (Enron Bankruptcy News, Issue No. 181;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
ENRON CORP: SEC Charges Three Former Enron Execs. Of Aiding Fraud
-----------------------------------------------------------------
As widely reported, the U.S. Securities and Exchange Commission
has filed before the U.S. District Court in Houston, Texas, a
lawsuit against former Enron Corp. officers Jerry Kent Castleman,
Cheryl I. Lipshutz and Kathleen M. Lynn in connection with their
involvement in a bogus sale of Enron's energy project in Brazil
in 1999.
Ms. Lipshutz has agreed to pay $52,150 to settle the case without
admitting or denying wrongdoing, the SEC said.
The SEC alleges that that three executives aided Enron in
committing fraud by recording revenue gains from the sale of a
stake in the Brazilian energy project to LJM Cayman, a private
equity fund then owned by former Enron officer Andrew Fastow.
The SEC says that Enron repurchased the stake in the project
without amending its previously recorded earnings that were filed
with the SEC.
About Enron Corp.
Headquartered in Houston, Texas, Enron Corporation filed for
chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case
No. 01-16033) following controversy over accounting procedures,
which caused Enron's stock price and credit rating to drop
sharply. Judge Gonzalez confirmed the Company's Modified Fifth
Amended Plan on July 15, 2004, and numerous appeals followed. The
Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004.
Albert Togut, Esq., at Togut Segal & Segal LLP, Brian S. Rosen,
Esq., Martin Soslan, Esq., Melanie Gray, Esq., Michael P. Kessler,
Esq., Sylvia Ann Mayer, Esq., at Weil, Gotshal & Manges LLP,
Frederick W.H. Carter, Esq., Michael Schatzow, Esq., Robert L.
Wilkins, Esq., at Venable, Baetjer and Howard, LLP, and Mark C.
Ellenberg, Esq., at Cadwalader, Wickersham & Taft, LLP represent
the Debtor. Jeffrey K. Milton, Esq., Luc A. Despins, Esq.,
Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank,
Tweed, Hadley & McCloy LLP represents the Official Committee of
Unsecured Creditors. (Enron Bankruptcy News, Issue No. 181;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
ENTERGY NEW ORLEANS: Files Amended Plan & Disclosure Statement
--------------------------------------------------------------
Entergy New Orleans Inc. delivered to the Honorable Jerry A.
Brown of the U.S. Bankruptcy Court for the Eastern District of
Louisiana its First Amended Chapter 11 Plan of Reorganization and
an accompanying First Amended Disclosure Statement on Nov. 14,
2006.
ENOI filed the Amended Plan to, among others, address certain
issues raised by the Official Committee of Unsecured Creditors and
The Bank of New York in the Financial Guaranty Insurance Company's
request to terminate the Debtor's exclusive periods to file, and
solicit acceptances of, a reorganization plan.
A full-text copy of ENOI's First Amended Chapter 11 Plan is
available for free at http://researcharchives.com/t/s?1544
A full-text copy of ENOI's First Amended Disclosure Statement is
available for free at http://researcharchives.com/t/s?1545
Claims & Interests
Pursuant to the Amended Plan, claims and interests continue to be
grouped into 12 classes, all of which will be treated in the same
manner provided for under ENOI's Chapter 11 Plan of Reorganization
filed on Oct. 23, 2006.
ENOI discloses that, as of May 31, 2006, the accumulated unpaid
dividends for the Class 11 Preferred Interests are $277,155 for
the 4.75% Preferred Shares, $457,800 for the 4.36% Preferred
Shares, and $583,800 for the 5.56% Preferred Shares.
Updates to Financing
On Oct. 27, 2006, the Council for the City of New Orleans,
Louisiana, approved a settlement agreement that resolves ENOI's
2006 FRP Applications, Storm Reserve Riders and Storm Cost
Recovery Riders. The settlement provides for phased-in rate
increases while taking into account the anticipated receipt of the
$200,000,000 Community Development Block Grants Funds as
recommended by the Louisiana Recovery Authority. The settlement
also provides:
-- a $3,900,000 increase in electric base rates to be
implemented in January 2008;
-- an increase in gas base rates by $4,750,000 in November
2006, and additional increases of $1,500,000 in March
2007 and $4,750,000 in November 2007; and
-- the establishment of a $75,000,000 storm reserve for
damage from future storms, which will be created over a
10-year period through a storm reserve rider beginning
in March 2007.
Daniel F. Packer, ENOI's president and chief executive officer,
says that the company is expected to receive the CDBG Funds no
later than June 30, 2007.
In addition, as of Nov. 14, 2006, ENOI has received an aggregate
of $7,206,767 in Katrina Insurance Proceeds. Based on its
discussions with the Oil Insurance Limited and the Excess
Carriers, ENOI believes it will receive an additional $42,800,000
of Katrina Insurance Proceeds on or before June 30, 2007.
Conditions to Effectiveness Reduced
ENOI removed certain conditions to effectiveness specified in the
Original Plan. The effective date of the Amended Plan will not
occur unless these conditions are satisfied:
(1) the Bankruptcy Court's Confirmation Order has been entered
in a form reasonably satisfactory to ENOI, and no
injunction has been entered pending any appeal of the
Confirmation Order;
(2) ENOI has received in cash at least $200,000,000 in CDBG
Funds in cash;
(3) ENOI has received $50,000,000 Katrina Insurance Proceeds
in cash; and
(4) no Material Adverse Change will have occurred from and
after the Confirmation Date of the Amended Plan.
One or more of the conditions to the Effective Date may be waived,
in whole or in part, by the Debtor at any time and without any
Court order.
If on or before June 30, 2007, one or more of the Conditions does
not occur, or has not been waived, any order confirming the
Amended Plan will be vacated, no distributions under the Amended
Plan will be made, and ENOI and all Holders of Claims and
Interests will be restored to the status quo ante as of the day
immediately preceding the Confirmation Date.
The Debtor believes that the changes it made in respect to the
terms of the Plan demonstrate that it is has diligently moved
toward confirming a plan.
Initial Financial Forecasts
ENOI has yet to submit its financial projections to the Court.
Mr. Packer notes that the Debtor's forecasts assumes that after
the Effective Date, the company will continue to incur storm
restoration costs and there could be long delays in the timing and
the amount of recovery of Katrina damage costs.
ENOI's primary insurer, the Oil Insurance Limited, has advised its
insureds and stakeholders that due to the devastations caused by
Hurricane Katrina, it intends to invoke a $1,000,000,000 aggregate
cap for all insureds.
Mr. Packer says that it is likely that the total damages claimed
by all insureds for Katrina damages will exceed $1,000,000,000,
and that the insureds, including ENOI, will suffer proportionate
reduction in their claims payments.
Mr. Packer also admits that there is significant uncertainty in
the rebuilding and repopulation of New Orleans that could affect
ENOI after its emergence from bankruptcy. As of August 2006,
about 85,000 electric customers and 55,000 gas customers have
returned to ENOI's service, but the numbers are significantly less
than ENOI's retail customer base before Hurricane Katrina.
Only 70% to 75% of ENOI's commercial load and 85% to 90% of its
industrial load have returned to pre-Katrina levels. ENOI's
financial forecast is premised upon electric load reaching 65% of
the level it was projected to be in 2010 in financial forecasts
that were prepared pre-Katrina. The 65% level is consistent with
the level of load currently in place, but there is no assurance
that the 65% level will be sustained, Mr. Packer relates.
Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc.
-- http://www.entergy-neworleans.com/-- is a wholly owned
subsidiary of Entergy Corporation. Entergy New Orleans provides
electric and natural gas service to approximately 190,000 electric
and 147,000 gas customers within the city of New Orleans. Entergy
New Orleans is the smallest of Entergy Corporation's five utility
companies and represents about 7% of the consolidated revenues and
3% of its consolidated earnings in 2004. Neither Entergy
Corporation nor any of Entergy's other utility and non-utility
subsidiaries were included in Entergy New Orleans' bankruptcy
filing. Entergy New Orleans filed for chapter 11 protection on
Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J.
Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker,
Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the
Debtor in its restructuring efforts. Carey L. Menasco, Esq.,
Philip Kirkpatrick Jones, Jr., Esq., and Joseph P. Hebert, Esq.,
at Liskow & Lewis, APLC, represent the Official Committee of
Unsecured Creditors. When the Debtor filed for protection from
its creditors, it listed total assets of $703,197,000 and total
debts of $610,421,000. (Entergy New Orleans Bankruptcy News,
Issue No. 27; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
ERICO INT'L: Proposed Recapitalization Cues S&P's CreditWatch
-------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on ERICO
International Corp., including its 'BB-' corporate credit rating,
on CreditWatch with negative implications.
"The CreditWatch listing follows ERICO's announced plans to
recapitalize the company in a transaction valued at approximately
$675 million, which could result in an increase in debt leverage
beyond the expectations at the current rating," said Standard &
Poor's analyst Anita Ogbara.
ERICO is principally owned by Citigroup Venture Capital Partners
L.P. and management. Citigroup Venture Capital has reached an
agreement in principal to complete a leveraged recapitalization of
the company whereby ERICO will repurchase all of its shares held
by Citigroup Venture Capital and certain management shareholders.
Standard & Poor's will monitor events and assess the impact of any
recapitalization plans proposed. Higher debt leverage or decrease
in cash flow protection measures could lead to a downgrade.
FERTINITRO FINANCE: Moody's Puts B3 Rating on Review for Downgrade
------------------------------------------------------------------
Moody's Investors Service today placed the B3 rating of FertiNitro
Finance Inc.'s $250 million 8.29% senior secured notes due 2020 on
review for downgrade.
The review was prompted by a report from the project's management
that it did not receive a completed deferred second reliability
test certificate from its independent engineers, as required under
the bond indenture. This non-certification event results from the
independent engineer's assessment that a manufacturing defect in
certain equipment at the FertiNitro complex could result in
unexpected repairs that extend the plant's downtime limits beyond
expectations. The non-certification will also trigger a $50
million permanent repayment of senior bank debt to lenders by
November 30, 2006.
With a reported $156 million of available and restricted cash on
hand at October 31, 2006, Moody's expects that FertiNitro will
have adequate liquidity to make the required $50 million payment.
However, given the ongoing requirement to pre-fund its debt
service reserve to meet interest and principal payments, the
project's liquidity will be somewhat weakened.
Although Moody's believes the cost involved to remedy the
problems, related to water coolers in the ammonia plants, is
manageable, the unpredictability of when this corrective action
would take place, and the days of downtime required, are unclear.
The potential for increased future downtime notwithstanding, the
project's current production levels have shown consistent results
with output at approximately 97% of budget for ammonia and urea
year to date.
Moody's review will primarily consider the timing and potential
economic impact any remedial action would have.
Given the 35% ownership position of the project held by Pequiven,
a subsidiary of Venezuelan government owned Petroleos de
Venezuela, FertiNitro is a government-related issuer in accordance
with Moody's rating methodology entitled "The Application of Joint
Default Analysis to Government-Related Issuers".
As such, the ratings of FertiNitro currently reflect the
combination of these inputs:
-- a baseline credit assessment range of 17-19;
-- the current B1 foreign currency rating of Venezuela;
-- low dependence; and,
-- low support.
The baseline credit assessment range of 17-19 represents the
project's historically challenged operating history, location in
Venezuela and the associated potential for socio-economic unrest,
position of weakness with its gas supplier, Venezuelan government
owned PDVSA and relatively weak but improving cash flows. More
positively, the rating recognizes the project's good location for
accessing both U.S. and South American markets, off-take
agreements with its sponsors, and current relatively low-cost gas
feedstock supply.
FertiNitro Finance, Inc. is a Cayman Islands special purpose
financing vehicle for the $1 billion ammonia and urea project
located in Venezuela. The project is designed to produce ammonia
and urea, primarily from domestically sourced methane gas feed-
stocks.
FOCUS CORPORATION: Moody's Withdraws B3 Rating on CDN$70MM Loan
---------------------------------------------------------------
Moody's Investors Service has withdrawn all ratings on Focus
Corporation because the proposed financing was never completed.
Moody's has withdrawn these ratings:
-- CDN$30 million senior secured first lien revolver maturing
2011, rated Ba3, LGD2, 28%
-- CDN$165 million senior secured first lien term loan B due
2012, rated Ba3, LGD2, 28%
-- CDN$70 million senior secured second lien term loan due
2013, B3, LGD5, 76%
-- Corporate Family Rating, B2
-- Probability of Default Rating, B2
-- Stable ratings outlook is withdrawn.
Focus Corporation, headquartered in Edmonton, Alberta, is a
professional and technical services firm in Western Canada
providing services to end-market segments that include energy,
land development, transportation, and community infrastructure
through two primary divisions: Geomatics Energy Services and Intec
Engineering Services. Geomatics primarily provides land surveying
and mapping to oil and gas companies, while Intec provides
engineering services to public and private customers. Pro forma
for recently completed acquisitions, Focus's revenue for fiscal
year 2006 was approximately CDN$160 million.
FINOVA GROUP: Wants Ch. 11 Case Re-Opened & Thaxton Pact Approved
-----------------------------------------------------------------
The FINOVA Group Inc. and FINOVA Capital Corp. ask the U.S.
Bankruptcy Court for the District of Delaware to:
-- approve the settlement of the Thaxton Litigation;
-- approve the ongoing sale of FINOVA's remaining assets,
the wind-up of the Reorganized Debtors' operations, and
the future dissolution of FINOVA;
-- reopen FINOVA Group's chapter 11 case; and
-- channeling claims related to the Reorganized Debtors'
Chapter 11 Plan into the Bankruptcy Court.
Relevant Plan Provisions
FINOVA's joint chapter 11 plan was funded by a $5.6 billion senior
secured loan to FINOVA Capital from Berkadia LLC. Berkadia is the
joint venture of Berkshire Hathaway Inc. and Leucadia National
Corporation. In return, FINOVA Group issued to Berkadia
approximately 61 million shares of common stock representing 50%
of FINOVA Group's outstanding shares after giving effect to
implementation of the Plan.
The proceeds of the Berkadia Loan, together with cash on hand and
FINOVA Group's issuance of approximately $3.25 billion of 7.5%
Senior Secured Notes maturing 2009 due 2016, were used to
restructure FINOVA's debt.
The New Senior Notes were secured by a second-priority lien on (i)
the common stock of FINOVA Capital held by FINOVA Group, and (ii)
a secured intercompany note in the principal amount of the New
Senior Notes that was issued to FINOVA Group by FINOVA Capital.
The terms of the New Notes effectively precluded FINOVA from
conducting any new business other than realizing the value of its
assets until those Notes were repaid in full.
The New Notes were issued to the general unsecured creditors of
FINOVA Capital and to certain holders of interests related to the
FINOVA Trust.
Status of Certain Plan Distributions
As of Nov. 15, 2006, the holders of the New Senior Notes will have
received:
a. cash distributions representing 70% of their claims and
b. payments aggregating approximately $1.5 billion in
principal amount of the New Senior Notes plus interest of
$994 million.
Additionally, FINOVA repurchased and retired $285 million of New
Senior Notes at a discount. Approximately $1.5 billion in
principal amount of New Senior Notes is still outstanding.
FINOVA anticipates that there will be insufficient funds to
satisfy in full the obligation arising under the New Notes.
"Gating Issues"
FINOVA said, to effectuate a complete windup, it requires the
Court to resolve key issues it names as "gating issues,"
including:
-- approving the terms of the settlement of litigation related
to The Thaxton Group Inc.;
-- a determination of the 5% Solvency Issue; and
-- an adjudication of the remaining claims.
Thaxton Litigation
In the litigation, the Noteholders alleged that FINOVA conspired
with the Thaxton Debtors to defraud them, and FINOVA and various
parties should be liable for those alleged actions.
On Sept. 11, 2006, all the parties involved in the litigation
reached a global settlement. The salient terms of the settlement
were presented to the South Carolina District Court for approval.
The salient terms of the Master Settlement Agreement are:
a. All Thaxton Noteholders and other unsecured creditors of
the Thaxton Debtors will be certified for settlement
purposes;
b. On the effective date of the agreement, FINOVA will receive
approximately $81 million in cash in full satisfaction of
its claim in the principal amount of $110 million. FINOVA
will also receive half of all net recoveries in excess of
$2.27 million from the avoidance actions in the Thaxton
cases, excluding any recoveries from certain parties named
in the Master Settlement Agreement;
c. On the settlement effective date of the agreement, the
Thaxton Noteholders and other unsecured creditors will
receive all real and personal property of the Thaxton
Debtors (excluding property to be received by FINOVA);
d. All the Thaxton parties will release FINOVA Group,
FINOVA Capital, and certain related parties from all
Thaxton-related claims. All releases will be incorporated
in the Thaxton Debtors' chapter 11 plan;
e. FINOVA Capital and FINOVA Group will release the Thaxton
parties from all claims and liens; and
f. The Master Settlement Agreement must be approved by the:
1. South Carolina District Court in the Settlement Case;
2. Delaware Bankruptcy Court for the Thaxton Cases; and
3. Delaware Bankruptcy Court for FINOVA's cases.
In addition, the settlement effective date cannot occur
until:
1. the effective date of the Thaxton Plan has occurred;
2. the District Court Summary Judgment order has been
vacated; and
3. the Thaxton litigation has been dismissed.
5% Solvency Issue
FINOVA's Plan required it to set aside amounts for eventual
distribution to equity holders at such time as FINOVA would be
permitted to distribute dividends to equity holders. This is
known as the 5% Holdback.
As of Nov. 15, 2006, FINOVA has approximately $78 million in
segregated account in connection with the 5% Holdback.
Because it is insolvent, FINOVA sought the Bankruptcy Court's
permission to cease escrowing the 5% Holdback and use the
segregated account to pay expenses, debts, and other obligations.
Certain members of the statutory equity committee objected to
FINOVA's motion.
The Bankruptcy Court ruled that the 5% provision did not create a
debt to the equity holders. FINOVA would not be able to pay the
equity holders if FINOVA is insolvent or if the payments would:
-- render FINOVA insolvent,
-- be a fraudulent conveyance, or
-- be illegal under applicable law.
The Bankruptcy Court left unresolved the issue of FINOVA's
ultimate solvency.
If the Bankruptcy Court determines that FINOVA is solvent, the
equity holders will receive the balance of the segregated account.
On the other hand, if FINOVA is insolvent, the segregated account
will be used to pay FINOVA's expenses, debts, and other
obligations.
Remaining Claims
More than 3,500 proofs of claims were filed against FINOVA.
At this time, FINOVA said, there are 29 outstanding state and
local tax claims filed by nine taxing authorities totaling
$5 million. In addition, there are five outstanding non-tax
claims.
Re-opening of Chapter 11 Case
FINOVA said that because it will never be able to repay the
Noteholders in full, it would ultimately liquidate. In
anticipation of this inevitability, FINOVA asks the Court for
authority to take all necessary steps to wind up its affairs and
dissolve itself and its affiliates.
FINOVA said that obtaining shareholder approval for its
dissolution is inappropriate because its shareholders will not
receive any liquidation distributions, given that Noteholders will
not recover in full.
FINOVA wants to reopen the chapter 11 case of FINOVA Group so that
it may available of a Delaware law provision that allows a
Delaware corporation in bankruptcy to take any action directed by
a bankruptcy court order "with like effect as if exercised and
taken by unanimous action of the directors and stockholders of the
corporation."
Channeling Claims
FINOVA also asks the Court for authority to issue an order
channeling to the Bankruptcy Court any claims of the Noteholders
or the indenture trustee for the New Senior Notes against FINOVA
arising under the Plan, the ongoing liquidation, the New Senior
Notes, or its winding up.
Objections to the Debtors' motions, if any, must be filed by 4:00
p.m. on Nov. 28, 2006. The Court will hear FINOVA's motion at
3:00 p.m. on Dec. 4, 2006.
A full-text copy of FINOVA's motion and the Thaxton Settlement
Agreement is available for free at:
http://ResearchArchives.com/t/s?1540
About Finova
Headquartered in Scottsdale, Arizona, The Finova Group, Inc.,
provides commercial financing to small and mid-sized businesses;
other services include factoring, accounts receivable management,
and equipment leasing. The firm has three segments: Commercial
Finance, Specialty Finance, and Capital Markets. FINOVA targets
such markets as transportation, wholesaling, communication, health
care, and manufacturing. Loan write-offs had put the firm on
shaky ground. The company and its debtor-affiliates and
subsidiaries filed for Chapter 11 protection on March 7, 2001
(U.S. Bankr. Del. 01-00697). Pachulski, Stang, Ziehl, Young &
Jones P.C. and Wachtell, Lipton, Rosen & Katz represent the
Official Committee of Unsecured Creditors. Daniel J.
DeFranceschi, Esq., at Richards, Layton & Finger, P.A., represents
the Debtors. FINOVA has since emerged from Chapter 11 bankruptcy.
Financial giants Berkshire Hathaway and Leucadia National
Corporation (together doing business as Berkadia) own FINOVA
through the almost $6 billion lent to the commercial finance
company. Finova is winding up its affairs.
Going Concern
As reported in the Troubled Company Reporter on May 16, 2006,
Ernst & Young LLP expressed substantial doubt about The Finova
Group Inc.'s ability to continue as a going concern after auditing
the company's financial statements for the year ended Dec. 31,
2005. The auditing firm pointed to the company's negative net
worth as of Dec. 31, 2005 as well as its limited sources of
liquidity to satisfy its obligations.
At Sept. 30, 2006, the Company's balance sheet showed
$473.55 million in total assets and $1,076.45 million in total
liabilities, resulting in a $602.90 million stockholders' deficit.
FISHER SCIENTIFIC: Thermo Merger Cues Moody's to Lift Ba2 Rating
----------------------------------------------------------------
Moody's Investors Service concludes the rating review for possible
downgrade initiated on May 8, 2006 for Thermo Electron
Corporation, which is the surviving entity whose name has changed
to Thermo Fisher Scientific Inc., as a result of the report that
the merger between it and Fisher Scientific International Inc. has
been finalized. The ratings for Thermo have been downgraded and
concurrently the ratings for Fisher Scientific International Inc.
were upgraded.
The companies combined in a tax-free, stock-for-stock transaction
following its recently received anti-trust clearance which
completed the merger.
The Baa2 senior unsecured debt rating for the combined entity,
Thermo Fisher, reflects a capital structure, financial leverage
and cash flow coverage of debt indicative of an investment grade
issuer. Moody's expects that Thermo Fisher will yield a range in
operating cash flow to adjusted debt of 27% to 31% with adjusted
free cash flow to adjusted debt of 19% to 23% in 2006. Moody's
also expects that the company will pay down debt over the same
time period, from approximately $3 billion pro-forma as of
Dec. 31, 2005, to $2.6 billion and $2.3 billion at the end of 2006
and 2007, respectively.
Moody's believes that the merger between the two companies will
offer these benefits:
-- greater scale and a broad portfolio of products and
services;
-- the ability to offer an end to end solution for laboratory
customers, including equipment, software, reagents,
consumables and services; and,
-- a more diverse geographic, product and customer mix.
Moody's also expects that the combination could result in cost
synergies and revenue synergies of approximately $150 million and
$50 million, respectively, over the next few years. Moody's also
views the two companies as highly complimentary.
Fisher has a strong supply chain management with distribution
capabilities, multiple sales channels, as well as significant
sales and marketing resources. Thermo, on the other hand, has
strong production innovation, intellectual property, research and
development, as well as a solid global manufacturing footprint and
expertise. Thermo has also been quite successful in penetrating
Asia and other emerging markets, offering potentially greater
access for Fisher.
Moody's believes that the unsecured senior debt of Thermo Fisher
will be structurally subordinated to the current debt at Fisher,
as well as the $1 billion senior unsecured guaranteed credit
facility for the combined entity. Moody's assessment reflects the
fact that the proposed credit facility should benefit from a
guarantee from Fisher while the existing Fisher debt benefits from
a co-obligation from the parent.
Moody's, however, did not view technical structural subordination
as a major constraint to Thermo Fisher's current senior unsecured
notes and bonds at the Baa2 senior unsecured rating for the
combined company. Moody's notes that this subordination issue
could become more material if the combined company's rating were
at a lower level.
Moody's ratings do consider the major risks in combining both
companies, specifically the integration of the two company's
systems, operations and cultures. While Moody's notes that both
companies have acquired other life science firms in the past few
years, Moody's expects the combined company to focus on internal
growth and cost synergies in the short-term prior to resuming to
acquiring additional companies.
These ratings of Thermo Fischer Scientific Inc. (formerly Thermo
Electron Corporation) were downgraded:
-- $150 million senior unsecured notes, due 2008, downgraded
to Baa2 from Baa1
-- $250 million 5% Senior Global Notes, due 2015, downgraded
to Baa2 from Baa1
-- $125 million convertible subordinated debentures due 2007,
downgraded to Ba1 from Baa3
These ratings were withdrawn for Thermo Fischer Scientific Inc.:
-- Senior Unsecured Shelf Rating, rated (P) Baa1
-- Subordinated Shelf Rating, rated (P) Baa2
These ratings of Fisher Scientific International, Inc. were
upgraded:
-- $300 million 2.50% senior unsecured convertible notes, due
2023, upgraded to Baa2 from Ba1
-- $330 million 3.25% senior subordinated convertible notes
due 2024, upgraded to Baa3 from Ba2
-- $300 million 6.75% senior subordinated notes, due 2014,
upgraded to Baa3 from Ba2
-- $500 million 6 1/8% senior subordinated notes, due 2015,
upgraded to Baa3 from Ba2
These ratings of Fisher Scientific International, Inc. were
withdrawn:
-- Corporate Family Rating
-- $500 million Senior Secured Guaranteed Revolver due 2009
-- $250 million Senior Secured Guaranteed US Dollar Term Loan
A due 2009
These ratings of Apogent Technologies, Inc. (a wholly-owned
subsidiary of Fisher) were upgraded:
-- $345 million floating rate senior convertible contingent
notes due 2033 upgraded to Baa2 from Ba1
The ratings outlook is stable.
Thermo Fisher Scientific Inc., based in Waltham, Massachusetts,
with annual sales of more than $9 billion, serves over
350,000 customers within pharmaceutical and biotech companies,
hospitals and clinical diagnostic labs, universities, research
institutions and government agencies, as well as environmental and
industrial process control settings. Thermo Scientific offers
customers a complete range of high-end analytical instruments as
well as laboratory equipment, software, services, consumables and
reagents to enable integrated laboratory workflow solutions.
FLYI INC: Bridge Associates to Assist in Wind-Down Process
----------------------------------------------------------
FLYi, Inc., and its debtor-affiliates obtained authority from the
U.S. Bankruptcy Court for the District of Delaware to employ
Bridge Associates to provide wind-down consulting services, nunc
pro tunc to October 4, 2006.
The Debtors' Joint Plan of Liquidation provides that, as of the
Plan's effective date, each of the Debtors will cease to exist
and all assets of the Debtors' estates will be transferred to and
vest in a distribution trust. The distribution trust will be
established pursuant to a trust agreement to liquidate the
assets, resolve all disputed claims against the Debtors' estates,
make all distributions to allowed claimholders in accordance with
the Plan, and otherwise implement the Plan and administer the
Debtors' estates.
In connection with a Court-approved protocol with respect to
certain Plan matters, the Debtors and the Official Committee of
Unsecured Creditors agreed to designate Anthony H. N. Schnelling
at Bridge Associates LLC as the trustee of the distribution trust
under the Plan.
Bridge Associates is a national restructuring, turnaround
management and consulting firm with experience in numerous large
Chapter 11 cases and in post-confirmation plan administration for
many large estates.
The Debtors believe that utilizing the expertise of Bridge
Associates to provide wind-down consulting services before the
Effective Date will ensure a smooth and efficient transition of
the Debtors' estates to the distribution trust proceeds. The
retention would also allow the firm to become knowledgeable about
the Debtors' assets, claims activity and pending issues and
matters of critical importance to the distribution trustee.
Specifically, Bridge Associates will:
a) assist the Debtors in execution of their claims
reconciliation process and advise on, among other things,
reconciliation of over-stated and inappropriate secured,
priority, and administrative expense and unsecured claims,
and capture data to facilitate timely distributions to
creditors upon Plan confirmation;
b) assist with the reconciliation of secured, priority,
administrative expense and unsecured claims;
c) review case-to-date activity to familiarize itself with
assets remaining in the estate, claims activity, issues
and disputes in the Debtors' cases;
d) evaluate potential avoidance actions, fraudulent
conveyances and other actions to be retained by the
distribution trust;
e) assist the Debtors with the Plan consummation, including
necessary filings with the Internal Revenue Service and
other federal, foreign, state and local authorities;
f) begin the planning process for dissolution of the Debtors,
including fact gathering and coordination of the
preparation of any outstanding and final tax returns;
g) review, establish, negotiate and procure insurance to
satisfy the Debtors' requirements;
h) monitor the wind down of the Debtors' estates and provide
periodic written reports to the Debtors and the Creditors
Committee relating to the administration of property of
the Debtors' estates; and
i) perform other tasks reasonably requested by the Debtors,
after consultation with the Creditors' Committee.
The firm's standard hourly rates are:
$350 - $500 Managing directors, directors, principals,
and senior consultants
$250 - $375 Senior associates and consultants
$200 - $300 Associates and consultants
$90 - $150 Paraprofessionals
Mr. Schnelling and Mark Stickel, managing directors at Bridge
Associates, will be paid $500 and $400 per hour, while Sid
Harris, the firm's senior consultant, will be paid $375 per hour.
Mr. Schnelling discloses that Bridge Associates has been employed
by official creditor committees in other cases in which members
of the committees or creditors may be "interested parties", and
may in the future work on matters with the Debtors' creditors or
their professionals. However, he assures the Court that Bridge
Associates does not and will not represent any members of the
committees, any creditors or any other "interested party" in any
claims against the Debtors.
Mr. Schnelling maintains that Bridge Associates does not have any
adverse interest to the Debtors' estates and is a "disinterested
person," as defined in Section 101(14) of the Bankruptcy Code.
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).
GENERAL CABLE: Selling $355 Million Senior Convertible Notes
------------------------------------------------------------
General Cable Corporation has completed the sale of $355 million
in aggregate principal amount of its 0.875% Senior Convertible
Notes due 2013, which includes the exercise of a $40 million over-
allotment option by the underwriters in the offering. The Company
received approximately $302.9 million in net proceeds from the
sale of the Senior Convertible Notes after paying underwriting
discounts and the net cost of separate convertible note hedge and
warrant transactions entered into in connection with this
offering.
The Senior Convertible Notes will be convertible, under certain
circumstances, into General Cable Corporation common stock at a
conversion rate of 19.856 shares per $1,000 principal amount of
Senior Convertible Notes. This conversion is equivalent to an
initial conversion price of approximately $50.36 per share. Prior
to Oct. 15, 2013, holders may convert their Senior Convertible
Notes under certain circumstances.
On and after Oct. 15, 2013, the notes will be convertible at
any time prior to the close of business on the business day before
the stated maturity date of the notes. Upon conversion of a note,
if the conversion value is $1,000 or less, holders will receive an
amount in cash in lieu of common stock equal to the lesser of
$1,000 or the conversion value of the number of shares of common
stock equal to the conversion rate. If the conversion value
exceeds $1,000, in addition to this cash payment, holders will
receive, at General Cable Corporation's election, cash or common
stock or a combination of cash and common stock for the excess
amount.
General Cable Corporation will use a portion of the net proceeds
from the offering to repay outstanding amounts of principal and
interest under its senior secured credit facility. The Company
also expects to use the remaining net proceeds of this transaction
for general corporate purposes, which may include funding internal
growth or potential acquisitions.
Headquartered in Highland Heights, Kentucky, General Cable
Corporation (NYSE: BGC) -- http://www.generalcable.com/-- makes
aluminum, copper, and fiber-optic wire and cable products. It has
three operating segments: industrial and specialty (wire and cable
products conduct electrical current for industrial and commercial
power and control applications); energy (cables used for low-,
medium- and high-voltage power distribution and power transmission
products); and communications (wire for low-voltage signals for
voice, data, video, and control applications). Brand names
include Carol and Brand Rex. It also produces power cables,
automotive wire, mining cables, and custom-designed cables for
medical equipment and other products.
* * *
As reported in the Troubled Company Reporter on Oct. 27, Moody's
Investors Service's, in implementation of its new Probability-
of-Default and Loss-Given-Default rating methodology for the
U.S. manufacturing sector, confirmed the B1 Corporate Family
Rating for General Cable Corporation, as well as the B2 rating
on the company's $285 million 9.5% senior unsecured notes due
2010. Those debentures were assigned an LGD4 rating suggesting
that creditors will experience a 70% loss in the event of a
default.
As reported in the Troubled Company Reporter on Jan. 30, Standard
& Poor's Rating Services revised its outlook on General Cable
Corp. to positive from stable, and affirmed the 'B+' corporate
credit rating, the 'BB' secured bank loan rating, and the 'B'
senior unsecured debt rating. The revised outlook reflects
improved financial leverage metrics stemming from improved
profitability and reduced debt.
GMAC LLC: Moody's Expects to Confirm Ba1 Long-Term Ratings
----------------------------------------------------------
Moody's expects to confirm the Ba1 long-term ratings of GMAC LLC
and its subsidiaries upon the closing of GM's sale of a 51%
interest in the firm to FIM Holdings LLC, the buyer consortium led
by Cerberus Capital Management.
Moody's expects the outlook for GMAC's ratings to be negative at
closing.
In a separate release, Moody's said that it also expects to
confirm Residential Capital LLC's Baa3 long-term rating upon the
closing of the sale.
GMAC's long-term ratings remain on review for possible downgrade
pending the completion of the transaction. The expected Ba1
rating outcome assumes the sale will be consummated in the form
and according to the timeline previously communicated by GM, and
furthermore, that no factors that affect GMAC's credit profile
come to light in the intervening period of time.
GM's B3 corporate family and Caa1 senior unsecured ratings and
negative outlook are not affected by the closing of the sale, as
they already take the transaction into consideration.
Moody's said that several aspects of the sale enhance GMAC's
stand-alone credit profile, including:
-- a sizeable reduction in direct unsecured exposure to GM
with a subsequent cap of $1.5 billion;
-- a decrease, albeit temporary, in the firm's retail lease
portfolio due to the carve-out from the sale of leases with
a net book value of approximately $4 billion;
-- elimination of uncertainty regarding GMAC's liability for
GM's pension plans; and,
-- upfront payment by GM to GMAC of estimated lease residual
support, which until earlier this year had been paid by GM
at lease termination.
Furthermore, Moody's expects that as a result of the change in
ownership, GMAC is likely to accelerate efforts to improve its
operating efficiency, thus improving profitability; and to focus
on strengthening its capital position, including by issuing high
equity-content preferred shares and by retaining all "after-tax"
dividends for a period of two years.
In addition, in the upcoming three years, FIM Holdings will
reinvest its share of "after-tax" dividends into identical GMAC
high equity-content preferred shares.
Moody's also believes that the sale effectively transfers control
of GMAC to FIM, improving the control and governance of the firm
to the degree that ratings "linkage" between the GMAC and GM
ratings can be severed on this basis. As a result, GMAC's
expected Ba1 public debt rating would represent a convergence with
its stand-alone credit profile. Moody's said that it does not
regard either FIM or its primary sponsor Cerberus to be strategic
investors, and therefore the Ba1 rating reflects no benefit from
external support.
Constraining the positive implications of the sale, GMAC's
business concentrations with GM will continue post-sale, by virtue
of agreements that require GMAC to dedicate significant capital to
originating GM-related auto finance receivables. These agreements
provide GMAC exclusivity with respect to originating GM-subvented
receivables and leases, an enviable franchise that forms a solid
base for financing volumes and earnings potential. However, this
also presents downside risk. Nearly all of GMAC's current auto
finance activities relate to its association with GM, and as a
result, its asset quality, financing volumes, earnings, and
liquidity position continue to be vulnerable to adverse changes in
GM's condition.
Moody's noted that GMAC's strengths in underwriting, risk
management, and liquidity management have enabled the firm to
mitigate the difficulties it has encountered in these areas as a
consequence of GM's operating challenges.
But according to Moody's Vice President Mark Wasden, "GMAC's
higher borrowing costs have significantly pressured the firm's
financing margins, causing its earnings and financial condition to
be more vulnerable to a deterioration in asset quality, whether
brought about by cyclical factors or GM-related events."
Moody's also believes that as long as GMAC's GM concentration is
significant, liquidity risk may be elevated due to GM-related
confidence sensitivity.
"In time, GMAC's margins could improve as high-cost debt runs off
and is replaced with bonds priced at narrower credit spreads,
assuming continued favorable investor reaction to the
transaction," said Wasden.
Moody's will monitor the "new" GMAC's ability to consistently
access competitively priced unsecured funding, as well as market
signals, regarding the GM-related confidence sensitivity issue.
Moody's noted that diversification of GMAC's revenue sources has a
very limited impact on the company's ratings, particularly as it
relates to its ownership of ResCap. Moody's believes GMAC's
ownership of ResCap benefits primarily GMAC's shareholders, and
that the sale transaction does not meaningfully change this view.
Should GMAC sell ResCap in the future, Moody's expects the use of
the sale proceeds would reflect the interests of GMAC's owners, to
the potential exclusion of GMAC bondholder interests.
In addition, GMAC bondholders are structurally subordinated to
ResCap's creditors with respect to ResCap's earnings, cash flows,
and assets. Though ResCap will likely begin paying dividends for
the first time after the transaction closes, Moody's views this as
representing ResCap's share of GMAC's consolidated dividend
requirement, including a step-up in the annual distribution rate
after year two of the transaction. Thus ResCap's dividends will
be effectively passed-through to GMAC's shareholders.
Moody's expects that GMAC's long-term ratings will have a negative
outlook upon closing. This negative outlook would reflect its
continuing vulnerability to near-term GM stresses, as a result of
its business concentrations and funding profile. Of particular
concern is a GM bankruptcy trigger within GMAC's SWIFT funding
structure, used to finance GM dealer floorplan receivables.
A GM bankruptcy would cause early amortization of the SWIFT
securities, requiring GMAC to source alternative funds to continue
originating critical floorplan loans to dealers. GMAC has
established facilities that would replace over half of the SWIFT
funding that would be subject to early amortization. Should GMAC
complete the transition of the remainder of this source of funding
to a structure that is less exposed to a GM bankruptcy or develop
other mitigation strategies, the rating outlook could improve to
stable.
Moody's believes such a transition could be accomplished by the
firm within the next few quarters; in the meantime, GMAC is
expected to maintain elevated cash balances as partial liquidity
insurance. A revision of GM's rating outlook to stable would also
lead to a stable outlook for GMAC's ratings.
Given GMAC's continuing business connections with GM, Moody's
believes GMAC's ratings are unlikely to improve until GM's own
ratings improve. GMAC may embark on strategies that will lead to
greater diversification of its revenues and earnings, such as non-
GM used car and dealer floorplan finance, that could eventually
enhance its credit profile and ratings, but it will likely take a
substantial amount of time for such strategies to meaningfully
impact GMAC's business mix given its portfolio size. Any
consideration for ratings improvement must also be accompanied by
a sustained improvement in GMAC's financing margins.
Finally, a limiting factor to any potential increase in GMAC's
ratings is GM's option to repurchase GMAC's North American and
International auto finance businesses should GM achieve either
investment grade ratings (Baa3) or ratings better than GMAC. If
GM ever exercises this option, it would result in ratings for the
reacquired entities once again becoming linked with GM's ratings.
Therefore, Moody's will likely limit GMAC's ratings on the upside
to the higher of Baa2 and one-notch higher than GM's ratings, for
the duration of the call option.
GMAC LLC, headquartered in Detroit, Michigan, provides retail and
wholesale auto financing, primarily in support of GM's auto
operations, and is one of the world's largest non-bank financial
institutions. GMAC reported earnings of $2.4 billion in 2005.
GOODYEAR TIRE: Steelworkers Blast $1 Billion Senior Notes Offer
---------------------------------------------------------------
The United Steelworkers blasted Goodyear Tire and Rubber Company's
announcement to place about $1 billion of three-year and five-year
senior unsecured notes, subject to market and other customary
conditions. The company has indicated that it will use about one-
half of the proceeds to repay existing notes due Dec. 1, 2006 and
March 1, 2007. The rest of the money will be used for general
purposes, including funding the strike with the USW.
"Goodyear is already carrying about $6.4 billion dollars in debt,
and its credit is poor and getting worse," said USW International
president Leo W. Gerard. "Now they plan to borrow more money to
flush down a rat hole of a fight they can never win."
"Quite simply, this latest move by the company is the wrong thing
for the wrong reasons at the wrong time," said USW International
vice president Tom Conway. Mr. Conway heads the USW's bargaining
team in its negotiations with Goodyear. "When you borrow money,
you have to pay it back, and to pay it back Goodyear needs to
build tires that people want to buy," said Conway. "This company
has no such plan in place."
"It is really time for the company's owners to step forward and
stop this madness," said Mr. Gerard. "Bob Keegan is looking
increasingly like Captain Queeg in the The Caine Mutiny."
Queeg is the fictional character in Herman Wouk's 1951 novel, who
was removed from command of a World War II minesweeper because of
eccentric behavior that lead to mistakes that endangered his crew.
The USW represents more than 17,000 workers at Goodyear facilities
in the U.S. and Canada. On Oct. 5, about 15,000 USW-represented
workers at 16 locations in North America went out on strike in an
effort to win a fair and equitable contract.
Overall, the USW presents more than 850,000 members in the U.S.
and Canada. Some 70,000 are employed in the tire, rubber and
plastics industry.
About Goodyear Tire
Headquartered in Akron, Ohio, The Goodyear Tire & Rubber Company
(NYSE: GT) -- http://www.goodyear.com/-- is the world's largest
tire company. The company manufactures tires, engineered rubber
products and chemicals in more than 90 facilities in 28 countries.
It has marketing operations in almost every country around the
world. Goodyear employs more than 80,000 people worldwide.
* * *
As reported in the Troubled Company Reporter on Oct. 23, 2006,
Fitch Ratings placed The Goodyear Tire & Rubber Company on Rating
Watch Negative. Goodyear's current debt and recovery ratings are
-- Issuer Default Rating (IDR) 'B'; $1.5 billion first lien credit
facility 'BB/RR1'; $1.2 billion second lien term loan 'BB/RR1';
$300 million third lien term loan 'B/RR4'; $650 million third lien
senior secured notes 'B/RR4'; Senior Unsecured Debt 'CCC+/RR6'.
As reported in the Troubled Company Reporter on Oct. 19, 2006,
Standard & Poor's Ratings Services placed its 'B+' corporate
credit rating on Goodyear Tire & Rubber Co. on CreditWatch with
negative implications because of the potential for business
disruptions and earnings pressures that could result from the
ongoing labor dispute at some of its North American operations.
Goodyear has total debt of about $7 billion.
As reported in the Troubled Company Reporter on Oct. 18, 2006,
Moody's Investors Service affirmed Goodyear Tire & Rubber
Company's B1 Corporate Family rating, but changed the outlook to
negative from stable. At the same time, the company's Speculative
Grade Liquidity rating was lowered to SGL-3 from SGL-2. These
rating actions reflect the increased operating uncertainty arising
from the ongoing United Steelworkers strike at Goodyear's North
American facilities, and the company's decision to increase cash
on hand by drawing-down $975 million under its domestic revolving
credit facility.
HOLLINGER INTERNATIONAL: Names Cyrus Freidheim as New CEO
---------------------------------------------------------
Sun-Times Media Group Inc., fka Hollinger International Inc., has
named board member Cyrus Freidheim Jr. as its chief executive, the
Associated Press reports.
James P. Miller, a Chicago Tribune staff writer, relates that
Mr. Freidheim previously served as CEO of Chiquita Brands
International from 2002 to 2004, spent 35 years as a consultant
with the management-consultant firm of Booz Allen Hamilton Inc.,
and has experience in designing turnarounds and corporate
reorganizations.
Mr. Freidheim, 71 years old, succeeds investment banker Gordon
Paris, who will stay on as a director and chairman of the board's
special committee. Mr. Paris had served as CEO since November
2003.
AP reports that Mr. Freidheim plans to cut costs and "move
quickly" on key decisions involving the company's Sun-Times News
Group newspapers, which have been struggling along with others in
the industry, citing Mr. Freidheim as saying.
In a statement published in the Chicago Tribune, Mr. Freidheim
said the company's operations "face an extremely difficult and
rapidly changing environment", as well as the challenge of "years
of disinvestment" during Conrad M. Black's control.
Mr. Black, former CEO, is set to go on trial on federal criminal-
fraud charges early in 2007, the Chicago Tribune adds.
About Hollinger International
Hollinger International Inc., nka Sun-Times Media Group, Inc --
http://www.hollingerinternational.com/-- is a newspaper publisher
whose assets include The Chicago Sun-Times and a large number of
community newspapers in the Chicago area.
The Company's balance sheet at Sept. 30, 2006, showed $905,298,000
in total assets and $1,227,326,000 in total liabilities, resulting
in a $322,028,000 stockholders' deficit.
INLAND FIBER: Posts $6.6 Million Net Loss in 2006 Second Quarter
----------------------------------------------------------------
Inland Fiber Group LLC reported a $6.6 million net loss on
$2.7 million of revenues for the second quarter ended
June 30, 2006, compared with a $8.8 million net loss on $4 million
of revenues for the same period in 2005.
The decrease in revenues during the second quarter of 2006 was
caused primarily by lower log sales of $2.2 million in 2006
compared to log sales of $3.3 million in 2005. The company,
however, reported a gross profit of $.4 million in the second
quarter compared to a gross loss of $0.1 million for the same
period in 2005. Additionally, the company did not recognize any
equity in net loss of affiliate during the second quarter of 2006,
compared with equity in net loss of affiliate of $2.3 million in
the same period in 2005. These accounted for the lower net loss
reported in the second quarter of 2006.
At June 30, 2006, the company's balance sheet showed $82.2 million
in total assets and $262.5 million in total liabilities, resulting
in a $180.3 million members' deficiency.
The company's balance sheet at June 30, 2006, also showed strained
liquidity with $2.4 million in total current assets available to
pay $262.5 million in total current liabilities.
Full-text copies of the company's consolidated financial
statements for the second quarter ended June 30, 2006, are
available for free at:
http://researcharchives.com/t/s?14cf
Headquartered in Klamath Falls, Oregon, Inland Fiber Group LLC,
aka U.S. Timberlands Klamath Falls LLC, and its affiliate Fiber
Finance Corp., grow trees and sell logs, standing timber, and
timberland. The Debtors filed a chapter 11 petition on Aug. 18,
2006 (Bankr. D. Del. Case Nos. 06-10884 & 06-10885). William P.
Bowden, Esq. at Ashby & Geddes P. A. and Glenn E. Siegal, Esq. at
Dechert LLP represent the Debtors in their restructuring efforts.
The Hon. Kevin J. Carey has confirmed Inland Fiber Group, LLC, and
its debtor-affiliates' chapter 11 plan of reorganization. When
the Debtors filed for protection from their creditors, Inland
Fiber reported $81,890,311 in total assets and $264,433,754 in
total liabilities while its debtor-affiliate, Fiber Finance,
disclosed $1,048 in total assets and $263,074,983 in total debts.
INNOVATIVE COMMS: Proofs of Claim due by December 22
----------------------------------------------------
The U.S. District Court of the Virgin Islands, Division of St.
Thomas and St. John, set Dec. 22, 2006, at 5:00 p.m. Atlantic
Standard Time, as the deadline for all creditors owed money by
Innovative Communication Company, LLC, and its affiliate, Emerging
Communications, Inc., to file formal written proofs of claim on
account of claims arising prior to July 31, 2006.
Creditors must deliver their claim forms to the:
Clerk of the Bankruptcy Court
U.S. District Court of the Virgin Islands
Division of St. Thomas and St. John
Bankruptcy Division
5500 Veterans Drive, Room 310
St. Thomas, VI 00802
Governmental entities have until Jan. 29, 2007, 5:00 p.m. Atlantic
Standard Time, to file their proofs of claim.
Headquartered in St. Thomas, Virgin Islands, Innovative
Communication Company, LLC -- http://www.iccvi.com/-- and
Emerging Communications, Inc., are diversified telecommunications
and media companies operating mainly in the U.S. Virgin Islands.
Jeffrey J. Prosser is the owner of Emerging Communications and
Innovative Communications. Innovative and Emerging filed for
chapter 11 protection on July 31, 2006 (D.C. V.I. Case Nos.
06-30007 and 06-30008). When the Debtors filed for protection
from their creditors, they estimated assets and debts of more than
$100 million.
Mr. Prosser also filed for chapter 11 protection on July 31, 2006
(D.C. V.I. Case No. 06-10006).
Greenlight Capital Qualified, L.P., Greenlight Capital, L.P., and
Greenlight Capital Offshore, Ltd., which holds an $18,780,614
claim against Mr. Prosser, had filed an involuntary chapter 11
petition against Innovative Communication, Emerging
Communications, and Mr. Prosser on Feb. 10, 2006 (Bankr. D. Del
Case Nos. 06-10133, 06-10134, and 06-10135). Mr. Prosser argued
that the Greenlight entities, the former shareholders of
Innovative Communications, and Rural Telephone Finance
Cooperative, Mr. Prosser's lender, conspired to take down his
companies into bankruptcy and collect millions in claims.
INSIGHT HEALTH: S&P Slashes Corp. Credit Rating to 'CCC' from 'B'
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Lake
Forest, California-based medical imaging services provider Insight
Health Services Corp. The corporate credit rating was lowered to
'CCC' from 'B-', and the rating outlook is negative.
"The rating downgrade reflects the company's engagement of Lazard
Freres & Co. LLC as its financial advisor to assist it in
exploring strategic alternatives," noted Standard & Poor's credit
analyst Cheryl Richer.
"It is possible that creditors would be offered an exchange of
their current securities for either common equity or securities
with less attractive terms. We would consider either case an
event of default for current lenders, even though such a
restructuring could subsequently improve Insight Health's
operations. In addition, while the company currently has adequate
liquidity, the accelerating trend of declining revenues and cash
flow could result in pressures that would precipitate a default on
debt service within a year."
The rating on InSight reflects the highly fragmented and
competitive nature of the medical imaging industry, the limited
barriers to competitor entry, and reimbursement risk. As a result
of the negative financial trend over the past nine fiscal
quarters, the company's balance sheet is weak: Debt to EBITDA
increased to 6.4x for the 12 months ended Sept. 30, 2006. These
risks overshadow the favorable effect on the industry as the
population ages, the ability of imaging to limit overall health
costs, and the expanded approval of imaging for additional disease
states.
INTERPUBLIC GROUP: Moody's Rates $400MM Senior Notes at Ba3
-----------------------------------------------------------
Moody's Investors Service assigned a Ba3 senior unsecured debt
rating to Interpublic Group Of Companies, Inc.'s (Ba3 Corporate
Family Rating) new 4.25% convertible senior notes due 2023. The
Ba3 rating reflects a loss given default of about 66% given the
company's all-bond debt capital structure.
The rating outlook is negative.
The $400 million of new notes were exchanged for $400 million of
IPG's Ba3 (senior unsecured) rated 4.50% convertible senior notes
due 2023. The new notes are pari passu with the remaining
$400 million 4.50% convertible notes and all of IPG's other senior
unsecured debt. As compared to the 4.50% notes, the new notes
bear a slightly lower interest rate, are not callable until March
15th 2012 rather than Sept. 15th 2009, are not putable until March
15th 2012 and March 15th 2015 rather than March 15th 2008 and
March 15th 2013.
"The exchange preemptively begins to chip away at the IPG's
looming 2008 large debt maturities", said Moody's Senior Vice
President Neil Begley, "and it provides the company with added
liquidity headroom to get its house in order, since it is still in
the midst of a significant turnaround and internal control
weakness remediation program".
Moody's also noted that the company is showing signs of turn
around traction but stated that the company will need to build
upon its recent notable client wins and the operating performance
improvement of the third quarter in order to remove the negative
outlook and be comfortably within the Ba3 rating category.
The Interpublic Group of Companies, Inc., with its headquarters in
New York, is one of the world's largest advertising, marketing and
corporate communications holding companies.
KANA SOFTWARE: Sept. 30 Balance Sheet Upside-Down by $4.5 Million
-----------------------------------------------------------------
KANA Software Inc. incurred a $582,000 net loss on $13.1 million
of net revenues for the three months ended Sept. 30, 2006,
compared to a $1.2 million net loss on $10.9 million of net
revenues from the same period in 2005, the Company disclosed in
its third quarter financial statements on Form 10-Q to the
Securities and Exchange Commission on Nov. 14, 2006.
At Sept. 30, 2006, the Company's balance sheet showed $28,388,000
million in total assets and $32,910,000 million in total
liabilities, resulting in a $4,522,000 stockholders' deficit.
The Company's Sept. 30 balance sheet also showed strained
liquidity with $14.2 million in total current assets available to
pay $27.6 million in total current liabilities.
A full-text copy of the Company's quarterly report is available
for free at http://researcharchives.com/t/s?1531
Going Concern Doubt
As reported in the Troubled Company Reporter on July 12, 2006,
KANA Software, Inc.'s auditor, Burr, Pilger & Mayer LLP, expressed
substantial doubt about the Company's ability to continue as a
going concern after auditing the Company's financial statement for
the year ending Dec. 31, 2005. Burr Pilger pointed to the
Company's recurring losses from operations, net capital
deficiency, negative cash flow from operations and accumulated
deficit.
About KANA
Headquartered in Menlo Park, California, KANA Software, Inc.,
provides multi-channel customer service software applications.
KANA's integrated solutions allow companies to deliver service
across all channels, including email, chat, call centers and Web
self-service, so customers have the freedom to choose the service
they want, how and when they want it. The Company's target market
is the Global 2000 with a focus on large enterprises with high
volumes of customer interactions such as banks, telecommunications
companies, high-tech manufacturers, healthcare organizations and
government agencies. The Company has offices in Japan, Hong Kong,
Korea and throughout the United States and Europe.
KRISPY KREME: Posts $135.8MM Net Loss in Year Ended January 2006
----------------------------------------------------------------
Krispy Kreme Doughnut, Inc. reported a $135.8 million net loss on
$543.4 million of revenues for the fiscal year ended
Jan. 31, 2006, compared with a $198.3 million net loss on
$707.8 million of revenues for the same period in 2005.
Both revenues from company owned stores and franchisee stores
declined in fiscal 2006 compared with fiscal 2005, as did company
sales to franchise stores. This was offset mainly by lower
recorded direct operating expenses of $474.6 million in fiscal
2006, compared with $598.3 million in fiscal 2005. In addition,
the company recognized lower impairment charges and lease
termination costs of $55.1 million in 2006 compared to
$161.8 million in 2005.
At June 30, 2006, the company's balance sheet showed
$410.8 million in total assets, $302.2 million in total
liabilities, and $108.7 million in total stockholders' equity.
The company's balance sheet at Jan. 29, 2006 also showed
$147 million in total current assets available to pay
$153.9 million in total current liabilities.
A full-text copy of the company's annual report is available for
free at http://researcharchives.com/t/s?1485
Founded in 1937 in Winston-Salem, North Carolina, Krispy Kreme
(NYSE: KKD) -- http://www.krispykreme.com/-- is a branded
specialty retailer of premium quality doughnuts, including the
company's signature Hot Original Glazed. There are currently
approximately 323 Krispy Kreme stores and 79 satellites operating
systemwide in 43 U.S. states, Australia, Canada, Mexico, the
Republic of South Korea and the United Kingdom.
The company generates revenues from three distinct sources:
company-owned stores, franchise fees and royalties from franchise
stores, and a vertically integrated supply chain.
Freedom Rings, LLC, company's franchisee in Eastern Pennsylvania,
Delaware and Southern New Jersey, filed on Oct. 16, 2005 for
Chapter 11 protection with the Delaware Bankruptcy Court (Bankr.
D. Del. Case No. 05-14268). Following closure of its four
remaining stores, the Bankruptcy Court confirmed Freedom Rings'
plan of liquidation on April 20, 2006 and its operations have been
substantially wound up.
KremeKo, Inc., Krispy Kreme's Canadian franchisee, filed for
restructuring on April 15, 2005, pursuant to the Companies'
Creditors Arrangement Act with the Ontario Superior Court of
Justice. Krispy Kreme Doughnut Corp. agreed to pay approximately
$9.3 million to two secured creditors to settle its obligations
with respect to its guarantees pertaining to certain indebteness
and related equipment agreements. In exchange, a newly formed
subsidiary of Krispy Kreme Doughnut Corp. acquired substantially
all of the operating assets of KremeKo, as authorized by the
Ontario Court.
Glazed Investments, LLC, company's franchisee in Colorado,
Minnesota and Wisconsin, filed for Chapter 11 protection on Feb.
3, 2006 (Bankr. N.D. Ill. Case No. 06-00932). Subsequent to this
filing, Glazed Investments sold its remaining 12 Krispy Kreme
stores to Western Dough, Krispy Kreme's area developer for Nevada,
Utah, Idaho, Wyoming and Montana, for appoximately $10 million.
This sale was facilitated by the Chapter 11 filing, by permitting
the assets to be sold free and clear of all liens, claims and
encumbrances.
Under the plan of liquidation filed by Glazed Investments, it will
be dissolved after distribution of the sale proceeds to creditors,
and Krispy Kreme will not receive any payment on account of its
ownership in Glazed Investments. While a substantial portion of
Glazed Investments' debts were retired from the sale proceeds and
liquidation of other assets, Krispy Kreme paid approximately $1
million of its franchisee's debt which was guaranteed by it.
LANGUAGE LINE: Improved Operations Cue S&P's Revised Outlook
------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Language
Line Holdings Inc. to stable from negative.
At the same time, Standard & Poor's affirmed its ratings,
including the 'B' corporate credit rating, on Language Line
Holdings, and on its Language Line Inc. operating subsidiary.
Monterey, California-based over-the-phone interpretation provider
Language Line Holdings had total debt of $477 million as of
Sept. 30, 2006.
"The outlook revision reflects improving operating performance,
slightly reduced debt leverage, and enhanced liquidity following
the completion of the company's amended and restated senior
secured bank facility," said Standard & Poor's credit analyst Hal
F. Diamond.
The ratings reflect Language Line's high debt leverage and the
price-competitive nature of the over-the-phone interpretation
market.
These are the rating actions:
(a) concerns are only partially mitigated by the company's
strong position in the outsourced OPI market;
(b) favorable demographic trends; and,
(C) good discretionary cash flow.
LIMITED BRANDS: Moody's Holds Preferred Shelf Rating at Ba1
-----------------------------------------------------------
Moody's Investors Service affirmed the ratings of Limited Brands,
Inc. following the company's report that it will tender for the
shares of Canadian intimate apparel retailer La Senza Corporation
for cash of approximately $640 million, including transaction
costs.
The rating outlook remains negative.
Ratings affirmed:
Senior unsecured at Baa2
Senior unsecured shelf at (P)Baa2
Subordinated shelf at (P)Baa3
Preferred shelf at (P)Ba1
Commercial paper at Prime-2
The affirmation was based on Moody's view that this modest
acquisition will be a good strategic fit:
-- La Senza will give Limited a needed means to grow its
intimate apparel business at a time when its US store base
may have reached maturity;
-- La Senza provides Limited with more geographic diversity
and a model for future international expansion; and,
-- La Senza has a significant market share in Canada and
especially appeals to the ages groups (15 to 29 years)
prized by Limited's Victoria Secret concept.
In addition, while Limited's credit metrics will be slightly
impacted by incremental debt of about $400 million to finance a
portion of the acquisition, credit ratios are not anticipated to
fall to levels articulated by Moody's as triggering a downgrade.
Limited's Baa2 rating weighs the company's Baa-like attributes --
scale, market position, merchandising expertise, supply chain
management, and credit metrics -- and its A score on domestic
geographic diversity against the volatility of demand for apparel
and personal care and beauty aids, scored at the B level, and
against the Ba-like seasonality of Limited's operating cash flow.
The negative rating outlook reflects Moody's concerns that Limited
will be challenged to sustain credit metrics appropriate for its
rating levels given:
(a) Moody's view that its US businesses could be approaching
maturity in terms of store count and margin expansion;
(b) the fact that Limited's apparel business, nearly one-
quarter of consolidated sales, remains an unreliable
performer in terms of profitability; and,
(c) the anticipated change in Limited's growth strategy and
risk profile flowing from its acquisition of La Senza,
which represents the company's first acquisition of
another specialty chain of any size and will take the
company beyond its domestic US market.
Ratings could be lowered:
(a) if the market position of Victoria's Secret or BBW
deteriorates such that comparable store sales are negative
for a sustained period;
(b) if operating losses continue in the apparel business;
(c) if the La Senza operation is not integrated seamlessly;
or,
(d) if Limited is likely to sustain EBIT to interest expense
at less than 3x or debt to EBITDA at more than 3.5x or
retained cash flow to debt at less than 20% by the fiscal
year ending January 2008.
The rating outlook could stabilize:
(a) if the apparel business breaks even on a reported
operating profit basis; and,
(b) if EBIT to interest is likely to be sustained at 4x, debt
to EBITDA at no more than 3x and retained cash flow to
debt approaching 25%.
Over the long term, an upgrade would require consistently positive
comparable store sales in all brands, expansion in profit margins,
and sustained profitability in the apparel businesses.
Headquartered in Columbus, Ohio, Limited Brands, Inc. operates
about 3,534 specialty stores under the Victoria's Secret, Bath &
Body Works, Express, Limited Stores, White Barn Candle Co. and
Henri Bendel names, and sells products online. Revenues for the
twelve months ended in July 29, 2006 exceeded $9.9 billion. La
Senza owns and operates 318 stores in Canada, and licensees
operate a further 327 stores in 34 other countries.
LOM HOLDINGS: Case Summary & Three Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: LOM Holdings Inc.
321 West Naomi Avenue
Arcadia, CA 91007
Bankruptcy Case No.: 06-15960
Chapter 11 Petition Date: November 16, 2006
Court: Central District Of California (Los Angeles)
Judge: Samuel L. Bufford
Debtor's Counsel: Cedric Troncoso, Esq.
7251 Owensmouth Avenue, Suite 4
Canoga Park, CA 91303
Tel: (626) 440-9123
Estimated Assets: $1 Million to $100 Million
Estimated Debts: $1 Million to $100 Million
Debtor's Three Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Warren Deutsch $1,000,000
2122 Century Park Lane, Suite 303
Los Angeles, CA 90067
Corrodi Family Trust Alleged Loan on $350,000
John T. Corrodi Real Estate
P.O. Box 66
Malibu, CA 90265
High Investments LLC Alleged Loan on $185,000
16236 San Dieguito, #303 Road Real Estate
Building 4, Suite 3-10
Rancho Santa Fe, CA 92067
MAYCO PLASTICS: Hires Plunkett & Cooney as Special Labor Counsel
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan,
Southern Division allows Mayco Plastics Inc. to employ Plunkett &
Cooney, PC as its special labor counsel, nunc pro tunc to
Sept. 12, 2006.
Plunkett & Cooney will act as labor counsel to the Debtor and will
be responsible for providing counsel and representation with
respect to the Debtor's various labor and employment issues.
Stanley C. Moore, III, Esq., at Plunkett & Cooney, has been the
Debtor's primary prepetition labor counsel with respect to
contract negotiations, grievance administration and arbitration
with the United Autoworkers Union.
The Debtor says Mr. Moore has intimate knowledge of the labor
issues it currently faces including:
a) contract negotiations with UAW Local 155 set to expire on
Dec. 12, 2006;
b) the American Arbitration Association Case Nos. 54 300
00308 06 and 54 300 01202 06 involving discharge
grievances;
c) an unfair labor practice trial before the National Labor
Relations Board, docketed as Case No. 7 A 49592; and
d) general day-to-day labor relations issues arising out of
the UAW local 155 labor contract.
The Debtor will pay Mr. Moore based on his current rate of $290
per hour. Plunkett & Cooney has agreed to waive the $9,855 the
Debtor owed prepetition for unpaid service charges.
Mr. Moore assures the Court that his firm does not hold any
interest adverse to the Debtor's estate and is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
Plunkett & Cooney can be reached at:
Plunkett & Cooney, PC
Attn: Stanley C. Moore, III, Esq.
38505 Woodward Ave.
Suite 2000
Bloomfield Hills, MI 48304
Phone: (248) 901-4011
Fax: (248) 901-4040
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. AlixPartners LLC serves as the
Debtors' financial advisor. Clark Hill PLC is counsel to the
Official Committee of Unsecured Creditors while Grant Thornton LLP
serves as its Financial Advisor. When the Debtors filed for
protection from their creditors, they estimated assets and debts
between $50 million and $100 million.
MGM MIRAGE: Earns $156.2 Million in Quarter Ended September 30
--------------------------------------------------------------
MGM Mirage reported net revenue of $1.9 billion for the third
quarter ended Sept. 30, 2006, compared to net revenues of
$1.8 billion for the same quarter in 2005.
The Company disclosed that the 5% increase in gaming revenue was
led by double-digit increases in slot revenues at several resorts,
including Bellagio, MGM Grand Las Vegas, Mandalay Bay, TI, MGM
Grand Detroit and Gold Strike Tunica. Baccarat volume was also up
22%, continuing the trend from the second quarter. Table games
hold percentages were near the mid-point of the normal 18% to 22%
range in both periods.
The 6% increase in Las Vegas Strip Revenue per Available Room
represents the Company's thirteenth consecutive quarter of year-
over-year REVPAR growth.
The Company's operating income for the 2006 third quarter
increased 26% to $427.6 million from $339.9 million in the 2005
third quarter. The current quarter operating income includes
$27 million of profit from closings on the final units of Tower 1
of the Signature at MGM Grand. The operating margin was 22% in
the current quarter versus 19% in the 2005 quarter.
Net income for the third quarter was reported at $156.2 million,
as compared to net income of $93.2 million for the prior year
third quarter.
"The third quarter once again demonstrated our Company's ability
to grow organically and generate meaningful increases in cash
flow," Terry Lanni, chairman and chief executive officer, said.
"We are extremely pleased with the record performances turned in
by several resorts, and especially proud of the recently re-opened
Beau Rivage. Our valued employees are excited to be back to work,
and we are glad to be a part of the revival of the Gulf Coast."
Earnings per share for the 2006 third quarter include the impact
of implementing SFAS 123(R) on Jan. 1, 2006. Under the new
standard, the cost of employee stock awards are required to be
recognized as an expense and it classified the incremental expense
of $17 million as a result of implementing the standard.
Third quarter capital investments totaled $610 million, including
$198 million for CityCenter, $70 million for the permanent MGM
Grand Detroit hotel and casino, $164 million for rebuilding
efforts at Beau Rivage, $45 million for a new corporate aircraft
and $31 million of additional investments in MGM Grand Macau.
Remaining capital expenditures of $102 million included spending
on the new theatre and new restaurants at Mirage, new amenities at
Mandalay Bay, and other routine capital expenditures.
During the third quarter of 2006, the Company repurchased
3 million shares of its common stock for $106 million, leaving 8
million shares available under the Company's current
authorization. At September 30, 2006, the Company had $2.1
billion of available borrowings under its senior credit facility.
"Our financial strength continues to be the foundation for future
growth at MGM MIRAGE, and the continued confidence of our
stakeholders is proof that our strategies are sound," Jim Murren,
president, chief financial officer and treasurer, said. "With the
amended credit facility and our resorts' success in generating
cash flows, we will continue to have financial flexibility for our
growth initiatives while still being able to re-invest in our
market leading resorts."
For the nine months ended Sept. 30, 2006 the Company reported net
revenues of $5.6 billion with net income $446.6 million, versus
net revenues of $4.7 billion with net income of $345.4 million for
the comparable period in 2005.
At Sept. 30, 2006 the Company's balance sheet showed strained
liquidity with total current assets of $1 billion and total
current liabilities of $1.5 billion.
Outlook
The Company expects to recognize approximately $40 million to
$45 million of profits in the fourth quarter related to sales of
Tower 2 at The Signature at MGM Grand. The Company expects to
recognize the remaining profits on Tower 2, approximately
$30 million to $35 million, in the first quarter of 2007. The
Company further disclosed that its Laughlin operations - Colorado
Belle and Edgewater - and the Primm Valley Resorts will be
classified as discontinued operations beginning in the fourth
quarter.
Headquartered in Las Vegas, Nevada, MGM Mirage (NYSE: MGM)
-- http://www.mgmmirage.com/-- owns and operates 23 properties
located in Nevada, Mississippi and Michigan, and has investments
in three other properties in Nevada, New Jersey and Illinois. MGM
Mirage has also announced plans to develop Project CityCenter, a
multi-billion dollar mixed-use urban development project in the
heart of Las Vegas, and has a 50% interest in MGM Grand Macau, a
hotel-casino resort currently under construction in Macau S.A.R.
* * *
As reported in the Troubled Company Reporter on Oct. 3, 2006
Moody's Investors Service's, in connection with the implementation
of its new Probability-of-Default and Loss-Given-Default rating
methodology, confirmed MGM MIRAGE's Ba2 Corporate Family Rating.
NATIONAL ENERGY: To Appeal Bankr. Court's Claim Inclusion Order
---------------------------------------------------------------
National Energy & Gas Transmission Inc. notifies the United States
Bankruptcy Court for the Middle District of Maryland that it will
take an appeal from the Honorable Paul Mannes' order further
extending time for inclusion of disallowed claim in a disputed
claim reserve, to the U.S. District Court for the District of
Maryland.
NEGT wants the District Court to review whether the Bankruptcy
Court erred by requiring it to reserve funds on account of
certain disallowed interest claims by a syndicate of lenders to
the Lake Road and La Paloma power projects, where:
(a) the express terms of NEGT's confirmed plan of
reorganization does not require NEGT to do so; and
(b) the order confirming the Plan has become final and non-
appealable.
About National Energy
Bethesda, MD-based PG&E National Energy Group Inc. nka National
Energy & Gas Transmission Inc. -- http://www.pge.com/--
develops, builds, owns and operates electric generating and
natural gas pipeline facilities and provides energy trading,
marketing and risk-management services. The Company and six of
its affiliates filed for Chapter 11 protection on July 8, 2003
(Bankr. D. Md. Case No. 03-30459). When the Company filed for
protection from its creditors, it listed $7,613,000,000 in assets
and $9,062,000,000 in debts. NEGT received bankruptcy court
approval of its reorganization plan in May 2004, and emerged from
bankruptcy on Oct. 29, 2004.
NEGT's affiliates -- NEGT Energy Trading Holdings Corp., NEGT
Energy Trading - Gas Corporation, NEGT ET Investments Corp., NEGT
Energy Trading - Power, L.P., Energy Services Ventures, Inc., and
Quantum Ventures -- filed their First Amended Plan and Disclosure
Statement on March 3, 2005, which was confirmed on Apr. 19, 2005.
Steven Wilamowsky, Esq., and Jessica S. Etra, Esq., at Willkie
Farr & Gallagher LLP represent the ET Debtors.
On Nov. 6, 2006, Judge Mannes entered a final decree closing
Quantum Ventures' Chapter 11 case with its estate having been
fully administered.
(PG&E National Bankruptcy News, Issue No. 67; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
NBS TECHNOLOGIES: Inks $3.6MM Going Private Deal with Brookfield
----------------------------------------------------------------
NBS Technologies Inc. entered into an agreement with Brookfield
Asset Management Inc. to effect a going private transaction
whereby Brookfield will acquire all of the outstanding common
shares of NBS not already owned by Brookfield or its affiliates at
a price of $1 per Common Share in cash, representing a total cash
consideration of approximately $3.6 million.
In addition, holders of Common Shares will receive a non-
transferable contingent entitlement to share in the net proceeds
received by NBS from any final adjudication or final settlement of
all matters related to the claims and counterclaims of the Card
Technology v. DataCard litigation involving NBS and the related
proceedings in the United States Department of Justice.
The price of $1.00 per Common Share offered by Brookfield
represents a premium of approximately 42.9% over the closing price
of the Common Shares on the Toronto Stock Exchange on
Nov. 6, 2006, the last day on which the Common Shares traded prior
to the announcement of the proposed transaction, and a premium of
approximately 57.7% over the 20-day average closing price of the
Common Shares on the TSX.
The board of directors of NBS established a special committee of
independent directors to supervise the preparation of a formal
valuation of the Common Shares by BDO Dunwoody LLP, a qualified
independent valuator, and to consider the proposed transaction.
Subject to the assumptions contained in the valuation, BDO
Dunwoody reached the opinion that the fair market value of the
Common Shares was in the range of $0.00 to $0.51 per Common Share.
BDO Dunwoody also delivered a fairness opinion that the
consideration offered under the proposed transaction is fair, from
a financial point of view, to the minority shareholders of NBS.
Based on BDO Dunwoody's conclusions, among other matters
considered, the Special Committee unanimously determined that the
proposed transaction is in the best interests of NBS and is fair,
from a financial point of view, to the minority shareholders of
NBS. In light of the Special Committee's conclusions, the board
of directors of NBS has unanimously approved the proposed
transaction and recommends that shareholders vote in favor of the
proposed transaction.
The transaction will be effected through an amalgamation of NBS
and a newly incorporated company wholly owned by Brookfield.
Pursuant to the amalgamation, each shareholder of NBS, other than
Brookfield and its affiliates, will receive one redeemable
preference share of the amalgamated company for each Common Share
held immediately prior to the amalgamation. Each redeemable
preference share will then be redeemed for $1.00 in cash.
On Nov. 6, 2006, an affiliate of Brookfield purchased an
additional 1,297,693 Common Shares from Drazen Ivanovic, an
officer of NBS. These Common Shares were acquired pursuant to a
private agreement transaction. After giving effect to this
acquisition, Brookfield and its affiliates own 39,526,226 Common
Shares, representing 91.6% of the outstanding Common Shares.
Brookfield has advised NBS that these additional Common Shares
were acquired by an affiliate of Brookfield in order to increase
the percentage ownership interest in NBS of Brookfield and its
affiliates above 90%.
A special meeting of shareholders of NBS will be held on or about
Dec. 18, 2006 to consider the proposed transaction. The proposed
transaction is subject to the approval of not less than two-thirds
of the shareholders of NBS voting at the meeting. As of Nov. 6,
2006, NBS had outstanding 43,151,922 Common Shares. As Brookfield
and its affiliates own more than 90% of the outstanding Common
Shares and an appraisal remedy will be available to shareholders
under applicable corporate law, no minority approval will be
required to approve the proposed transaction. The votes attached
to the Common Shares owned by Brookfield and its affiliates will
therefore be sufficient to approve the proposed transaction.
The terms and conditions of the proposed transaction, including
copies of the formal valuation and fairness opinion prepared by
BDO Dunwoody, will be detailed in a management information
circular to be mailed to shareholders of NBS as soon as
practicable.
About Brookfield Asset Management
With corporate offices in New York City, Toronto, Ontario, and
London, UK, Brookfield Asset Management Inc. (NYSE/TSX:BAM) --
http://www.brookfield.com/-- is an asset manager. Focused on
property, power and infrastructure assets, the Company has over
$50 billion of assets under management.
About NBS Technologies
Based in Toronto, Ontario, NBS Technologies Inc. (TSX: NBS) --
http://www.nbstech.com/-- provides smart card manufacturing and
personalization equipment, secure identity solutions and point of
sale transaction services for financial institutions, governments
and corporations worldwide. NBS Technologies is a global company
with locations in Canada, China, France, the U.S. and the United
Kingdom, along with a worldwide dealer network.
At June 30, 2006, NBS Technologies' balance sheet showed a
stockholders' deficit of CDN$13,743,000, compared to a deficit
of CDN$4,646,000 at Sept. 30, 2005.
NEXMED INC: Applies for Listing on Nasdaq Capital Market
--------------------------------------------------------
NexMed, Inc. has applied to transfer its listing to the Nasdaq
Capital Market in response to a staff determination letter from
Nasdaq indicating that it has not regained compliance in
accordance with Marketplace Rule 4450(b)(4) as the bid price of
its common stock had not closed at more than $1.00 per share for a
minimum of 10 consecutive business days over the previous 180-day
period ended Oct. 30, 2006. Additionally, a staff determination
letter indicated that NexMed has not regained compliance with
Marketplace Rule 4450(b)(1)(A) as the market value of listed
securities was not at least $50 million for a minimum of 10
consecutive business days over the previous 30 day period ended
Nov. 3, 2006.
As reported in the Troubled Company Reporter on Oct. 19, 2006,
NexMed received a notice from Nasdaq indicating that it did
not comply with the minimum $50 million market value of listed
securities requirement for continued listing set forth in
Marketplace Rule 4450(b)(1)(A). Additionally, the Company did
not comply with the alternative Marketplace Rule 4450(b)(1)(B)
which requires total assets and total revenue of $50 million each
for the most recently completed fiscal year or two of the last
three most recently completed fiscal years.
In accordance with the rules of the Nasdaq Capital Market, NexMed
has submitted an application to transfer the listing of its
securities from the Nasdaq Global Market to the Nasdaq Capital
Market. The initiation of the delisting proceedings will be
stayed pending Nasdaq staff review of the transfer application.
If the transfer application is approved, NexMed will be notified
that it has been afforded an additional compliance period of 180
days, up to April 30, 2007 in order to comply with the continued
listing requirements of the Nasdaq Capital Market. Accordingly,
NexMed's common stock must achieve a minimum bid price of $1.00
for a minimum of 10 consecutive days during the 180-day period
ended April 30, 2007, in order to maintain its listing on the
Nasdaq Capital Market. If the application is not approved, NexMed
may appeal the Nasdaq staff determination to a Listing
Qualifications Panel.
About NexMed
Headquartered in Robbinsville, New Jersey, NexMed, Inc. (NASDAQ:
NEXM) -- http://www.nexmed.com/-- develops drug through
participation in early stage licensing and development
partnerships with large pharmaceutical companies.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 11, 2006,
PricewaterhouseCoopers LLP expressed substantial doubt about
NexMed's ability to continue as a going concern after it audited
the Company's financial statements for the year ended
Dec. 31, 2005. The auditing firm pointed to the Company's
recurring losses and accumulated deficit.
NEW RIVER: Court Okays Pact on Woodland's Request to Dismiss Case
-----------------------------------------------------------------
The Honorable John K. Olson of the U.S. Bankruptcy Court for the
Southern District of Florida approved the stipulation entered into
by New River Dry Dock Inc., Woodland Resources Inc., and the
Official Committee Of Unsecured Creditors, resolving, on an
interim basis:
a) Woodland Resources' motion to have the Debtor's case
dismissed or in the alternative, for relief from automatic
stay; and
b) the Debtor's motion to have the automatic stay extended
for cause pursuant to Sec. 362(d)(3) of the Bankruptcy Code.
In September 2006, Woodland, a creditor in the Debtor's case,
asked the Court to dismiss the Debtor's chapter 11 case or to
designate the case as a single-asset real estate case.
Woodland asked the Court to require the Debtor to:
a) file a plan of reorganization that has a reasonable chance
of being confirmed within a reasonable time; or
b) commence monthly payments to Woodland as prescribed by
Section 362(d)(3)(B)(iii) of the Bankruptcy Code, within the
later of (i) 90 days of the filing of the petition, or (ii)
30 days of the Court finding that the Debtor is a single
asset real estate case.
Subsequently, the Debtor sought to extend the 90-day stay period
provided for in Section 362(d) of the Bankruptcy Code for an
additional 60 days due to the Debtor's "extensive efforts to
retain a suitable marine real estate broker, its efforts at
consensus, and the prospect that a confirmable plan of
reorganization will provide a substantial dividend to the general
unsecured creditors."
To resolve the matter, the Debtor and Woodland, together with the
Committee, agreed to defer consideration of Woodland's Motion to
Dismiss.
Accordingly, the parties stipulate that:
1. During the extended stay period contemplated by the
Stipulation, the Debtor will work diligently to obtain, on
or before January 31, 2007, a written contract with a bona
fide purchaser for the sale of the Debtor's real property
located at 2200 E. Marina Bay Drive, in Fort Lauderdale,
Florida, and to file a motion to sell the property pursuant
to the contract;
2. If the Debtor does not obtain a contract on or before
January 31, 2007, Woodland may seek relief from the
automatic stay, or set its Motion to Dismiss for expedited
hearing on any date on or after February 1, 2007;
3. In consideration of the forbearance period agreed to by
Woodland, (a) neither the Debtor nor the Committee will
attempt to surcharge the collateral of Woodland, except to
the extent contemplated in paragraph 4; and (b) Woodland and
the Debtor's estate will share the proceeds arising from any
sale of the property by the Debtor, as follows:
i) If the net proceeds realized from a sale of the
property, after deducting normal and customary closing
costs, including by way of example ad valorem taxes,
brokerage commission and recording fees, are
$10,000,000 or less, then there will be no surcharge
of the proceeds of Woodland's collateral (except to
the extent of closing costs) and no proceeds from the
sale will be distributed to the Debtor's estate; or
ii) If the net proceeds of a sale of the property, after
deducting normal and customary closing costs,
including by way of example ad valorem taxes,
brokerage commission and recording fees, are greater
than $10,000,000, then any proceeds over and above
$10,000,000 will be split equally between Woodland and
the Debtor's estate until the secured claim due
Woodland is satisfied in full, and then any remaining
proceeds will be distributed in their entirety to the
Debtor's estate;
4. A bona fide contract sufficient to satisfy paragraphs 2 and
3 is a contract which provides for (i) a period of no more
than 60 days for the purchaser to complete due diligence
with respect to the property, (ii) a purchaser's deposit of
at least 5% of the purchase price under the contract to be
deposited with Marine Realty Inc. or Debtor's counsel, which
deposit must be at risk at the conclusion of the due
diligence period, (iii) closing to be completed within
90 days from the date of the contract and (iv) contingencies
considered standard in the industry.
Notwithstanding that a bona fide contract must, by its
terms, limit the due diligence period to 60 days, the Debtor
reserves the right to seek Bankruptcy Court approval of a
reasonable extension of the due diligence period in the
event a prospective purchaser under the contract seeks
additional time in good faith to complete its due diligence
with respect to the property, and Woodland agrees not to
object to a reasonable extension request;
5. Woodland retains the right to consent or object to a sale of
the property pursuant to Section 363(f)(2) of the Bankruptcy
Code if the net proceeds of the sale, after deducting normal
and customary closing costs, will result in Woodland
receiving less than $10,000,000; and
6. None of the Debtor, the Debtor's professionals, any
representatives or successors in interest to the estate,
like a chapter 11 or 7 trustee, the Committee, nor the
Committee's professionals, will assert a claim under
Section 506(c) of the Bankruptcy Code for any costs and
expenses incurred in connection with the preservation,
protection or enhancement of the collateral, except as
stated in paragraph 4 with respect to:
i) normal and customary closing costs incurred in
connection with a sale pursuant to a contract; and
ii) the split of net proceeds over $10,000,000 between
Woodland and the Debtor's estate.
Additionally, the Debtor and the Committee agree that Woodland's
claim comprises:
Judgment or
Principal
Basis for Claim Amount Interest Provisions
--------------- ----------- -------------------
Final Judgment $1,746,739.68 Additional interest
of Foreclosure accrues at a per diem
dated March 7, 2005 rate of $1,087.70 from
March 8, 2005
Revised Second $3,605,429.85 Additional interest
Amended Agreed accrues at the rate
Partial Summary of $1,956.30 per day
Final Judgment of from June 6, 2005,
Foreclosure dated until the public sale
June 23, 2006
First Mortgage made $2,972,656.44 .75% above prime
by Debtor in favor
of RBC Centura Bank
dated Nov. 19, 1998,
as modified by the
first, second and
third mortgage
modification
Third Mortgage made $1,000,000.00 15.25% during the
by Debtor in favor extended term of the
of Fred M. Cuppy, Future Advance
Trustee of RPP Finance Promissory Note
Trust as modified by
the future advance
agreement and extension
agreement
Woodland reserves all rights to assert its entitlement to recover
default interest, fees, costs and other charges to be determined
at a later date, as provided by law or the subject documentation,
as part of its secured claim.
Woodland is represented by Joel L. Tabas, Esq., at Tabas,
Freedman, Soloff & Miller, P.A.
New River Dry Dock, Inc., filed for chapter 11 protection on
July 18, 2006 (Bankr. S.D. Fla. Case No. 06-13274). James H.
Fierberg, Esq., at Berger Singerman, P.A., represents the
Debtor in its restructuring efforts. Mindy A. Mora, Esq., at
Bilzin Sumberg Baena Price & Axelrod LLP represents the Official
Committee of Unsecured Creditors. When the Debtor filed for
protection from its creditors, it estimated assets between
$10 million and $50 million and its debts between $1 million to
$10 million.
NORTHWEST AIRLINES: Can Assume Modified Microsoft Licensing Pact
----------------------------------------------------------------
The Hon. Allan Gropper of the U.S. Bankruptcy Court for the
Southern District of New York allows Northwest Airlines, Inc., to
assume its Modified Enterprise Agreement with Microsoft Licensing
GP, and to file the modified agreement under seal.
Judge Gropper also rules that upon Northwest Airlines' payment of
the $355,267 administrative claim and allowance of the $1,029,586
general unsecured claim, Microsoft will be deemed to have
immediately withdrawn Claim Nos. 11014 and 11231.
As reported in the Troubled Company Reporter on Nov. 9, 2006, 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. The Debtors' exclusive period
to file a chapter 11 plan expires on Jan. 16, 2007.
(Northwest Airlines Bankruptcy News, Issue No. 46; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
NORTHWEST AIRLINES: Wants to Enter into Revised CBA with AMFA
-------------------------------------------------------------
Pursuant to Rule 9019(a) of the Federal Bankruptcy Rules of
Procedure and Section 363 of the Bankruptcy Code, Northwest
Airlines Corp. and its debtor-affiliates ask the United States
Bankruptcy Court for the Southern District of New York to:
(i) approve the compromise and settlement of their labor
dispute with the Aircraft Mechanics Fraternal Association;
and
(ii) authorize them to enter into a revised collective
bargaining agreement with AMFA.
AMFA is the bargaining representative of the Debtors' mechanics,
cleaners and custodians. AMFA and the Debtors' management had
reached a collective bargaining agreement that became effective
May 12, 2001 and amendable as of May 12, 2005.
The AMFA CBA required early commencement of bargaining pursuant
to Section 6 of the Railway Labor Act. The bargaining commenced
with opening proposals served on October 14, 2004 and reached an
"impasse" on July 19, 2005.
In August 2005, AMFA declined to send the Debtors' final contract
offer to union members for ratification and called for a strike
against the Debtors.
In December 2005, the Debtors and AMFA reached agreement on a
tentative strike settlement, but the union's members failed to
ratify the agreement.
The parties reached a second tentative strike settlement
agreement in October 2006. AMFA's membership ratified the new
settlement agreement with about 72% of its membership voting for
approval on November 6, 2006.
The Debtors' new agreement with AMFA provides these terms:
A. AMFA Represented Employees Electing Lay-off Status
* Employees whose employment status is currently "on
strike" can elect to go on lay-off status from the
permanent positions they held at the time of the strike,
without a right to exercise seniority for purposes of
displacing any new hire permanent replacement employees or
employees who made unconditional offers to return to work
and were reinstated prior to October 9, 2006;
* Employees making the lay-off election will be entitled to
one week of severance pay for each year of service with a
maximum of five weeks, paid in a lump sum and calculated
at the base rates of pay. The employees will also be
entitled to payment of any accrued vacation at the base
rates of pay set plus the applicable number of license
premiums each employee had been receiving at the time of
the strike;
* Employees making the lay-off election will be deemed to
have a right of recall to the permanent positions without
filing a request for Recall for the calendar years 2006
and 2007 and will be allowed Internet access to job
bulletins in RADAR -- Northwest's electronic employee
information system; and
* Northwest agrees to withdraw immediately any pending
appeals as to any strike related unemployment claims filed
by the employees and will not thereafter contest payment
of unemployment compensation benefits to any employee
whose status is converted to lay-off status.
B. AMFA Represented Employees Electing to Resign Their Employment
* Employees who are "on strike" from a permanent position
and who elect to resign their employment with Northwest
will be entitled to one week of separation pay for each
year of service with a maximum of 10 weeks, paid in a lump
sum and calculated at the base rates of pay. The
employees will also be entitled to payment of any accrued
vacation at the base rates of pay plus the applicable
number of license premiums each employee had been
receiving at the time of the strike;
* Employees who elect to resign will be deemed to have
voluntarily resigned from employment with Northwest and
will be permanently ineligible for reemployment with
Northwest; and
* An employee who has a minimum of 10 years of vesting
service and whose years of vesting service plus age is
equal or greater than 60 will be considered eligible to
apply for "Rule of 60" retiree boarding priority space for
available lifetime pass privileges, subject to the terms
and conditions of that Program and pass privilege rules
generally applicable to the Debtors' employees.
In addition to the resolution of disputes over the treatment of
striking AMFA-represented employees, the AMFA Agreement modifies
certain elements of the compensation, work rules and benefits
currently in effect for AMFA-represented employees:
(1) Overtime will be paid for hours worked in excess of eight
hours in any one workday modifying the current term
providing for overtime pay for hours worked in excess of
40 hours per workweek;
(2) Certain employees will not suffer loss of pay while
investigating or handling complaints and grievances;
(3) The vacation bid procedures will be relaxed so that an
employee is not required to bid his or her entire vacation
accrual in the annual bid but may reserve up to 10 days;
(4) Sick leave pay will be increased from 70% to 75% of the
employee's normal hourly pay rate for each of the first
seven continuous and consecutive work days of illness or
injury. The eighth additional day and all subsequent
continuous and consecutive work days of illness or injury
will be paid at 100%;
(5) Across-the board base pay rate increases of 1.5% effective
every January 1 of each year from 2007 to 2011;
(6) A Paid Union Leave Program; and
(7) An amendable date of December 31, 2011.
In connection with the Debtors' Chapter 11 cases, the AMFA
Agreement provides that:
(x) Northwest is not assuming any liabilities or obligations
under any prior agreement with AMFA or any claims which
otherwise may be alleged to have arisen against Northwest
at any time prior to the execution of the AMFA Agreement;
(y) Northwest's obligations under the AMFA Agreement are not
administrative costs and expenses of the Debtors' Chapter
11 cases; and
(z) Northwest reserves all rights to seek rejection and
modification of the terms and conditions of the AMFA
Agreement under Sections 1113 and 1114 of the Bankruptcy
Code, or otherwise, on the same basis as if the AMFA
Agreement had been executed and delivered by the parties
prior to the Petition Date.
The settlement is fair and reasonable and preserves the necessary
cost savings implemented with the labor group, Gregory M.
Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, in New York,
says.
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. The Debtors' exclusive period
to file a chapter 11 plan expires on Jan. 16, 2007.
(Northwest Airlines Bankruptcy News, Issue No. 46; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
OIKOS COMMUNITY: Case Summary & Six Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: OIKOS Community Development Corp.
1306 North Main Street
Dayton, OH 45405
Tel: (937) 222-7815
Fax: (937) 222-7814
Bankruptcy Case No.: 06-33412
Type of Business: The Debtor is a non-profit and an equal
housing opportunity organization.
See http://www.oikoscdc.org/
Chapter 11 Petition Date: November 16, 2006
Court: Southern District of Ohio (Dayton)
Judge: Lawrence S. Walter
Debtor's Counsel: Donald F. Harker, III, Esq.
Harker Baggott & Hall
One First National Plaza
130 West Second Street, Suite 2103
Dayton, OH 45402
Tel: (937) 461-8800
Fax: (937) 461-8818
Total Assets: $1,919,911
Total Debts: $2,885,069
Debtor's Six Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Fifth Third Bank $800,000
c/o Terrence Warncke
34 North Main Street
Dayton, OH 45401
Vectren $5,800
P.O. Box 209
Evansville, IN 47702-0209
Protector $2,500
3439 Linden Avenue
Dayton, OH 45410
Dayton Power & Light $2,000
P.O. Box 1247
Dayton, OH 45401-1247
Southtown Heating $1,700
3024 Springboro West
Dayton, OH 45439
AABCO O Electric $435
c/o Joseph Steven & Associates
9452 Telephone Road, Suite 227
Ventura, CA 93004
OMNICARE INC: UnitedHealth Rift Cues Moody's to Lower Ratings
-------------------------------------------------------------
Moody's Investors Service lowered the debt ratings of Omnicare,
Inc. and Corporate Family Rating to Ba3 from Ba2.
The rating outlook remains negative.
At the same time, Moody's affirmed Omnicare's Speculative Grade
Liquidity rating at SGL-1.
Ratings downgraded:
* Omnicare, Inc.
-- Corporate family rating to Ba3 from Ba2
-- Senior subordinated notes to Ba3, LGD4, 53% from Ba2,
LGD4, 55%
-- Convertible senior unsecured notes to B2, LGD5, 82% from
Ba3, LGD5, 82%
-- PDR to Ba3 from Ba2
* Omnicare Capital Trust I
-- PIERS Trust preferred to B2, LGD6, 94% from B1, LGD6, 95%
* Omnicare Capital Trust II
-- PIERS Trust preferred to B2, LGD6, 94% from B1, LGD6, 95%
Rating affirmed:
* Omnicare, Inc.
-- Speculative Grade Liquidity Rating at SGL-1
This rating action is based on concerns that - combined with
previously identified cash flow constraints, including high
working capital needs and the UnitedHealth Group dispute - several
new developments could result in greater pressure on cash flow.
These include:
(a) the shutdown of the company's Heartland facility;
(b) lower than expected patient volume; and,
(c) potential changes in reimbursement associated with Average
Wholesale Price benchmarks.
"While the transition to Part D continues to have a meaningful
negative effect on Omnicare, newer challenges, including
regulatory issues, are expected to depress cash flows over a more
protracted period. Combined with looming intermediate term
uncertainties, we believe a downgrade is appropriate at this
time," said Diana Lee, a Vice President at Moody's.
After the shutdown of its automated Heartland packaging facility
due primarily to quality control issues, the company has been able
to ramp up production at its other repackaging facility and also
shift packaging onsite to its local pharmacies.
However, the use of less automated local pharmacies has resulted
in higher operating expenses. At this time, it its unclear how
long it will take to get a new site up and running.
To date, the dispute with United remains outstanding and higher
working capital needs associated with the implementation of
Medicare Part D benefits continue to result in lower than
anticipated cash flows.
While the company recently settled two Medicaid suits, Moody's
believe that the negative overhang from these legal matters may be
affecting Omnicare's ability to sign on new patients. Over the
intermediate term,
Moody's believe there are two major issues facing the company.
First, as the industry moves away from using AWP as a benchmark in
drug pricing, it could result in lower reimbursement for Omnicare.
Secondly, Moody's believe the company may be more vulnerable to
loss of its rebates because of disclosure requirements.
Omnicare's Ba3 corporate family rating reflects relatively high
financial leverage associated with last year's acquisition of
NeighborCare, but also incorporates the company's scale and
leading position in the sector, which should help in its
negotiations with manufacturers as well as Prescription Drug
Plans.
The negative outlook is largely based on concerns that potential
movement away from AWP benchmarks as well as rebate disclosure
requirements could result in fundamental changes in reimbursement.
In addition, Moody's believes that while certain cash flow
constraints may resolve over time, the timing and outcomes are
unclear.
If OCR's challenges remain largely unresolved or are resolved
unfavorably, such that cash flow to debt ratios either remain at
the current mid-single digit level or decline even further, the
ratings could be downgraded. If regulatory and reimbursement
issues result in further cash flow deterioration, the ratings
could also face pressure.
If OCR continues to repay debt, working capital needs reverse as
Part D administrative issues are resolved, the United dispute is
settled in OCR's favor, a new repackaging plant becomes
operational, and details regarding new pricing benchmarks and
disclosure requirements appear to limit downside risk for OCR, the
outlook or ratings could improve.
Specifically, if favorable resolution of these matters results in
free cash flow to debt ratios that approach or are sustained in
the 12-15% range, upward movement could be considered.
The affirmation of the SGL-1 speculative grade liquidity rating
reflects our view that operating cash flow levels will be
sufficient to support operating needs, but more constrained over
the next 12 months. Nevertheless, OCR should still maintain
strong liquidity over the near-term, due in part to the
availability of an $800 million revolver.
OWENS CORNING: Reaches Pact Resolving Heart & Degginger Claims
--------------------------------------------------------------
Owens Corning and its debtor-affiliates have reached an agreement
with Heart Construction and Daniel Degginger wherein the Heart &
Degginger claims filed against the Debtor's estate will be
disallowed and expunged in their entirety. In return, the Debtors
will dismiss their State Court Action against the claimants with
prejudice.
Heart Construction filed Claim No. 9003, and Daniel Degginger
asserted Claim No. 9014 in April 2002. The Claims relate to a
prepetition action filed by Owens Corning in the Circuit Court of
Clay County, Missouri, Associate Circuit Division, captioned Owens
Corning fka Delsan Industries, Inc., v. Daniel Degginger and Heart
Construction Midwest, Inc., Case no. CV-199-2492AC.
The Claimants had filed an answer to the Complaint and asserted
their counterclaims.
In light of the settlement, the Claimants also agree to dismiss
their counterclaims with prejudice.
About Owens Corning
Owens Corning (OTC: OWENQ.OB) -- http://www.owenscorning.com/--
manufactures fiberglass insulation, roofing materials, vinyl
windows and siding, patio doors, rain gutters and downspouts.
Headquartered in Toledo, Ohio, the Company filed for chapter 11
protection on Oct. 5, 2000 (Bankr. Del. Case. No. 00-03837).
Norman L. Pernick, Esq., at Saul Ewing LLP, represents the
Debtors. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered,
represents the Official Committee of Asbestos Creditors. James J.
McMonagle serves as the Legal Representative for Future Claimants
and is represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP.
(Owens Corning Bankruptcy News, Issue No. 143; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
OWENS CORNING: Settles Over $4MM in Claims With Ellison Windows
---------------------------------------------------------------
Owens Corning's debtor-affiliate, Exterior Systems, Inc., has
reached a settlement agreement with Ellison Windows and Doors, a
division of The Ellison Company, Inc., resolving and setting-off
their prepetition claims against each other.
On February 18, 1898, Debtor Exterior Systems, Inc., and Ellison
Windows and Doors, a division of The Ellison Company, Inc.,
entered into a supply agreement pursuant to which:
(a) Ellison was granted the right to manufacture and sell
certain window and door products to Exterior;
(b) Exterior agreed to purchase its requirements for the
products from Ellison; and
(c) Ellison was required to pay Exterior certain rebates,
advertising allowance and store credits.
Exterior and Ellison also entered into certain promissory notes
pursuant to which Ellison was required to pay to Exterior
$2,000,000 in three payments. Ellison failed to pay the $500,000
final installment.
Ellison's prepetition obligations to Exterior total $1,132,842 on
account of rebates, advertising allowances, store credits plus
the final payment under the Promissory Note.
Exterior, on the other hand, owes prepetition obligations to
Ellison under the Supply Agreement for goods totaling $2,969,465.
To resolve all issues relating to their mutual obligations, the
parties agree that:
(a) the automatic stay provision under Section 362 of the
Bankruptcy Code will be modified to set off and reduce the
Exterior Debt by the amount of the Ellison Debt;
(b) after the set-off is effected, Ellison will be deemed to
hold a general, unsecured claim in Exterior's bankruptcy
proceeding for $1,836,623 -- Claim No. 4118. The Claim
represents the amount of the Exterior Debt, less the
amount of the Ellison Debt; and
(c) except with respect to Claim No. 4118, the Stipulation
will resolve all outstanding prepetition claims between
Exterior and Ellison with respect to the Exterior Debt and
the Ellison Debt.
About Owens Corning
Owens Corning (OTC: OWENQ.OB) -- http://www.owenscorning.com/--
manufactures fiberglass insulation, roofing materials, vinyl
windows and siding, patio doors, rain gutters and downspouts.
Headquartered in Toledo, Ohio, the Company filed for chapter 11
protection on Oct. 5, 2000 (Bankr. Del. Case. No. 00-03837).
Norman L. Pernick, Esq., at Saul Ewing LLP, represents the
Debtors. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered,
represents the Official Committee of Asbestos Creditors. James J.
McMonagle serves as the Legal Representative for Future Claimants
and is represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP.
(Owens Corning Bankruptcy News, Issue No. 143; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
PENSION BENEFIT: Annual Report Shows $18 Bil. Deficit at Sept. 30
-----------------------------------------------------------------
The Pension Benefit Guaranty Corp.'s insurance program for
single-employer pension plans posted a deficit of $18.1 billion
in 2006 fiscal year ended September 30, compared with the
$22.8 billion shortfall recorded a year ago, according to the
agency's Annual Management Report submitted to Congress this week.
The $4.7 billion net improvement is attributable mainly to the
airline relief provisions in the Pension Protection Act that led
to a sharp reduction in the amount of "probable" liabilities
reflected on the agency's balance sheet.
"The PBGC's financial condition appears to have stabilized for the
time being," Interim Director Vince Snowbarger said. "Our current
assets can cover pension payments coming due for a number of years
into the future, and our exposure to additional losses has
declined."
As of September 30, the single-employer program reported assets of
$60 billion and liabilities of $78.1 billion. In addition to
on-balance-sheet liabilities, the report showed PBGC's potential
future exposure to losses from pension plans sponsored by
financially weak employers decreased to $73 billion, compared with
$108 billion in 2005. Higher interest rates, and improved credit
ratings and plan funding among some employers were factors for the
reduced risk of claims. Total underfunding of insured single-
employer plans decreased to approximately $350 billion, compared
to $450 billion estimated in 2005.
During the year, the single-employer program took in 94 terminated
pension plans with a total of $600 million in assets and
$1.1 billion in future benefit liabilities, for an average funded
ratio of about 50%. All but $200 million of this liability was
already reflected on PBGC's balance sheet at the end of fiscal
year 2005. The program insures the pensions of 34 million
Americans in about 28,800 plans.
The PBGC was responsible for the pension benefits of 1.3 million
workers and retirees in 2006, reflecting no net change from 2005.
The amount of benefits paid increased from $3.7 billion in 2005 to
$4.1 billion in 2006 and is projected to rise to $4.8 billion in
2007.
The PBGC's separate insurance program for multi-employer pension
plans posted a net loss of $404 million in fiscal year 2006,
versus a $99 million net loss in 2005, increasing the program's
net deficit to $739 million from the $335 million recorded a year
earlier. The $305 million increase in net loss is due primarily
to a projected $257 million increase in loss from providing
financial assistance to multi-employer plans, partially offset by
a $32 million increase in premium income. Reasonably possible
exposure to pension plans that may require financial assistance in
the future declined to $83 million from $418 million in 2005. The
agency estimated total pension under funding in the multi-employer
system at $150 billion in 2006, down from about $200 billion in
the previous year. Overall, the multi-employer program has about
$1.2 billion in assets to cover $1.9 billion in liabilities. It
insures the pensions of almost 10 million Americans in some 1,540
plans.
The PBGC's financial statements are prepared in accordance with
accounting principles generally accepted in the United States of
America. The financial statements for fiscal year 2006 received
an unqualified audit opinion. Clifton Gunderson LLP performed the
audit under the direction and oversight of the agency's Inspector
General.
A full-text copy of the PBGC's Annual Management Report is
available for free at http://ResearchArchives.com/t/s?153f
The Pension Benefit Guaranty Corp. is a federal corporation
created under the Employee Retirement Income Security Act of 1974.
It currently guarantees payment of basic pension benefits for
44 million American workers and retirees participating in over
30,000 private sector defined benefit pension plans. The agency
receives no funds from general tax revenues. Operations are
financed largely by insurance premiums paid by companies that
sponsor pension plans and by PBGC's investment returns.
PETALS DECORATIVE: Most & Co. Raises Going Concern Doubt
--------------------------------------------------------
Most & Company, LLP, expressed substantial doubt about Petals
Decorative Accents, Inc. ability to continue as a going concern
after auditing the company's balance sheet at June 30, 2006 and
the company's statement of operations for the ten-month period
ended June 30, 2006. The auditing firm pointed to the company's
accumulated deficit of $15.4 million at June 30, 2006, net loss
and cash used in operations of $5.4 million and $3.6 million,
respectively, for the ten-month period ended June 30, 2006.
Petals Decorative Accents, Inc. reported a $5.4 million net loss
on $18.1 million of revenues for the ten-month period ended June
30, 2006, compared with a $3.3 million net loss on $13.6 million
of revenues for the same period in 2005. The increase in revenues
for the ten-month period ended June 30, 2006, was offset by higher
operating and other expenses, accounting for the higher net loss
in 2006.
At June 30, 2006, the company's balance sheet showed $6.4 million
in total assets and $11.3 million in total liabilities, resulting
in a $4.9 million stockholders' deficit.
Full-text copies of the company's balance sheet at June 30, 2006
and statement of operations for the ten-month period ended June
30, 2006, are available for free at:
http://researcharchives.com/t/s?14c4
The company's fiscal year is the twelve months ended June 30,
2006. Petals Decorative LLC's fiscal year has historically been
the 52 or 53-week period ending on the Saturday closest to August
31 in each year. Because Petals Decorative LLC is considered the
accounting acquirer and because the company (the legal acquirer)
is continuing its historical June 30, 2006 fiscal year, the
company is considered to have changed its fiscal year and is
required to file audited financial statements covering the
resulting transition period between the closing date of the
accounting acquirer's most recent fiscal year and the opening date
of legal acquirer's new fiscal year.
About Petals Decorative
Headquartered in Delaware, Petals Decorative Accents,
Inc.(formerly ImmunoTechnology Corp.), sells decorative silk
flowers, plants and trees, along with complimentary decorative
accents. The company imports most of the floral stems and other
materials used primarily from China.
On June 23, 2006, ImmunoTechnology Corp. entered into a
Contribution Agreement with Petals Decorative Accents, LLC wherein
the company agreed to acquire substantially all of the assets of
Petals Decorative Accents, LLC in exchange for the assumption by
the company of certain liabilites of the latter and the issuance
of Preferred and Common shares. The acquisition was completed and
on Sept. 20, 2006 the company name was changed. Prior to the
acquisition, the company was inactive and was considered a "shell
company".
PILGRIM'S PRIDE: Posts $7.5MM Net Loss in 4th Qtr. Ended Sept. 30
-----------------------------------------------------------------
Pilgrim's Pride Corporation reported a net loss of $7.5 million
on total sales of $1.338 billion for the fourth quarter ended
Sept. 30, 2006. Included in net income for the fourth quarter
of fiscal 2006 are non-recurring U.S. and foreign tax expenses
of $25.8 million related to the Company's repatriation of
$155 million of foreign earnings pursuant to the American Jobs
Creation Act of 2004. Excluding the effect of this one-time
item, net income for the fourth fiscal quarter would have been
$18.3 million. For the fourth quarter of fiscal 2005, the
Company reported net earnings of $74.7 million, on total sales
of $1.483 billion.
"We are pleased that in the fourth quarter, excluding the tax
effect associated with our foreign dividend repatriation, we
returned to profitability, particularly in light of the tremendous
challenges facing the U.S. chicken industry," said O.B. Goolsby,
Jr., Pilgrim's Pride president and chief executive officer. "Our
financial performance during the quarter reflected an improvement
in chicken prices for most of the quarter, coupled with the
progress we have made toward lowering our costs and operating more
efficiently in a difficult operating environment."
Last May, Pilgrim's Pride announced a multi-point plan designed to
improve the Company's competitive position. This plan included a
3% reduction in weekly chicken processing, which had been fully
implemented by the end of July, as well as a reduction in capital
investment and a sharpened focus on cost reductions and improved
efficiencies.
However, over the past two months market conditions have weakened,
as evidenced by a decrease in prices for boneless breast meat and
leg quarters, as well as a sharp increase in the price of corn and
soybean meal.
In response, Pilgrim's Pride on Oct. 29 announced further plans to
reduce weekly chicken processing by 5% year-over-year -- or
approximately 1.3 million head -- beginning Jan. 1, 2007, in an
effort to better balance production and demand. The Company said
it intends to keep the reduction in effect until average industry
margins return to more normalized levels.
For the full 2006 fiscal year, the Company reported a net loss
of $34.2 million on total sales of $5.236 billion. Included in
net income for fiscal 2006 are non-recurring U.S. and foreign
tax expenses of $25.8 million, related to the Company's
repatriation of $155 million of foreign earnings pursuant to the
American Jobs Creation Act of 2004. Excluding the effect of this
one-time item, net loss for fiscal 2006 would have been $8.4
million. For the full 2005 fiscal year, Pilgrim's Pride reported
net earnings of $265 million, on sales of $5.666 billion.
Included in the net income for fiscal 2005 were a non-recurring
gain of $7.5 million net of tax, associated with a litigation
settlement, and recoveries on prior year's turkey restructuring
charges of $3.3 million net of tax. Excluding these items,
adjusted earnings for fiscal 2005 would have been $254.2 million.
Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corp.
(NYSE: PPC) -- http://www.pilgrimspride.com/-- produces,
distributes and markets poultry processed products through
retailers, foodservice distributors and restaurants in the United
States, Mexico and in Puerto Rico. Pilgrim's Pride employs
approximately 40,000 people and has major operations in Texas,
Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina,
Pennsylvania, Tennessee, Virginia, West Virginia, Mexico and
Puerto Rico, with other facilities in Arizona, Florida, Iowa,
Mississippi and Utah.
* * *
Moody's Investors Service held its Ba2 Corporate Family Rating for
Pilgrim's Pride Corp in connection with the implementation of its
new Probability-of-Default and Loss-Given-Default rating
methodology for the U.S. Consumer Products sector. In addition,
Moody's revised or held its probability-of-default ratings and
assigned loss-given-default ratings on the company's note issues,
including an LGD6 rating on its $100 million 9.250% Sr. Sub.
Global Notes Due Nov. 15, 2013, suggesting noteholders will
experience a 95% loss in the event of a default.
PINE VALLEY: Retains Financial Advisor to Assist in CCAA Process
----------------------------------------------------------------
Pine Valley Mining Corporation reports on a number of developments
relating to its Companies' Creditors Arrangement Act (Canada)
process and provides an update regarding volumes of oxidized coal.
As reported in the Troubled Company Reporter on Oct. 23, 2006,
the British Columbia Supreme Court granted an order in favor of
Pine Valley Mining Corporation under CCAA. Initially, the Order
will be effective for a period ending Nov. 15, 2006, during which
time creditors and other third parties are stayed from terminating
agreements with Pine Valley or otherwise taking steps against Pine
Valley. The purpose of obtaining the Order is to afford Pine
Valley an opportunity to preserve the going concern value of its
assets as it assesses its alternatives, including the possible
sale of the company, to satisfy creditors and preserve shareholder
value. Ernst & Young LLP has been appointed by the Court as the
Monitor in the CCAA proceedings.
The Company reported its plans to put its operations on a care and
maintenance basis after completing a planned shipment of
approximately 46,000 tons of coking coal. That coal shipment has
been transported to Ridley Terminals and is available for
immediate loading. The Company's mining contractor, Tercon Mining
PV Ltd. is no longer providing any mining services to the Company
and has served notice, accepted by the Company, of termination of
the mining services contract effective Nov. 2, 2006.
In addition, the Company has retained an independent financial
advisor to assist it as it assesses its alternatives to
restructure the Company pursuant to the CCAA process. The Advisor
is in the process of contacting companies that may have an
interest in participating in a restructuring plan, and has entered
into confidentiality agreements with a number of such companies.
Pine Valley Mining Corporation (TSX:PVM.TO)(OTC BB:PVMCF.OB) --
http://www.pinevalleycoal.com/-- a publicly owned corporation,
operates the Willow Creek Mine which has a large supply of good
quality PCI and metallurgical coal reserves in British Columbia.
The Company has now completed construction of its infrastructure
at Willow Creek and has been making commercial coal shipments
since September 2004.
PORTRAIT CORP: Inks Premium Financing Pact with First Insurance
---------------------------------------------------------------
The Honorable Adlai S. Hardin Jr. of the U.S. Bankruptcy Court for
the Southern District of New York will convene a hearing at 9:30
a.m., on Nov. 22, 2006, to consider Portrait Corporation of
America, Inc., and its debtor-affiliates' for permission to enter
into an Insurance Premium Financing Agreement with First Insurance
Funding Corp. The hearing will be held at the U.S. Bankruptcy
Court, Courtroom 520, 300 Quarropas Street, in White Plains, New
York.
The Debtors want to enter into the financing agreement with First
Insurance in order to maintain various policies for general
liability, property damage, workers compensation and other forms
of insurance. The Debtors say these policies are essential to
their business operations and the preservation of their property
and assets.
One of the Debtors' prepetition premium financing agreements with
First Insurance expired by its terms on Oct. 31, 2006. The
Debtors seek to continue coverage by entering into a new premium
finance agreement with First Insurance dated Nov. 1 2006.
The new agreement provides funds for insurance policies on these
terms:
TERM AMOUNT
---- ------
Total Premium $718,520
Cash Down Payment $179,630
Amount Financed $538,890
Finance Charge $17,733.72
Annual Percentage Rate 7.830%
Monthly Payments 9
Payment Amount $61,847.08
Under the new premium financing agreement, the Debtors are
required to provide First Insurance security interests in return
premiums, dividend payments and certain loss payments related to
the relevant policies.
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. Kristopher M. Hansen, Esq., at Stroock &
Stroock & Lavan LLP represents the Official Committee of Unsecured
Creditors. Peter J. Solomon Company serves as financial advisor
for the Committee. At June 30, 2006, the Debtor had total assets
of $153,205,000 and liabilities of $372,124,000.
PORTRAIT CORPORATION: Has Access to $45-Million DIP Loan Facility
-----------------------------------------------------------------
The Honorable Adlai S. Hardin, Jr., of the U.S. Bankruptcy Court
for the Southern District of New York gave his final stamp of
approval to Portrait Corporation of America, Inc., and its debtor-
affiliates' request to obtain debtor-in-possession financing from
Wells Fargo Foothill, Inc.
Pursuant to Judge Hardin's order, the Debtors now have full access
to up to an aggregate outstanding principal amount of $45 million
from Wells Fargo, including:
-- a sub-limit for letters of credit having a maximum
drawing amount of not more than $20 million; and
-- an amount sufficient to indefeasibly pay in full, in
accordance with the DIP facility documents, the
outstanding prepetition obligations under the Debtors'
prepetition credit agreements.
The Debtors owe Wells Fargo approximately $11 million on account
of loans made under an aggregate of $30 million in prepetition
revolving lines of credit. Debts under the lines of credit are
secured by a first priority lien and security interest on all of
the Debtors' property and assets.
As reported in the Troubled Company Reporter on Sept. 6, 2006, the
Court issued and interim DIP financing order allowing the Debtors
to borrow up to $10 million, inclusive of a letter of credit sub-
facility in the amount of $5 million. The Court rules that all
borrowings made under the interim DIP order are deemed made in
accordance with and pursuant to the final DIP order.
All obligations arising from the DIP facility will be secured by a
first priority perfected lien and security interest against the
Debtors' assets, subject only to carve outs for:
a) any unpaid amounts payable pursuant to 28 U.S.C.
1930(a)(6);
b) wind-down costs and expenses for chapter 7 trustee or
trustees that may be appointed; and
c) upon and after an event of default, allowed reasonable
fees, costs and expenses of professionals retained
pursuant to sections 327 and 1103 of the Bankruptcy
Code by any Debtor or Statutory Committee
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. Kristopher M. Hansen, Esq., at Stroock &
Stroock & Lavan LLP represents the Official Committee of Unsecured
Creditors. Peter J. Solomon Company serves as financial advisor
for the Committee. At June 30, 2006, the Debtor had total assets
of $153,205,000 and liabilities of $372,124,000.
PROVIDIAN GATEWAY: Moody's Lifts Ba1 Rating on $68MM Class E Notes
------------------------------------------------------------------
Moody's Investors Service upgraded the ratings on three classes of
credit card receivables-backed securities issued from the
Providian Gateway Owner Trusts. The primary reason for the
upgrade is the continued long-term improvement in collateral
performance as well as improvement in the collateral mix.
The notes issued from the Providian Gateway Owner Trusts, the
Washington Mutual Master Trust and the Washington Mutual Master
Note Trust are backed by a common pool of credit card receivables.
The notes issued from the Master Trust were not affected by this
rating action because they are scheduled to mature within six
months.
Also, the notes issued from the Note Trust were not upgraded due
to a structural feature that allows for a retroactive reduction in
the required credit enhancement levels.
These are the rating actions:
* Issuer: Providian Gateway Owner Trusts
-- $68,113,000 Class E Notes, Series 2004-D, upgraded to
Baa2 from Ba1
-- $64,814,800 Class E Notes, Series 2004-E, upgraded to
Baa2 from Baa3
-- $35,843,500 Class E Notes, Series 2004-F, upgraded to
Baa2 from Baa3
The ratings of these classes of notes are not affected by this
rating action because they are scheduled to mature within the next
six months:
-- $112,020,000 Class C Notes, Series 2004-A, rated Aa1
-- $84,630,000 Class D Notes, Series 2004-A, rated A2
-- $100,605,000 Class E Notes, Series 2004-A, rated Ba1
Also, this class of notes issued from the related Washington
Mutual Master Trust, which are backed by the same pool of
collateral as the above-listed notes, were not affected by this
rating action because they are scheduled to mature within six
months:
* Issuer: Washington Mutual Master Trust
-- $63,694,000 Class B Certificate, Series 2003-A, rated
Baa2
Retroactive reduction in enhancement for note trust:
Due to a structural feature of the Note Trust, the improved credit
quality of the underlying collateral results in a reduction of the
required credit enhancement rather than an upgrade. The Note
Trust's operating documents permit the retroactive reduction in
the required credit enhancement levels so long as such reduction
does not result in a downgrade of the current ratings, among other
things.
Effective Nov. 1, 2006, the credit enhancement requirements for
the class A, M, B, and C notes were reduced to 27%, 22%, 16.5%,
and 8.5%, respectively, from 31%, 24%, 18%, and 11.5%. These new
enhancement levels retroactively affect all outstanding notes
issued by the Note Trust.
Also, with the exception of the Class 2005-D1 notes, the Class D
issuances require only 2% enhancement and are rated Ba3. The
Class 2005-D1 notes, issued in Aug. 2005, continue to have 6%
credit enhancement and are rated Ba2.
Washington Mutual, Inc., headquartered in Seattle, Washington, is
the largest thrift holding company in the U.S. and sixth largest
among U.S. bank and thrift companies, with assets of $351 billion
at June 30, 2006.
RAILAMERICA TRANSPORTATION: Fortress Offer Cues Moody's Review
--------------------------------------------------------------
Moody's Investors Service placed all ratings of RailAmerica
Transportation Corp. under review for possible downgrade; senior
secured of Ba2 / 26 -- LGD2. The review was prompted by the
report of the planned acquisition of RailAmerica by an affiliate
of Fortress Investment Group LLC.
The report indicates that the existing rated credit facilities
will be refinanced. If so, Moody's will withdraw the existing
ratings at such time.
Moody's believes that the transaction indicates the willingness of
the company to explore a more leveraged capital structure if the
transaction does not proceed. More leverage could restrict
financial flexibility, particularly if the declines in monthly car
loads reported throughout 2006 continue or if higher costs
pressure the operating ratio.
Moody's notes that Debt / EBITDA was 4.9x and EBIT / Interest was
1.6x at Sept. 30, 2006. As well, the proposed transaction values
the RailAmerica enterprise at $1.1 billion.
If the existing facilities are not repaid, Moody's will consider
in its review the effect of the resultant capital structure on
RailAmerica's leverage and coverage as well as the outlook for
demand across RailAmerica's railroads.
Ratings placed under review for possible downgrade:
* RailAmerica Transportation Corp.
-- Corporate Family Rating, currently Ba3
-- Senior Secured, currently Ba2 / 26 - LGD2
Outlook actions:
* RailAmerica Transportation Corp.
-- Outlook, Changed To Rating Under Review From Stable
RailAmerica Transportation Corp., headquartered in Boca Raton,
Florida, is the largest owner and operator of short line freight
railroads in North America.
READERS DIGEST: Inks $2.4 Billion Merger Pact with Ripplewood
-------------------------------------------------------------
The Reader's Digest Association Inc. has entered into a definitive
merger agreement under which an investor group led by Ripplewood
Holdings LLC will acquire all of the outstanding common shares of
RDA for $17.00 per share in a transaction valued at $2.4 billion,
including assumption of debt.
The Board of Directors of RDA has approved the merger agreement
and recommended to the holders of RDA common stock that they adopt
the merger agreement.
Under the terms of the agreement, RDA's common shareholders will
receive $17.00 in cash for each share of RDA common stock they
hold. This represents a premium of approximately 25% over RDA's
volume-weighted average price over the past 60 trading days.
The transaction is expected to close during the first quarter of
calendar year 2007, and is subject to the funding of the investor
group's committed financing and the approval of the holders of a
majority of the outstanding shares of RDA common stock, as well as
other customary closing conditions, including antitrust clearance.
Goldman, Sachs & Co. and Michael R. Lynch served as financial
advisors, and Jones Day and Richards Layton & Finger P.A. served
as legal advisors, to RDA in connection with its review of
strategic alternatives and with this transaction.
Morgan Stanley & Co. Incorporated, J.P. Morgan Securities Inc.,
Citigroup and Merrill Lynch served as financial advisors, and
Cravath, Swaine & Moore LLP served as legal advisor, to the
investor group.
About Ripplewood Holdings LLC
Based in New York, Ripplewood Holdings LLC is a private equity
firm established in 1995 by Timothy C. Collins. Through five
institutional private equity funds managed by Ripplewood, the firm
has invested over $3 billion in transactions in the U.S., Asia,
Europe, and the Middle East.
About Reader's Digest
Pleasantville, New York-based The Reader's Digest Association Inc.
(NYSE: RDA) -- http://www.rda.com/-- is a global publisher and
direct marketer of products including magazines, books, recorded
music collections, and home videos. Products include Readers
Digest magazine, which is published in 50 editions and
21 languages.
* * *
Moody's Investors Service placed in September 2006 The Reader's
Digest Association Inc.'s Ba1 Corporate Family Rating and Ba2
senior unsecured note rating on review for possible downgrade.
Standard & Poor's Ratings Services placed in August 2006 its
ratings, including the 'BB' corporate credit and 'BB-' senior
unsecured debt ratings, on Reader's Digest Association Inc. on
CreditWatch with negative implications.
READERS DIGEST: Posts $26.7 Mil. Net Loss in Qtr. Ended Sept. 30
----------------------------------------------------------------
The Reader's Digest Association Inc. reported significantly
improved free cash flow despite lower operating results for the
quarter, consistent with the company's expectations and in line
with guidance for the full fiscal year.
First quarter results reflect seasonal investment as the company
ramps up for the heavy fall and winter selling season. These are
company-wide results for the Fiscal 2007 first quarter, versus the
same quarter in Fiscal 2006:
* Revenues were $517 million, up slightly versus last year.
Adjusting for foreign-currency fluctuations, consolidated
revenues were down 2%.
* Reported operating losses were $30 million versus a loss of
$7 million last year. Last year's results included a
$3 million gain on the sale of certain non-strategic assets
previously recorded in other income/expense, net.
* Reported net losses for the 2007 first fiscal quarter ended
Sept. 30, 2006, were $26.7 million compared with $8.2 million
net loss in the comparable quarter of 2006.
At Sept. 30, 2006, Reader's Digest's balance sheet showed
$2.249 billion in total assets, $2.111 billion in total
liabilities, and $138 million in total stockholders' equity.
At June 30, 2006, the Company had $175 million in total equity.
The Company's September 30 balance sheet showed strained
liquidity with $824.1 million in total current assets available
to pay $899 million in total current liabilities.
Free cash flow was a use of $62 million, an improvement of
$37 million over last year's first quarter usage of $99 million.
The positive variance was driven by a significant improvement in
working capital. The company historically uses cash in the first
quarter in preparation for the fall and winter selling seasons.
"Operating results were down in the quarter versus last year,
although slightly better than our internal expectations. As we
guided in the fourth quarter of Fiscal 2006, much of the decline
reflects a planned shift in timing and mix of customer-
acquisition- related marketing activities and increased investment
spending on new initiatives including Every Day with Rachael Ray,
Daheim in Deutschland and Taste of Home Entertaining. These new
initiatives collectively will contribute substantial revenues in
Fiscal 2007," president and chief executive officer Eric Schrier
said.
"Free cash flow is off to a very strong start, and consistent with
our earlier guidance we continue to expect much stronger free cash
flow in Fiscal 2007 versus last year."
First Quarter Variance Explanation
* Revenues:
Consolidated revenues were up slightly to $517 million,
down 2% currency-neutral. RD North America (RDNA) increased
1% to $229 million, or flat currency-neutral. RD
International (RDI) was up 3% to $241 million, down 1%
currency-neutral. Consumer Business Services revenues
declined 11% to $53 million, mainly attributable to lower
sales at Books Are Fun (BAF).
* Losses:
Operating losses were $30 million, versus operating losses of
$7 million in last year's quarter. RDNA profits of
$9 million were down $7 million versus last year.
RDI reported a loss of $9 million, down from a profit of
$1 million last year.
* Other Income:
Other Income/Expense, net was $14 million versus $9 million
last year. The unfavorable variance reflects higher
interest expense this year versus last.
Outlook
In Fiscal 2007, the company continues to expect to grow both
revenues and profits for each of the next three quarters as well
as the full year, in line with its expectations announced in
August, principally driven by:
* Further strengthening RDNA, RDI, and QSP.
* Returning BAF to profitability through the division's
five-part plan that includes new management, cost reduction,
strengthening the sales force, focusing on the core book and
gift businesses, and improving the business model. The
goals of the plan are to maintain and expand BAF's leading
position in the display marketing business, improve
operating profit margins, and position the business for
long-term revenue growth.
* Accelerating growth from new launches including businesses in
new international markets, the magazine Every Day with
Rachael Ray, and Taste of Home Entertaining.
* Expanding RDA's Internet/digital presence by integrating
RDA's existing food and Web activities with Allrecipes.com,
the recently acquired leading home cooks Web site.
For full-year Fiscal 2007, RDA expects:
* Total company revenues to grow mid-single digits.
* Total company operating profits to grow in low double digits,
reflecting high single-digit profit growth at RDNA and RDI,
and significantly improved profits at CBS in comparison with
Fiscal 2006 Adjusted Operating Profits. These gains will be
partly offset by higher Corporate expenses related to an
expected increase in legal fees as several BAF legal actions
move to trial, as well as the absence of favorable
non-recurring items in 2006 including the reversal of a legal
accrual and reduced management compensation.
* EPS to improve to a range of $0.88 to $0.98 per share.
* Free cash flow in the $120 million to $140 million range.
Reader's Digest North America
In the first quarter, revenues for RDNA were $229 million, up 1%
over last year. Excluding the effects of foreign currency
translation, revenues were flat to last year. Operating profits
were $9 million versus $16 million in the year-ago quarter.
Revenues reflect incremental sales from new launches Every Day
with Rachael Ray magazine and Taste of Home Entertaining, the
acquisition of Allrecipes.com, and the launch of the new Taste of
Home Cookbook. These gains were offset by lower advertising and
newsstands sales at U.S. Reader's Digest magazine and the timing
of Reiman magazines and book annuals.
The decline in operating profits principally reflects the revenue
drivers mentioned above as well as a planned shift in timing of
certain promotional mailings, and increased investment in new
launches Every Day with Rachael Ray and Taste of Home
Entertaining.
Reader's Digest International
In the first quarter, RDI revenues were $241 million, up 3% over
last year. Excluding the effects of foreign currency translation,
revenues were down 1%. RDI reported an operating loss in the
quarter of $9 million, versus a profit of $1 million last year.
Revenues were driven by higher sales in Germany, Russia,
Australia, Brazil, and Czech Republic.
In certain markets, including Germany, results were bolstered by
sales of the blockbuster title launched in the United States last
year, Extraordinary Uses for Ordinary Things. The newer markets
launched in recent years also contributed revenue growth. These
gains were offset by sales declines in France, United Kingdom,
Portugal, and Poland, principally reflecting weaker- than-expected
mailings.
Operating losses principally reflect a shift in timing and mix of
new customer-acquisition mailings, investments in new initiatives,
and some softness in Portugal and certain markets in Eastern
Europe.
Investments include additional testing in potential new markets,
new magazine launches in Germany, Finland, Mexico, and Australia,
and continued development of the company's English-language
learning business in several markets.
Consumer Business Services
CBS reported revenues of $53 million, down 11% from last year, and
operating losses of $19 million, versus a loss of $18 million last
year. The first quarter is typically the smallest for CBS as its
two businesses invest in preparation for the fall and winter
selling season. Revenues declined at both BAF, and to a far
lesser extent, QSP, while operating losses at QSP improved versus
last year.
At BAF, revenue declines were driven by lower corporate events
reflecting the impact of fewer corporate sales reps versus last
year, while averages for both schools and corporate events were
stronger than expected. Operating losses reflect the revenue
shortfall and planned increased investment spending for the head
office relocation and investment in the sales force. BAF is
beginning to make progress relative to its cost reduction program
developed last year, sales force retention and recruiting efforts
are improving, and the new Chicago office is now fully
operational.
At QSP, results were driven by higher magazine subscription sales,
offset by lower gift sales and the timing of food sales. QSP
continues to benefit from an improving business position and lower
costs.
Corporate Unallocated
Corporate unallocated expenses were $10 million in the quarter,
versus $9 million in the year-ago quarter. Corporate unallocated
expenses include the cost of governance and other centrally
managed expenses, as well as the accounting for U.S. pension
plans, post-retirement healthcare costs, and stock and executive
compensation programs.
Full-text copies of the Company's first quarter financials are
available for free at http://ResearchArchives.com/t/s?153e
About Reader's Digest
Pleasantville, New York-based The Reader's Digest Association Inc.
(NYSE: RDA) -- http://www.rda.com/-- is a global publisher and
direct marketer of products including magazines, books, recorded
music collections, and home videos. Products include Readers
Digest magazine, which is published in 50 editions and
21 languages.
* * *
Moody's Investors Service placed in September 2006 The Reader's
Digest Association Inc.'s Ba1 Corporate Family Rating and Ba2
senior unsecured note rating on review for possible downgrade.
Standard & Poor's Ratings Services placed in August 2006 its
ratings, including the 'BB' corporate credit and 'BB-' senior
unsecured debt ratings, on Reader's Digest Association Inc. on
CreditWatch with negative implications.
REFCO INC: Courts Sets Protocol on Plan Confirmation Discovery
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approves procedures governing discovery with respect to the
confirmation of the Chapter 11 Plan filed by Refco, Inc., and its
debtor-affiliates; Marc S. Kirschner, the Chapter 11 Trustee for
Refco Capital Markets, Ltd.; and the Joint Sub-Committee of the
Official and Additional Committees of Unsecured Creditors.
Judge Drain authorizes the Plan Proponents to file on or before
November 17, 2006, a list of:
(a) names of witnesses that the Plan Proponents anticipate
presenting at the December 15, 2006 Plan confirmation
hearing; and
(b) specific area for which the testimony of any witness will
be offered including any opinions that the witnesses will
offer, provided that, in the event that the Plan
Proponents determine the need to supplement their Witness
List based on a need that was not anticipated at the time
the list was filed, the Debtors will file a supplement to
that list on or before December 4, 2006, providing
additional witnesses and the general areas of testimony
to be offered.
Notwithstanding a person's designation on the Witness List, the
Plan Proponents will not be required to present any person during
the Confirmation Hearing or precluded from offering witnesses
that do not appear on the Witness List for the limited purpose of
rebutting testimony offered or adduced at the Confirmation
Hearing in opposition to Plan confirmation.
Judge Drain overrules the objections raised by the Ad Hoc
Committee of Equity Security Holders and New York Financial LLC
on the discovery procedures.
The Ad Hoc Equity Committee has argued that the procedures (i)
permit the Plan Proponents to surprise objecting parties with
witnesses and evidence, and (ii) do not allow sufficient time for
objecting parties to conduct discovery.
On the Ad Hoc Equity Committee's behalf, Paul N. Silverstein,
Esq., at Andrews Kurth LLP, in New York, pointed out that since
objections to Plan confirmation are due by December 1, 2006,
objecting parties must have a full opportunity to discover the
Plan Proponents' positions and knowledge regarding well-known
confirmation issues, including the allowability of disputed
claims against Refco and the value of parent causes of action.
As it stands, Mr. Silverstein said, objectors are required to
file their confirmation objections before depositions have even
commenced, and well before receiving information necessary to
prepare an objection. On the other hand, Mr. Silverstein noted,
the Plan Proponents have no deadline to file a response to the
Plan confirmation objections and to state their position on key
issues. He said their response could be filed the day before
confirmation, raising allegations, claims or defenses that
objectors would not have had an opportunity to properly test
during discovery.
In support of the Ad Hoc Equity Committee's contentions, NY
Financial argued that the protocol "contravenes due process and
constitutes a specious attempt to modify, if not extinguish,
procedural and substantive rights afforded litigants in federal
courts and under prior [Court orders]."
Judge Drain rules that the Plan Proponents may present the
testimony of any designated person by:
-- direct examination;
-- use of deposition testimony in accordance with Rule 7032
of the Federal Rules of Bankruptcy Procedure;
-- submission of a person's declaration, or the proffer of
testimony as contained in a previously submitted
declaration, subject to:
* the rights of any party that has filed a Plan
confirmation objection on or before December 1, 2006,
to object to the presentation; and
* other rights afforded by the Federal Rules of
Evidence and applicable law.
Notwithstanding the Objection Deadline, any party-in-interest
who, on or before November 10, 2006, serves a statement of issues
to be raised in opposition to the Plan confirmation, will be
entitled to seek discovery of the Plan Proponents in connection
with the Plan confirmation and the global compromise and
settlement underlying the Plan. However, nothing will:
(i) excuse an Eligible Objectant from, on or before the
Objection Deadline, filing a Confirmation Objection,
which may include additional issues not raised in the
Issue Statement;
(ii) preclude any party-in-interest from seeking discovery of
any party, other than the Plan Proponents, in connection
with a timely filed Confirmation Objection; or
(iii) preclude an Eligible Objectant from seeking discovery
with respect to an issue not on the Eligible Objectant's
Issue Statement that is identified during the course of
discovery and could not have been known by the Eligible
Objectant at the time of the Issue Statement.
Any party-in-interest who does not serve an Issue Statement on or
before the Contested Matter Commencement Date will not be
permitted to seek discovery of the Plan Proponents by any method
in connection with the Plan confirmation.
Judge Drain directs the Plan Proponents to establish an
electronic document depository by November 17, 2006, which will
include all non-privileged documents constituting relevant
information concerning the negotiation of the global compromise
and settlement underlying the Plan.
The Plan Proponents will also prepare a privilege log of all
documents relevant to the negotiation of the global compromise
and settlement underlying the Plan to which any of the Plan
Proponents assert an available privilege, which identifies by
category only the types of documents and communications as to
which privilege is asserted and the nature of the privileged
asserted. The Privilege Log will be posted in the Document
Depository on or as soon as practicable after November 17, 2006.
Aside from access to the Document Depository, any of the Eligible
Objectants may serve upon the Plan Proponents no later than
November 10, 2006, these types of discovery requests:
(a) requests for production pursuant to Rule 34 of the
Federal Rules of Civil Procedure, provided that the Plan
Proponents will not be required to produce pleadings of
record in the Debtors' cases or related adversary
proceedings in response to any Production Request;
(b) notices for depositions upon oral examination of the
persons on the Witness List pursuant to Civil Rule 30, to
be served by Eligible Objectants not later than
November 27, 2006, and which depositions will commence on
December 4, 2006; and
(c) requests for admissions pursuant to Civil Rule 36, solely
with respect to authentication of documents to be offered
as exhibits at the Confirmation Hearing.
In the event that a dispute arises concerning any request for
discovery, the party alleging non-compliance with any request
will inform the non-responsive party of that dispute.
The Court will conduct a pre-Confirmation Hearing conference on
December 13, 2006, at 10:00 a.m., in Room 610 of the United
States Customs House, One Bowling Green, in New York, to discuss,
among others, motions in limine and the presentation of
testimony.
In anticipation of the pre-Confirmation Conference, the Plan
Proponents and the objecting parties will each file with the
Court a list of proposed Confirmation Hearing exhibits on or
before December 11, 2006.
A full-text copy of the Court's Plan Confirmation Discovery Order
is available at no charge at http://ResearchArchives.com/t/s?1537
About Refco Inc.
Based in New York, Refco Inc. -- http://www.refco.com/-- is a
diversified financial services organization with operations in 14
countries and an extensive global institutional and retail client
base. Refco's worldwide subsidiaries are members of principal
U.S. and international exchanges, and are among the most active
members of futures exchanges in Chicago, New York, London and
Singapore. In addition to its futures brokerage activities, Refco
is a major broker of cash market products, including foreign
exchange, foreign exchange options, government securities,
domestic and international equities, emerging market debt, and OTC
financial and commodity products. Refco is one of the largest
global clearing firms for derivatives.
The Company and 23 of its affiliates filed for chapter 11
protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006).
J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, represent the Debtors in their restructuring efforts. Luc A.
Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents
the Official Committee of Unsecured Creditors. Refco reported
$16.5 billion in assets and $16.8 billion in debts to the
Bankruptcy Court on the first day of its chapter 11 cases.
On Oct. 6, 2006, the Debtors filed their Amended Plan and
Disclosure Statement. On Oct. 16, 2006, the gave its tentative
approval on the Disclosure Statement and on Oct. 20, 2006, the
Court Clerk entered the written disclosure statement order.
The hearing to consider confirmation of Refco, Inc., and its
debtor-affiliates' plan is set for Dec. 15, 2006. Objections to
the plan, if any, must be in by Dec. 1, 2006.
Refco LLC, an affiliate, filed for chapter 7 protection on
Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is
a regulated commodity futures company that has businesses in the
United States, London, Asia and Canada. Refco, LLC, filed for
bankruptcy protection in order to consummate the sale of
substantially all of its assets to Man Financial Inc., a wholly
owned subsidiary of Man Group plc. Albert Togut, the chapter 7
trustee, is represented by Togut, Segal & Segal LLP.
On April 13, 2006, the Court appointed Marc S. Kirschner as Refco
Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is
represented by Bingham McCutchen LLP. RCM is Refco's operating
subsidiary based in Bermuda.
Three more affiliates of Refco, Westminster-Refco Management LLC,
Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed
for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case
Nos. 06-11260 through 06-11262).
Refco Commodity Management, Inc., formerly known as CIS
Investments, Inc., a debtor-affiliate of Refco Inc., filed for
chapter 11 protection on Oct. 16, 2006 (Bankr. S.D.N.Y. Case No.
06-12436). RCMI's exclusive period to file a chapter 11 plan
expires on Feb. 13, 2007.
(Refco Bankruptcy News, Issue No. 48; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
REFCO INC: GAIN Capital Buys Refco FX's Customer & Marketing List
-----------------------------------------------------------------
Gain Capital Group, LLC entered into a definitive Purchase
Agreement with Refco F/X Associates LLC to purchase the RFXA
retail customer account information and marketing list. The
Purchase Agreement was approved as submitted by the Honorable
Robert D. Drain, U.S. Bankruptcy Court for the Southern District
of New York, at a hearing on Nov. 14, 2006.
Under the terms of the Agreement, privately held GAIN will pay
RFXA an upfront fee of $750,000 for the entire customer list of
approximately 15,000 customer accounts and over 150,000 marketing
contacts. In addition, GAIN has agreed to further remuneration in
the form of an activation fee of $100 per account, payable on
every account over 4,000 opened before the 2nd anniversary of the
closing date.
In addition, GAIN will pay RFXA an Annual Maintenance Fee of 1% of
the average account balance of each Customer, payable on both the
1st and 2nd anniversaries of the Closing Date. The Closing Date
was yesterday, Nov. 16, 2006.
"Under the terms of the proposed bankruptcy plan for Refco Inc,
and its subsidiaries, the proceeds of the sale of the RFXA
Customer List will enhance distributions to be made to creditors
of RFXA," said Refco's Chief Restructuring Officer David Pauker.
"We are pleased to have finalized the sale to GAIN Capital,"
continued Mr. Pauker.
"In addition to operating within a solid regulatory framework,
GAIN offers RFXA clients a reliable, full service trading solution
and a commitment to the highest professional standards," said
GAIN's Chief Executive Officer Mark Galant. GAIN Capital Group
and FOREX.com are registered with the National Futures Association
(NFA) as a Futures Commission Merchant (NFA ID #0339826).
RFXA clients will be given the option to open an account at either
GAIN Capital or at GAIN's retail division, FOREX.com.
As reported in the Troubled Company Reporter on July 3, 2006, RFXA
and GAIN reached a preliminary agreement whereby GAIN would
acquire the RFXA retail customer account information and related
assets, subject to Court approval. On July 26, 2006, the two
parties disclosed that the proposed Agreement had been jointly
terminated because the parties were unable to reach terms on a
final asset purchase agreement. On Oct. 30, 2006, RFXA entered
into an Agreement with Saxobank to purchase the customer list for
$500,000, subject to higher and better offers. GAIN and Saxobank
participated in an auction on Nov. 9, 2006 with GAIN ultimately
submitting the highest and best offer for the RFXA customer list.
About GAIN Capital Group
Headquartered in Bedminster, New Jersey, GAIN Capital Group --
http://www.gaincapital.com/-- is a leading provider of foreign
exchange services, including direct-access trading and asset
management. Founded in 1999 by Wall Street veterans, GAIN Capital
Group is one of the largest, most respected firms in the online
forex industry, servicing clients from more than 140 countries and
supporting trade volume in excess of $100 billion per month. The
company operates sales offices in New York and Shanghai.
The company operates two full service web portals. FOREX.com
(www.forex.com) services individual investors of all experience
levels with a full-service trading platform, lower account
minimums and extensive education and training. The company's
flagship service, GAIN Capital focuses on the needs of
professional forex traders, including hedge funds and money
managers.
About Refco Inc.
Based in New York, Refco Inc. -- http://www.refco.com/-- is a
diversified financial services organization with operations in 14
countries and an extensive global institutional and retail client
base. Refco's worldwide subsidiaries are members of principal
U.S. and international exchanges, and are among the most active
members of futures exchanges in Chicago, New York, London and
Singapore. In addition to its futures brokerage activities, Refco
is a major broker of cash market products, including foreign
exchange, foreign exchange options, government securities,
domestic and international equities, emerging market debt, and OTC
financial and commodity products. Refco is one of the largest
global clearing firms for derivatives.
The Company and 23 of its affiliates filed for chapter 11
protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006).
J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, represent the Debtors in their restructuring efforts. Luc A.
Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents
the Official Committee of Unsecured Creditors. Refco reported
$16.5 billion in assets and $16.8 billion in debts to the
Bankruptcy Court on the first day of its chapter 11 cases.
Refco LLC, an affiliate, filed for chapter 7 protection on
Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is
a regulated commodity futures company that has businesses in the
United States, London, Asia and Canada. Refco, LLC, filed for
bankruptcy protection in order to consummate the sale of
substantially all of its assets to Man Financial Inc., a wholly
owned subsidiary of Man Group plc. Albert Togut, the chapter 7
trustee, is represented by Togut, Segal & Segal LLP.
On April 13, 2006, the Court appointed Marc S. Kirschner as Refco
Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is
represented by Bingham McCutchen LLP. RCM is Refco's operating
subsidiary based in Bermuda.
Three more affiliates of Refco, Westminster-Refco Management LLC,
Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed
for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case
Nos. 06-11260 through 06-11262).
Refco Commodity Management, Inc., formerly known as CIS
Investments, Inc., a debtor-affiliate of Refco Inc., filed for
chapter 11 protection on Oct. 16, 2006 (Bankr. S.D.N.Y. Case No.
06-12436).
RENT-A-CENTER: Completes Rent-Way Acquisition & Debt Refunding
--------------------------------------------------------------
Rent-A-Center Inc. has completed the reported acquisition of
Rent-Way Inc. As a result, Rent-Way is now a wholly owned
indirect subsidiary of the Company.
The Company also reported the completion of the refinancing of its
senior secured debt. The new $1,322.5 million senior credit
facility consists of $922.5 million in term loans and a $400
million revolving credit facility.
Of the $922.5 million in term loans, $322.2 was used to refinance
the Company's existing term loans and $600.3 million was drawn
down today and utilized to finance the acquisition of all of the
outstanding capital stock of Rent-Way, repay the outstanding
indebtedness of Rent-Way, and pay transaction expenses.
Based in Plano, Texas, Rent-A-Center, Inc. (Nasdaq:RCII)
-- http://www.rentacenter.com/-- operates the largest chain of
consumer rent-to-own stores in the U.S. with 2,751 company
operated stores located in the U.S., Canada, and Puerto Rico.
The company also franchises 297 rent-to-own stores that operate
under the "ColorTyme" and "Rent-A-Center" banners.
* * *
Standard & Poor's Ratings Services lowered on Oct. 10, 2006, its
corporate credit rating on Plano, Texas-based Rent-A-Center Inc.
to 'BB' from 'BB+'. S&P said the outlook is negative.
At the same time, Standard & Poor's assigned its 'BB' bank loan
rating to Rent-A-Center Inc.'s proposed US$1.325 billion credit
facility. The rating agency also assigned a recovery rating of
'2' to the facility, indicating the expectation for substantial
(80%-100%) recovery of principal in the event of a payment
default. The proposed loan comprises:
-- a $400 million revolving credit facility due in 2011,
-- a $200 million term loan A due in 2011, and
-- a $725 million term loan B due in 2012.
"The downgrade is due to an increase in debt leverage and a
decline in cash flow protection, as the acquisition of Rent-Way
Inc. will be funded with $600 million of incremental debt," said
Standard & Poor's credit analyst Gerald Hirschberg.
RESIDENTIAL CAPITAL: GMAC Sale May Cues Moody's to Hold Ba1 Rating
------------------------------------------------------------------
Moody's Investors Service expects to confirm the Baa3 senior
unsecured debt rating and Prime-3 short-term debt rating of
Residential Capital LLC with a stable outlook.
Moody's would confirm ResCap's ratings after the expected closing
of the sale of a majority interest in ResCap's parent company,
GMAC, to a consortium of investors led by Cerberus Capital
Management.
According to Moody's, this transaction will support ResCap's
credit profile by de-linking it from GM, providing it with an
owner focused on improved growth and efficiency.
In a separate release, Moody's said that it also expects to
confirm GMAC LLC's Ba1 long-term rating upon the closing of the
sale.
Confirmation of ResCap's ratings also reflects the company's
success in gaining strong access to diverse funding sources in the
global public capital markets, elimination of its reliance on
intercompany borrowings from GMAC, as well as progress that the
company is making in integrating its GMAC Residential and GMAC RFC
mortgage businesses.
Moody's also views positively ResCap's management of its US
business which will focus on the diversification of its business
mix within existing products and through the development of newer
businesses. ResCap will continue to focus on credit risk and will
seek to reduce some balance sheet credit exposure as the cycle
develops.
Furthermore, ResCap is firmly among the top ten mortgage firms in
the USA, a position Moody's expects will be maintained, if not
enhanced. Moody's also expects the company to successfully
navigate through a more challenging environment for mortgage
originators while continuing to make solid progress in integrating
and rationalizing its business lines.
That said ResCap faces a difficult business environment for
residential mortgage originators and investors, resulting from a
weakening US residential housing market. The company also still
has progress to make to complete the integration of its business
platforms and reduce business infrastructure costs. Moody's
expects ResCap's profitability to continue to be under pressure in
the near term as it contends with credit and competitive
challenges. This concern is potentially mitigated by the
reduction in ResCap's credit and funding risks as the balance
sheet is actively managed.
"ResCap's limited independent operating track record, the highly
competitive residential mortgage banking environment in which it
operates, its sound competitive position and performance, and its
moderate capitalization continue to be rating factors," Philip
Kibel said, Moody's Senior Vice President.
In addition, on a stand-alone basis, Moody's believes ResCap would
likely be rated in the "mid-Baa" range."
The stable outlook reflects Moody's expectation that there will
not be a material alteration to ResCap's leadership, business
model or capital structure as a result of the transaction with the
Cerburus consortium. The stable outlook also indicates a
reduction in the linkage between ResCap and GMAC, which comes as a
result of the new ownership's focus on improved growth and
efficiency of the company. Moody's expects the sale will lead to
an enhancement of ResCap's operational structure and flexibility,
which should result in further earnings and funding diversity over
time.
Moody's believes that GMAC's 100% ownership of ResCap links the
two firms' ratings, and places a cap on ResCap's rating. Although
some reduction to the linkage results from the GMAC sale
transaction, some continued uncertainty regarding ResCap's
ultimate operational and funding structure, including its dividend
policy, limits the current notching potential between the two
firms' ratings. Thus, an action on GMAC's ratings could likely
affect ResCap's ratings, assuming no material changes in ResCap's
corporate ownership or enhancement to the company's operational
structure and flexibility. Moody's noted, however, that notching
between the two firms' ratings could increase to as much as two
notches, should the operational and funding structure
uncertainties be clarified in such a way as to demonstrate
ResCap's operational and funding independence from GMAC.
Assuming that the balance sheet and business mix composition do
not change substantially, a material build-up in common equity and
long-term debt and a debt to tangible equity ratio closer to 9X,
would boost ResCap's stand-alone creditworthiness. A
strengthening of market share in mortgage origination and
servicing, further integration of the company's business lines,
and a deepening in franchise in ResCap's newer, often smaller,
businesses, as well as successful international expansion would be
needed as well.
A rating downgrade would likely reflect a downgrade of GMAC with
no material changes in ResCap's corporate ownership and operation
structure and flexibility. Two consecutive quarterly operating
losses, or a drop in origination market share below the top ten,
would also likely cause a downgrade.
ResCap is a holding company for the real estate financing
businesses of GMAC, including GMAC-RFC Holding and GMAC
Residential Holding Corp.
SEA CONTAINERS: Taps Kirkland As Special Conflicts Counsel
----------------------------------------------------------
Sea Containers, Ltd. and its debtor-affiliates ask permission from
the U.S. Bankruptcy Court for the District of Delaware to employ
Kirkland & Ellis LLP as their special conflicts litigation counsel
for litigation relating to GE SeaCO SRL, nunc pro tunc to
Oct. 15, 2006.
Edwin S. Hetherington, vice president, general counsel and
secretary of Sea Containers Ltd., states that the Debtors want
Kirkland to prosecute or defend litigation or contested matters
involving GE Capital Corporation and some of its subsidiaries
concerning GE SeaCo and other matters adverse to GE.
Mr. Hetherington notes that the Debtors' general reorganization
and bankruptcy counsel, Sidley Austin LLP, represents GE in
matters wholly unrelated to the Debtors and their Chapter 11
cases.
Because Sidley also represents the Debtors in connection with all
operational and substantive aspects of the Chapter 11
proceedings, including with respect to issues raised by GE, the
Debtors want Kirkland to serve as their special conflicts
litigation counsel to the limited extent that underlying
litigation or certain contested matters are commenced by GE or
the Debtors during the pendency of the Chapter 11 proceedings.
Mr. Hetherington assures the Court that Sidley and Kirkland have
discussed Kirkland's role to avoid duplication of work and
expenses. The two firms will confer on certain matters to
minimize duplicative efforts and billing.
Kirkland's current hourly rates are:
Designation Hourly Rate
----------- -----------
Attorneys $295 - $825
Paraprofessionals $115 - $255
The firm will also charge the Debtors for all costs and expenses
incurred, including charges on mails, travels, overtime expenses,
"working meals," and other overhead expenses.
Kirkland received a $100,000 retainer for its prepetition
services.
David L. Eaton, Esq., a partner at Kirkland & Ellis, assures the
Court that his firm does not hold or represent any interests
adverse to the Debtors and their estates.
About Sea Containers
Headquartered in Hamilton, Bermuda, Sea Containers Ltd. --
http://www.seacontainers.com/-- provides passenger and freight
transport and marine container leasing. Registered in Bermuda,
the company has regional operating offices in London, Genoa, New
York, Rio de Janeiro, Sydney, and Singapore. The company is
owned almost entirely by United States shareholders and its
primary listing is on the New York Stock Exchange (SCRA and
SCRB) since 1974. On Oct. 3, the company's common shares and
senior notes were suspended from trading on the NYSE and NYSE
Arca after the company's failure to file its 2005 annual report
on Form 10-K and its quarterly reports on Form 10-Q during 2006
with the U.S. Securities and Exchange Commission.
Through its GNER subsidiary, Sea Containers Passenger Transport
operates Britain's fastest railway, the Great North Eastern
Railway, linking England and Scotland. It also conducts ferry
operations, serving Finland and Estonia as well as a commuter
service between New York and New Jersey in the U.S.
Sea Containers Ltd. and two subsidiaries filed for chapter 11
protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156).
Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they reported
US$1.7 billion in total assets and US$1.6 billion in total
debts. (Sea Containers Bankruptcy News, Issue No. 4; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
SEA CONTAINERS: Wants to Employ PWC as Investment Banker
--------------------------------------------------------
Sea Containers, Ltd. and its debtor-affiliates seek authority from
the U.S. Bankruptcy Court for the District of Delaware to employ
PricewaterhouseCoopers LLP as their restructuring advisor,
investment banker, and accounting and tax advisor, nunc pro tunc
to Oct. 15, 2006.
Edwin S. Hetherington, vice president, general counsel and
secretary of Sea Containers Ltd., says the Debtors need the
services of seasoned and experienced restructuring advisors,
investment bankers and accounting and tax financial advisors that
are familiar with the Debtors' businesses and operations, the
Chapter 11 process, and the various issues related to cross-
border insolvency proceedings.
Since January 2006, PwC has provided a wide range of services to
the Debtors, including reviewing the Company's business plan and
banking agreements, advising the Debtors with respect to certain
accounting matters, assisting the Company in refinancing certain
of its indebtedness, and assisting the Company to sell certain of
its businesses.
Under its Restructuring Services, PwC will:
(a) marshal information to develop an effective draft
restructuring plan;
(b) analyze and outline the Debtors' major potential financial
restructuring options, including analysis of the
advantages and disadvantages and summary of major issues
associated with each option;
(c) consider the restructuring options with the Debtors and
their other advisors;
(d) assist the Debtors to consult and negotiate with key
financial stakeholders, regulators, rating agencies, and
other parties, including preparing information and
accompanying the Debtors to meetings and attending
meetings on the Debtors' behalf;
(e) refine the proposed restructuring plan and prepare a
contingency plan;
(f) assist the Debtors implement the restructuring plan and
achieve a Restructuring Transaction;
(g) negotiate interim amendments to existing debt facilities
and note indentures, pending the negotiation and
implementation of a final restructuring, assist the
Debtors to define and negotiate with relevant parties the
appropriate amendments while they continue to work on
definitive restructuring agreements; and
(h) provide other financial advisory services in relation to
the restructuring, including seeking any regulatory
approvals.
Under its Accounting and Tax Advisory Services, PwC will:
(a) assist in the preparation of the Debtors' financial
information for distribution to creditors and other
parties-in-interest, including:
* 13-week rolling cash flow projections;
* cash receipts and disbursement analysis for inclusion
in the monthly operating reports;
* commentary and variance analysis against budgets of
company-prepared management accounts;
* revised short-term and medium-term forecasts and
business plans identifying any key variances from
earlier submissions as appropriate;
* analysis of material asset and liability accounts and
financial analysis of proposed asset sales for which
Court approval is sought;
(b) assist with the identification and implementation of
short-term cash management procedures;
(c) assist with the identification and cost/benefit evaluation
of material contracts and leases to enable management to
assess, whether to renew or discontinue them;
(d) assist in compiling the Schedules of Assets and
Liabilities and Statements of Financial Affairs, and in
the analysis of creditor claims by type, entity and
individual claim;
(e) assist in the preparation of information and financial
analysis necessary for a plan of reorganization, including
but not limited to assistance in the preparation of a pro-
forma balance sheet, financial projections and a
liquidation analysis;
(f) assist in the preparation of financial information to be
tabled at meetings with potential investors, banks and
other secured lenders, the Official Committee of Unsecured
Creditors, the United States Trustee, other parties-in-
interest, including but not limited to financial
projections, sensitivity analysis, recovery analysis, and
other financial information;
(g) assist in the preparation and maintenance of the Debtors'
project plan to coordinate the financial restructuring
with the operational restructuring program;
(h) provide advice in the development of an appropriate tax
structure in conjunction with the development of the
Debtors' proposed restructuring plan:
* advice on the tax impact of simplifying the
inter-company loan position;
* tax impact of the decision to either fund or not fund
individual group companies;
* whether a conversion of debt for equity could result
in change of ownership issues. This requires
understanding of both whether there would be a change
of ownership for tax purposes and the potential
downside to any change of ownership;
* whether there are any tax costs associated with the
disposals any of the container businesses and whether
any tax planning could enhance the value of the
disposals;
* whether there are any tax costs associated with any
non-core disposals and whether any tax planning could
enhance the value of the disposals;
* withholding tax implications of the proposed
disposals and refinancing options;
* the tax impact of transferring assets out of the
Debtors as part of the restructuring process, should
this be considered appropriate as a way forward;
* advice on the tax impact of reorganizing and funding
the pension deficit;
* any other points that require tax consideration as
the more detailed restructuring steps are formulated;
and
* general advice to the Debtors on the current tax
status of the Debtors and Non-Debtor subsidiaries;
and
(i) provide advice or testimony on matters arising from PwC's
work and provide regular updates to the Debtors.
PricewaterhouseCoopers is a multi-national corporate advisory
firm that provides a broad range of corporate advisory services
to its clients including, services pertaining to:
-- general financial advice;
-- mergers, acquisitions, and divestitures;
-- special committee assignments;
-- capital raising; and
-- corporate restructurings.
Mr. Hetherington notes PwC has resources and restructuring
expertise in the United Kingdom and other countries throughout
the world. He adds the firm and its senior professionals have
extensive experience in the reorganization and restructuring of
troubled companies.
PwC will charge a GBP50,000 Restructuring Services monthly fee, a
Degearing Event fee, and a Restructuring Transaction Fee equal to
1.5% of the total par amount of Restructured Debt.
PwC employees providing restructuring services will keep time
records describing their general daily activities, the identity
of persons performing those activities, and the estimated amount
of time expended on those activities on a daily basis.
The firm will charge the Debtors per hour for Accounting and Tax
Advisory Services:
Designation Hourly Rate
----------- -----------
Partner GBP536
Director GBP442
Senior Manager GBP338
Manager GBP270
Executive GBP212
Analyst GBP130
PwC's accounting and tax professionals will provide a description
of the services rendered and the amount of time spent on each
date, in half-hour increments.
PwC will seek reimbursement for all out-of-pocket expenses,
including reasonable fees and expenses of its counsel, travel and
lodging expenses, word processing charges, messenger and
duplication services, facsimile expenses, and other customary
expenditures incurred.
Before the Petition Date, PwC received approximately GBP4,400,000
for services rendered and expenses incurred. PwC will apply any
excess amounts towards fees and expenses that accrue
postpetition.
Steven Pearson, a partner at PricewaterhouseCoopers LLP, assures
the Court that PwC is a "disinterested person" as defined in
Section 101(14) of the Bankruptcy Code, and does not hold or
represent an interest adverse to the Debtors' estates.
About Sea Containers
Headquartered in Hamilton, Bermuda, Sea Containers Ltd. --
http://www.seacontainers.com/-- provides passenger and freight
transport and marine container leasing. Registered in Bermuda,
the company has regional operating offices in London, Genoa, New
York, Rio de Janeiro, Sydney, and Singapore. The company is
owned almost entirely by United States shareholders and its
primary listing is on the New York Stock Exchange (SCRA and
SCRB) since 1974. On Oct. 3, the company's common shares and
senior notes were suspended from trading on the NYSE and NYSE
Arca after the company's failure to file its 2005 annual report
on Form 10-K and its quarterly reports on Form 10-Q during 2006
with the U.S. Securities and Exchange Commission.
Through its GNER subsidiary, Sea Containers Passenger Transport
operates Britain's fastest railway, the Great North Eastern
Railway, linking England and Scotland. It also conducts ferry
operations, serving Finland and Estonia as well as a commuter
service between New York and New Jersey in the U.S.
Sea Containers Ltd. and two subsidiaries filed for chapter 11
protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156).
Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they reported
US$1.7 billion in total assets and US$1.6 billion in total
debts. (Sea Containers Bankruptcy News, Issue No. 4; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
SG MORTGAGE: Poor Performance Prompt S&P's Negative CreditWatch
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on classes
M-11 and M-12 from SG Mortgage Securities Trust 2006-FRE1 on
CreditWatch with negative implications.
The CreditWatch placements reflect early signs of poor collateral
performance for the transaction, which has only five months of
seasoning since securitization, plus an additional four months
since origination of the mortgage loans. While the deal has yet
to incur any realized losses, delinquencies have increased sharply
since it closed; as of the Oct. 2006 remittance period, 540 loans
(of the current 3,683) totaling $119.8 million, or 14.81% of the
current pool balance, had become delinquent. Of the total
delinquencies, $60.5 million, or 7.48% of the current pool
balance, is seriously delinquent (90-plus days, foreclosure, and
REO).
While the current credit support is sufficient to support the
current ratings, the high level of severe delinquencies may lead
to large realized losses, resulting in a decline in credit support
to a level that is no longer sufficient to support the current
ratings.
This deal utilizes a senior/subordinate overcollateralization
structure. The collateral initially consisted of subprime, fixed-
and adjustable-rate, first- and second-lien mortgage loans
originated by Fremont Investment & Loan.
Standard & Poor's will continue to closely monitor the performance
of classes M-11 and M-12 from this transaction. If the delinquent
loans cure to a point at which credit support projections are
equal to or greater than the original credit support percentages,
the rating agency will affirm the ratings and remove them from
CreditWatch negative. Conversely, if delinquencies begin to
translate into substantial realized losses in the coming months
and significantly erode available credit enhancement, Standard &
Poor's will take further negative rating actions on these classes.
Ratings Placed On Creditwatch Negative
SG Mortgage Securities Trust 2006-FRE1
Rating
Class To From
----- -- ----
M-11 BB+/Watch Neg BB+
M-12 BB/Watch Neg BB
SILICON GRAPHICS: 2006 First Quarter Revenue Rises to $122 Mil.
--------------------------------------------------------------
Silicon Graphics Inc. disclosed its financial results for the
first quarter of fiscal 2007 ended Sept. 29, 2006. Revenue for
the first quarter was $122 million, compared to $116 million in
the fourth quarter of fiscal 2006 and $106 million in the third
quarter of fiscal 2006-marking two consecutive quarters of
improved revenue.
"SGI made significant progress this quarter executing our
strategic growth initiatives, focusing on delivering 'innovation
for results' for our customers, and rebuilding sales momentum,"
said Dennis McKenna, SGI's CEO. "Our momentum comes from
refreshing 75% of our server and storage products, defining
solutions that are re-engaging our traditional markets of
engineering analysis, sciences, and government intelligence. In
addition, we made significant progress on our operating results,
which has had a positive impact on our liquidity position and
overall financial stability. We were able to make this progress
during the same period we worked through and completed our
restructuring. This accomplishment is a tribute to the passion
and focus of our SGI employees."
Gross margins remained consistently strong at 38.4% during the
first quarter of fiscal 2007 compared to 39.0% in the prior
quarter.
GAAP operating expenses for the first quarter of fiscal 2007 were
$62 million compared to $53 million for the fourth quarter of
fiscal 2006. Excluding restructuring charges and other unusual
items, operating expenses were $58 million in the first quarter
compared to $61 million in the prior quarter, reflecting the
impact of the company's cost reduction initiatives. First quarter
operating expenses were higher than we expect to see for the
remainder of the fiscal year as a result of a significant increase
in selling, general and administrative expense due to the change
in accounting firms effective for fiscal 2006.
SGI reported a GAAP operating loss of $15 million in the first
quarter of fiscal 2007, compared with a GAAP operating loss of $8
million for the last quarter of fiscal 2006.
Management believes that a non-GAAP presentation of operating
results is useful to investors to facilitate period to period
comparisons of SGI's operating performance. A full reconciliation
is available in the Investor Relations portion of the Company's
website at http://www.sgi.com/company_info/investors/
Fresh-Start Accounting
On Oct. 17, 2006, the Company emerged from chapter 11. SGI
adopted fresh-start financial accounting on Sept. 29, 2006. The
effects of fresh-start accounting on the Condensed Consolidated
Balance Sheet are presented on a preliminary basis in Note 4 of
the Form 10-Q for the quarter ended Sept. 29, 2006, separately
filed yesterday. Under fresh-start accounting, the Company is
required to adjust its balance sheet to reflect fair value,
similar to purchase accounting. This includes recording all Plan
effects per the Plan of Reorganization approved by the Bankruptcy
Court, revaluing assets and liabilities to current estimated fair
values, establishing the new shareholders' equity of the Company,
and recording any portion of the equity value that cannot be
attributed to specific tangible or intangible assets as goodwill.
The adoption of fresh-start accounting had and will continue to
have a material effect on SGI's financial statements, primarily
due to the valuation impacts on the ending balance sheet for the
first quarter of fiscal 2007, and the associated future period
non-cash amortization that will flow through the income statement
for periods of up to 15 years. As a result of the adoption of
fresh-start accounting, SGI's financial statements in future
periods will not be comparable with financial statements prior to
the adoption of fresh-start accounting.
Headquartered in Mountain View, California, Silicon Graphics, Inc.
(OTC: SGID) -- http://www.sgi.com/-- offers high-performance
computing. SGI helps customers solve their computing challenges,
whether it's sharing images to aid in brain surgery, finding oil
more efficiently, studying global climate, providing technologies
for homeland security and defense, enabling the transition from
analog to digital broadcasting, or helping enterprises manage
large data. The Debtor and 13 of its affiliates filed for chapter
11 protection on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977
through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq.,
at Weil Gotshal & Manges LLP, represent the Debtors in their
restructuring efforts. Judge Lifland confirms the Debtors' Plan
of Reorganization on Sept. 19, 2006. When the Debtors filed for
protection from their creditors, they listed total assets of
$369,416,815 and total debts of $664,268,602.
SPECIALTY UNDERWRITING: Moody's Reviews Ba2 Rated Class B-3 Cert.
-----------------------------------------------------------------
Moody's Investors Service placed on review for possible downgrade
two classes of certificates from one of Merrill Lynch's Specialty
Underwriting and Residential Finance deals from 2005. SURF
purchases loans from brokers who underwrite to its guidelines.
The B-2 and B-3 certificates are being reviewed for downgrade
based on deteriorating credit enhancement. While the collateral
is performing as expected, the overcollateralization has been
falling significantly below its target as a result of lower than
expected excess spread levels.
These are the rating actions:
* Issuer: Specialty Underwriting and Residential Finance
Trust, Series 2005-AB1
-- Class B-3, on review for possible downgrade, current
rating Ba2
-- Class B-2, on review for possible downgrade, current
rating Baa3.
TENFOLD CORP: Posts $2 Million Net Loss in Quarter Ended Sept. 30
-----------------------------------------------------------------
TenFold Corporation filed its first quarter financial statements
for the three months ended September 30, 2006, with the Securities
and Exchange Commission on Nov. 1, 2006.
The Company reported a $2,065,000 net loss on $1,107,000 of
revenues for the three months ended Sept. 30, 2006, compared with
a $341,000 net loss on $1,492,000 of revenues in the comparable
period of 2005.
At Sept. 30, 2006, the Company's balance sheet showed $3,211,000
in total assets and $3,602,000 in total liabilities resulting in a
$391,000 stockholders' deficit.
The Company's September 30 balance sheet also showed strained
liquidity with $2,942,000 in total current assets available to pay
$3,602,000 in total current liabilities.
A full-text copy of the Company's quarterly report is available
for free at http://researcharchives.com/t/s?151b
TenFold Corporation (OTCBB: TENF) -- http://www.tenfold.com/--
licenses its patented technology for applications development,
EnterpriseTenFold(TM), to organizations that face the daunting
task of replacing obsolete applications or building complex
applications systems. Unlike traditional approaches, where
business and technology requirements create difficult IT
bottlenecks, EnterpriseTenFold technology lets a small, team of
business people and IT professionals design, build, deploy,
maintain, and upgrade new or replacement applications with
extraordinary speed, superior applications quality and power
features.
Going Concern Doubt
Tanner LC expressed substantial doubt about TenFold Corporation's
ability to continue as a going concern after it audited the
Company's financial statements for the year ended Dec. 31, 2005.
The auditing firm points to the Company's reliance on significant
balances of its cash for its operating activities and the
likelihood that the Company will not have sufficient resources to
meet operating needs based on its present levels of cash
consumption.
THERMO FISCHER: Moody's Cuts $125-Mil Debentures' Rating to Ba1
---------------------------------------------------------------
Moody's Investors Service concludes the rating review for possible
downgrade initiated on May 8, 2006 for Thermo Electron
Corporation, which is the surviving entity whose name has changed
to Thermo Fisher Scientific Inc., as a result of the report that
the merger between it and Fisher Scientific International Inc. has
been finalized. The ratings for Thermo have been downgraded and
concurrently the ratings for Fisher Scientific International Inc.
were upgraded.
The companies combined in a tax-free, stock-for-stock transaction
following its recently received anti-trust clearance which
completed the merger.
The Baa2 senior unsecured debt rating for the combined entity,
Thermo Fisher, reflects a capital structure, financial leverage
and cash flow coverage of debt indicative of an investment grade
issuer. Moody's expects that Thermo Fisher will yield a range in
operating cash flow to adjusted debt of 27% to 31% with adjusted
free cash flow to adjusted debt of 19% to 23% in 2006. Moody's
also expects that the company will pay down debt over the same
time period, from approximately $3 billion pro-forma as of
Dec. 31, 2005, to $2.6 billion and $2.3 billion at the end of 2006
and 2007, respectively.
Moody's believes that the merger between the two companies will
offer these benefits:
-- greater scale and a broad portfolio of products and
services;
-- the ability to offer an end to end solution for laboratory
customers, including equipment, software, reagents,
consumables and services; and,
-- a more diverse geographic, product and customer mix.
Moody's also expects that the combination could result in cost
synergies and revenue synergies of approximately $150 million and
$50 million, respectively, over the next few years. Moody's also
views the two companies as highly complimentary.
Fisher has a strong supply chain management with distribution
capabilities, multiple sales channels, as well as significant
sales and marketing resources. Thermo, on the other hand, has
strong production innovation, intellectual property, research and
development, as well as a solid global manufacturing footprint and
expertise. Thermo has also been quite successful in penetrating
Asia and other emerging markets, offering potentially greater
access for Fisher.
Moody's believes that the unsecured senior debt of Thermo Fisher
will be structurally subordinated to the current debt at Fisher,
as well as the $1 billion senior unsecured guaranteed credit
facility for the combined entity. Moody's assessment reflects the
fact that the proposed credit facility should benefit from a
guarantee from Fisher while the existing Fisher debt benefits from
a co-obligation from the parent.
Moody's, however, did not view technical structural subordination
as a major constraint to Thermo Fisher's current senior unsecured
notes and bonds at the Baa2 senior unsecured rating for the
combined company. Moody's notes that this subordination issue
could become more material if the combined company's rating were
at a lower level.
Moody's ratings do consider the major risks in combining both
companies, specifically the integration of the two company's
systems, operations and cultures. While Moody's notes that both
companies have acquired other life science firms in the past few
years, Moody's expects the combined company to focus on internal
growth and cost synergies in the short-term prior to resuming to
acquiring additional companies.
These ratings of Thermo Fischer Scientific Inc. (formerly Thermo
Electron Corporation) were downgraded:
-- $150 million senior unsecured notes, due 2008, downgraded
to Baa2 from Baa1
-- $250 million 5% Senior Global Notes, due 2015, downgraded
to Baa2 from Baa1
-- $125 million convertible subordinated debentures due 2007,
downgraded to Ba1 from Baa3
These ratings were withdrawn for Thermo Fischer Scientific Inc.:
-- Senior Unsecured Shelf Rating, rated (P) Baa1
-- Subordinated Shelf Rating, rated (P) Baa2
These ratings of Fisher Scientific International, Inc. were
upgraded:
-- $300 million 2.50% senior unsecured convertible notes, due
2023, upgraded to Baa2 from Ba1
-- $330 million 3.25% senior subordinated convertible notes
due 2024, upgraded to Baa3 from Ba2
-- $300 million 6.75% senior subordinated notes, due 2014,
upgraded to Baa3 from Ba2
-- $500 million 6 1/8% senior subordinated notes, due 2015,
upgraded to Baa3 from Ba2
These ratings of Fisher Scientific International, Inc. were
withdrawn:
-- Corporate Family Rating
-- $500 million Senior Secured Guaranteed Revolver due 2009
-- $250 million Senior Secured Guaranteed US Dollar Term Loan
A due 2009
These ratings of Apogent Technologies, Inc. (a wholly-owned
subsidiary of Fisher) were upgraded:
-- $345 million floating rate senior convertible contingent
notes due 2033 upgraded to Baa2 from Ba1
The ratings outlook is stable.
Thermo Fisher Scientific Inc., based in Waltham, Massachusetts,
with annual sales of more than $9 billion, serves over
350,000 customers within pharmaceutical and biotech companies,
hospitals and clinical diagnostic labs, universities, research
institutions and government agencies, as well as environmental and
industrial process control settings. Thermo Scientific offers
customers a complete range of high-end analytical instruments as
well as laboratory equipment, software, services, consumables and
reagents to enable integrated laboratory workflow solutions.
TOTAL INDUSTRIAL: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Total Industrial & Packaging Corp.
1300 Island Avenue
McKees Rocks, PA 15136
Tel: (412) 331-8301
Bankruptcy Case No.: 06-25791
Type of Business: The Debtor offers packaging and delivery
services. See http://www.totalindpkg.com/
Chapter 11 Petition Date: November 16, 2006
Court: Western District of Pennsylvania (Pittsburgh)
Debtor's Counsel: Byron W. King, Esq.
Jones Gregg Creehan Gerace LLP
411 Seventh Avenue, Suite 1200
Pittsburgh, PA 15219
Tel: (412) 261-6400
Fax: (412) 261-2652
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 largest unsecured
creditors.
TOTAL SAFETY: S&P Assigns B- Corporate Credit Rating
----------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' corporate
credit rating to Total Safety U.S. Inc., a safety services company
that provides rental equipment, equipment maintenance,
and safety system consulting services for oil field,
petrochemical, and other industrial companies.
At the same time, Standard & Poor's assigned its 'B-' rating and
'3' recovery rating to Total Safety's proposed $90 million first-
lien bank facilities, and its 'CCC' rating and '5' recovery rating
to Total Safety's proposed $40 million second-lien bank facility.
The outlook is stable.
Pro forma for the pending bank debt issuance, Houston, Texas-based
Total Safety is expected to have around $117 million in debt.
The ratings on Total Safety reflect its niche position in a
competitive market and aggressive financial leverage. These
weaknesses are partially offset by the company's diversified
customer base and low capital requirements.
Total Safety has a vulnerable business profile. The company
operates in three business segments, including safety equipment
rentals, equipment sales and safety systems, and services. The
in-plant service centers are an important aspect of the company's
business strategy, as they provide full safety services to the
customer's facilities.
Assuming future cash flows are positive, the company should have
the ability to service its fixed charges with a modest cushion.
"A negative rating action could result if cash flows are lower
than expected and create liquidity concerns, whether due to
industry conditions, operational challenges, loss of customers, or
increased competition," said Standard & Poor's credit analyst
Aniki Saha-Yannopoulos. "A rating upgrade would be dependent on
consistent operating results and markedly lower financial
leverage," she continued.
TRANSWITCH CORP: Accumulated Deficit Tops $319.2 Mil. at Sept. 30
-----------------------------------------------------------------
TranSwitch Corporation incurred a $725,000 net loss on
$9.6 million of net revenues for the three months ended Sept. 30,
2006, compared to a $1.3 million net loss on $7.2 million of net
revenues from the same period in 2005.
As of Sept. 30, 2006, the Company's accumulated deficit widened to
$319.2 million from $311.5 million of deficit at Dec. 31, 2005.
A full-text copy of the Company's quarterly report is available
for free at http://researcharchives.com/t/s?1533
On Oct. 19, 2006, the Company disclosed that its Senior Vice
President, Chief Financial Officer and Treasurer and Principal
Accounting Officer, Peter J. Tallian, resigned on Oct. 17, 2006,
to become Chief Financial Officer of Distributed Energy Systems
Corporation.
In addition, Theodore Quinlan has accepted the position of Vice
President of Finance and Controller of the Company effective
immediately. Mr. Quinlan will also be the Principal Accounting
Officer. Mr. Quinlan joined the Company as interim Vice
President, Controller in July 2006. Prior to joining the Company,
Mr. Quinlan was an independent financial consultant for various
corporations from 2005 to 2006. Prior to that time, Mr. Quinlan
held the position of Vice President, Finance and Controller for
Molecular Staging, Inc. from 2001 to 2005. Mr. Quinlan, 50 years
old, holds a Bachelor of Science degree in Business Administration
from State University of New York College at Oswego and a Master
of Business Administration from Syracuse University.
Based in Shelton, Conn., TranSwitch Corporation (NASDAQ: TXCC) --
http://www.transwitch.com/-- designs, develops and markets
innovative semiconductors that provide core functionality and
complete solutions for voice, data and video communications
network equipment. TranSwitch is an ISO 9001: 2000 registered
company.
* * *
TranSwitch Corp. carry Standard and Poor's Ratings Service's B-
long-term foreign and local issuer credit ratings.
UNIVERSITY HEIGHTS: Section 341(a) Meeting Scheduled on Nov. 20
---------------------------------------------------------------
The U.S. Trustee for Region 2 will convene a meeting of University
Heights Association Inc.'s creditors at 10:15 a.m., on Nov. 20,
2006, at Room 811B, 8th Floor, in Leo W. O'Brien Federal Bldg.,
Clinton Avenue & North Pearl Street, in Albany, New York. This is
the first meeting of creditors required under Section 341(a) of
the 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 Albany, New York, University Heights Association
Inc. -- http://www.universityheights.org/-- is composed of four
educational institutions that aim to enhance the economic vitality
and quality of life of its immediate community. The company filed
for chapter 11 protection on Feb 13, 2006 (Bankr. N.D.N.Y. Case
No. 06-10226). Judge Littlefield dismissed the Debtor's chapter
11 case due to bad faith filing. On Oct. 12, 2006, the Debtor
filed a chapter 22 petition. Francis J. Smith, Esq., at McNamee,
Lochner, Titus & Williams, PC, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it estimated assets and liabilities between $10
million and $50 million.
UNIVERSITY HEIGHTS: Taps McNamee Lochner as Bankruptcy Counsel
--------------------------------------------------------------
University Heights Association Inc. asks the U.S. Bankruptcy Court
for the Northern District of New York for authority to employ
McNamee, Lochner, Titus & Williams, P.C., as its bankruptcy
counsel.
McNamee Lochner will:
a) assist in the preparing and filing with the Court and the
office of the U.S. Trustee all schedules and statements
required by the Court Bankruptcy Rules, the Bankruptcy Code
and the U.S. Trustee; represent the Debtor at all meetings
of creditors and assist the Debtor in preparing and filing
the Debtor's chapter 11 plan and obtaining Court-approval of
that plan; and
b) assist in the preparation of a disclosure statement; in the
protection of the Debtor's interest in executory contracts
and leases; defend any motions to lift stay and any other
ancillary motions necessary within the context of the
Chapter 11 proceedings; and represent the Debtor's interest
in any and all other related proceedings during the course
of the Debtor's chapter 11 case.
Francis J. Smith, Esq., a McNamee Lochner member, discloses that
the firm received $83,789 for prepetition services rendered for
the Debtor.
Court documents do not disclose how much McNamee Lochner's
professionals will be paid.
Mr. Smith assures the Court that the Firm is "disinterested" as
that term is defined in Section 101(14) of the Bankruptcy Code.
Headquartered in Albany, New York, University Heights Association
Inc. -- http://www.universityheights.org/-- is composed of four
educational institutions that aim to enhance the economic vitality
and quality of life of its immediate community. The company filed
for chapter 11 protection on Feb 13, 2006 (Bankr. N.D.N.Y. Case
No. 06-10226). Judge Littlefield dismissed the Debtor's chapter
11 case due to bad faith filing. On Oct. 12, 2006, the Debtor
filed a chapter 22 petition. Francis J. Smith, Esq., at McNamee,
Lochner, Titus & Williams, PC, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it estimated assets and liabilities between $10
million and $50 million.
US AIRWAYS: Proposed Delta Merger Cues S&P's CreditWatch
--------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on US
Airways Group Inc., including the 'B-' corporate credit ratings on
US Airways Group Inc. and its major operating subsidiaries America
West Holdings Corp., America West Airlines Inc., and US
Airways Inc., on CreditWatch with developing implications.
At the same time, ratings on enhanced equipment trust certificates
of Delta Air Lines Inc. were also placed on CreditWatch with
developing implications.
The CreditWatch placement does not affect 'AAA' rated EETCs that
are covered by bond insurance.
These rating actions follow US Airways Group's unsolicited
proposal to merge with Delta, upon Delta's emergence from
bankruptcy, expected in the first half of 2007. The proposal
offers approximately $8 billion in cash and stock to Delta's
unsecured creditors, using $7.2 billion of committed credit
facilities to fund the $4 billion cash portion of the offer and to
refinance various existing debt.
The combination would result in one of the world's largest
airlines and US Airways' management forecasts annual revenue and
cost synergies of $1.6 billion when fully phased in over a two-
year period. The combination is also subject to an antitrust
review by the Department of Justice.
"If US Airways is successful in completing the merger with Delta
and realizing these synergies, ratings could be raised modestly,"
said Standard & Poor's credit analyst Betsy Snyder.
"Alternatively, if US Airways completes the merger but encounters
problems with integrating the two airlines, particularly among the
different labor groups, or if a potential competing bid for Delta
forces US Airways to raise its bid materially, ratings could be
lowered."
Affirmation of ratings at the current level is also a possible
outcome. Management has stated that it will not seek to change
the aircraft obligations that Delta has agreed to perform on in
bankruptcy, which includes the rated EETCs.
US Airways Group is already the product of a recent merger, the
Sept. 2005 combination of America West Holdings Corp. and US
Airways Group Inc. upon the latter's emergence from Chapter 11. In
2006, the combined US Airways' earnings performance has been among
the best of U.S. airlines, due in large part to strong revenue
growth.
In addition, the company has realized $425 million of synergies
from that merger, in excess of the forecast $350 million.
However, the company has not yet integrated its labor forces,
which is often the most difficult part of an airline merger. US
Airways has indicated that if labor costs for each labor group
were to rise to that of the highest paid among those of the three
airlines, the cost to the combined entity would be only
$90 million annually. US Airways intends to serve all cities on
the combined route system, but to reduce capacity 10% primarily
through the early termination of aircraft leases.
USEC INC: Earns $9.9 Million in Quarter Ended September 30
----------------------------------------------------------
USEC Inc., reported net income of $9.9 million in the quarter
ended Sept. 30, 2006, compared to a loss of $5.2 million in the
same quarter of 2005. Pro forma net income before American
Centrifuge expenses was $24.7 million in the third quarter of
2006, compared to $7.2 million in the same period of 2005.
For the first nine months of 2006, net income was $66.1 million,
compared to a loss of $7.3 million in the same period of 2005.
For the nine-month period, pro forma net income before American
Centrifuge expenses was $110 million in 2006 compared to
$33.4 million in the same period last year.
The Company disclosed that the improved third quarter results were
a result of its Separative Work Units revenue that was higher than
a year earlier, improved gross profit margins due to higher
average prices billed to customers for SWU and uranium, and lower
interest expense following the repayment of bonds maturing in
January 2006. Spending related to the American Centrifuge was
$3.5 million higher than in the third quarter of 2005 as the
Company continues to successfully test centrifuge machines and to
prepare the American Centrifuge Demonstration Facility.
Revenue for the third quarter was $417.8 million, lower than the
$421 million recorded in the same period last year. Revenue from
the sale of Separative Work Units was $336.6 million, which was
$30.4 million or 10% more than in the corresponding period in
2005. Uranium revenue was $34.4 million for the quarter,
a $25.8 million decline compared to the same period last year due
to lower sales volume. Revenue from U.S. government contracts and
other was $46.8 million, a decrease of $7.8 million due to a
smaller scope of contract and other work for the U.S. Department
of Energy.
Nine-Month Period
For the nine-month period, revenue was $1.3 billion compared to
$1 billion in the same period of 2005. Revenue from SWU sales was
$974.9 million compared to $713.8 million in the prior period, a
37% increase that reflects a 28% increase in volume and a 7%
increase in average price billed to customers. Uranium revenue
during the nine-month period was $181.2 million, a $41.5 million
or 30% increase over the prior year due to a 39% higher average
price billed to customers as sales volume declined 6%. The
Company expects the volume of uranium sold in 2006 will be 10% to
15% less than in 2005 as sales from inventory wind down in 2007.
Revenue from U.S. government contracts and other was
$148.3 million, a $7.8 million decline over last year.
At September 30, deferred revenue amounted to $118.3 million, with
a deferred gross profit of $40.1 million. In a number of sales
transactions, USEC transfers title and collects cash from
customers but does not recognize the revenue until low enriched
uranium is physically transferred.
Cash flow
At Sept. 30, 2006, the Company had a cash balance of $96.3 million
and no short-term debt under its bank credit facility. Cash flow
from operations during the nine-month period was $153 million
compared to $20.2 million in the same period a year earlier. The
largest use of cash during 2006 was the repayment of principal at
maturity of the remaining $288.8 million of bonds due in
January 2006. The Company also had $29.6 million in capital
expenditures, including capitalized costs for the American
Centrifuge Plant, compared to $20.6 million in capital
expenditures in the same period last year.
The Company also disclosed that it has in place a syndicated bank
credit facility that provides up to $400 million in revolving
credit commitments secured by assets of the Company and its
subsidiaries. Availability was approximately $214 million as of
September 30, with approximately $36 million in outstanding
letters of credit and no borrowings.
American Centrifuge Update
The Company continues to demonstrate the American Centrifuge and
plans to deploy the technology as a replacement to its gaseous
diffusion plant in Paducah, Ky. that currently provides all
domestically produced low enriched uranium.
2006 Outlook
The Company has updated its 2006 earnings and cash flow guidance
and reiterate that it expects revenue to be approximately
$1.8 billion and that the gross profit margin for 2006 will be
approximately 16%. Total spending on the American Centrifuge
project for 2006 is expected to be approximately $160 million, a
decrease of $25 million from earlier guidance due to the delay in
deploying the Lead Cascade. 2006 net income guidance is expected
to be in a range of $65 million to $75 million. Cash flow from
operations in 2006 is expected to generate cash in a range of
$150 million to $160 million.
Bethesda, Maryland-based USEC Inc. (NYSE:USU) is a global energy
company that supplies enriched uranium fuel for commercial nuclear
power plants.
* * *
As reported in the Troubled Company Reporter on June 30, 2006,
Standard & Poor's Ratings Services lowered its corporate credit
rating on USEC Inc. to 'B-' from 'B+'. At the same time, S&P
lowered its senior unsecured rating on USEC's 6.75% senior notes
due 2009 to 'CCC' from 'B-'. S&P said the outlook is negative.
Moody's Investors Service downgraded the senior unsecured debt
rating of USEC Inc. to B2 from Ba3. Moody's also downgraded the
Corporate Family Rating to B1 from Ba2.
WILCOX PRESS: Case Summary and 20 Largest Unsecured Creditors
-------------------------------------------------------------
Lead Debtor: Wilcox Press Inc.
17 Hall Woods Road
Ithaca, NY 14850
Bankruptcy Case No.: 06-62938
Type of Business: The Debtor offers comprehensive pre-press
services utilizing electronic and digital file
applications, Heat-Set web presses including UV
coating and varnishing and finishing services,
including selective binding, trimming,
Shrinkwrap/polybag, custom inkjet messaging,
custom postal sorting, mail verification and
distribution.
Chapter 11 Petition Date: Nov. 15, 2006
Court: Northern District of New York (Utica)
Judge: Stephen D. Gerling
Debtor's Counsel: Michael Pinnisi, Esq.
111 North Tioga Street
Second Floor
Ithaca, NY 14850
Tel: (607) 257-8000
Total Assets: $1 Million to $100 Million
Total Debts: $1 Million to $100 Million
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
WORLDCOM INC: Court OKs Pact Settling Dist. of Columbia's Claims
----------------------------------------------------------------
The Honorable Arthur Gonzalez of the U.S. Bankruptcy Court for the
District of New York approved stipulation entered into by WorldCom
Inc., its debtor-affiliates, and the District of Columbia Office
of Tax and Revenue resolving the District's tax claims against the
Debtors.
In January 2003, the District of Columbia Office of Tax and
Revenue filed Claim No. 8765 for $11,843,980, asserting
corporation franchise tax, personal property tax, withholding
tax, and sales and use tax liabilities against the Debtors.
Columbia amended Claim No. 8765 by filing Claim No. 33297 in
February 2003 and Claim No. 35808 in June 2003.
The Debtors objected to those claims and the claims have since
been expunged as amended by later filed claims.
In November 2003, Columbia was granted more time to file
additional proofs of claims against the Debtors for certain D.C.
taxes. Subsequently, in March 2004, Columbia filed Claim No.
38038, amending Claim No. 35808 and asserting additional claims.
The Debtors objected to Claim No. 38038.
By a Court order dated October 11, 2005, the Reorganized Debtors
settled the Additional claims with Columbia and other
jurisdictions pursuant to a certain settlement agreement and
release.
On December 27, 2005, and as a result of the Additional Claims
Settlement, Columbia amended Claim No. 38038 by filing Claim No.
38598 for $9,011,297, asserting the same liabilities in the
Original Claims. The Reorganized Debtors, however, objected to
Claim No. 38598.
In a Court-approved stipulation dated March 9, 2006, between the
parties, Claim No. 38038 was expunged in its entirety as amended
and superseded by Claim No. 38598 and all other claims previously
filed by Columbia have also been expunged.
The parties have now reached an agreement to settle all the
remaining tax claims. The Debtors and Columbia stipulate that:
(a) the Corporation Franchise Tax asserted in Claim No. 38598,
totaling $7,474,861, is deemed an allowed Priority Tax
Claim for $1,742,938. Columbia waives the penalty and
interest amounts asserted for the Corporation Franchise
Tax portion of Claim No. 38598;
(b) the payment of $1,742,938 constitutes complete
satisfaction of the Corporation Franchise Tax portion of
Claim No. 38598;
(c) the Personal Property Tax asserted in Claim No. 38598,
totaling $563,643, is deemed an allowed Priority Tax Claim
for $125,000. Columbia waives any additional Personal
Property Tax;
(d) the payment of $125,000 constitutes complete satisfaction
of the Personal Property Tax portion of Claim No. 38598,
as well as complete satisfaction of all issues relating to
Personal Property Tax through the return filed for the
2005-2006 tax year;
(e) Columbia will not raise issues with the method of filing
of Personal Property Tax returns, the calculation of the
tax, or the reporting of any property for any return filed
up to the 2005-2006 return;
(f) the Debtors will have no liability for the withholding
taxes and the sales and use taxes, or the associated
interest and penalties, asserted in Claim No. 38598;
(h) the Debtors are due a refund totaling $2,464,883 with
respect to their 2002 D.C. Corporation Franchise Tax
Return;
(i) the Debtors waive their rights to claim the additional
overpayment of $36,400, which represents the difference
between the overpayment amount in the 2002 D.C.
Corporation Franchise Tax Return and the amount agreed in
the Stipulation;
(j) the tax priority amounts asserted as Corporation Franchise
Tax and Personal Property Tax, totaling $1,867,938, can
be offset by the Debtors against the Refund;
(k) no interest will be paid on the remaining Refund, which
totals $596,944 after taking into account the allowed
offset, and no amounts can be carried forward as a credit
for subsequent tax years;
(l) Columbia will issue a check for $596,944 for the Refund;
and
(m) Claim No. 38598 will be deemed satisfied in full,
released, and withdrawn with prejudice.
About WorldCom
WorldCom, Inc., a Clinton, MS-based global communications company,
filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y.
Case No. 02-13532). On March 31, 2002, WorldCom listed
$103,803,000,000 in assets and $45,897,000,000 in debts. The
Bankruptcy Court confirmed WorldCom's Plan on Oct. 31, 2003, and
on Apr. 20, 2004, the Company formally emerged from U.S. Chapter
11 protection as MCI, Inc. On Jan. 6, 2006, MCI merged with
Verizon Communications, Inc. MCI is now known as Verizon
Business, a unit of Verizon Communications. (WorldCom Bankruptcy
News, Issue No. 127; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
WORNICK COMPANY: Moody's Slashes and Reviews CFR to Caa1 from B2
----------------------------------------------------------------
Moody's Investors Service lowered ratings of The Wornick
Company's, Corporate Family Rating and Senior Notes rating to Caa1
from B2; Speculative Grade Liquidity Rating to SGL-4 from SGL-3.
Under Moody's Loss Given Default Methodology, Wornick's
Probability of Default Rating also lowers to Caa1 from B2, while
the Senior Notes' LGD Assessments remains LGD3, 49%.
In addition, the ratings have been placed under review for further
possible downgrade.
The ratings change was prompted by the company's deteriorating
operating performance through September 2006 resulting in
weakening cash flow and credit metrics, both current and near-term
projected, no longer appropriate for the B2 rating.
Moreover, both the Corporate Family Rating and the lower
Speculative Grade Liquidity Rating reflect Moody's assessment of a
weak liquidity position based on the company's reported cash
position, negative recent free cash generation, and substantial
reliance on the company's revolving credit facility. The
company's liquidity condition is further made uncertain by
Wornick's disclosure in its Q3 2006 10-Q filing that it is
probable that the company will violate financial covenants
relating to positive operating profit as prescribed by its
revolving credit facility at Dec. 31, 2006.
The ratings review will focus on the company's efforts to improve
operating performance in FY 2007 to levels that could sustain debt
service through internally-generated cash flows, and, more
immediately, on Wornick's ability to obtain waivers on compliance
with the most restrictive financial covenants prior to a potential
breach.
Ratings could be stabilized if such waivers could be obtained to
avoid near-term liquidity problems, or if the company were to
replace the existing revolver with another facility of similar
size and terms. However, the review could resolve with a further
downgrade if instead the company defaults on its revolving credit
facility or the Jan. 2007 interest payment on its senior notes.
Downgrades:
* Issuer: Wornick Company
-- Speculative Grade Liquidity Rating, Downgraded to SGL-4
from SGL-3
-- Corporate Family Rating, Downgraded to Caa1 from B2
Outlook Actions:
* Issuer: Wornick Company
-- Outlook, Changed To Rating Under Review From Negative
The Wornick Company, headquartered in Cincinnati, Ohio,
specializes in the manufacturing, packaging and distribution of
extended shelf-life, shelf-stable, and frozen food for the
military and for commercial customers. Wornick had LTM September
2006 revenues of $283 million.
* LeClair Ryan Lawyers Selected Best Lawyers in America for 2007
----------------------------------------------------------------
LeClair Ryan disclosed that 37 attorneys in 33 practice areas were
selected by their peers for inclusion in the 2007 edition of The
Best Lawyers in America(TM). By office, LeClair Ryan attorneys
selected include:
a) Alexandria
* James K. Fitzpatrick - Medical Malpractice Law, Personal
Injury Litigation, Product Liability Litigation
* Thomas C. Junker - Product Liability Litigation
b) Blacksburg
*James K. Cowan, Jr. - Labor and Employment Law
c) Charlottesville
* Michael P. Drzal - Corporate Law, Technology Law, Venture
Capital Law
d) Glen Allen
* Micheal L. Hern - Energy Law
* Eric M. Page - Communications Law
e) Norfolk
* Alan D. Albert - Commercial Litigation, Government Relations
Law
* Neal P. Brodsky - Trusts and Estates
* Stephen R. Romine - Real Estate Law, Land Use & Zoning Law
f) Richmond
* Everette G. "Buddy" Allen, Jr. - Bet-the-Company Litigation,
Commercial Litigation
* John M. Barr - Labor and Employment Law
* Brian L. Buniva - Environmental Law
* L. Brad Cann, III - Construction Law
* Steven D. Delaney - Real Estate Law
* Dana J. Finberg - Intellectual Property Law
* John M. Fitzpatrick - Mass Tort Litigation, Medical
Malpractice Law, Product Liability Litigation, Professional
Malpractice Law
* Gary D. LeClair - Corporate Law, Leveraged Buyouts and
Private Equity Law, Private Funds Law
* Thomas A. Lisk - Government Relations Law
* Bruce H. Matson - Bankruptcy and Creditor-Debtor Rights Law
* Charles G. Meyer, III - Personal Injury Litigation
* Douglas M. Palais - Insurance Law
* N. Pendleton Rogers - Tax Law
* George P. Whitley - Banking Law
* Thomas M. Wolf - Construction Law
g) Roanoke
* Douglas W. Densmore - Banking Law, Corporate Law, Mergers &
Acquisitions
* G. Franklin Flippin - Banking Law, Corporate Law
* Michael E. Hastings - Bankruptcy and Creditor-Debtor Rights
Law
* John T. Jessee - Personal Injury Litigation, Medical
Malpractice Law
* Clinton S. Morse - Labor and Employment Law
* Kevin P. Oddo - Commercial Litigation
* David E. Perry - Employee Benefits Law
* Lori D. Thompson - Bankruptcy and Creditor-Debtor Rights Law
* Jeffrey A. Van Doren - Immigration Law
* Hugh B. Wellons - Biotechnology Law
h) Virginia Beach
* Jeffrey H. Gray - Commercial Litigation, Professional
Malpractice Law, Securities Law
i) Washington, DC
* Lee E. Goodman - Education Law
* Thomas J. McGonigle - Securities Law
The Best Lawyers lists, representing 80 specialties in all 50
states and Washington, DC, are compiled through an exhaustive
peer-review survey in which thousands of the top lawyers in the
U.S. confidentially evaluate their professional peers. The
current, 13th edition of Best Lawyers (2007), is based on more
than 1.8 million detailed evaluations of lawyers by other lawyers.
With over 140 lawyers across Virginia, in New York City and
Washington, D.C., LeClair Ryan -- http://www.leclairryan.com/--
is a leader in both legal and business communities.
* BOOK REVIEW: Crafting Solutions for Troubled Businesses: A
Disciplined Approach to Diagnosing and Confronting
Management Challenges
-----------------------------------------------------------------
Author: Stephen J. Hopkins and S. Douglas Hopkins
Publisher: Beard Books
Hardcover: 316 pages
List Price: $74.95
Order your personal copy at
http://www.amazon.com/exec/obidos/ASIN/1587982870/internetbankrupt
So the first thing to do when dealing with a troubled business is
to find the guilty and lop someone's head off! Don't be so quick
to react, advise co-authors Stephen J. Hopkins and S. Douglas
Hopkins in their thoughtful, well-researched book, Crafting
Solutions for Troubled Businesses.
The father-son team of Steve and Doug Hopkins are principals of
Kestrel Consulting LLC, a firm they founded in March 2004.
Each has more than 25 years of experience working with troubled
businesses and providing turnaround advisory and interim
management services.
Steve got his first taste of a troubled business when, as chief
financial officer of an 80-year-old chemical company, Bill
Nightingale of Nightingale & Associates assisted him in taking the
company through a Chapter 11 filing. The company subsequently
emerged from bankruptcy with payment in full to all creditors.
Steve then joined Nightingale, staying for 23 years and serving
initially as a principal and eventually as president from 1994 to
2000. Doug began working at Nightingale in 1978 as a part-time
resource for special projects. After working in this capacity for
10 years, Steve joined Nightingale full time in the 1980s and
became a principal in 1994. Both Steve and Doug have served in
various C-level roles in troubled companies, including CEO, CFO,
COO, and CRO.
To write this book, the Hopkinses drew upon their vast experience
in dealing with troubled companies. They took 100 of the largest
projects they have been involved in and applied a "disciplined
analysis" to diagnose problem situations and produce successful
outcomes.
The projects -- helpfully set apart by shaded boxes -- demonstrate
the authors' theories and methods in dealing with troubled
businesses.
The authors also analyze some well-known cases like Enron,
WorldCom, and Sunbeam to help the reader connect the dots in a
very real sense and use the book for actionable advice.
The book is divided into five parts:
1) Conceptual Approach and Key Issues,
2) Managing the Crisis,
3) The Diagnosis Process,
4) Alternatives and Action Plans, and
5) Lessons Learned in 100 Completed Assignments.
Each part has multiple chapters expanding on these themes, and
each chapter concludes with a recap of what was discussed. For
speed readers and the time crunched, these recaps are an excellent
way of extracting from the book the essence of what the authors
are advocating.
So what about lopping off that head? The authors contend that
management's role is much less pivotal than is commonly believed.
The real issue when working with a troubled business is
determining the viability of the business. To do that, the
underlying causes must be identified at different stages of the
corporate lifecycle.
The authors categorize troubled businesses as Undisciplined
Racehorses, Overburdened Workhorses, and Aging Mules. Only
through a step-by-step diagnosis can the core problems be dealt
with. Pursuing a turnaround may not always be a viable and, in
fact, in only one-third of the 100 cases the authors worked on did
the company achieve a true operational turnaround.
Crafting Solutions to Troubled Businesses should be on the must-
read list of anyone involved in dealing with, consulting for, or
operating a troubled business.
*********
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 ***