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/raid1/www/Hosts/bankrupt/TCR_Public/061123.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, November 23, 2006, Vol. 10, No. 279 Headlines ABRAXAS PETROLEUM: 2007 CAPEX Budget Could Reach $44 Million ADVANCED MEDICAL: Sees $45-Mil. Revenue Cut From Product Recall AIRTRAN HOLDINGS: Moody's Assigns Loss-Given-Default Ratings ALLIED HOLDINGS: Posts $7.1MM Net Loss in Quarter Ended Sept. 30 AMERIQUEST MORTGAGE: Poor Performance Cues S&P's Junk Rating ANDREW VELEZ: Case Summary & 19 Largest Unsecured Creditors ANVIL KNITWEAR: Taps Jefferies & Company as Financial Advisor ASSET BACKED: Losses Cue S&P to Pare Rating to B from BB ASSET SECURITIZATION: Loan Repayments Prompt Fitch's Upgrade BANC OF AMERICA: Fitch Lifts Rating on $16.8-Mil. Certs to BB- BLOCKBUSTER INC: CEO Raises Holdings, Co. Shares Up 52-Week High BLOCKBUSTER INC: Ties Up with Papa John on New Movie Rental Promo BOOTIE BEER: Board OKs Repurchase of Up to Two Mil. Common Shares CALPINE CORP: Can Add Ten Admin. Employees to Severance Program CALPINE CORP: Court Rules Lienholder Claims Forever Relinquished CAPITAL LEASE: Fitch Holds B+ Rating on $6.8MM Class E Certs. CATHOLIC CHURCH: Portland Wants to Ink Joint Access Easement Pact CATHOLIC CHURCH: Spokane Ct. to Hold Plan-Related Talks on Dec. 11 CEPHALON INC: Probe Result Says Company Marketed Drugs Illegally CHAPARRAL RESOURCES: Case Summary & 11 Largest Unsecured Creditors CITIGROUP COMMERCIAL: Fitch Rates Six Cert. Classes at Low-Bs COMMUNITY GENERAL: Moody's Cuts Rating on $13.5MM Bonds to Ba3 COMMUNITY HEALTH: New Loan Cues Moody's to Hold Low-B Ratings COMPLETE RETREATS: Court Dismisses Bermuda Cliffs' Chapter 11 Case COMPLETE RETREATS: Court Moves Lease Decision Deadline to Feb. 18 CONSUMERS ENERGY: Restructures Executive Team to Raise Efficiency CREDIT SUISSE: Fitch Holds Low-B Rating on Six Cert. Classes CRESCENT REAL: Reports $9.3MM of Net Income in 2006 Third Quarter DANA CORP: Files Unredacted Term Sheet on Burns, et al. Employment DELL INC: Reports Preliminary Fiscal 2007 Third Quarter Results DELTA AIR: Edward Budd Sells 6,669,685 Shares of Stock DUN & BRADSTREET: Sept. 30 Equity Deficit Widens to $187.9 Million DURA AUTOMOTIVE: Gets Interim Court Okay for Customer Programs EAST COAST: Case Summary & 20 Largest Unsecured Creditors ENRON CORP: Court Approves $90MM Settlement with CFSB Parties ENRON CORP: Seeks Approval for Deseret Generation Settlement EPOCH 2002-1: Fitch Lifts Low-B Rating on $12-Million Note EXABYTE CORP: Closes $22 Million Asset Sale to Tandberg Data FAIRFAX FINANCIAL: Fitch Removes Negative Watch on Low-B Ratings FEDERAL-MOGUL: Court Places Insurers' Lift Stay Motion On Hold FEDERAL-MOGUL: Judge Fitzgerald Denies Lloyd's Discovery Plea FOAMEX INT'L: Murray Capital Supports Panel's DIP Loan Objections FOAMEX INTERNATIONAL: Parties Balk at Amended Disclosure Statement FORD MOTOR: Accelerates Growth Plan in China FREEPORT-MCMORAN: Purchase Plan Prompts DBRS to Review Ratings GAINEY CORP: Moody's Assigns Loss-Given-Default Ratings GE CAPITAL: Fitch Holds Low-B Ratings on Three Cert. Classes GE CAPITAL: Fitch Rates $18.3-Mil. Class I Certificates at BB+ GENERAL MOTOR: Kirk Kerkorian Cuts GM Stake to 7.4% GLOBAL PETROLEUM: Moody's Assigns Loss-Given-Default Ratings GLOBAL POWER: Appoints John Matheson as President and CEO GMAC COMMERCIAL: Fitch Lifts Rating on $27MM Certs. to B+ from B GREEKTOWN HOLDINGS: Construction Delays Cue Moody's Review GSAMP TRUST: Excessive Losses Cue S&P's Downgrades & Neg. Watch GUITAR CENTER: Inks Asset Purchase Deal with The Woodwind HARBORVIEW MORTGAGE: Moody's Rates Class B-7 Certificates at Ba1 HASBRO INC: Earns $99.6 Million in Third Quarter of 2006 HAWAIIAN TELCOM: Limited Resources Cue Moody's Ratings Review HERTZ CORP: S&P Affirms Low-B Ratings & Removes CreditWatch IMAGIVISION MEDIA: Voluntary Chapter 11 Case Summary INFOUSA INC: Earns $11.1 Million in Quarter Ending September 30 INT'L SHIPHOLDING: Moody's Assigns Loss-Given-Default Ratings JACK IN THE BOX: Dutch Offer Cues Moody's Negative Review JAZZ GOLF: Court OKs Asset Sale Proposal under Canadian Bankr. Act JETBLUE AIRWAYS: Moody's Junks Rating on $40-Mil. Facility Bonds JOSEPH JEMSEK: Case Summary & 13 Largest Unsecured Creditors JOSEPH STATKUS: Case Summary & Nine Largest Unsecured Creditors LB-UBS COMMERCIAL: Moody's Holds Low-B Rating on 3 Cert. Classes LEANDER JACKSON: Voluntary Chapter 11 Case Summary LEAR CORP: Fitch Rates New $900-Mil. Sr. Unsecured Notes at B LEGACY ESTATE: Files Amended Disclosure Statement in California LEVITZ HOME: Government Withdraws $1.3-Million Claim LEVITZ HOME: Moves Corporate Offices to the Woolworth Building MAGNOLIA ENERGY: Files Schedules of Assets and Liabilities MATRIA HEALTHCARE: Moody's Affirms Corporate Family Rating at B1 MORGAN STANLEY: Credit Enhancement Cues Fitch to Lift Low-B Rating MORRY WAKSBERG: Case Summary & 40 Largest Unsecured Creditors NALCO CO: S&P Holds B+ Corp. Credit Rating with Stable Outlook NASDAQ STOCK: Makes $250 Mil. Partial Prepayment of Sr. Bank Debt NEVADA DEPARTMENT: Fitch Cuts Rating on $445.8-Mil. Bonds to B3 NEW YORK IDA: Moody's Junks Rating on $40-Mil. Facility Bonds NEW YORK IDA: S&P Places B Rating to $40-Mil. Facility Bonds NOMURA HOME: DBRS Rates $6.4-Million Class N3 Certs. at BB NOVELIS CORPORATION: Moody's Affirms Corp. Family Rating at B1 OAK PARK: Case Summary & Largest Unsecured Creditor OM GROUP: S&P Holds B Rating & Revises Outlook to Positive OPEN TEXT: Earns $7.3 Mil. in First Fiscal Quarter Ended Sept. 30 ORION HEALTHCORP: Posts $488,000 Net Loss in 2006 Third Quarter ORION HEALTHCORP: Special Stockholders' Meeting Set for Nov. 27 OWENS CORNING: Can Enter Into Waiver Letter With JPMorgan OWENS CORNING: Wants $2,000,000 Louisiana Accord Approved OZBURN-HESSEY: Moody's Assigns Loss-Given-Default Ratings PACER INTERNATIONAL: Moody's Assigns Loss-Given-Default Ratings PEP BOYS: Improved Profitability Cue S&P's Outlook Revision PHILLIPS-VAN HEUSEN: Earns $50.8 Million in Third Quarter of 2006 PIER 1 IMPORTS: Gets NYSE Notice of Unusual Stock Trading PINNACLE ENT: Amends PNK Ownership Pact with Robert Johnson PRO-PAC INC: Case Summary & 20 Largest Unsecured Creditors PW LLC: Case Summary & 20 Largest Unsecured Creditors RADIATION THERAPY: Buys Michigan Facility Network for $45.83 Mil. RADNOR HOLDINGS: Tennenbaum Becomes Sole Bidder At Radnor Auction RAILAMERICA: Moody's Assigns Loss-Given-Default Ratings RC2 CORP: Earns $19.4 Million in 2006 Third Quarter RESI SECURITIES: S&P Lifts Ratings on Eight Transaction Classes RICHMOND REAL: Case Summary & 13 Largest Unsecured Creditors RIGEL CORP: Chapter 7 Trustee Wants Cavanagh as Special Counsel RONCO CORP: Posts $4.6 Million Net Loss in Quarter Ended Sept. 30 SAINT VINCENTS: Excl. Plan-Filing Period Stretched to December 20 SAINT VINCENTS: Trade Creditors Sell Claims Totaling $915,169 SALOMON HOME: S&P Cuts Rating on Class M-3 Certificates to BB SATURNS TRUST: S&P Affirms BB+ Rating on $26-Mil. Callable Units SEA CONTAINERS: Can Assign Admin. Status to Claims Until Dec. 19 SEA CONTAINERS: Reports Initial Consolidated Cash Flow Forecast SERACARE LIFE: Hires AccuVal Associates as Inventory Appraiser SERACARE LIFE: Hires Prolman Group to Provide Financial Services SIRVA WORLDWIDE: Moody's Assigns Loss-Given-Default Ratings SOLECTRON CAPITAL: Moody's Affirms B1 Corporate Family Rating SONTRA MEDICAL: Must Raise Capital to Dodge Bankruptcy Threat SPIRIT AEROSYSTEMS: S&P Lifts Corp. Credit Rating to BB from BB- STANFIELD CLO: Moody's Lifts Rating on $29MM Notes to A1 from Ba2 TALECRIS BIO: Moody's Puts B3 Rating on Proposed $330-Mil. Loan TELESOURCE INT'L: Sept. 30 Capital Deficit Increases to $10.4 Mil. TRAILER BRIDGE: Moody's Assigns Loss-Given-Default Ratings TRANSPORT INDUSTRIES: Moody's Assigns Loss-Given-Default Ratings TRAVELCENTERS: Moody's Assigns Loss-Given-Default Ratings UNITEDHEALTH GROUP: Earns $1.1 Billion in Quarter Ended Sept. 30 UNIVERSAL COMPRESSION: S&P Lifts Credit Rating to 'BB' from 'BB-' UNIVERSITY HEIGHTS: Court Fixes February 20 as Claims Bar Date UNIVERSITY HEIGHTS: Gets Okay to Hire Walter Kresge as Appraiser WACHOVIA BANK: Moody's Holds Low-B Ratings on Six Cert. Classes WESTINGHOUSE AIRBRAKE: Moody's Assigns Loss-Given-Default Ratings WILLIAM HACHMANN: Case Summary & 20 Largest Unsecured Creditors WOODWIND & BRASSWIND: Inks Deal Selling Assets to Guitar Center YOSHIHIKO KOKURA: Chapter 15 Petition Summary * AlixPartners Marks 25 Years, to Open Office in India Next Year * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ********* ABRAXAS PETROLEUM: 2007 CAPEX Budget Could Reach $44 Million ------------------------------------------------------------ Abraxas Petroleum Corporation announced a preliminary 2007 capital expenditure budget of $27 million to $44 million. The preliminary budget includes approximately 20 to 30 projects from the Company's inventory of projects on its existing leasehold and may include: West Texas -- Devonian horizontal re-entry in the Oates SW Field of Pecos County; -- Woodford Shale horizontal re-entry in the Oates SW Field of Pecos County; -- Cherry/Bell Canyon in-fill drilling in Ward County; -- Spraberry in-fill drilling in Midland County; -- Clearfork in-fill drilling in Mitchell and Scurry Counties; and -- Strawn Reef in-fill drilling in Coke County. South Texas -- Several exploratory wells targeting the Wilcox on internally generated prospects in Bee and Karnes Counties. Wyoming -- Mowry horizontal well in the Brooks Draw Field of Converse and Niobrara Counties. The Company disclosed that the ultimate capital expenditures will depend on a number of factors, including commodity prices, rig availability, service costs, and general market conditions. Bob Watson, president and chief executive officer, commented, "Our 2007 budget was partly designed to improve our reserve ratio through the conversion of proved undeveloped reserves, as well as probable/possible reserves, to the category of proved developed reserves. "Our goal is to increase the ratio of proved developed reserves to total proved reserves by at least 10%; we feel that such an improvement in our PD ratio would greatly benefit Abraxas in the public markets and consequently, benefit all of our shareholders. At present, approximately 50% of our budget consists of PUD projects while another 20% represent probable and possible projects. "We will begin the year by keeping our company-owned workover rigs busy on several re-entry/re-completion projects in West Texas, while we secure larger drilling rigs for grass roots and deeper projects" Based in San Antonio, Texas, Abraxas Petroleum Corp. (AMEX: ABP) -- http://www.abraxaspetroleum.com/-- is an independent natural gas and crude oil exploitation and production company with operations concentrated in Texas and Wyoming. * * * At Sept. 30, 2006, Abraxas Petroleum Corp.'s balance sheet showed total assets of $118 million and total liabilities of $138 million resulting in a total stockholders' deficit of $20 million. ADVANCED MEDICAL: Sees $45-Mil. Revenue Cut From Product Recall --------------------------------------------------------------- Advanced Medical Optics Inc. anticipates a financial impact associated with its voluntarily recall of certain eye care product lots and the related manufacturing capacity constraints caused by a production-line issue at its manufacturing plant in China. Advanced Medical expects the recall to reduce revenue for the remainder of 2006 and 2007 by a total of $40 million to $45 million. This is due to expected product returns, supply shortages and temporary lost market share, primarily in Japan and Asia Pacific where the vast majority of products produced at the China facility are shipped. As a result, Advanced Medical now expects its 2006 revenue to be between $985 million and $1 billion, compared to prior guidance of $1,010 million to $1,020 million. For 2007, the company now expects revenue to be in the range of $1,060 million and $1,080 million, compared to prior guidance in the range of $1,080 million and $1,100 million. Advanced Medical expects to incur charges and costs to complete the recall, remedy the manufacturing issue and restore market share. For the remainder of 2006 and 2007, the company expects these charges and costs to total approximately $35 million to $40 million, which primarily includes inventory writedowns, recall costs, plant costs, freight and logistics costs, as well as anticipated increased marketing expenses. As a result of the change in anticipated revenue and the associated reduction in margin, coupled with recall-related spending for the balance of 2006 and the increased effective tax rate due to reduction of earnings outside the U.S., AMO now expects 2006 adjusted EPS to be between $1.30 and $1.40, compared to previous guidance of $1.85 to $1.90. For 2007, the company now expects adjusted EPS to be between $1.85 and $2.00, compared to prior guidance in the range of $2.25 to $2.35. These actions will affect other financial metrics such as adjusted gross margin and adjusted operating margin for 2006 and 2007. AMO will provide updated guidance on these measures in future communications. The company commenced the voluntary recall because of a production-line issue at its manufacturing plant in China, which could affect the sterility of the product. Of the 2.9 million units being recalled, only 183,000 units were shipped to the U.S. and the remainder was shipped to Asia Pacific and Japan. "This is a production-line issue and is not related to our formulations, which have been used safely by contact lens wearers for years," said Jim Mazzo, AMO chairman, president and chief executive officer. "While we believe the likelihood of patients experiencing an adverse reaction is low based on our investigation to date, we are implementing this voluntary recall as a precautionary measure. While this issue is limited to two of the four production lines in the China facility, we have temporarily ceased all manufacturing there to clean and sanitize the plant. We want to be abundantly certain that eye care practitioners and their patients know they can continue to rely on and trust AMO for products that meet high quality standards. We are working aggressively to replace recalled product and minimize the inconvenience this action may cause." AMO plans to extend the time period of the temporary plant closure in order to move forward a previously disclosed plan to expand manufacturing capacity at the China facility. These plans include adding new filling lines and increasing packaging capacity. The company expects production at the China facility to be suspended for approximately 10 to 12 weeks. Operations at the company's eye care facility in Alcobendas, Spain are unaffected by this action and production continues uninterrupted. None of the recalled products were manufactured at the Spain facility, which is the primarily supplier for the U.S. and European markets. For the first nine months of 2006, AMO's eye care sales were $208.6 million and represented approximately 28 percent of total sales. The company's largest eye care markets are the Americas and Europe, which represented 34% and 28% of total eye care sales, respectively, for the first nine months of 2006. For this same period, Japan and Asia Pacific eye care sales were 24 percent and 14 percent of total eye care sales. About Advanced Medical Optics Based in Santa Ana, California, Advanced Medical Optics, Inc. (NYSE: EYE) -- http://wwwamo-inc.com/-- develops, manufactures and markets ophthalmic surgical and contact lens care products. AMO employs approximately 3,600 worldwide. The company has operations in 24 countries and markets products in 60 countries. * * * In October 2006, Fitch simultaneously affirmed and withdrew its ratings for Advanced Medical Optics Inc. Affected ratings include the company's 'B+' Issuer Default Rating and 'BB+/RR1' Senior Secured Credit Facility Rating. Additionally, Moody's Investors Service confirmed its B1 Corporate Family Rating for Advanced Medical Optics in connection with the rating agency's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology. AIRTRAN HOLDINGS: Moody's Assigns Loss-Given-Default Ratings ------------------------------------------------------------ In connection with Moody's Investors Service's implementation of its Probability-of-Default and Loss-Given-Default rating methodology for the Transportation sector, the rating agency confirmed its B3 Corporate Family Rating for AirTran Holdings Inc. In addition, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these debentures: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- 7.0% Guaranteed Convertible Notes Due July 1, 2023 Caa1 Caa2 LGD6 91% Shelf Unsecured Caa2 Caa2 LGD6 97% Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). AirTran Airways, Inc. (NYSE: AAI) -- http://www.airtran.com/-- operates over 600 daily flights to 50 destinations. The airline's hub is at Hartsfield-Jackson Atlanta International Airport, where it is the second largest carrier. AirTran Airways recently added the fuel-efficient Boeing 737-700 aircraft to create America's youngest all-Boeing fleet. The airline is also the first carrier to install XM Satellite Radio on a commercial aircraft and the only airline with Business Class and XM Satellite Radio on every flight. ALLIED HOLDINGS: Posts $7.1MM Net Loss in Quarter Ended Sept. 30 ---------------------------------------------------------------- Allied Holdings, Inc., reported a $7,198,000 net loss for the quarter ended Sept. 30, 2006, versus a $15,996,000 net loss for the same period in 2005. Management attributes the decrease in net loss primarily to customer rate increases and the net effect of fuel surcharges, partially offset by the effect of the lower volume of vehicles delivered and certain categories of higher expenses including insurance. Operating loss for the third quarter of 2006 reflected an improvement of $4.2 million over the third quarter of 2005 Revenues were $202.2 million in the third quarter of 2006, compared to revenues of $203.1 million in the third quarter of 2005, a decrease of 0.5% or $0.9 million. The decrease in revenues was due primarily to a decline in the number of vehicles delivered by the Company's Automotive Group, which was partially offset by an increase in revenue per vehicle delivered. At Sept. 30, 2006, the Company's balance sheet showed $337,156,000 in total assets, total long-term liabilities of $74,675,000 and liabilities subject to compromise of $199,199,000; resulting in a $196,777,000 stockholders' deficit. During the third quarter of 2006, the Company incurred approximately $2.1 million of costs related to its Chapter 11 proceedings, versus $3.9 million in the third quarter of 2005. Restructuring costs are primarily for legal and professional services rendered in connection with the Chapter 11 filing and for the third quarter of 2005, included the write-off of $1.4 million of deferred financing costs. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?158b Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. AMERIQUEST MORTGAGE: Poor Performance Cues S&P's Junk Rating ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on class M- 4 from series 2002-3 and class M-2 from series 2002-C issued by Ameriquest Mortgage Securities Inc. to 'CCC' from 'B'. In addition, the ratings were removed from CreditWatch, where they were placed with negative implications on July 12, 2006. Concurrently, ratings on three other classes from the same series are affirmed. The rating on each class was lowered to 'CCC' because of the continued adverse performance of the collateral backing each transaction. During the past 12 months, monthly net losses have outpaced monthly excess interest by more than 100%, causing the overcollateralization for each transaction to fall significantly below its respective target. The current o/c for series 2002-3 and 2002-C are 0.13% and 0.15%, respectively, which are below their respective targets of 0.75% and 0.50%. Furthermore, cash flow projections indicate that monthly net losses will continue to exceed monthly excess spread, which will further erode the o/c for each transaction. As of the Oct. 2006 remittance period, total delinquencies were 31.60% for series 2002-3 and 27.79% for series 2002-C; and cumulative realized losses were 2.35% and 1.95%, respectively. In addition, the transactions have paid down to approximately 9% of their original pool balances. The affirmed ratings reflect adequate actual and projected credit support percentages and the shifting interest structure of the transactions. The credit support is provided by subordination, overcollateralization, and excess spread. The collateral consists of 30-year, adjustable-rate, fully amortizing, subprime mortgage loans secured by first liens on one- to four-family residential properties. Ratings Lowered And Removed From CreditWatch Negative Ameriquest Mortgage Securities Inc. Mortgage pass-through certificates Rating Series Class To From ------ ----- -- ---- 2002-3 M-4 CCC B/Watch Neg 2002-C M-2 CCC B/Watch Neg Ratings Affirmed Ameriquest Mortgage Securities Inc. Mortgage Pass-Through Certificates Series Class Rating ------ ----- ------ 2002-3 M-2 A+ 2002-3 M-3 BBB 2002-C M-1 BBB ANDREW VELEZ: Case Summary & 19 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Andrew Velez Construction, Inc. 2 Park Avenue New York, NY 10016 Bankruptcy Case No.: 06-12765 Type of Business: The Debtor operates a construction company. Chapter 11 Petition Date: November 21, 2006 Court: Southern District of New York (Manhattan) Judge: Robert E. Gerber Debtor's Counsel: Norma E. Ortiz, Esq. Ortiz & Ortiz, LLP 127 Livingston Street Brooklyn, NY 11201 Tel: (718) 522-1117 Fax: (718) 596-1302 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 19 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Port Morris Tile $859,926 1285 Oakpoint Avenue Bronx, NY 10474 Universal Electric Corp. $507,900 135 Lafayette Avenue White Plains, NY 10603 Lynbrook Glass $525,183 941 Motor Parkway Hauppague, NY 11788 Interstate Masonry $323,313 58-17 59th Drive Maspeth, NY 11378 Proficient Builders $321,788 6215 Dry Harbor Road Middle Village, NY 11379 JT&T Mechanical $196,589 A&A Maintenance $172,342 JES Plumbing $146,369 Weir Weilding Corp. $131,000 FMB Corp. $124,457 R. LaPointe Construction $71,165 TM&M Mechanical $70,384 Kenneth J. Herman, Inc. $60,352 Empire Architectural $41,000 Thyssen Krup Corp. $34,415 Hayward Baker $39,922 Alante Security $38,633 Tristate $26,033 KP Organization $25,920 ANVIL KNITWEAR: Taps Jefferies & Company as Financial Advisor ------------------------------------------------------------- Anvil Knitwear Inc. and its debtor-affiliates ask the the U.S. Bankruptcy Court for the Southern District of New York for authority to employ Jefferies & Company, Inc., as its financial advisor. Jefferies & Company will: a. familiarize with and analyze the business, operations, properties, financial condition and prospects of the Company; b. Advise the Company on the current state of the restructuring market; c. assist and advise the Company in developing a general strategy for accomplishing the restructuring; d. assist and advise the Company in implementing a plan of restructuring on behalf of the Company; e. assist and advise the Company in evaluating and analyzing a restructuring including the value of securities, if any, that may be issued to certain creditors under any restructuring plan; and f. render other financial advisory services as may agreed upon by the Company and Jefferies. Jefferies & Company will be paid a $125,00 monthly retainer for its work. If the Debtors consummate a restructuring, the Debtor will be entitled to a cash fee equal to: (i) $600,000, if the restructuring includes solely of an extension of maturities of the notes and preferred stock or (ii) 0.75% of the face amount of: (a) all preferred stock greater than $20 million and (b) all notes, in each case, that are subject to restructuring. The Debtors may credit 50% of the monthly retainers actually paid to the firm after the first $375,000 against the transaction fee. Thane W. Carlston, a Jefferies & Company member, assures the Court that the firm is a "disinterested person" as that term is defined in Section 101(14), as modified in Section 1107(b) of the Bankruptcy Code. Headquartered in New York, Anvil Holdings, Inc., is a Delaware holding company with no material operations and owns all of the outstanding common stock of Anvil Knitwear, Inc. Anvil Knitwear, in turn, owns all of the outstanding common stock of Spectratex, Inc., fka Cottontops, Inc. The Debtors design, manufacture, and market active wear. The Debtors filed for chapter 11 protection on Oct. 2, 2006 (Bankr. S.D.N.Y. Case Nos. 06-12345 through 06- 12347). Richard A. Stieglitz, Jr., Esq., at Dechert, LLP, represents the Debtors in their restructuring efforts. The Debtors' consolidated financial data as of July 29, 2006, showed total assets of $110,682,000 and total debts of $244,586,000. The Debtors' exclusive period to file a chapter 11 plan expires on Jan. 30, 2007. ASSET BACKED: Losses Cue S&P to Pare Rating to B from BB -------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class M4 certificate from Asset Backed Securities Corp. Home Equity Loan Trust 2002-HE3 to 'B' from 'BB'. This rating remains on CreditWatch, where it was placed with negative implications on July 19, 2006. Concurrently, the ratings on the remaining classes from this transaction were affirmed. The subordinate certificate from this transaction is made up of component classes divided between two loan groups. The rating on the subordinate certificate is dependent on the performance of each loan group. If one loan group is performing poorly, the rating on the entire subordinate certificate must be lowered, which will affect the ratings on both loan groups. The lowered rating and CreditWatch placement is the result of credit support reduction to the II-M4 component class. The reduced credit support is the result of realized losses that have exceeded excess spread. During the past six remittance periods, realized losses have outpaced excess spread by approximately 2.0x. The failure of excess spread to cover monthly realized losses has resulted in an overcollateralization deficiency of $1,587,616. As of the November 2006 distribution date, o/c was $1,212,709, which is below its target balance of $2,800,325 by approximately 57%. Cumulative realized losses represent 2.14% of the original pool balance, while severely delinquent loans represent 13.86% of the current pool balance. Standard & Poor's will continue to monitor the performance of this transaction. If realized losses continue to outpace excess interest, and the level of overcollateralization continues to decline, the rating agency will take further negative rating actions. Conversely, if realized losses no longer outpace monthly excess interest, and the level of overcollateralization rebuilds to its target balance, Standard & Poor's will affirm the rating on this class and remove it from CreditWatch. The affirmations reflect actual and projected credit support that is sufficient to maintain the current ratings. The credit support for this transaction is provided through a combination of excess spread, overcollateralization, and subordination. The underlying collateral consists of closed-end, first-lien, fixed- and adjustable-rate mortgage loans with original terms to maturity of no more than 30 years. Rating Lowered And Remains On CreditWatch Negative Asset Backed Securities Corp. Home Equity Loan Trust Rating Series Class To From ------ ----- -- ---- 2002-HE3 M4 B/Watch Neg BB/Watch Neg Ratings Affirmed Asset Backed Securities Corp. Home Equity Loan Trust Series Class Rating ------ ----- ------ 2002-HE3 II-M1 AA 2002-HE3 M2 A 2002-HE3 M3 BBB ASSET SECURITIZATION: Loan Repayments Prompt Fitch's Upgrade ------------------------------------------------------------ Fitch upgraded these classes of Asset Securitization Corporation's commercial mortgage pass-through certificates, series 1996-MD VI: -- $44.8 million class A-4 to 'AAA' from 'AA+; -- $22.4 million class A-5 to 'AAA' from 'AA'; -- $49.2 million class A-6 to 'AAA' from 'BBB'; -- $71.6 million class A-7 to 'A+' from 'BB+'; -- $35.8 million class B-1 to 'BB' from 'B-'; and, -- $1,000 class B-1H to 'BB' from 'B-'. Classes A-1C, interest only class CS-3, class A-2 and class A-3 are not rated by Fitch. The upgrades are due to loan repayments, defeasance and scheduled amortization. As of the Nov. 2006 remittance date, the transaction has paid down 63.6% since issuance. The Horizon portfolio had been a Fitch loan of concern due to declining performance and a stressed debt service coverage ratio less than 1x at Fitch's last rating action. However, the loan's payoff on its anticipated repayment date in Oct. 2006, combined with the earlier defeasance of the Columbia Sussex portfolio allow for the upgrades to the Fitch rated classes. Currently, there are two remaining non-defeased loans in the transaction, the MHP portfolio and the Palmer Square loan. The MHP loan is the largest loan in the pool consisting of four full- service hotels located in three states. Performance has improved for 2005 and year to date 2006, for three of the hotels in the portfolio, but the overall net cash flowis down due to declining results at the Marriott New Orleans, which sustained damage from hurricane Katrina and continues to be impacted by reduced market demand. However, the portfolio benefits from a short, 20-year amortization schedule which has resulted in loan paydown of approximately 25% since issuance resulting in a debt per key exposure of $58,598 per room. The other non-defeased loan in the transaction, representing 9.1% of the pool balance, is the Palmer Square loan. The loan is secured by a mixed use property consisting of three mixed use office and retail buildings, a full-service hotel and a two parking facilities. The year end (YE) 2005 NCF continues to improve and Fitch's resulting DSCR is 3.30x, as compared to 3.12x for YE 2004. The weighted average occupancy remains strong at 96.3% for the retail and office portions as of April 2006. BANC OF AMERICA: Fitch Lifts Rating on $16.8-Mil. Certs to BB- -------------------------------------------------------------- Fitch Ratings upgrades Banc of America Commercial Mortgage Inc.'s commercial mortgage pass-through certificates, series 2002-2: -- $64.7 million class B to 'AAA' from 'AA+'; -- $17.2 million class C to 'AAA' from 'AA'; -- $12.9 million class D to 'AAA' from 'AA-'; -- $17.2 million class E to 'AAA' from 'A+'; -- $21.6 million class F to 'AAA' from 'A'; -- $21.6 million class G to 'AA+' from 'A-'; -- $19.4 million class H to 'AA-' from 'BBB+'; -- $21.6 million class J to 'A' from 'BBB'; -- $36.6 million class K to 'BBB' from 'BBB-'; -- $12.9 million class L to 'BBB-' from 'BB+'; -- $12.9 million class M to 'BB+' from 'BB'; -- $16.8 million class N to 'BB-' from 'B+'. In addition, Fitch affirms these ratings: -- $19.3 million class A-1 at 'AAA'; -- $320.7 million class A-2 at 'AAA'; -- $975.2 million class A-3 at 'AAA'; -- $1.7 billion class XC at 'AAA'; -- $1.5 billion class XP at 'AAA'; -- $6.8 million class O at 'B'. The $34.8 million class P is not rated by Fitch. The upgrades reflect scheduled amortization as well as the defeasance of an additional 19 loans including the credit assessed Bank of America Plaza since Fitch's last rating action. In total 29 loans have defeased since issuance. As of the October 2006 distribution date the pool has paid down 4% to $1.63 billion from $1.72 billion at issuance. There are currently three specially serviced loans all of which have the same borrower. The loans transferred to the special servicer after the borrower refused to reimburse the master servicer for forced placed insurance. The properties are located in the Gulf Coast. Fitch reviewed the transaction's two non-defeased credit assessed loans: Crabtree Valley Mall and Centre at Preston Ridge loans. Both loans maintain their investment grade credit assessments based on their stable performance. Crabtree Valley Mall is secured by a 998,486 square feet retail property located in Raleigh, North Carolina. Occupancy as of March 2006 was 94% compared to 97.1% at issuance. Center at Preston Ridge is secured by a 728,962sf retail property located in Frisco TX. Occupancy as of December 2005 was 97% compared to 85.7% at issuance. BLOCKBUSTER INC: CEO Raises Holdings, Co. Shares Up 52-Week High ---------------------------------------------------------------- Blockbuster Inc.'s chairman of the board and chief executive officer, John F. Antioco, bought Tuesday 220,000 shares of the Company's Class A common stock, bringing his holdings to a total of 1,100,460, according to a regulatory filing with the Securities and Exchange Commission. The Company's shares rose to a 52-week high after Mr. Antioco raised his holdings. Analysts said the surge signal confidence in the Company. Analysts also said that the stock rose higher because the Company is selling non-core assets in Taiwan. A Taiwan-based Web site DigiTimes.com reported that the Company is selling 89 stores in Taiwan to Webs-TV Digital International Co. Ltd. for an undisclosed amount. Blockbuster Inc. (NYSE: BBI, BBI.B) -- http://www.blockbuster.com/ -- provides in-home movie and game entertainment, with more than 8,500 stores throughout the Americas, Europe, Asia, and Australia. * * * As reported in the Troubled Company Reporter on Nov. 21, 2006, Fitch Ratings affirmed Blockbuster Inc.'s Issuer default rating at 'CCC'; Senior secured credit facility rating at 'CCC/RR4'; and Senior subordinated notes rating at 'CC/RR6'. BLOCKBUSTER INC: Ties Up with Papa John on New Movie Rental Promo ----------------------------------------------------------------- Starting today, Papa John's International Inc. customers can get unmatched access to movies free for a 14-day trial period through a new alliance with Blockbuster Inc. thru BLOCKBUSTER Total Access(TM). Customers who sign-up online at http://www.papajohns.com/for the new Blockbuster online movie rental program will also receive a free $10 Papa Card for use toward their next purchase of Papa John's pizza, side items, or beverages. BLOCKBUSTER Total Access is a new rental program that gives online subscribers unprecedented access to movies. It provides online customers the option of returning their DVDs through the mail or exchanging them at one of more than 5,000 participating Blockbuster stores for free in-store movie rentals. For each online rental exchanged in the store, customers can receive a free in-store movie rental. In-store movies are still subject to store rental terms, including due dates, and must be returned to the store from which they were rented. "Pizza and movies are an irresistible combination," Papa John's International Inc. vice president of partnership development Sean Muldoon said. "Papa John's delivers pizza to the door, and in addition to its extensive store network, Blockbuster delivers DVDs to the mailbox and it is all done online from the comfort of your own home. And, we're upping the ante by offering a $10 Papa Card during the busy holiday season to customers who sign up for the rental program through http://www.papajohns.com/" As Papa John's online business continues to grow, increasing by more than 50% year-over-year in 2006, continued special offerings to online customers are a win-win for the company and its customers. Recent online small group research shows that more than 70% of Papa John's customers are eating pizza while watching DVDs at least once a month providing further incentive to implement the popular pizza and a movie concept. "We've enjoyed working with Papa John's in the past and we look forward to increasing our awareness of BLOCKBUSTER Total Access with their customer base through this new alliance," Blockbuster chief marketing officer Curt Andrews said. "Pizza and a movie are a great mix and now, when a customer's favorite pizza is delivered they can already have a movie ready to watch, whether it was delivered through our online service or something they picked up from one of our stores. Only BLOCKBUSTER Total Access can offer online customers the convenience and selection of the more than 60,000 titles available online coupled with the ability to immediately exchange their online movies for free in-store rentals." Facts About http://www.papajohns.com/ * Papa John's is the only national pizza chain with online ordering available from all of its U.S. restaurants. * Papajohns.com features 24/7 plan-ahead ordering, allowing orders to be placed online up to 21 days in advance. * A "repeat last order" function allows customers to enter their last order with only a few keystrokes. * Papa John's recently made papajohns.com online ordering available in Spanish. Papa John's and Blockbuster Alliance * Blockbuster has been featured for a limited-time only on Papa John's pizza boxes. * Papa John's and Blockbuster team to provide BLOCKBUSTER Total Access and $10 Papa Card to subscribers. About Papa John's Louisville, Ky.-based Papa John's International Inc. (NASDAQ: PZZA) -- http://www.papajohns.com/-- is the world's third largest pizza company. For seven years running, consumers have rated Papa John's No. 1 in customer satisfaction among all national QSR chains in the highly regarded American Customer Satisfaction Index. About Blockbuster Blockbuster Inc. (NYSE: BBI, BBI.B) -- http://www.blockbuster.com/ -- provides in-home movie and game entertainment, with more than 8,500 stores throughout the Americas, Europe, Asia, and Australia. * * * As reported in the Troubled Company Reporter on Nov. 21, 2006, Fitch Ratings has affirmed Blockbuster Inc.'s Issuer default rating at 'CCC'; Senior secured credit facility rating at 'CCC/RR4'; and Senior subordinated notes rating at 'CC/RR6'. BOOTIE BEER: Board OKs Repurchase of Up to Two Mil. Common Shares ----------------------------------------------------------------- Bootie Beer Corporation's Board of Directors has adopted a stock repurchase program of their common stock. The Company will repurchase securities on the Over-the-Counter Bulletin Board open market, pursuant to Rule 10b-18 under the Securities Exchange Act of 1934. The Company reserves quantity, purchase, and price discretions, but will not exceed purchasing a maximum of 2,000,000 shares and the purchase price will not exceed the higher of the current independent bid quotation or the last independent sale price. Bootie Beer reserves time discretion, but will not purchase securities during the half-hour prior to the scheduled close of trading. It may purchase the securities at the market, or in a block trade. The Company reserves volume discretion, but will conduct the trades in compliance with the volume restrictions for either at the market or block trade transactions. The Company also reserves broker or dealer discretion, but will purchase the securities through only one broker or dealer on a single day and may change the broker or dealer from day to day. The Company expects to fund its share repurchase program principally from proceeds from the recent sale of secured convertible notes, with the remaining proceeds to be applied towards unsecured debt and executing the Company's business model. Tania M. Torruella, chief executive officer, said, "This stock repurchase program demonstrates our confidence in the long-term outlook of the Company. We believe our shares are mispriced by the market and the best investment we can make with the NIR proceeds is in our own stock. The repurchase program is strategically beneficial for our shareholders, and shareholders equity." Headquartered in Winter Park, Florida, Bootie Beer Corporation -- http://www.bootiebeer.com/-- brews and produces malt beverage products in La Crosse, Wisconsin. The Company brewery has approximately a 20 million case capacity. The first brand developed, in the Company portfolio of beers, is Bootie Beer and Bootie Light. Going Concern Doubt Jaspers + Hall, P.C., in Denver, Colorado, raised substantial doubt about Bootie Beer's ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's net loss and negative cash flows from operations. CALPINE CORP: Can Add Ten Admin. Employees to Severance Program --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Calpine Corp. and its debtor-affiliates to modify their Severance Program, provided that the aggregate payments made as a result of the modification will not exceed $100,000. As reported in the Troubled Company Reporter on Oct. 26, 2006, the Debtors sought authority from the Court to add ten Administrative Employees as participants to the Severance Program. In March 2006, the Court authorized the Debtors to implement a new, broad-based employee severance program. Richard M. Cieri, Esq., at Kirkland & Ellis LLP, in New York, related that since then, the Debtors have completed the process of implementing the Severance Program, but continue to review and reassess the program to ensure that it is fair, cost effective and provides benefits to employees commensurate with their contributions to the company. In early October 2006, it came to the Debtors' attention that certain non-exempt administrative employees that had been excluded from the Severance Program were also unlikely to be eligible for any bonus under the Calpine Incentive Program approved by the Court in April 2006. Because those Administrative Employees are unable to receive bonuses, in the interests of fairness, the Debtors have determined that those employees should be entitled to participate in the Severance Program. 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. 29; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CALPINE CORP: Court Rules Lienholder Claims Forever Relinquished ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extended the Investigation Termination Deadline solely for Calpine Corp. and its debtor-affiliates and the Official Committee of Unsecured Creditors until: (a) May 15, 2007, as it pertains to Perfection Claims; and (b) the earlier of (i) May 15, 2007, or (ii) 20 days after the date on which the Debtors and the Committee are required to answer in the Adversary Proceeding, as it pertains to whether the First Lien Debt constitutes "Priority Lien Debt" or "Parity Lien Debt." There will be no Investigation Termination Deadline for any claims or defenses related to any demands for payments allegedly due as a consequence of the Debtors' default or repayment, before the maturity date, of First or Second Lien Debt. All Calpine Corp. Lienholder Claims and Defenses will be deemed, immediately and without further action by the Calpine Corp. Lienholders, the First Lien Trustee, the Second Lien Trustee or Term Loan Agent, to have been forever relinquished and waived as to all entities. Responses to Investigation Deadline Extension 1. First Lien Trustee The First Lien Trustee asked the Court to deny the Creditors Committee's request for further extension of the Investigation Termination Deadline. The Creditors Committee sought to further extend the Investigation Termination Deadline as it pertains to the security interests granted to Law Debenture Trust Company of New York, the trustee for the First Lien Noteholders, when the Debtors have already determined that challenge as wholly without merit and should not be pursued, Steven B. Levine, Esq., at Brown Rudnick Berlack Israels, LLP, in Boston, Massachusetts, contends. "The Creditors Committee has cited no cause for the indefinite extension of unlimited scope that it now seeks," Mr. Levine says. Mr. Levine refutes the Creditors Committee' assertion that the Investigation Termination Deadline has been extended by a Scheduling Order entered in the adversary proceeding filed by the First Lien Trustee. The Investigation Termination Deadline predates the Adversary Proceeding by five months and the Adversary Proceeding and the Investigation Termination Deadline has a separate and distinct timeframe for the Debtors and the Committee to identify and assert potential claims against the First Lien Trustee, Mr. Levine explains. Previous extension motions related to the Cash Collateral Order focused on avoiding "conflicting results" in the Federal District Court appeal filed by the First Lien Trustee and the Adversary Proceeding filed in the Bankruptcy Court concerning the Make Whole Premium issue. Mr. Levine points out that the Extension Motions did not mention the extension of the deadline fixed by the Final Cash Collateral Order with respect to other potential lien challenges nor did the Bankruptcy Court refer to any issue other than the Make Whole Premium in entering the Scheduling Order. 2. Debtors The Debtors asked the Court to deny the Committee's request. The Debtors argue that the Creditors Committee's proposed claims against the First Lien Trustee lack merit. In addition, the Committee's investigation of potential challenges to the First Lien Debt is already completed. Thus, further extension of the Investigation Termination Date is futile, the Debtors maintain. Committee Talks Back Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld, LLP, in New York, asserts that the Creditors Committee seeks further extension of the Investigation Termination Deadline to ensure that parties are not required to now litigate inextricably intertwined issues that are stayed in the Adversary Proceeding commenced by the First Lien Trustee. Mr. Stamer argues that prosecuting the challenges against the liens securing 2014 Notes now would result in the prosecution of not only the 2014 Lien Challenges but also compulsory cross claims, counterclaims, and counter defenses in connection with both the 2014 Lien Challenges and the Adversary Proceeding. The requested extension is not an attempt by the Committee to re- write history and extend indefinitely the deadline to raise the 2014 Lien Challenges, Mr. Stamer explains. The Committee asked the Court to extend the Investigation Termination Deadline pertaining to the alleged First Lien security interests until the date on which the Debtors and the Committee are required to answer in the Adversary Proceeding. 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. 31; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CAPITAL LEASE: Fitch Holds B+ Rating on $6.8MM Class E Certs. ------------------------------------------------------------- Fitch Ratings affirms Capital Lease Funding Securitization, L.P.'s corporate credit-backed pass-through certificates, series 1997- CTL-1: -- $9.4 million class A-2 at 'AAA'; -- $17.8 million class A-3 at 'AAA'; -- Interest-only class IO at 'AAA'; -- $15.5 million class B at 'AA+'; -- $15.5 million class C at 'A'; -- $6.1 million class D at 'BBB-'; -- $6.8 million class E at 'B+'. The $1.9 million class F and the $1.3 million class G certificates remain at 'CCC'. The affirmations are the result of the transaction paydown and subsequent increase in credit enhancement offsetting the overall decline in the underlying credit tenants' ratings. As of the Nov. 2006 distribution date, the pool has paid down 42.5% to $74.5 million from $129.4 million at issuance. Currently 89.5% of the underlying credit tenants are below investment grade, compared to 30.4% at issuance. There have been no specially serviced loans and no realized losses since issuance. Fitch is concerned with the two Winn-Dixie loans. On Feb. 21, 2005, Winn-Dixie Stores, Inc. filed for Chapter 11 bankruptcy protection. The Winn-Dixie loans, both secured by properties located in Slidell, LA, represent 7.8% of the pool as of the November 2006 distribution date. While the bankruptcy filing is seen as a negative event for the pool, both stores are currently open and operating. Fitch will closely monitor future lease rejection announcements to assess the impact of any new developments to the pool. The pool's tenants consist of CVS Corp., Circuit City, Rite Aid Corp., RadioShack Corp., Winn-Dixie, New York State Electric & Gas Corp., Food Lion, Royal Ahold N.V., Walgreen Co., Pep Boys, and HCA Inc. CATHOLIC CHURCH: Portland Wants to Ink Joint Access Easement Pact ----------------------------------------------------------------- The Archdiocese of Portland in Oregon seeks authority from the U.S. Bankruptcy Court for the District of Oregon to execute a joint access easement and a warranty deed to: -- adjust the property line between the St. Augustine Church property in Lincoln City, Oregon, and the adjacent property of John LoBello; and -- grant a joint easement between the church property and the LoBello property. Portland relates that St. Augustine Parish and Mr. LoBello have agreed to adjust the property lines and to grant a joint driveway and easement between those properties to be used by both the Parish and Mr. LoBello on land formerly constituting a portion of the Eleventh Street that has been vacated by Lincoln City. Portland says it needs to execute both the Joint Access Easement and the Warranty Deed. Portland notes that the parish property does not belong to the bankruptcy estate. Rather, Portland says it holds bare legal title to the property and that St. Augustine Parish, as a separate juridic person under Canon Law, is the beneficial owner of the Church Property. The property is held by the Archdiocese in trust. Portland believes that the transaction will have no detrimental effect, either monetary or otherwise, on the bankruptcy estate and is in the best interest of the Parish and its parishioners. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 73; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CATHOLIC CHURCH: Spokane Ct. to Hold Plan-Related Talks on Dec. 11 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of Washington will conduct a scheduling conference on Dec. 11, 2006, relating to the plans of reorganization and disclosure statement filed in the Diocese's case at the request of the Plan mediator, Judge Greg Zive, and through a stipulation of the parties undergoing mediation in the Chapter 11 case of the Catholic Diocese of Spokane. The Hon. Patricia C. Williams has vacated her prior ruling directing parties to file their Plans on or before Nov. 13, 2006. The Court cancelled the November 15 status conference on the Plan matters. Judge Williams will also take up at the December 11 conference Spokane's requests to approve the settlement agreements with General Insurance Company of America, ACE Property and Casualty Insurance Company, Indiana Insurance Company, and Oregon Auto Insurance Company. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 73; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CEPHALON INC: Probe Result Says Company Marketed Drugs Illegally ---------------------------------------------------------------- A Connecticut investigating team led by Attorney General Richard Blumenthal disclosed that Cephalon Inc. has been promoting its drugs for uses for which they are not approved, Reuters reports. The statement follows the team's probe into the company's drug marketing practices. Among the questioned drugs include powerful painkiller Actiq, sleep disorder drug Provigil, and epilepsy treatment Gabitril. An estimate on the proportion of the sales generated from illegal promotion by Cephalon was not disclosed. Mr. Blumenthal told Reuters in an interview that he plans to meet with Cephalon's lawyers around the middle of December to try to settle the matter. If Cephalon agrees to a settlement, he would seek millions of dollars in fines and penalties on behalf of the state's Medicaid program, Mr. Blumenthal said in the report. Headquartered in Frazer, Pennsylvania, Cephalon Inc. -- http://www.cephalon.com/-- engages in the discovery, development, and marketing of products in central nervous system disorders, pain, cancer, and addiction therapeutic areas. * * * Standard & Poor's assigned Cephalon Inc.'s long-term local and foreign issuer credit ratings at B+ with a positive outlook. CHAPARRAL RESOURCES: Case Summary & 11 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Chaparral Resources, Inc. 505 Westcrest Kerrville, TX 78028 Bankruptcy Case No.: 06-36457 Chapter 11 Petition Date: November 20, 2006 Court: Southern District of Texas (Houston) Judge: Letitia Z. Clark Debtor's Counsel: Barbara Mincey Rogers, Esq. Rogers, Anderson & Bensey, PLLC 2200 North Loop West, Suite 310 Houston, TX 77018 Tel: (713) 957-0100 Fax: (713) 957-0105 Total Assets: $4,007,194 Total Debts: $1,876,509 Debtor's 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ THI Money Loaned $750,000 212 Sidney Baker South Kerrville, TX 78028 HCSB Second Lien $268,762 207-C Sidney Baker South Value: Kerrville, TX 78028 $122,565 Wells Fargo Bank Money Loaned $245,782 c/o Robert L. Barrows 800 Broadway San Antonio, TX 78215 R.J. Pace Loans $198,000 505 Westcrest Kerrville, TX 78028 Stephen B. Schulte, P.C. Legal Fees for DFIC $26,546 Main Plaza One 820 Main Street, Ste 100 Kerrville, TX 78028 Mosty Law Firm Legal Fees for DFIC $19,983 222 Sidney Baker South, Suite 400 Kerrville, TX 78028 Texas Hills Investments Lawsuit $0 Greg T. Perkes 606 North Carancahua, Suite 1500 Corpus Christi, TX 78476 Linda Lashley Lawsuit $0 c/o Ruth Kollman 606 North Carancahua, Suite 1501 Corpus Christi, TX 78476 John O. Brentin & Associates Lawsuit $0 Porter & Hedges 1000 Main Street, 36th Floor Houston, TX 77002 Emmett Brandon, Jr. Lawsuit $0 c/o William Spencer Hart 317 Sidney Baker Street, Suite 175 Kerrville, TX 78208 Brandon & Company Ind. Lawsuit $0 Systems, Inc. c/o William Spencer Hart 317 Sidney Baker Street, Suite 175 Kerrville, TX 78208 CITIGROUP COMMERCIAL: Fitch Rates Six Cert. Classes at Low-Bs ------------------------------------------------------------- Fitch rates Citigroup Commercial Mortgage Trust 2006-C5, commercial mortgage pass-through certificates: -- $60,255,000 class A-1 'AAA'; -- $236,789,000 Class A-2 'AAA'; -- $93,821,000 class A-3 'AAA'; -- $92,770,000 class A-SB 'AAA'; -- $774,252,000 class A-4 'AAA'; -- $228,753,000 class A-1A'AAA'; -- $212,378,000 class A-M 'AAA'; -- $172,556,000 class A-J 'AAA'; -- $2,072,801,000 class XP'AAA'; -- $2,123,772,692 class XC 'AAA'; -- $42,476,000 class B 'AA'; -- $21,237,000 class C 'AA-'; -- $26,548,000 class D 'A'; -- $29,201,000 class E 'A-'; -- $26,548,000 class F 'BBB+'; -- $21,237,000 class G 'BBB'; -- $21,238,000 class H 'BBB-'; -- $7,964,000 class J 'BB+'; -- $7,964,000 class K 'BB'; -- $7,964,000 class L 'BB-'; -- $2,655,000 class M 'B+'; -- $7,964,000 class N 'B'; -- $2,655,000 class O 'B-'; -- $40,000,000 class AMP-1 'BBB+'; -- $48,000,000 class AMP-2 'BBB'; -- $27,000,000 class AMP-3 'BBB-'. The $26,547,692 class P is not rated by Fitch. Classes A-1, A-2, A-3, A-SB, A-4, A-1A, A-M, A-J, B, C, and D are offered publicly, while classes E, F, G, H, J, K, L, M, N, O, and P are privately placed pursuant to Rule 144A of the Securities Act of 1933. With the exception of the certificates AMP-1, AMP-2, and AMP-3, which represent an interest in a subordinate note secured by the Ala Moana Portfolio, the certificates represent beneficial ownership interest in the trust, primary assets of which are 207 fixed rate loans having an aggregate principal balance of approximately $2,123,772,692, as of the cutoff date. COMMUNITY GENERAL: Moody's Cuts Rating on $13.5MM Bonds to Ba3 -------------------------------------------------------------- Moody's Investors Service downgraded to Ba3 from Ba2 the ratings on $13.5 million of bonds issued by Community-General Hospital of Greater Syracuse through the Onondaga County Industrial Development Authority. The outlook is revised to negative from stable. The downgrade is due to the significant decline in interim 2006 operating performance, while the negative outlook reflects our expectation that liquidity will decline materially in 2007 when CGH funds a large pension obligation. Legal security: The bonds are secured by a pledge of CGH's gross revenue receipts. Interest rate derivatives: None. Strengths: -- Relatively large and growing active medical staff of 320 physicians -- Modest amount of debt outstanding, though the pension obligation represents an additional $28 million liability -- Growing orthopedic business which is a profitable service line Challenges: -- Modest liquidity of 52 days cash on hand, which is expected to decline considerably in 2007 as CGH funds approximately $9.4 million of pension obligations -- Significant 68% decline in 9-month 2006 operating cash flow and decline in total revenues; financial covenant violations expected by year-end 2006 -- Competitive four-hospital market wherein CGH represents the smallest provider with a 14% market share and the most limited clinical offerings -- Moody's demographics in the greater Syracuse market, characterized by population declines, high unemployment and low wealth indices -- A high 78% of employees represented by unions Recent Developments Operating performance has deteriorated significantly in 2006 and currently modest liquidity is expected to decline materially over the next year. Through the first nine months of 2006operating cash flow has declined by 68%, reflecting patient volume softness and higher staff expenses. Actual 9-month operating cash flow of only $1.8 million compares unfavorably with a budget of $5.6 million. While total inpatient admissions fell by a modest 0.5%, inpatient surgeries declined by nearly 7%, contributing to a 1% decline in total revenues. The volume declines were attributable to the departure of one of two hospitalists, a mild flu season and the loss of endoscopy and radiology procedures to physician offices. Physical medicine and rehabilitation revenues were hurt by Medicare's "75% rule", which reduces reimbursement for less acute conditions. CGH demonstrated success in the orthopedic arena, with procedures rising 14% through interim 2006, but not enough to offset losses in ENT, thoracic, GYN and ophthalmic surgery. Staff levels had been increased based on optimistic expectations for FY2006 which had assumed continuation of the trend of increased inpatient admissions experienced in 2005 over 2004 levels. Actual inpatient volumes have fallen 6% short of budget through 9-months 2006 and the hospital was unable to flex staff quickly enough in concert with the reduced volume. Total FTEs actually increased from 977 as of Dec. 31, 2005 to 1,000 as of Sept. 30, 2006, despite a 25-person layoff in June. Management is looking for additional ways to control staff and non-staff expenses but is limited by its unionized workforce. Unfortunately, the high level of union representation has created additional disruption, despite management having negotiated reasonable unit wage increases over the next three years. CGH is pursuing additional revenue growth and has been successful recruiting additional physicians in 2006, including two hospitalists, two neurologists, two oncologists, three orthopedic surgeons and a urologist. The total active staff of 320 is comparatively large for a hospital of CGH's relatively small size, having grown steadily from 272 physicians since 2001. In addition to orthopedic/spine surgery, the hospital recently opened its first diagnostic cath lab, has leased space and staff to two neurologists on campus and has invested in its physical medicine and rehabilitation program. However, Moody's caution that the other three hospitals in Syracuse are, on average, twice as large as CGH and provide a more extensive array of clinical services. Moody's biggest credit concern is CGH's liquidity. Days cash on hand fell from 65 days at the end of 2004 to 52 days at the end of 2005, largely due to a decline in operating performance and a $1.8 million increase in pension funding. While unrestricted liquidity has remained relatively stable through Sept. 30, 2006, the hospital faces large pension funding obligations in 2007. Similar to many other hospitals, CGH has seen its under-funded pension obligation rise significantly, from $7 million in 2001 to $28 million in 2005. Management anticipates making cash pension contributions of $9.4 million in 2007, a sizable increase from the $2.3 million expected to be funded in 2006. This 2007 payment represents a substantial 31 days cash on hand; management has already segregated $5.5 million of its unrestricted cash to be used for this purpose which is included in our calculation of unrestricted cash at Sept. 30, 2006. Moody's is also concerned by discussions involving the County and CGH regarding its potential affiliation with the County's financially-troubled 526-bed nursing home, which shares a common campus with CGH. Although Moody's understand that the County government recently adopted its 2007 budget which continues County sponsorship of the nursing home, Moody's is concerned that at some point political pressure could be brought to bear on CGH to accept sponsorship, although CGH has stated it would consider affiliation only if it were financially protected. Outlook The revision in the outlook to negative from stable is based on our belief that liquidity will fall to dangerously low levels, approaching 20 days cash on hand during 2007, due to the need to fund $9.4 million in pension obligations. What could change the rating--up Increase in liquidity and operating performance to the levels experienced during 2003-2005. What could change the rating--down Decline in liquidity or inability to improve upon the 2006 operating performance. Key Indicators Assumptions & Adjustments: -- Based on financial statements for Community General Hospital of Greater Syracuse -- First number reflects audit year ended December 31, 2005 -- Second number reflects annualized 9-month income statement ended Sept. 30, 2006 but balance sheet as of Oct. 31, 2006 -- Investment income and contributions have been reclassified from operating revenues to non-operating income -- 2006 excludes $882,000 of non-recurring foundation contributions and $550,000 of non-recurring severance expenses -- Investment returns normalized at 6% unless otherwise noted -- Inpatient admissions: 9,224; 9,097 -- Total operating revenues: $111.6 million; $110.2 million -- Moody's-adjusted net revenue available for debt service: $6.5 million; $3.3 million -- Total debt outstanding: $20.7 million; $17.7 million -- Maximum annual debt service (MADS): $5.5 million; $5.5 million -- MADS Coverage with reported investment income: 1.17x; 0.63x -- Moody's-adjusted MADS Coverage with normalized investment income: 1.20x; 0.61x -- Debt-to-cash flow: 3.78x; 7.77x -- Days cash on hand: 52 days; 52 days -- Cash-to-debt: 74%; 87% -- Operating margin: 0.1%; -3.4% -- Operating cash flow margin: 5.0%; 1.7% Rated Debt (debt outstanding as of December 31, 2005): -- Series 1993A: $3.9 million; rated Ba3 -- Series 1993B: $8.2 million; rated Ba3 -- Series 1998: $1.4 million; rated Ba3 COMMUNITY HEALTH: New Loan Cues Moody's to Hold Low-B Ratings ------------------------------------------------------------- Moody's Investors Service affirmed the ratings of Community Health Systems, Inc. after the report of a proposed $300 million add-on term loan. The incremental term loan would leave $100 million of the accordion feature included in the existing credit facility. The borrower is the intermediate holding company, CHS/Community Health Systems, Inc. Moody's expects the company to use the proceeds from the expanded term loan to repay amounts outstanding under its revolver. The company used the revolver to partially fund several acquisitions of healthcare service providers, including most recently two hospitals acquired in Nov. 2006 and a home health agency acquired in October 2006. As of Sept. 30, 2006, Community Health had $272 million outstanding under the revolving credit facility. Remaining proceeds will be used for general corporate purposes. The increased leverage from the term loan add-on is somewhat offset by the conversion to equity of its $287.5 million convertible subordinated notes, completed in Jan. 2006. The affirmation of the ratings reflects the modest change in the pro forma credit metrics resulting from the incremental term loan. The SGL-2 rating is unaffected by the proposed action. Despite the near-term enhancement to the availability of external liquidity from the pay down of the revolver, Moody's believes the overall liquidity profile of the company is substantially unchanged given the expectation of a continuation of Community Health's aggressive acquisition strategy and significant capital spending. The Ba3 Corporate Family Rating is supported by the company's scale and competitive position as the largest operator of rural hospitals in the US. In addition, because of the company's focus on non-urban markets, many of Community Health's hospitals benefit from limited competition. Pricing, measured as year over year growth in same-facility revenue per adjusted admission, has also remained favorable for Community Health and is expected to remain stable in future periods. In addition the rating reflects Community Health's favorable operating history and demonstrated ability to improve margins at acquired hospitals. Despite the company's acquisitive nature, leverage has remained measured. Moody's views the company's moderate leverage and strong interest coverage metrics as credit strengths. The rating is constrained by the risk associated with the company's acquisition program and tendency to acquire under- performing facilities. Community Health has pursued an aggressive acquisition strategy in 2006, acquiring eight hospitals and three home health agencies in the first ten months of the year and funding a portion of these transactions through the use of its revolver. Further, given the current performance of hospital sector stocks and recent calls to increase shareholder value within the sector, Moody's believes there is increased risk associated with the implementation of shareholder initiatives. The rating also reflects broader hospital industry trends, including weak volume growth and increasing bad debt expense, which has affected Community Health and much of the rated peer group. The growing number of uninsured individuals in the US and increased competition from alternative service providers are contributing to these trends in the hospital industry. The stable outlook anticipates continued favorable performance at the company. Moody's expects increases in revenues, operating profits and cash flow driven by both acquired and organic growth. However, Moody's anticipates this growth to be more moderate in future periods due to industry wide volume and bad debt trends. The company should continue to generate stable operating cash flow and free cash flow, however, Moody's believes free cash flow may be insufficient to fund the company's acquisition program. Given the expectation that the company will likely continue to grow through acquisitions and not repay debt, Moody's does not expect significant improvement in credit metrics over the near term. However, Moody's could consider changing the outlook to positive of upgrading the ratings if the company can achieve sustained improvement in operating cash flow coverage of adjusted debt through continued growth. Moody's may consider downgrading the ratings if the company's credit metrics deteriorate as a result of any of several factors, including a decline in admission trends, a continued increase in bad debt expense, unfavorable reimbursement or pricing trends, and aggressive acquisition activity. Additionally, Moody's may consider changing the outlook or downgrading the ratings if the company pursues a large debt financed acquisition or adopts significant shareholder initiatives, such as a large share repurchase or dividend. These are the rating actions: Ratings Affirmed: * CHS/Community Health Systems, Inc.: -- Senior Secured Revolver due 2009, Ba3, LGD3, 43% -- Senior Secured Term Loan due 2011, Ba3, LGD3, 43% * Community Health Systems, Inc.: -- 6.5% Senior Subordinated Notes due 2012, B2, LGD6, 93% -- Corporate Family Rating, Ba3 -- Probability of Default Rating, Ba3 -- The Speculative Grade Liquidity Rating is SLG-2. The outlook for the ratings is stable. Community Health Systems, Inc., headquartered in Brentwood, Tenn., is a leading non-urban provider of general hospital healthcare services. At Sept. 30, 2006, the company owned, leased or operated 76 facilities in 22 states. Its hospitals offer a range of inpatient and outpatient medical and surgical services, including orthopedics, internal medicine, general surgery, cardiology, oncology, OB/GYN, diagnostic services, emergency services, and rehabilitation treatment. Based on individual community needs, some hospitals also offer home health, and skilled nursing services. The company recognized revenue of approximately $4.2 billion for the twelve months ended Sept. 30, 2006. COMPLETE RETREATS: Court Dismisses Bermuda Cliffs' Chapter 11 Case ------------------------------------------------------------------ At Complete Retreats LLC and its debtor-affiliates' behest, the U.S. Bankruptcy Court for the District of Connecticut dismissed the bankruptcy case of Bermuda Cliffs LLC nka Arthrr LLC, nunc pro tunc to July 23, 2006. The Honorable Alan H.W. Shiff directed Larry Langer, Arthrr LLC, and Bermuda Cliffs to release and discharge the Debtors and their subsidiaries, affiliates, successors, agents, and attorneys from all claims and causes of action in connection with Bermuda Cliffs having been a Debtor in the Chapter 11 cases. As reported in the Troubled Company Reporter on Oct. 2, 2006, Nicholas H. Mancuso, Esq., at Dechert LLP, in Hartford, Connecticut, told the Court that Bermuda Cliffs was formed pursuant to the Delaware Limited Liability Company Act and in contemplation of a business prospect in Bermuda, but that business never materialized. Mr. Mancuso noted that Bermuda Cliffs was never capitalized by any Tanner & Haley entity, no operating agreement was ever executed for it, and the Debtors never used Bermuda Cliffs for any purpose. Bermuda Cliffs' bankruptcy petition disclosed that it had no assets or operations. Mr. Mancuso informed the Court that Mr. Langer, then a manager and officer of the Debtors, amended Bermuda Cliffs' certificate of formation to change its name to Arthrr LLC, on Feb. 28, 2005. In addition, before the Debtors' bankruptcy filing, Mr. Langer executed an operating agreement pursuant to which he was the exclusive managing member. Mr. Mancuso said that under the operating agreement, Mr. Langer capitalized the company with his own funds for the eventual purpose of conducting his own business in Arizona. Mr. Langer currently remains the sole member and manager of Arthrr. Mr. Langer has resigned from the Debtors effective as of Aug. 28, 2006. According to Mr. Mancuso, the Debtors have never been involved in any of Arthrr's operations and were unaware of the name change and subsequent capitalization and use of Arthrr by Mr. Langer before the Debtors' bankruptcy filing. On Sept. 8, 2006, Mr. Langer sent a letter to the Debtors confirming that: (i) no Tanner & Haley entity has ever had any member interest or other interest in Arthrr; (ii) Arthrr has never had any member interest or other interest in any Tanner & Haley entity; and (iii) no current or prior asset of Arthrr was transferred to Arthrr directly or indirectly from any Tanner & Haley entity. Moreover, Mr. Mancuso said, counsel for Arthrr has informed the Debtors that the filing of Bermuda Cliffs' bankruptcy petition has caused Arthrr to be in default under certain agreements, none of which the Debtors are a party to or are even aware of, and has otherwise significantly restricted its ability to conduct business. Thus, Mr. Mancuso asserted that Bermuda Cliffs' bankruptcy case should be dismissed because: (1) Arthrr has no connection with the Debtors. Arthrr does not contain any assets that are the property of the Debtors' estates, and it is not an affiliate of any of the Debtors; (2) Arthrr and the Debtors are not responsible for the obligations of each other; (3) The administration of Bermuda Cliffs' case would inevitably lead only to confusion and delay the course of the other Debtors' cases, especially if Arthrr's creditors assert that their claims cannot be treated alongside of those of the other Debtors. The Debtors reserve any and all claims that they may have against Mr. Langer, whether related to Arthrr, Bermuda Cliffs, or otherwise. About Complete Retreats Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor-affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. Michael J. Reilly, Esq., at Bingham McCutchen LP, in Hartford, Connecticut, serves as counsel to the Official Committee of Unsecured Creditors. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed $308,000,000 in total debts. The Debtors' exclusive period to file a plan expires on February 18, 2007. They have until April 19, 2007, to solicit acceptance to that plan. (Complete Retreats Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). COMPLETE RETREATS: Court Moves Lease Decision Deadline to Feb. 18 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Connecticut extended Complete Retreats LLC and its debtor-affiliates time to assume or reject unexpired non-residential real property leases to Feb. 18, 2007, without prejudice to the Debtors' right to seek additional extensions. The Court will determine the assumption or rejection of the Debtors' leases with Fideicomiso at a later date. In the ordinary course of their businesses, the Debtors are parties to several unexpired non-residential real property leases. The Debtors have yet to determine whether it is in the best interests of their estates and their creditors to assume or to reject the leases. In their request, as published in the Troubled Company Reporter on Nov. 2, 2006, the Debtors told the Court that they are still in the process of analyzing the necessity of the leases in connection with their development of a long-term business plan and anticipate assuming or rejecting the Leases in the near future. About Complete Retreats Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor-affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. Michael J. Reilly, Esq., at Bingham McCutchen LP, in Hartford, Connecticut, serves as counsel to the Official Committee of Unsecured Creditors. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed $308,000,000 in total debts. The Debtors' exclusive period to file a plan expires on February 18, 2007. They have until April 19, 2007, to solicit acceptance to that plan. (Complete Retreats Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). CONSUMERS ENERGY: Restructures Executive Team to Raise Efficiency ----------------------------------------------------------------- Consumers Energy Company is restructuring its executive team as the first step to improve operating efficiency, reliability, and customer service. "This new structure will help us improve customer service by making our operations more effective, productive, and flexible," John Russell, president and chief operating officer, said. "We are eliminating our separate electric and gas business operating structures and aligning our leadership and organizational structure along major functional lines such as operations, construction, and engineering," Mr. Russell said, adding that the new structure also will support the development of needed new generation capacity. Mr. Russell said the new executive structure will be implemented December 1 and full implementation of the reorganization is expected early in 2007. The executive changes are: -- Frank Johnson, senior vice president of electric transmission and distribution, will become the senior vice president of energy operations and will have overall responsibility for the operation and maintenance of the electric and natural gas delivery systems, including natural gas storage. -- Paul Preketes, senior vice president of gas operations, will become the senior vice president of energy delivery and will be responsible for the engineering and planning for the electric and natural gas distribution assets. -- Robert Fenech, senior vice president of nuclear, fossil, and hydro operations, will assume a transition leadership role, pending his retirement in June 2007. Mr. Fenech will manage the completion of the sale of the Palisades nuclear power plant, and will continue to represent Consumers Energy on the Nuclear Management Company Board of Directors. -- James Coddington, vice president of fossil operations, will be vice president of generation operations and will be responsible for the operation of all of the Company's fossil fueled and hydroelectric generating units. -- Jack Hanson, Campbell Generating Complex site business manager, will be vice president of generation engineering and services and will responsible for engineering, environmental, and technical support for the utility's generating units. -- James Pomaranski, executive manager of Title I projects and responsible for the Company's $800 million construction program to reduce emissions at its major coal-fired units, will be vice president of generation construction, responsible for construction project management at Consumers Energy's existing generating plants as well as construction of new generation for the utility. -- Ronn Rasmussen, executive director of rates and business support, will be vice president of rates and regulation. 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. CREDIT SUISSE: Fitch Holds Low-B Rating on Six Cert. Classes ------------------------------------------------------------ Fitch Ratings affirms Credit Suisse First Boston Mortgage Securities Corp. commercial mortgage pass-through certificates, series 2005-C5: -- $73.3 million class A-1 at 'AAA'; -- $112 million class A-2 at 'AAA'; -- $149 million class A-3 at 'AAA'; -- $136.2 million class A-AB at 'AAA'; -- $1,003 million class A-4 at 'AAA'; -- $535.7 million class A-1A at 'AAA'; -- $290.2 million class A-M at 'AAA'; -- $224.8 million class A-J at 'AAA'; -- Interest-only class A-X at 'AAA'; -- Interest-only class A-SP at 'AAA'; -- Interest-only class A-Y at 'AAA'; -- $24.9 million class B at 'AA+'; -- $47.6 million class C at 'AA'; -- $21.8 million class D at 'AA-'; -- $18.1 million class E at 'A+'; -- $29 million class F at 'A'; -- $36.3 million class G at 'A-'; -- $21.8 million class H at 'BBB+'; -- $32.6 million class J at 'BBB'; -- $32.6 million class K at 'BBB-'; -- $7.3 million class L at 'BB+'; -- $14.5 million class M at 'BB'; -- $10.9 million class N at 'BB-'; -- $3.6 million class O at 'B+'; -- $7.3 million class P at 'B'; -- $10.9 million class Q at 'B-'; -- $5.5 million class 375-A at 'BBB+'; -- $9.5 million class 375-B at 'BBB'; and, -- $21.2 million class 375-C at 'BBB-'. Fitch does not rate the $36.3 million class S. The rating affirmations reflect the stable pool performance and minimal paydown since issuance. As of the Oct. 2006 distribution date, the pool has paid down 0.4% to $2.93 billion from $2.94 billion at issuance. There are currently three loans in special servicing. The first specially serviced loan is secured by a 146-unit multifamily property in Columbus, Ohio. The loan was transferred to the special servicer after the loan became 60+ day delinquent. The special servicer is pursuing foreclosure. The second specially serviced loan is secured by a 18,260 square foot retail property in Sinking Spring, Pennsylvania. The loan was transferred to the special servicer after the borrower was arrested for fraud. The property is under contract for liquidation and no losses are expected. The third specially serviced loan is secured by a 43-unit multifamily in Battle Creek, Michigan. The loan was transferred to the special servicer due to monetary default. The special servicer is pursuing foreclosure. Fitch expects significant losses on this loan, which will be absorbed by the non-rated class S. Fitch reviewed credit assessments of four loans: -- 375 Park Avenue, -- 120 Wall Street, -- Northland Center Mall, and, -- MK Plaza. All loans maintain investment grade credit assessments due to their stable performance since issuance. 375 Park Avenue is secured by a 791,993 SF office property in New York City. Occupancy as of Aug. 7, 2006 increased to 98.4% from 95% at issuance. 120 Wall Street is secured by a 607,172 SF office property on Wall Street in New York City. Occupancy as of June 30, 2006 increased to 99.5% from 99% at issuance. Northland Center Mall is secured by a 537,716 SF retail property in Southfield, Michigan. The occupancy as of June 30, 2006 increased to 87.9% from 87% at issuance. MK Plaza is secured by a 552,490 SF office property in Boise, Idaho. Occupancy as of Aug. 15, 2006 decreased to 90% from 92% at issuance. CRESCENT REAL: Reports $9.3MM of Net Income in 2006 Third Quarter ----------------------------------------------------------------- Crescent Real Estate Equities Company has filed its third quarter financial statements for the three months ended Sept. 30, 2006, with the Securities and Exchange Commission. The Company earned $9.3 million of net income on $204.6 million of net revenues for the three months ended Sept. 30, 2006, compared to a $79.6 million of net income on $210.4 million of net revenues for the same period in 2005. At Sept. 30, 2006, the Company's balance sheet showed $4.3 billion in total assets and $3.1 billion in total liabilities. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?1586 Review Of Strategic Alternatives During 2006, the Company conducted an extensive review of its strategic alternatives, and in late August received an offer to purchase certain of its assets. The Company's Board of Trust Managers established a special committee of independent trust managers to assist in its consideration of strategic alternatives and to respond to the offer that was received. The Special Committee hired an independent investment banker and counsel to assist with its review. The Special Committee has rejected the offer received, and the Company is continuing to review its strategic alternatives. The Company does not expect to make any further announcements or provide any further updates regarding its strategic review until the review has been completed or federal securities laws otherwise require an announcement. Due to its review of strategic alternatives, the Company will not provide further earnings guidance until the review process has been completed. Accordingly, the Company withdraws its previously disclosed 2006 FFO guidance and 2007 FFO target. In addition, the Company's ability to meet its prior 2006 FFO guidance will be dependent on the occurrence of several significant events, none of which is certain. Leasing Activity The Company leased 1.3 million net rentable square feet during the three months ended Sept. 30, 2006, of which 800,000 square feet were renewed or re-leased. The weighted average full service rental rate (which includes expense reimbursements) increased 3% from the expiring rates for the leases of the renewed or re-leased space. All of these leases have commenced or will commence within the next twelve months. Tenant improvements related to these leases were $1.43 per square foot per year, and leasing costs were $1.03 per square foot per year. The Company leased 3.8 million net rentable square feet during the nine months ended Sept. 30, 2006, of which 2.1 million square feet were renewed or re-leased. The weighted average full service rental rate (which includes expense reimbursements) increased 2% from the expiring rates for the leases of the renewed or re-leased space. All of these leases have commenced or will commence within the next twelve months. Tenant improvements related to these leases were $1.90 per square foot per year, and leasing costs were $1.12 per square foot per year. Lease Termination Fees The Company earned $8.6 million and $32.8 million of lease termination fees during the three months and nine months ended Sept. 30, 2006, respectively. This compares to $5.3 million and $7.9 million of lease termination fees earned during the three months and nine months ended Sept. 30, 2005, respectively. The increase in lease termination fees is primarily the result of accelerated termination fees due to releasing of space previously occupied by El Paso Corporation in Greenway Plaza in Houston, Texas. The Company's policy is to exclude lease termination fees from its same-store NOI calculation. Disposition On Sept. 26, 2006, the Company sold Four Westlake Park, a 561,065 square-foot office property in Houston, Texas, in which Crescent owned a 20% stake in a joint venture with a pension fund. The office property was sold for $122 million, or $217 per square foot. Crescent recognized in net income a gain on the sale of $24.2 million. Included in this gain is $14.7 million, which is attributable to Crescent's promoted interest and is recognized in FFO, as adjusted, as of Sept. 30, 2006. Development Paseo Del Mar, a 232,330 square-foot office property in the Del Mar Heights submarket of San Diego, California, was completed and placed into service in August 2006. The Company owns an 80% interest in the property through a joint venture with JMI Realty. The property is currently 70% leased. Cash Dividend On Oct. 13, 2006, the Company announced that its Board of Trust Managers had declared cash dividends of $0.375 per share for its Common Shares, $0.421875 per share for its Series A Convertible Preferred Shares, and $0.593750 per share for its Series B Redeemable Preferred Shares. The dividends are payable Nov. 15, 2006, to shareholders of record on Oct. 31, 2006. About Crescent Headquartered in Fort Worth, Texas, Crescent Real Estate Equities Company (NYSE: CEI) -- http://www.crescent.com/-- is one of the largest publicly held real estate investment trusts in the nation. Through its subsidiaries and joint ventures, Crescent owns and manages a portfolio of 75 premier office buildings totaling 31 million square feet located in select markets across the United States, with major concentrations in Dallas, Houston, Austin, Denver, Miami and Las Vegas. Crescent also makes strategic investments in resort residential development, as well as destination resorts, including Canyon Ranch(R). * * * Moody's Investors Service assigned a B3 rating to Crescent Real Estate Equities Company's preferred stock on Nov. 11, 2004. Standard & Poor's assigned a BB- long-term foreign and local issuer credit rating to Crescent Real Estate Equities Company on June 30, 2004. DANA CORP: Files Unredacted Term Sheet on Burns, et al. Employment ------------------------------------------------------------------ Dana Corporation and its debtor-affiliates filed with the U.S. Bankruptcy Court for the Southern District of New York a term sheet summarizing their proposed long-term incentive plan for Michael Burns and his key executives, Paul Miller, Nick Stone, Tom Stanage, Michael DeBacker and Ralf Goettel. A full-text copy of the Term Sheet is available for free at: http://researcharchives.com/t/s?1571 The Debtors propose to pay up to $4,500,000 as performance-based incentive to Mr. Burns in 2007 and up to $2,250,000 in 2008. The Debtors also propose to pay up to $3,180,000 as performance-based incentives for all the Other Senior Executives in 2007 and up to $1,590,000 in 2008. The Term Sheet reflects the Debtors' EBITDA level targets for the years 2007 and 2008, and the compensation of the Senior Executives in accordance with the achieved EBITDA levels: Year Michael Burns Other Executives ---- ------------- ---------------- 2007 Achievement of EBITDAR of Achievement of EBITDAR $250,000,000 for payment of $250,000,000 for of first $3,000,000. payment of first $497,778 for Mr. Miller, first $422,222 for Messrs. Stone, Stanage and Goettel, and $355,556 for Mr. DeBacker. Payment of additional 75 bps Payment of 12 bps for on 2007 EBITDAR in excess of Mr. Miller, 11 bps for $250,000,000, subject to a Messrs. Stone, Stanage cap of $350,000,000. and Goettel and 9 bps for Mr. DeBacker on EBITDAR in excess of $250,000,000, subject to a cap of $350,000,000. Additional payment of 75 bps Additional payment of on 2007 EBITDAR in excess of bps for Mr. Miller, 11 $350,000,000, subject to a bps for Mr. DeBacker on cap of $450,000,000. EBITDAR in excess of $350,000,000, subject to a cap of $450,000,000. 2008 Achievement of EBITDAR of Achievement of EBITDAR $375,000,000 for payment of $375,000,000 for of first $500,000. payment of first $82,963 for Mr. Miller, $70,370 for Messrs. Stone, Stanage, and Goettel, and $59,259 for Mr. DeBacker. Payment of additional 100 Payment of 17 bps for bps on EBITDAR in excess of Mr. Miller, 14 bps for $375,000,000, subject to a Messrs. Stone, Stanage cap of $450,000,000. and Goettel and 12 bps for Mr. DeBacker on EBITDAR in excess of $375,000,000, subject to a cap of $450,000,000. Additional payment of 50 bps Additional payment of 8 on EBITDAR in excess of bps for Mr. Miller, 7 $450,000,000, subject to a bps for Messrs. Stone, cap of $650,000,000. Stanage and Goettel, and 6 bps for Mr. DeBacker on EBITDAR in excess of $450,000,000, subject to a cap of $650,000,000. In October 2006, the Debtors asked the Court to reconsider and clarify certain provisions of its order denying the proposed compensation for Mr. Burns and his five key executives of his core management team, complaining that the Order did not directly address the supplement they filed on Sept. 4, 2006. In the Sept. 4 Supplement, the Debtors proposed an incentive compensation program based entirely on the Senior Executives' achievement of certain performance benchmarks and added provisions to the proposed assumption of the Senior Executives' retirement benefits that maintained parity with the treatment of non-executive pensions in their Chapter 11 cases. The Court denied the Debtors' proposed compensation for Mr. Burns and five key executives of his core management team, holding, among others, that the proposed Compensation included both the elements of a "Pay to Stay" compensation plan subject to the limitations of Section 503(c) of the Bankruptcy Code and, a "Produce Value for Pay" plan to be scrutinized through the business judgment lens of Section 363. Diana G. Adams, acting United States Trustee for Region 2, asked the Court to deny the Debtors' request arguing that it the Debtors' reconsideration motion is procedurally and substantively defective. The Official Committee of Non-Union Retirees joined in the U.S. Trustee's objection, contending that the Debtors' request is neither a motion for clarification nor for reconsideration. 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). As of Sept. 30, 2005, the Debtors listed $7,900,000,000 in total assets and $6,800,000,000 in total debts. 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. The Debtors' exclusive period to file a plan expires on Jan. 3, 2007. They have until Mar. 5, 2007, to solicit acceptances to that plan. (Dana Corporation Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELL INC: Reports Preliminary Fiscal 2007 Third Quarter Results --------------------------------------------------------------- Dell Inc. reported preliminary results for the third quarter of fiscal year 2007, with revenue of $14.4 billion and operating income of $824 million. Dell ended the quarter with $11.6 billion in cash and investments. Commercial paper outstanding at the end of the quarter totaled $236 million. The company suspended its share repurchase program in mid- September and, therefore, only spent $335 million to repurchase 15 million shares. Investigation Update; Preliminary Results Subject to Change The U.S. Securities and Exchange Commission and the Company's Audit Committee have been conducting investigations into certain accounting and financial reporting matters, including the possibility of misstatements in prior period financial reports, and the company previously received a related subpoena from the United States Attorney for the Southern District of New York. Due to questions raised in connection with these ongoing investigations, the Company has not filed the Form 10-Q for its fiscal second quarter ended Aug. 4, 2006, and does not expect to be able to timely file its Form 10-Q for the fiscal third quarter ended November 3, 2006. As a result, all of the company's financial results should be considered preliminary, and are subject to change to reflect any necessary corrections or adjustments, or changes in accounting estimates, that are identified prior to the time the company is in a position to complete these filings. In addition, the preliminary results for the second and third quarters could be affected by any restatements of prior period financial statements that are required as a result of any conclusions reached by the investigations. No determination has been made as to whether restatements of prior period financial statements will be required. The company is not currently able to predict the extent or significance of any such changes, and those changes could materially affect the reported preliminary results, as well as the previously announced results for the second quarter. Summary of Third Quarter Results In the quarter, the company achieved a better balance of liquidity, profitability and growth, which was driven by an improved mix of products worldwide. In addition, the company continued to focus its actions to strengthen product lines, particularly in the enterprise, improve customer experience, and accelerate growth outside the U.S. Desktop to Data Center; Broadest Product Portfolio in Dell's History Dell began shipping two new PowerEdge servers featuring AMD Opteron processors, providing customers an additional choice for high-performance two-socket and four-socket systems. The company also launched the industry's first standards-based Quad-Core processors for two-socket blade, rack and tower servers. Combined with the 9G servers launched last quarter with Intel Xeon 5100 series processors, Dell now provides the broadest selection of industry-standard servers in its history. In the quarter, server revenue was $1.5 billion on 12% unit growth. In storage, revenue was $577 million and the company announced a five-year extension to its partnership with EMC. In client systems, the company launched quad core processors on its XPS 710 Extreme desktop as well as on Dell Precision workstations. In addition, the company launched its 64-bit dual core Dimension and OptiPlex systems, and Dell Latitude and Inspiron notebooks featuring AMD processors. Mobility revenue was $3.9 billion on 17 percent unit growth. Desktop revenue was $4.7 billion on negative 5 percent unit growth. In both cases, growth was impacted by the company's decision to focus on more profitable products. In software and peripherals, revenue was $2.3 billion. Enhanced services revenue was $1.4 billion. The company's new Platinum Plus offering drove an increase in premium service contracts year- over-year and the company now has more than 300 Platinum Plus customers. Strong Unit Growth in APJ and Emerging Markets In the Asia-Pacific and Japan region, revenue was $1.9 billion on unit growth of 23 percent, as the company gained 1.4 share points year-over-year. Led by 33 percent unit growth in China, Dell was also the fastest growing among the top five vendors in the region, growing at nearly three times the growth rate of the industry. In India, units were up 93 percent and to more efficiently serve the growth in this market, Dell plans to open manufacturing operations there early next year. In Europe, Middle East and Africa, where the company took a more balanced approach to pricing, revenue was $3.3 billion with unit growth of 9 percent. Dell also recently announced its second manufacturing location for EMEA to be located in Lodz, Poland, to provide more timely delivery to customers in Central and Eastern Europe. In the Americas, revenue was $9.2 billion on unit growth of negative 4 percent. Unit growth was 37 percent in Brazil and 19 percent in Canada. Customer Experience Improvement Led by "Resolve in One" The company has been investing an incremental $150 million this year on its Customer Experience initiatives and is seeing signs of improvement in key external and internal indicators. By increasing the number of agents, average hold times for U.S. customers have been reduced from nine minutes to three minutes in the past year. In addition, the company has reduced call transfers by over 30 percent and has improved first contact resolution rates by 20%. "Resolve in One" reflects Dell's goal to resolve issues to a customer's satisfaction on initial contact. Company Outlook The company said that the actions it has taken to drive improved operating and financial performance long-term with a better balance of liquidity, profitability and growth are starting to take hold. However, in the near term, improvement in growth and profitability may not be linear due to a variety of factors, including the timing of continued investments in Customer Experience, global expansion, and new product introductions, as well as a muted seasonal uplift due to changes in the mix of product and regional profit. In addition, the fourth quarter of fiscal year 2006 included one extra week. About Dell Inc. Headquartered in Round Rock, Texas, Dell Inc. (NASDAQ: DELL) -- http://www.dell.com/-- designs, develops, manufactures, markets, sells, and provides support for various computer systems and services to customers worldwide. DELTA AIR: Edward Budd Sells 6,669,685 Shares of Stock ------------------------------------------------------ Delta Air Lines, Inc., officer Edward H. Budd disclosed to the U.S. Securities and Exchange Commission that on November 10, 2006, he sold 6,669,685 shares of Delta common stock: No. of Shares Price Per Share ------------- --------------- 7,000 $1.35 6,662,685 $1.3148 Mr. Budd did not beneficially own any shares of Delta stock after the transactions. 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. 49; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) DUN & BRADSTREET: Sept. 30 Equity Deficit Widens to $187.9 Million ------------------------------------------------------------------ The Dun & Bradstreet Corporation reported $45.8 million of net income on $359.2 million of net revenues for the three months ended Sept. 30, 2006, compared to $31.7 million of net income on $341.6 million of net revenues for the same period in 2005. At Sept. 30, 2006, the Company's balance sheet showed $1.4 billion in total assets and $1.6 billion in total liabilities, resulting in a $187.9 million stockholders' deficit. The Company's Sept. 30 balance sheet also showed strained liquidity with $526.5 million in total current assets available to pay $729.2 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?1588 Strategic Agreement in China D&B has signed an agreement with Huaxia International Credit Consulting Co. Limited -- a provider of business information and credit management services in China -- to establish a new joint venture to trade under the name Huaxia D&B China. D&B will be the majority shareholder in the new venture, which the Company expects will commence business in early December, subject to completion of certain regulatory and contractual conditions. Additional financial details are not being disclosed. Huaxia D&B China is expected to significantly improve D&B's quality and coverage of commercial data in China and enhance the Company's competitive position in the Asia-Pacific market. The joint venture will leverage the parent companies' best-in-class data collection capabilities and the D&B Worldwide Network to deliver superior commercial insight and value to customers around the world. The new entity will distribute both D&B and co-branded products and solutions throughout China. In addition, the parent companies will jointly develop new business information and credit management solutions. About D&B The Dun & Bradstreet Corporation (NYSE:DNB) -- http://www.dnb.com/ -- provides business information and insight, enabling companies to Decide with Confidence(R) for 165 years. D&B's global commercial database contains more than 100 million business records. The database is enhanced by D&B's proprietary DUNSRight(R) Quality Process, which transforms the enormous amount of data D&B collects daily into decision-ready insight. Through the D&B Worldwide Network - an unrivaled alliance of D&B and leading business information providers around the world - customers gain access to the world's largest and highest quality global commercial business information database. D&B partners with many of the world's largest and most successful enterprises as well as mid-size companies and entrepreneurial start-ups. Customers use D&B Risk Management Solutions(TM) to mitigate credit risk, increase cash flow and drive increased profitability; D&B Sales & Marketing Solutions(TM) to increase revenue from new and existing customers; D&B E-Business Solutions(TM) to convert prospects into clients faster by enabling business professionals to research companies, executives and industries; and D&B Supply Management Solutions(TM) to generate ongoing savings through supplier consolidation, and to protect their businesses from supply chain disruption and serious financial, operational and regulatory risk. DURA AUTOMOTIVE: Gets Interim Court Okay for Customer Programs -------------------------------------------------------------- DURA Automotive Systems Inc., pursuant to Sections 105(a), 363, 1107(a), and 1108 of the Bankruptcy Code, obtained, on an interim basis, the U.S. Bankruptcy Court for the District of Delaware's authorization to: (a) perform their prepetition obligations related to the foregoing Customer Programs; and (b) continue, renew, replace, implement new, or terminate their Customer Programs, in the ordinary course of business, without further application to the Court. The Debtors sought to continue their Customer Programs as they have proven: (i) successful business strategies in the past; and (ii) responsible for generating valuable goodwill, repeat business, and net revenue increases. Before filing for chapter 11 protection, and in the ordinary course of their businesses, the Debtors engaged in certain practices to develop and sustain positive reputations in the marketplace for their products and services, including warranty obligations, customer rebates, price reductions, and tooling and steel debit programs. The Debtors desire to continue, during the postpetition period, the cost-effective Customer Programs that were beneficial to their businesses during the period prior to their filing for chapter 11 protection, relates Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware. Warranty Obligations The Debtors' Customer Programs include ordinary course warranty obligations with their various industrial and indirect retail customers. Consistent with common industry practices, the Debtors issue warranties related to the various products and materials they produce. With respect to their automotive component products, the Debtors generally participate in their customers' warranty sharing or warranty recovery program. According to Mr. Collins, OEM-related Warranty Obligations generally mirror the OEM's warranty to its customer. However, in some cases, the Debtors' Warranty Obligations to the OEM may run as long as fifteen years. The Debtors also provide warranties with respect to their recreation, mass transit and heavy-duty commercial and industrial markets. While most component parts supplied to the recreation vehicle market are warranted for two to three years, there are exceptions where broader warranties exist for specific product lines and customers. The Debtors accrue warranty liabilities on their balance sheet. Based on their historical warranty claims, the Debtors estimate that claims related to the Warranty Obligations, if any, are not likely to exceed $5,000,000 for warranties issued prior to the Commencement Date. Moreover, the Debtors' products often contain parts and assemblies supplied by certain vendors, many of which are under warranty from those vendors. In other words, if one of these parts or components fails, or is part of a warranty claim against the Debtors, the Debtors may have recourse back against the vendor who supplied the part or component, Mr. Collins relates. Customer Rebates The Debtors provide rebates and incentives to certain customers to support the development and marketing of their various products. Most Customer Rebates are determined and issued to customers based on designated purchasing thresholds. The Customer Rebates are an integral part of the Debtors' incentive package to their customers. In the ordinary course, the Debtors accrue expense reserves for the Customer Rebates based upon the terms of the existing agreements with the relevant customers. For example, if a customer purchases a certain amount of product, they will be entitled to a percentage rebate for each pre-determined threshold they reach. The majority of these Customer Rebates are issued to customers of the Atwood Mobile Products segment. For the 2005 fiscal year, the Debtors issued a$625,000 in Customer Rebates related to the Atwood companies. Price Reduction Programs Pursuant to negotiated price reductions, the Debtors provide certain of their OEM Customers with purchase order piece price reductions. That is, the Debtors provide either percentage or dollar value discounts on the purchase of parts or systems, and in certain instances, the discounts are not realized for some period of time. Additionally, the Debtors accrue for potential cash refunds to Customers for estimated potential overpayments by Customers. As of Sept. 30, 2006, and pursuant to the Price Reduction Programs, the Debtors have accrued but unrealized purchase order piece price reductions and potential refunds in the amount of approximately $5,000,000. Tooling The Debtors also perform certain "middle-man" functions on behalf of many of their customers related to the purchasing of tooling equipment. In many cases, the Debtors need to acquire specialized tooling equipment in order to produce the end products ordered by their customers. In these situations, the customer will often intend to own the specialized tooling equipment and will use the Debtors to sub-contract the tool production work and to perform quality control assessments. The tooling would in most instances, be used by the Debtors at their location, although the customer would retain title to the tooling. The Debtors technically buy the tooling from third-party suppliers, but the customer will either advance funds to the Debtors prior to payment of the third-party toolmaker or will reimburse the Debtors for funds the Debtors paid to the third- party toolmaker for the specialized tooling. In these instances, the Debtors have no equitable interest in either the tooling or the funds advanced by the customers. The Debtors, out of an abundance of caution, request the Court's authority to continue to serve as a middle-man with respect to the Tooling Payments, regardless of whether the payments involve are prior to its filing for chapter 11 protection or postpetition transactions or transfers. Steel Debit Program The Debtors participate in steel repurchase and debit programs with certain of their customers. Under these programs, the Debtors have the opportunity to purchase steel at a customer- negotiated discount by buying through their customers' accounts with various steel manufacturers. In these instances, the customer will purchase steel on the Debtors' behalf; and subsequently will deduct the steel cost from payables owed to the Debtors for the goods the Debtors manufacture with such steel. As of Oct. 26, 2006, the payables to be deducted by customers total $530,000. The Steel Debit Programs do not represent typical "customer programs," as the Debtors do not directly extend benefits to their customers, Mr. Collins notes. Rather, he clarifies, the Debtors realize cost savings by purchasing their primary raw material through their customers' high-volume steel programs. The Debtors intend to continue, in their discretion, their participation in their customers' Steel Debit Programs. JCI Seeks Clarification on Tooling Program Johnson Controls Inc. issued numerous purchase orders to the Debtors for tooling. JCI objects to the Debtors' request on grounds that the Debtors have failed to: (i) identify to JCI existing or potential liens on JCI tooling; (ii) identify to JCI amounts owed to tooling suppliers and others having possession of JCI tooling; and (iii) unequivocally commit to pay tooling funds received from JCI to tooling suppliers and others having possession of JCI tooling. The Debtors manufacture parts for JCI using custom tooling built specifically for JCI. Dura Automotive Systems Inc. does not build the tooling but rather orders the tooling from third party suppliers on JCI's behalf. Dura initially incurs the expense of building tooling and passes it through to JCI without a mark-up or other surcharge. In some instances, JCI advances the costs of the tooling to Dura and the Debtor then is responsible for paying the third-party suppliers. JCI believes that its tooling transactions with the Debtors are consistent with their description of their tooling practices in their request, including the Debtors' statement that they have no equitable interest in either the tooling ordered for JCI or the funds advanced by JCI to pay for the tooling. Gaston P. Loomis II, Esq., at Reed Smith LLP, in Wilmington, Delaware, notes that the Debtors are seeking the authority, but not the obligation, to continue to act as a middleman for the tooling payments, among their other Customer Programs. JCI agrees with the Debtors' general intent to continue with their tooling program. However, JCI is concerned that it may make tooling payments to the Debtors that they may thereafter retain instead of using them to pay the tooling suppliers. This result, according to Mr. Loomis, would appear permitted by the Debtors' Motion, since the Debtors are requesting the authority, but not the obligation, to continue payments to suppliers under the tooling program. The unfair result, Mr. Loomis says, would likely disrupt JCI's relationship with the tooling suppliers and potentially subject JCI to having to pay twice for the tooling. In addition, this situation would adversely impact JCI's ongoing relationship with the Debtors, he asserts. To clarify the tooling payments situation, JCI asks the Court to enter an order explicitly stating that JCI's tooling payments, whether made to the Debtors or a third-party escrow agent, will be used only for the purpose of paying the third-party tooling suppliers for JCI's order, or other third-parties, including warehousemen or shippers, who may have possession of some of the tooling, and that the Debtors and JCI will work out a mutually agreeable method of ensuring this result. JCI also asks the Court to enter an order providing that its tooling payments will not at any time become property of the Debtors' estates. In addition, JCI asks Judge Carey to order the Debtors to: (i) timely account to JCI for their use of JCI's tooling payments to discharge their tooling payment obligations to the respective third-party suppliers, and other third- parties for JCI's orders; and (ii) provide JCI with current information regarding the status of the various pieces of JCI tooling, including unpaid amounts to suppliers and others having possession of JCI tooling as well as any existing or potential liens. Mr. Loomis maintains that JCI's proposal is entirely consistent with the Debtors' tooling program and would allow JCI to continue making payments to the Debtors or escrow agent with the assurance that those funds would be used only to pay tooling suppliers and other third parties relating to JCI orders or else the funds would be returned to JCI. Rochester Hills, Mich.-based DURA Automotive Systems, Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The Debtors filed for chapter 11 petition on October 30, 2006 (Bankr. District of Delaware Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. (Dura Automotive Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). EAST COAST: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: East Coast Juice Company, Inc. 118 Allen Boulevard Farmingdale, NY 11735 Bankruptcy Case No.: 06-73023 Chapter 11 Petition Date: November 21, 2006 Court: Eastern District of New York (Central Islip) Debtor's Counsel: Avrum J. Rosen, Esq. The Law Offices of Avrum J. Rosen 38 New Street Huntington, NY 11743 Tel: (631) 423-8527 Fax: (631) 423-4536 Total Assets: $644,300 Total Debts: $1,444,767 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Lambeth Groves Juice Co Loan $650,000 505 66th Avenue Southwest Collateral: Vero Beach, FL 32968 $600,000 Unsecured: $493,000 Genpro Transportation Inc. Vendor $60,200 201 Route 17 North Rutherford, NJ 07070 Odwalla Vendor $50,472 120 Stone Pine Road Half Moon Bay, CA 94019 Yes Trans Inc. Vendor $41,800 Nuco Express Vendor $36,602 American Express Trade debt $33,000 Pennisula Trucking Vendor $24,000 Saratoga Springs Water Co. Vendor $22,000 Alan Stern Vendor $15,000 Mayer Bros. Vendor $12,000 Jim Sims National Flatbed Trade debt $3,900 Service Florida's Natural Vendor $3,900 C.H. Robinson Worldwide Trade debt $3,800 Demasco Sena & Jahelka Professional fees $2,000 Nissan Lift of New York Equipment $1,521 Federal Express Trade debt $819 Hess Fleet Services Trade debt $613 Capital One Trade debt $451 United Service Workers Vendor $265 Amalgamated Local Union #335 United Service Workers Vendor $220 Security Division ENRON CORP: Court Approves $90MM Settlement with CFSB Parties ------------------------------------------------------------- The Honorable Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York approves the settlement agreement dated Aug. 25, 2006, between Enron Corp., Enron North America Corp., Enron Natural Gas Marketing Corp., Enron Broadband Services, Inc., Enron Energy Services, Inc., EES Service Holdings, Inc., Enron International Inc., Enron Energy Services Operations, Inc., ECT Merchant Investments Corp., Enron Power Marketing, Inc., Atlantic Commercial Finance, Inc., and: 1. Credit Suisse First Boston, Inc., 2. Credit Suisse First Boston (USA), Inc., 3. Credit Suisse First Boston LLC, 4. Credit Suisse First Boston International, 5. Credit Suisse First Boston (USA) International, Inc., 6. Credit Suisse First Boston, 7. Pershing LLC, 8. DLJ Capital Funding, Inc., 9. DLJ Fund Investments Partners III, L.P., 10. ERNB Ltd., and 11. Merchant Capital, Inc. As reported in the Troubled Company Reporter on Nov. 7, 2006, before the Oct. 15, 2002 bar date for filing claims, certain of the CSFB Entities filed or caused to be filed 17 proofs of claim for obligations allegedly owing to, or damages allegedly suffered by, the CSFB Entities in connection with various credit facilities or financial transactions referred as Brazos Office Holdings, JT Holdings, Syndicated LC Facility, Revolver-Short Term, and Revolver-Long Term. In Sept. 2003, the Enron Parties commenced an action against various financial institutions. In the MegaClaims Litigation, the Enron Parties allege that, in the late 1990's and early 2000's, the defendants, including the CSFB Entities, assisted a small number of the Enron insiders in a scheme to manipulate and misstate the true financial condition of the Enron Entities. The Enron entities subsequently filed various adversary proceedings to avoid and recover, among others, alleged preferential fraudulent transfers in connection with the purchase of Enron common stock. Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that over a period of several months, principals of the Enron Parties and the CSFB Entities held several meetings and telephone conversations to address whether a settlement of the Claims and the CSFB Litigation might be possible and, if so, on what terms and conditions. The discussions, which included participation by senior executives of both parties, intensified in May and June 2006 and eventually resulted in the Settlement Agreement. The principal terms of the Settlement Agreement are: (1) the CSFB Entities will make a $90,000,000 settlement payment to Enron; (2) certain CSFB Claims under the Revolver-Short Term and Syndicated L/C Credit Facilities will be allowed as Class 4 Claims against Enron in these amounts: Claimant Claim No. Claim Amount -------- --------- ------------ Rushmore Capital I, LLC 99049 $10,022,994 UBS AG, Stamford Branch 99196 43,767,075 Citibank, as agent 14179 6,985,638 Morgan Stanley Emerging Markets, Inc. 99226 1,278,771 UBS AG, Stamford Branch 99215 18,888,170 JPMorgan Chase, as Agent 11166 11,475,440 (3) certain CSFB Claims will be subordinated and assigned to Enron and the Litigation Trust, to the extent it is formed pursuant to the Plan: Debtor Party Claimant Claim No. Claim Amount ------------ -------- --------- ------------ Enron CSFB 99119 $5,549,802 ENA CSFB, as Agent 6215 2,934,499 Enron CSFB, as Agent 6216 1,467,250 JPMorgan Chase, ENA as Agent 11235 5,865,000 JPMorgan Chase, EPMI as Agent 11236 1,288,000 JPMorgan Chase, NEPCO as Agent 22135 4,307,383 Ventures CSFB Entities 10808 4,250,120 Enron CSFB Entities 10807 4,157,672 ENRON CSFB Entities 12101 3,919,331 ENA CSFB Entities 13091 22,896,190 Enron CSFB Entities 13090 6,868,857 ENA CSFB Entities 7523 138,304,856 Enron CSFB Entities 7524 120,448,323 ENA CSFB Entities 7525 40,738,911 (4) The Reorganized Debtors will cause the dismissal, with prejudice, of Counts XVI through XIX of the Equity Action; (5) the Enron Entities or the Reorganized Debtors will waive, release, acquit and discharge the CSFB Entities from any and all claims, demands, rights, liabilities, or causes of action relating to the MegaClaims Litigation and the MegaClaims Objection; and (6) Enron's claims against the CSFB Assignees will be deemed dismissed, with prejudice. 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. 182; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ENRON CORP: Seeks Approval for Deseret Generation Settlement ------------------------------------------------------------ Enron Corp., Enron North America Corp., and Enron Power Marketing, Inc., ask the Honorable Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York to approve their settlement agreement with Deseret Generation & Transmission Co- Operative. Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York, says that ENA and Deseret Generation are parties to an electricity SWAP agreement, dated Oct. 31, 2001, and a contingent call contract, dated April 30, 2001. EPMI and Deseret also entered into a Confirmation Agreement, dated April 30, 2001, for an electricity swap pursuant to the Western Systems Power Pool Agreement effective as of Jan. 1, 1999. Enron executed a $75,000,000 Guaranty, dated May 1, 2001, to support ENA's obligations to Deseret under the Contingent Call Contract. On Aug. 1, 2002, Deseret filed Claim Nos. 2594, 2595 and 2597 each for $16,548,209 against Enron, EPMI and ENA. Deseret alleges that Enron agreed to guaranty ENA and EPMI's obligations arising under the Contracts through the Guaranty and an unexecuted guaranty agreement attached to the EPMI SWAP Contract. On Nov. 25, 2003, the Debtors filed Adversary Proceeding No. 03-93409 against Deseret, which sought to avoid the Guaranty pursuant to Section 548 of the Bankruptcy Code. On Jan. 8, 2004, the Debtors filed an objection to the Deseret Claims, seeking to reduce the amounts of Claim Nos. 2597 and 2595. The Debtors claimed that no amounts are due under the Contingent Call Contract, the Guaranty, and the Unexecuted Guaranty. On Jan. 10, 2006, the Reorganized Debtors filed their supplemental objection to the Deseret Claims, seeking to: (i) reduce the amounts of Claim Nos. 2597 and 2594, including a right of set-off in favor of EPMI for $346,500 based on electricity delivered by EPMI to Deseret under the EPMI SWAP Contract; and (ii) disallow any claims for amounts allegedly owed under the Contingent Call Contract, the Guaranty, and the Unexecuted Guaranty. To settle their disputes, the parties reached a settlement agreement, which provides that: (1) Claim No. 2597 will be reduced and allowed as a Class 5 Allowed General Unsecured Claim against ENA for $2,150,925; (2) Claim No. 2595 will be reduced and allowed as a Class 6 Allowed General Unsecured Claim against ENA for $6,772,315; (3) Claim No. 2594 will be disallowed and expunged in its entirety; (4) they will mutually release each other from all claims related to the Contracts; and (5) the Adversary Proceeding will be dismissed with prejudice. 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. 182; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) EPOCH 2002-1: Fitch Lifts Low-B Rating on $12-Million Note ---------------------------------------------------------- Fitch upgrades four classes of notes issued by EPOCH 2002-1, Ltd. These rating actions are the result of Fitch's review process and are effective immediately: -- $40,000,000 class I notes affirmed at 'AAA'; -- $22,000,000 class II notes upgraded to 'AAA' from 'AA'; -- $10,000,000 class III notes upgraded to 'AA' from 'A'; -- $15,000,000 class IV-A notes upgraded to 'A' from 'BBB'; -- $12,000,000 class V notes upgraded to 'BBB' from 'BB'. These upgrades are the result of the transaction's reduced time to maturity and relatively stable portfolio performance. Since Fitch's previous review in Nov. 2004, the weighted average life has reduced to 0.4 years from 2.4 years, reflecting a shorter remaining risk horizon. To date, there have not been any credit events in the reference portfolio. The Reserve Account has built up $31,022 according to the Oct.6, 2006 trustee note valuation report. EPOCH 2002-1, Ltd, incorporated under the laws of the Cayman Islands, was created to enter into a credit default swap with Morgan Stanley Credit Products, Ltd. and to issue the above- referenced securities. The notes are supported by the cash flows of the collateral invested in with the proceeds of the note issuance, as well as the credit default swap premium paid by MSCPL. The credit default swap references a static portfolio of securities, consisting of predominantly senior unsecured credits. The ratings assigned to the notes address the timely payment of interest and the ultimate payment of principal. Fitch will continue to monitor and review this transaction for future rating adjustments. EXABYTE CORP: Closes $22 Million Asset Sale to Tandberg Data ------------------------------------------------------------ Exabyte Corporation completed the sale of substantially all of its assets to Tandberg Data Corp. for a total consideration of approximately $22,004,000 in cash and the assumption of the Assumed Liabilities. As reported in the Troubled Company Reporter on Sept. 1, 2006, Exabyte Corporation has entered into an Asset Purchase Agreement with Tandberg Data Corp., a wholly owned subsidiary of Tandberg Data ASA, a company organized under the laws of Norway and headquartered in Oslo, Norway. Tandberg will purchase substantially all of the assets of the Company in exchange for cash and the assumption of certain liabilities. The cash purchase price and payment to the Company at closing consisted of: -- the outstanding principal balance and accrued interest of $9,614,000 under the loan agreement with Wells Fargo Business Credit, Inc.; -- the repayment obligations under the Convertible Notes Restructuring Agreements with the holders of the Company's 10% Secured Subordinated Convertible Notes; -- the payment obligation under the Amendment No. 1 to the Debt Restructuring Agreement with Solectron Corporation ($300,000); -- the payment obligation under the Second Amendment to the Memorandum of Understanding with Hitachi, Ltd. ($2,000,000); -- the amount payable under the Note Restructuring Agreement with Imation Corp. ($1,000,000); -- transaction fees paid at closing (about $1,200,000); and -- the cash balance to be retained by Exabyte subsequent to closing ($100,000). It was a condition to the Agreement, the Company disclosed, that the cash proceeds will be used to make payments for Assumed Liabilities, which includes without limitation, substantially all accounts payable and accrued expenses, all liabilities under the Purchased Contracts, liabilities for warranty obligations and liabilities related to products sold and/or services performed, and new or restructured notes payable issued to Imation and Hitachi, among others. The Company also disclosed that the material Excluded Liabilities retained by Midgard consist of a note payable to a former landlord in the amount of $3,060,000, a Convertible Note with a principal balance of $50,000 and certain accounts payable and accrued expenses in the amount of $250,000, among other liabilities. Midgard does not have any significant assets remaining for the payment of the liabilities and have no assets available for distribution to its common or preferred stockholders. Midgard intends to liquidate and dissolve immediately after the closing of the Transaction. Exabyte Corporation -- http://www.exabyte.com/-- manufactures tape storage products. The Company's products back up and restore critical business information. Going Concern Doubt Ehrhardt Keefe Steiner & Hottman PC expressed substantial doubt about Exabyte Corporation and its subsidiaries' ability to continue as a going concern after auditing the Company's consolidated financial statements for the years ended Dec. 31, 2005, and 2004. The auditing firm pointed to the Company's recurring losses and accumulated deficit of $123,869,000. FAIRFAX FINANCIAL: Fitch Removes Negative Watch on Low-B Ratings ---------------------------------------------------------------- Fitch Ratings has affirmed the ratings of Fairfax Financial Holdings Limited, Odyssey Re Holdings Corp. and its insurance subsidiaries, and TIG Holdings Inc. All ratings are removed from Rating Watch Negative. The Rating Outlook is Stable. The holding company ratings of Crum & Forster Holdings Corp. and the insurance company ratings of Crum & Forster Insurance Group, Northbridge Financial Insurance Group and TIG Insurance Group are not affected by this action. The rating action reflects a reduced level of uncertainty following a series of restatements over the past nine months related to the company's finite reinsurance contracts and for numerous other accounting errors. While Fitch is concerned about the internal control weaknesses demonstrated by the erroneous accounting, the restatements in total were not significant relative to the company's capitalization. The rating action also reflects Fitch's favorable view of Fairfax's recent decision to reduce its ownership interest in Odyssey Re from 78.5% to approximately 60%. Although this partial sale reduces Fairfax's future consolidated earnings and upstream dividend capacity, it demonstrates the company's favorable financial flexibility in generating sources of cash. Furthermore, the reduced Fairfax ownership improves Odyssey Re's financial profile by lessening the ability of Fairfax to upstream dividends out of its strongest insurance subsidiary. The Stable Rating Outlook reflects that Fitch's ratings of Fairfax and its subsidiaries incorporate a certain amount of risk related to the ultimate potential negative effect of issues surrounding the company's use of finite reinsurance and transactions in Fairfax securities. These issues have led to various subpoenas received by Fairfax, its CEO Prem Watsa, its subsidiaries, its independent auditors and a shareholder, in addition to a class action lawsuit filed by the company's debt holders. However, to the extent that the ongoing investigations by the Securities and Exchange Commission and the U.S. Attorney's office for the Southern District of New York bring about a civil action against the company that considerably weakens the companies' franchise, reputation, and competitive position, particularly for Odyssey Re as a reinsurer, or results in significant fines and penalties levied, the ratings could be negatively impacted. Fairfax reported solid underlying underwriting results through the first nine months of 2006, with all ongoing insurers reporting combined ratios under 100%. Fairfax also commuted a $1 billion corporate insurance cover with a Swiss Re subsidiary in early Aug. 2006, which resulted in a pre-tax and after-tax loss of $412.6 million in the third quarter 2006. While Fitch has always adjusted the reported results of Fairfax to exclude the finite benefit from the Swiss Re Cover and other similar contracts, the commutation is still viewed favorably as it reduces reinsurance credit risk, lowers interest expense on funds withheld, improves liquidity and provides for greater transparency of results. These ratings have been affirmed with a Stable Rating Outlook and removed from Rating Watch Negative by Fitch: * Fairfax Financial Holdings Limited -- Issuer Default Rating (IDR) 'BB-'; -- $62 million unsecured notes due April 15, 2008 'B+'; -- $464 million unsecured notes due April 15, 2012 'B+'; -- $100 million unsecured notes due Oct. 1, 2015 'B+'; -- $184 million unsecured notes due April 15, 2018 'B+'; -- $98 million unsecured notes due April 15, 2026 'B+'; -- $91 million unsecured notes due July 15, 2037 'B+'; -- $134 million convertible notes due July 15, 2023 'B+'. * Fairfax, Inc. -- Issuer Default Rating (IDR) 'BB-'; -- $68 million exchangeable notes due Nov. 19, 2009 'B+'. * Odyssey Re Holdings Corp. -- Issuer Default Rating (IDR) 'BBB-'; -- $50 million series A unsecured notes March 15, 2021 'BB+'; -- $50 million series B unsecured notes due March 15, 2016 'BB+'; -- $40 million unsecured notes due Nov. 30, 2006 'BB+'; -- $35 million convertible notes due June 15, 2022 'BB+'; -- $225 million unsecured notes due Nov. 1, 2013 'BB+'; -- $125 million unsecured notes due May 1, 2015 'BB+'; -- $50 million series A preferred shares 'BB'; and, -- $50 million series B preferred shares 'BB'. * Odyssey America Reinsurance Corporation * Clearwater Insurance Company -- Insurer financial strength 'BBB+'. * TIG Holdings, Inc. -- Issuer Default Rating 'BB-'. * TIG Capital Trust I -- $37 million trust preferred stock due 2027 'B'. These ratings remain unchanged by Fitch: * Crum & Forster Holdings Corp. -- Issuer Default Rating (IDR) 'BB-'; -- $300 million unsecured notes due June 15, 2013 'B+'. * Crum & Forster Insurance Company * Crum & Forster Indemnity Company * The North River Insurance Company * United States Fire Insurance Company -- Insurer financial strength 'BBB-'. * Commonwealth Insurance Company * Commonwealth Insurance Company of America * Federated Insurance Company of Canada * Lombard General Insurance Company of Canada * Lombard Insurance Company * Markel Insurance Company of Canada * Zenith Insurance Co. (Canada) -- Insurer financial strength 'BBB'. * TIG Indemnity Company * TIG Insurance Company * TIG Specialty Insurance Company -- Insurer financial strength 'BB+'. FEDERAL-MOGUL: Court Places Insurers' Lift Stay Motion On Hold -------------------------------------------------------------- The Honorable Joseph H. Rodriguez, Senior U.S. District Court Judge for the District of Delaware, granted the request of certain insurers of Federal-Mogul Corporation and directed the Honorable Judith K. Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware, to place the insurers' request to lift the automatic stay off the Bankruptcy Court's calendar pending determination by the District Court of the Insurers' request to withdraw the reference of the Lift Stay Motion. In a separate order, Judge Fitzgerald ruled that the Insurers' request to lift the automatic stay to commence a state court insurance coverage action constitutes a core proceeding. Federal-Mogul Products Inc., with the Insurers' consent, previously filed with the Bankruptcy Court, an agreed proposed order, which provided that hearings on the Lift-Stay Motion will be taken off the calendar pending resolution of the Insurers' Withdraw-Reference Motion. The Insurers ask Judge Fitzgerald to reconsider the Modified Agreed Order and enter, instead, the original Agreed Order to allow the Withdraw-Reference Motion to be addressed in due course by the U.S. District Court for the District of Delaware, as contemplated by 28 U.S.C. Section 157(d). Brian L. Kasprzak, Esq., at Marks, O'Neill, O'Brien and Courtney, P.C., in Wilmington, Delaware, asserted that scheduling the Lift- Stay Motion for hearing in the Bankruptcy Court before the District Court even addresses the merits of the Withdraw-Reference Motion means that the Bankruptcy Court is intruding on the District Court's prerogative to determine whether particular matters in a bankruptcy case ought to be decided by the District Court rather than the Bankruptcy Court. Mr. Kasprzak also pointed out that by addressing the Lift-Stay Motion separately from the District Court's consideration of the Insurers' Abstention Motion the Bankruptcy Court creates the very risk of inconsistent rulings and resultant judicial inefficiency that the Withdraw-Reference Motion seeks to avoid. Furthermore, Mr. Kasprzak argued that implementation of the Modified Agreed Order will upset an agreement among the parties to an adversary proceeding commenced by DII Industries, LLC, against F-M Products. "A court ought to be reluctant to unravel a negotiated scheduling agreement reached at arm's-length by litigation adversaries, unless manifest injustice would result from the parties' agreement," Mr. Kasprzak notes. "Surely, no injustice would result from approving a negotiated arrangement specifically designed to permit the District Court to exercise discretion granted it by Congress to decide if the Lift-Stay Motion should be decided by that Court in tandem with the Abstention Motion, or separately by [the Bankruptcy] Court." Insurers Tackle F-M Products' Responses It is apparent from F-M Product's response to the Insurers' Motions that it agrees that coverage litigation ought to proceed now in a state court, Mr. Kasprzak tells Judge Fitzgerald. Mr. Kasprzak says F-M Products' argument against the Lift-Stay Motion boils down to "a contention that a debtor should be permitted to manipulate the automatic stay for tactical forum- shopping purposes in order to gain an artificial litigation priority over its adversaries." The Debtor argues that the Insurers' proposed New York action is no longer necessary, because it already filed a coverage suit in New Jersey state court, making the New York action duplicative. Mr. Kasprzak contends that the basic premise of the Debtor's argument is wrong, because "courts do not allow a debtor to use the automatic stay as a sword rather than a shield." Accordingly, the Insurers want the Debtor's objection to the Lift- Stay overruled. "[T]he courts of New York and New Jersey should be allowed to sort out which case proceeds," Mr. Kasprzak says. Mr. Kasprzak notes that even if the law did permit F-M Products to misuse the stay, its claim that the New Jersey action is an adequate substitute for the insurance companies' proposed New York action ignores the fact that there are other claimants to the insurance policies besides the Debtor who would be parties to the New York action, but cannot be joined to the New Jersey action because of the automatic stay. Unlike the insurance companies' proposed New York suit, the Debtor's New Jersey action cannot comprehensively resolve the parties' coverage disputes, Mr. Kasprzak explains. Compagnie Europeenne D'Assurances Industrielles support the Insurers' position. F-M Products Wants Lift-Stay Motion Denied F-M Products asks the Bankruptcy Court to deny the Insurers' Lift- Stay request because there is no longer any plausible ground for filing a lawsuit in New York state court. James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub LLP, in Wilmington, Delaware, informs the Bankruptcy Court that F-M Products filed its own coverage action in the Superior Court of New Jersey seeking to establish (i) scope of property that belongs to its bankruptcy estate and (ii) coverage rights as an insured party. He points out that F-M Products' true position is as "plaintiff," hence, F-M Products has exercised its rights to choose the appropriate state court forum. "The New Jersey Superior Court is the appropriate state court forum because New Jersey has the most substantial relationship to relevant parties and events during all of the years at issue," Mr. O'Neill tells Judge Fitzgerald. To the extent that the District Court refuses to abstain from hearing an adversary proceeding originally filed by Dresser Industries, Inc., against F-M Products, as well as a group of approximately 70 insurers, there will be never be a need for anyone to file any lawsuit in New York in connection with the disputed coverage issues, Mr. O'Neill notes. The coverage disputes will have to be resolved in the District Court, he points out. In addition, to the extent that the District Court does abstain and the parties resume their fight in New Jersey Superior Court, then any insurers that are dissatisfied with F-M Products' choice of forum will be able to seek dismissal of the New Jersey Action on the grounds of forum non-conveniens, Mr. O'Neill explains. Only if a dismissal is granted would the insurers have any legitimate basis for seeking to drag F-M Products -- a debtor with limited resources -- into another state court, Mr. O'Neill contends. Withdraw-Reference Motion Should Also Be Denied F-M Products also ask Judge Fitzgerald to deny the Insurers' request to withdraw the reference of the Lift-Stay Motion from the Bankruptcy Court because the issues raised are "basic bankruptcy law questions that are best considered and decided by [a] bankruptcy court, which specializes in bankruptcy law and is familiar with [F-M Products'] financial condition and reorganization efforts." Considering F-M Products' filing of its New Jersey Action, F-M Products maintains that it does not oppose discretionary abstention in the Adversary Proceeding except as to "corporate successorship" issue, which has been fully briefed and is ripe for decision. Certain Underwriters of Lloyd's, London and London Market Companies; Employers Mutual Casualty Company; European Reinsurance Company of Zurich; and Swiss Reinsurance Company support the Insurers' Withdraw-Reference Motion. The Underwriters, et al., believe that failure to withdraw the reference could result in inconsistent rulings by the District and Bankruptcy Courts. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some US$6 billion. In the Asian Pacific region, the company has operations in Malaysia, Australia, China, India, Japan, Korea, and Thailand. The company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No.01- 10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and US$8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. (Federal-Mogul Bankruptcy News, Issue No. 119; Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-7000). FEDERAL-MOGUL: Judge Fitzgerald Denies Lloyd's Discovery Plea ------------------------------------------------------------- The Honorable Judith K. Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware denied, without prejudice, the discovery request filed by certain Underwriters at Lloyd's, London, and certain London Market Companies. The underwriters sought to examine The Travelers Indemnity Company and Travelers Casualty and Surety Company concerning certain Vellumoid and Fel-Pro Claims. As reported in the Troubled Company Reporter on Oct. 11, 2006, certain underwriters at Lloyd's, London, and Certain London Market Companies obtained permission from the Bankruptcy Court to file a reply to The Travelers Indemnity Company and Travelers Casualty and Surety Company's objection to the Underwriters' request for discovery concerning Vellumoid and Fel- Pro Claims. The Travelers Objection has been filed under seal because Travelers obtained information from American Standard Inc. v. Admiral Insurance Co., et al., pending in the Superior Court of New Jersey, which is purportedly subject to a protective order and mediation protocol. Among others, Travelers argued that the Underwriters' discovery request was drawn from certain confidential information provided in the American Standard Case. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is an automotive parts company with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. (Federal-Mogul Bankruptcy News, Issue No. 114; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). FOAMEX INT'L: Murray Capital Supports Panel's DIP Loan Objections ----------------------------------------------------------------- Murray Capital Management Inc. adopts the arguments, and joins in the objection, of the Ad Hoc Committee of Senior Secured Noteholders to Foamex International Inc. and its debtor- affiliates' request to sign commitment letters for a $790,000,000 debt exit financing and a $150,000,000 equity exit financing in connection with their First Amended Plan of Reorganization, dated October 23, 2006. Murray Capital echoes the Senior Noteholders Committee's contentions that the Debtors have failed to show that their performance of the Equity Commitment constitutes an appropriate exercise of business judgment. The Senior Noteholders Committee complained that the Debtors have negotiated exclusively with the Significant Equityholders since June 2006, thus, foreclosing potentially more cost-effective financing alternatives. Murray Capital points out that the Equity Commitment puts the Debtors at substantial risk causing a Termination Event, which would enable the Significant Equityholders to abandon the Equity Commitment while collecting millions of dollars in fees and expenses before creditors receive any distribution. Mark D. Olivere, Esq., at Edwards Angell Palmer & Dodge LLP, in Wilmington, Delaware, notes that under the Equity Commitment, the Debtors must remit $2,000,000 to the Significant Equityholders merely because the Court approves the Motion. In addition, if the Debtors modify the Amended Plan in any means "adverse" to the Significant Equityholders, the Equity Commitment will terminate automatically and the Debtors will incur a $5,500,000 liability to the Significant Equityholders. The "adverse" modifications need not be material and may include modifications made by the Debtors to correct defects in the Amended Plan or to comply with any Court order, steps that are routine in most Chapter 11 cases, Mr. Olivere notes. Mr. Olivere also argues that the $9,500,000 Put Option Premium is grossly excessive by any calculation. Because the Significant Equityholders are eligible to subscribe for approximately $90,000,000 of the $150,000,000 Rights Offering, their Put Option Obligation with respect to the remaining rights approximates, $60,000,000, of which the Put Option Premium is roughly 15.8%. Fees paid by Chapter 11 debtors in the context of other backstopped rights offerings typically range between approximately 2% and 5% of the aggregate amount financed. In the event the Court determines that the fees are reasonable, Murray Capital asserts that the Equity Commitment should be modified to ensure that the Equity Commitment does not needlessly prejudice creditors. Specifically, Murray Capital proposes the Equity Commitment provide that no portion of the Put Option Premium and other fees potentially payable to the Significant Equityholders will become due until the Significant Equityholders pay the Call Option Premium in the event the Significant Equityholders exercise the Call Option. Murray Capital contends that the Equity Commitment, the Amended Plan and the related disclosure statement are all part and parcel of a proposed Chapter 11 plan that is patently unconfirmable. "The scheme hatched by Debtors and the Significant Equityholders is a blatant attempt to deprive the holders of the Senior Notes their contractual recovery, while impermissibly divesting [them] of their right [to] vote on the Plan by wrongly characterizing their Senior Note claims as unimpaired," Mr. Olivere argues. Murray Capital is a direct and indirect holder, by and through certain funds and managed accounts, of in excess of $20,000,000 of the Debtors' 10-3/4% Senior Notes Due April 1, 2009. * * * The Debtors informed the Court that the U.S. Trustee's informal concerns have been resolved. To the extent the Noteholders Committee and Murray Capital's objections are not resolved prior to the hearing, the Motion will go forward on a contested basis on Nov. 27, 2006. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FOAMEX INTERNATIONAL: Parties Balk at Amended Disclosure Statement ------------------------------------------------------------------ Various parties-in-interest and creditors object to the approval of the disclosure statement accompanying the Debtors' First Amended Plan of Reorganization, dated Oct. 23, 2006: (a) Nordstrom, Inc.; (b) Commercial Roofing Systems, Inc.; (c) U.S. Bank National Association, as indenture trustee; (d) Murray Capital Management, Inc.; and (e) the Ad Hoc Committee of the Debtors' 10-3/4% Senior Secured Noteholders Due April 2009; The Objectors argue that the Disclosure Statement fails to provide creditors with "adequate information" as required in Section 1125 of the Bankruptcy Code. Certain of the Objectors also assert that the Disclosure Statement should not be approved because the Amended Plan is patently unconfirmable. On behalf of Nordstrom, Rachel Mersky, Esq., in Monzack and Monaco, P.A., in Wilmington, Delaware, contends that: (a) the Disclosure Statement wholly fails to identify the nature and event of the Unliquidated Claims and the applicable insurance available to substantiate the statement that the Debtors will have sufficient resources to address these claims when and if allowed; (b) the Disclosure Statement does not adequately identify the nature and extent of the Intercompany Claims, or provide any real description of how or when they will be paid, including whether they will be paid ahead of the payment of the Unliquidated Claims; (c) the Amended Plan and accompanying Disclosure Statement improperly classify and treat similarly-situated claims without providing any legitimate business reason or explaining why those claims should be separately treated; (d) the Amended Plan removes federal jurisdiction over the Unliquidated Claims without setting forth the bases for the sub rosa abstention over the Unliquidated Claims; and (e) the Amended Plan and Disclosure Statement improperly designate the Unliquidated Claims as unimpaired when, among other alterations of the rights of those claims, the Amended Plan: * limits the amount and nature of the Unliquidated Claims to the information set forth in the filed proofs of claim; and * removes the rights of these claimants to allowance, objection and estimation provisions of the Bankruptcy Code and Federal Rules of Bankruptcy Procedure. Commercial Roofing informs the Court that it has perfected a mechanic's lien for $178,474 for work and materials furnished to Foamex International Inc., and Foamex, L.P., for the improvement of their property in Donna Ana County, New Mexico. Representing Commercial Roofing, Francis A. Monaco, Esq., at Monzack and Monaco, in Wilmington, Delaware, relates that although the Disclosure Statement identifies Commercial Roofing as an "Other Secured Creditor", it does not contain adequate information regarding the treatment of Commercial Roofing's claim. The Amended Plan contemplates three different ways of treating Other Secured Creditors. However, according to Mr. Monaco, the Disclosure Statement does not provide adequate information for the creditors to determine which treatment would apply to any particular claim. Commercial Roofing objects to any treatment of its claim other than full payment on the Effective Date of the Amended Plan considering that its claims is a mechanic's lien that is subject to immediate foreclosure if the amounts owed are not paid. Mr. Monaco also asserts that the Disclosure Statement does not contain adequate information about the $790,000,000 debt exit financing and a $150,000,000 equity exit financing facilities. "[I]t appears that certain of the Exit Facility lenders would be granted first priority liens on all of [the] Debtors' assets. There is no explanation or information provided as to why these liens totaling approximately $790,000,000, should be granted without providing either payment to or adequate protection of Other Secured Creditors and Commercial Roofing," he says. U.S. Bank said that the Amended Plan misstated the aggregate amount of its Liquidated Claim as $312,452,083, rather than $315,139,583, which is the correctly recalculated aggregate amount of principal and prepetition interest as reflected in its amended proofs of claim. Franklin Ciaccio, Esq., at King & Spalding LLP, tells the Court that while U.S. Bank agrees with the Amended Plan's provision of U.S. Bank's right to "accrued and unpaid [Postpetition] Interest," U.S. Bank takes exception to the express exclusion in the Amended Plan of "any call premiums or any prepayment fees and penalties," amounts to which U.S. Bank is otherwise entitled under the Indenture. Murray Capital's counsel, Mark D. Olivere, Esq., at Edwards Angell Palmer & Dodge LLP, in Wilmington, Delaware, states that although the Disclosure Statement alleges that all holders of claims against the Debtors will be unimpaired, a closer reading reveals that this is not the case. The Disclosure Statement lacks sufficient information for holders of claims on account of the Senior Notes and Subordinated Notes to determine the extent to which the Amended Plan may satisfy those claims for contractual default interest, Mr. Olivere contends. Mr. Olivere argues that the Amended Plan violates: -- the Bankruptcy Code's absolute priority rule by not satisfying the claims under the Senior Notes and Subordinated Notes in full, while providing for a distribution to the Debtors' Equityholders; and -- Section 506(b) by not affording the holders of Senior Notes claims the contractually required interest and charges which they are entitled under that section. Mr. Olivere adds that the Amended Plan impermissibly denies holders of claims on account of the Senior Notes and Subordinated Notes their statutory right to accept or reject the Plan by designing those claims as unimpaired while denying them full array of their contractual claims. The Senior Noteholders Committee asserts that: (a) the Disclosure Statement fails to disclose that there are significant disputes between the Debtors and the Senior Secured Noteholders regarding: * the amount of the Senior Secured Note Claims as of the Petition Date; * the right of the Senior Secured Noteholders to receive postpetition interest at the default rate set forth in the Senior Notes Indenture through the Effective Date; and * the right of the Senior Secured Noteholders to receive payment of either a prepayment premium or change of control premium in accordance with the terms of the Senior Secured Note Indenture; (b) the Disclosure Statement fails to disclose that if the Senior Secured Noteholders are successful in their dispute with the Debtors: * the Amended Plan cannot be confirmed or consummated as it will violate the requirements of Section 1129(b)(2)(A), and * the Amended Plan may fail by its own terms as its conditions to confirmation and effectiveness may not be satisfied; and (c) the Amended Plan and Disclosure Statement are both inaccurate and materially misleading as they assert that the Senior Secured Note Claims are unimpaired and deemed to have accepted the Amended Plan. * * * The Debtors informed the Court that Commercial Roofing's objection and the U.S. Trustee's informal concerns have been resolved in principle. The Court will convene a hearing to consider the adequacy of the Disclosure Statement on Nov. 27, 2006, at 2:00 p.m. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FORD MOTOR: Accelerates Growth Plan in China -------------------------------------------- Ford Motor Company continues its accelerated growth plan for China and is on track to deliver its year to date with growth expected to exceed 100.8% (year on year) in 2006. Headlining Ford's product line-up at Auto China 2006 is the all-new Ford S-MAX, which was named Car of the Year in Europe last week, and is the first Ford vehicle to introduce "kinetic design" to China's motoring enthusiasts. At Ford, kinetic design stands for "energy in motion." Ford S-MAX is one of the new vehicles to hit China's roads and highways. Ford Focus was also at the show. Ford recently added a 5-door version to Ford Focus to keep ahead of consumer demand. In addition to a product showing at Auto China 2006, Ford Motor Company also announced a major new investment -- the opening of the Ford Research and Engineering Center -- to be located in Nanjing, China. It will support Ford Motor Company's product development for worldwide operations while also making a major contribution to the future of China's auto market. "The Ford Research and Engineering Center represents another major milestone for Ford as it strengthens its manufacturing blueprint in China. It will offer a winning combination that leverages Ford's global expertise in research and engineering in addition to building China's leading local talent. It will also work with Technical Development Centers at Ford Motor's joint ventures in China to support product development and procurement, " Ford Motor (China) Ltd. chairman and chief executive officer Mei Wei Cheng said. With its "kinetic design" Ford S-MAX, it is expected to be a favorite in China as it has in Europe. Speaking at Auto China 2006, Mei Wei Cheng confirmed that S-MAX will be produced by Changan Ford and will be ready to roll off production lines in early 2007. Joining S-MAX and Focus on stage is the Ford iosis Concept Car which gives Ford's customers a strong sense of the future design direction the brand is taking. Other products taking center stage for Ford will include Ford's Reflex concept, which features a Diesel Hybrid Powertrain, the legendary Ford Mustang Shelby GT500 and the all-new Focus ST. A range of other locally produced blue oval favorites will also be on display. "We are using Auto China 2006 to showcase the strength of our product range, reinforcing the depth and diversity of the Ford Motor Company product family. Our portfolio has something to appeal to everyone, from dependable and affordable transportation through to luxurious premium brands. In the future, Chinese customers can continue to expect more exciting, locally made Ford vehicles that consistently deliver cutting-edge design and world leading technology," Mei Wei Cheng said. The full Ford Focus family will be on display at the show. Ranging from locally produced Focus 4-door and Focus 5-door through to the Focus China Circuit Championship (CCC) racing car and the visually stunning Focus ST. This convertible Focus has been a global success and is now making its first appearance in China at this years show. Ford Focus boosted the sales at Changan Ford Mazda Automobile in the first ten months of 2006 with retail sales totaling 56,151 units, representing more than 50% of total Ford product sales. With strong sales momentum, Changan Ford Mazda Automobile is now one of the fastest growing auto makers in China. In 2007, total annual production capacity will exceed 410,000 units at Chongqing and Nanjing plants (combined). Ford also continues to expand its distribution network and will have 200 appointed dealers by the end of 2006. "It is no secret that the China market is critical to our plans for building a stronger Ford Motor Company globally," Mei Wei Cheng said. "With sales volumes continuing to fuel growth, we are looking ahead and taking the required steps now to ensure our China operation is able to continue to meet the seemingly insatiable appetite for our products. In doing so, the China market will play an even greater role in the future growth and success of Ford Motor Company's global operations." For the year 2006, Ford Motor Company's China Sourcing Office is on track to source some $2.6 billion worth of auto parts and systems, supporting Ford Motor Company's global manufacturing operations and after sales customer services. The company is also actively expanding its auto financing business in the China market. Ford Automotive Finance has extended its auto financing services to more than 70 Chinese cities nationwide in just 18 months after starting operation, servicing Changan Ford Mazda Automobile and Jiangling Motor Company simultaneously. As one of the largest exhibitors with 5,000 square meters of exhibition space, Ford Motor Company, comprising of six affiliated brands (Ford, Lincoln, Volvo, Land Rover, Jaguar and Mazda) will demonstrate its enterprise muscle, displaying a full fleet of show vehicles. Executives from Ford Motor Company, John Parker, group vice president of Ford Motor Company, Asia Pacific and Africa; Mei Wei Cheng, chairman and chief executive officer of Ford Motor China; and Martin Smith, executive design director from Ford of Europe, attended the Ford press conference and show preview for media at Auto China 2006 in Beijing. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Company (NYSE: F) -- http://www.ford.com/-- manufactures and distributes automobiles in 200 markets across six continents. With more than 324,000 employees worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services include Ford Motor Credit Company and The Hertz Corporation. * * * As reported in the Troubled Company Reporter on Oct. 24, 2006, Standard & Poor's Ratings Services placed its 'B' senior unsecured debt issue ratings on Ford Motor Co. on CreditWatch with negative implications. At the same time, S&P affirmed all other ratings on Ford, Ford Motor Credit Co., and related entities, except the rating on Ford Motor Co. Capital Trust II 6.5% cumulative convertible trust preferred securities, which was lowered to 'CCC-'from 'CCC.' At the same time, Fitch Ratings placed Ford Motor's 'B+/RR3' senior unsecured debt on Rating Watch Negative. Moody's Investors Service has disclosed that Ford's very weak third quarter performance led to the downgrade of the company's long-term rating to B3. FREEPORT-MCMORAN: Purchase Plan Prompts DBRS to Review Ratings -------------------------------------------------------------- Dominion Bond Rating Service placed the rating of Freeport-McMoRan Copper & Gold Inc.'s Senior Notes at BB (low) Under Review with Developing Implications following Freeport's announced offer to acquire all of Phelps Dodge Corporation's common equity in a cash and stock takeover bid of $25.9 billion. The transaction is expected to close in the first quarter of 2007, subject to shareholder and regulatory approvals. The rating action recognizes the strengthened business profile as a result of the proposed acquisition but also incorporates the uncertainty regarding the rate at which the Company would be able to pay down the approximately $16 billion in new debt to fund the cash portion of the acquisition. DBRS notes that the acquisition would strengthen the business profile of the Company as the combined company would benefit from additional operating assets, geographic diversification, scale, development potential and a reduction in its political risk profile. Stand-alone Freeport is currently a one mine company. With the acquisition of Phelps, New Freeport would operate 11 mines -- thus reducing mine operational risk substantially. New Freeport would have operating mines in four countries and a large development project in the Congo. Pro forma 2006 production by geography would be 42% in the United States, 35% in Indonesia, 19% in Chile and 4% in Peru. With approximately 1.6 million tonnes of copper production for 2006, New Freeport would become the second-largest copper producer in the world -- behind state-owned Corporaci�n Nacional del Cobre de Chile. Phelps' Tenke Fungurume development project is believed to be the largest undeveloped, high-grade copper/cobalt project in the world today. The political risk profile of New Freeport would be reduced as production from Indonesia would be reduced from 100% for stand-alone Freeport to less than 40% for the combined companies. However, DBRS also notes that the acquisition would weaken the financial profile of the Company as its leverage would increase substantially. Pro forma total debt for the combined companies would be approximately $18 billion, at Sept. 30, 2006. New Freeport's pro forma per cent gross debt-to-capital would be approximately 64%, up from 33% for stand-alone Freeport at September 30, 2006. New Freeport's pro forma cash flow-to-total debt for the 12 months ended September 30, 2006, would be approximately 0.3x, down from 1.4x for stand-alone Freeport. The Company has indicated that it would use free cash flow in the next few years to pay down debt but it is uncertain how quickly the Company could do so. Furthermore, the Company plans to raise secured debt to complete the acquisition. DBRS understands that the majority of the permanent non-bridge bank debt at Freeport will be secured. Additionally, the existing notes and bonds at both Freeport and Phelps will likely be secured. DBRS awaits the Company's decision regarding the collateral for the different categories of debt. Any unsecured debt will be rated at least one notch below the secured debt to reflect structural subordination. DBRS notes that New Freeport would become the largest mining company in North America by market capitalization. However, DBRS notes that competing offers for either Phelps or Freeport are possible. GAINEY CORP: Moody's Assigns Loss-Given-Default Ratings ------------------------------------------------------- In connection with Moody's Investors Service's implementation of its Probability-of-Default and Loss-Given-Default rating methodology for the Transportation sector, the rating agency revised its B2 Corporate Family Rating to B3 for Gainey Corporation. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Guaranteed Senior Secured Revolver Due 2010 B2 B2 LGD3 37% Guaranteed Senior Secured Term Loan Due 2011 B2 B2 LGD3 37% Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Based in Grand Rapids, Michigan, Gainey Corporation -- http://www.gaineycorp.com/-- through its Gainey Transportation Services and Super Service units, provides dry van truckload freight transportation. Other Gainey units include Aero Bulk, which transports pressurized gases and liquid chemicals, LCT Transportation Services, which handles temperature-controlled freight, and Freight Brokers of America. Collectively, Gainey's transportation businesses operate about 2,400 tractors and 5,500 trailers. President Harvey Gainey founded the company in 1984. GE CAPITAL: Fitch Holds Low-B Ratings on Three Cert. Classes ------------------------------------------------------------ Fitch Ratings upgrades GE Capital Corp's commercial mortgage pass- through certificates, series 2001-2: -- $10 million class E certificates to 'AAA' from 'AA+'; -- $18.8 million class F certificates to 'AA' from 'AA-'; -- $11.3 million class G certificates to 'A+' from 'A'; -- $21.3 million class H certificates to 'BBB+' from 'BBB'; -- $18.8 million class I certificates to 'BBB-' from 'BB+'; In addition, Fitch affirms these ratings: -- $43.3 million class A-2 at 'AAA'; -- $68.3 million class A-3 at 'AAA'; -- $519.5 million class A-4 at 'AAA'; -- $40.1 million class B at 'AAA'; -- $45.1 million class C certificates at 'AAA'; -- Interest-only classes X-1 and X-2 at 'AAA'; -- $12.5 million class D certificates at 'AAA'; -- $5 million class J certificates at 'BB+'; -- $7.5 million class K certificates at 'BB'; -- $12.5 million class L at 'B'. Fitch does not rate the $7.5 million class M and the $5.7 million class N. Class A-1 has been paid in full. The rating upgrades reflect the increased credit enhancement levels from scheduled amortization as well as the additional defeasance of five loans since Fitch's last rating action. In total, 16 loans have defeased. As of the Oct. 2006 distribution date, the pool's aggregate certificate balance has decreased 15.5% to $847.3 million from $1,002.9 million at issuance. There are currently no delinquent and specially serviced loans. The largest loan in the pool is backed by Holiday Inn West 57th street, a 596-room full service hotel located in New York, New York. As of June 30, 2006, revenue per available room was $134.37 with occupancy at 82.15%, compared to RevPar of $122.85 with occupancy at 88% at issuance. GE CAPITAL: Fitch Rates $18.3-Mil. Class I Certificates at BB+ -------------------------------------------------------------- Fitch Ratings places the following classes of GE Capital's commercial mortgage pass-through certificates, series 2001-1 on Rating Watch Positive: -- $15.5 million class D at 'AA+'; -- $15.5 million class E at 'AA'; -- $15.5 million class F at 'A+'; -- $14.1 million class G at 'A-'; -- $25.4 million class H at 'BBB'; -- $18.3 million class I at 'BB+'. The classes have been placed on Rating Watch Positive due to increased paydown and defeasance since Fitch's last rating action. GENERAL MOTOR: Kirk Kerkorian Cuts GM Stake to 7.4% --------------------------------------------------- Billionaire investor Kirk Kerkorian's Tracinda Corp. had sold $462 million of stock in General Motor Corp., cutting its stake in the automaker to 7.4% from 9.9% of outstanding shares, Kevin Krolicki of Reuters reports. According to the source, Mr. Kerkorian dropped his plans to buy more GM shares after Jerome York's resignation from GM board and the closure of potential partnership deal between GM and the Nissan Motor Co.-Renault SA alliance, which sent GM stock dropping 5% on the New York Stock Exchange. Carlos Ghosn heads both Nissan and Renault. John D. Stoll and Stephen Wisnefski of the Wall Street Journal reports that Mr. Kerkorian had been the driving force behind the talks but failed to work it out because of a dispute over the specific equity arrangement of a potential tie-up, which leads to the resignation of his associate Mr. York from GM's board after GM ended the deal. The move to sell shares led many analysts to believe that Mr. Kerkorian's plans include the possibility of Tracinda seeking a proxy fight to place its members on GM's board of directors, Wall Street relates. Bloomberg states that Mr. Kerkorian offered to buy $825 million in shares of Las Vegas-based, casino operator MGM Mirage, the same day when the stake sale was announced. Tracinda, GM's second largest shareholder, seeks to pay $55 a share to increase its stake in MGM to 61.7%. In a filing with the Securities and Exchange Commission, Tracinda agreed to sell 14 million shares in a private transaction for $33 each. The purchase is to be settled tomorrow, Nov. 24, 2006. About General Motors General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- the world's largest automaker, has been the global industry sales leader since 1931. Founded in 1908, GM employs about 317,000 people around the world. It has manufacturing operations in 32 countries and its vehicles are sold in 200 countries. * * * As reported in the Troubled Company Reporter on Nov. 16, 2006, Standard & Poor's Ratings Services assigned its 'B+' bank loan rating to General Motors Corp.'s proposed $1.5 billion senior term loan facility, expiring 2013, with a recovery rating of '1'. The 'B+' rating was placed on Creditwatch with negative implications, consistent with the other issue ratings of GM, excluding recovery ratings. As reported in the Troubled Company Reporter on Nov 16, 2006, Standard & Poor's Ratings Services assigned its 'B+' bank loan rating to General Motors Corp.'s proposed $1.5 billion senior term loan facility, expiring 2013, with a recovery rating of '1'. The 'B+' rating was placed on Creditwatch with negative implications, consistent with the other issue ratings of GM, excluding recovery ratings. As reported in the Troubled Company Reporter on Nov. 14, 2006, Moody's Investors Service assigned a Ba3, LGD1, 9% rating to the proposed $1.5 Billion secured term loan of General Motors Corporation. The term loan is expected to be secured by a first priority perfected security interest in all of the US machinery and equipment, and special tools of GM and Saturn Corporation. GLOBAL PETROLEUM: Moody's Assigns Loss-Given-Default Ratings ------------------------------------------------------------ In connection with Moody's Investors Service's implementation of its Probability-of-Default and Loss-Given-Default rating methodology for the Transportation sector, the rating agency confirmed its B2 Corporate Family Rating for Global Petroleum, Inc., and held its rating on the company's Guaranteed Senior Secured Term Loan B Due 2013. In addition, Moody's assigned an LGD4 rating to those notes, suggesting noteholders will experience a 55% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). GLOBAL POWER: Appoints John Matheson as President and CEO --------------------------------------------------------- Global Power Equipment Group Inc. announced key management changes effective immediately, including the appointment of John Matheson as president and chief executive officer. Mr. Matheson, who previously served as the Company's executive vice president and chief operating officer, replaces Larry Edwards, who will remain as the Company's non-executive chairman of the board. Mr. Matheson was also named a member of the board of directors. The Company disclosed that Mr. Matheson has served in several other senior roles within the Company, including senior vice president of Global Power, executive vice president, Operations of the Auxiliary Power segment, and as the Company's general counsel and secretary. During these roles, Mr. Matheson was responsible for many of the Company's key strategic initiatives, including mergers and acquisitions and the corporate operations in Asia. He led the reorganization of the Auxiliary Power segment and the acquisitions of Williams Industrial Services Group and Deltak Power Equipment (China). Before joining the Company, he was with The Williams Companies, where he was responsible for mergers, acquisition, and securities law matters. Formerly, he was a shareholder with the law firm of Conner & Winters P.C., in Tulsa, Oklahoma, and was a Certified Public Accountant with Price Waterhouse. Mr. Matheson is an alumnus of Harvard Business School, Georgetown University Law Center, and the University of Oklahoma School of Business. Other Key Appointments The Company appointed Michael Hanson to chief financial officer, replacing Jim Wilson, who had retired. Mr. Hanson previously served as the Company's chief accounting officer, and before that, as corporate controller. Before joining Global Power, he was financial controller at Xeta Technologies, a provider of communications solutions and services, as well as an audit manager at Arthur Andersen LLP. A Certified Public Accountant, Mr. Hanson holds a B.S. in Accounting from the University of Tulsa. Jeff Davis has also been named president of the Deltak Specialty Boiler Systems division of Deltak LLC. Mr. Davis first joined Deltak in 1985, and has served in a range of positions within its engineering, sales, and management teams. He holds a B.S. in Chemical Engineering from the University of Colorado. Headquartered in Tulsa, Oklahoma, Global Power Equipment Group Inc. aka GEEG Inc. -- http://www.globalpower.com/-- provides power generation equipment and maintenance services for its customers in the domestic and international energy, power and infrastructure and service industries. The Company designs, engineers and manufactures a range of heat recovery and auxiliary equipment primarily used to enhance the efficiency and facilitate the operation of gas turbine power plants as well as for other industrial and power-related applications. The Company has facilities in Plymouth, Minnesota; Tulsa, Oklahoma; Auburn, Massachusetts; Atlanta, Georgia; Monterrey, Mexico; Shanghai, China; Nanjing, China; and Heerleen, The Netherlands. The Company and 10 of its affiliates filed for chapter 11 protection on Sept. 28, 2006 (Bankr. D. Del. Case No 06-11045). Attorneys at White & Case LLP and The Bayard Firm, P.A., represent the Debtors. The Official Committee of Unsecured Creditors appointed in the Debtors' cases has selected Landis Rath & Cobb LLP as its counsel. As of Sept. 30, 2005, the Debtors reported total assets of $381,131,000 and total debts of $123,221,000. The Debtors' exclusive period to filed a chapter 11 plan expires on Jan. 26, 2007. GMAC COMMERCIAL: Fitch Lifts Rating on $27MM Certs. to B+ from B ---------------------------------------------------------------- Fitch Ratings upgrades GMAC Commercial Mortgage Securities, Inc.'s mortgage pass-through certificates, series 1999-C1: -- $83.4 million class F to 'A-' from 'BBB+'; -- $13.3 million class G to 'BBB' from 'BBB-'; -- $26.7 million class H to 'B+' from 'B'. In addition, Fitch affirms these ratings: -- $646.1 million class A-2 at 'AAA'; -- Interest only class X at 'AAA'; -- $66.7 million class B at 'AAA'; -- $66.7 million class C at 'AAA'; -- $86.7 million class D at 'AAA'; -- $20 million class E at 'AAA'; -- $20 million class J remains at 'B-/DR1'. The $10.9 million class K-1 is not rated by Fitch. Class A-1 paid in full. The rating upgrades reflect increased credit enhancement due to loan payoffs, scheduled amortization and additional defeasance since Fitch's last rating action. As of the Nov. 2006 distribution date, the transaction's aggregate principal balance has decreased 22% to $1.04 billion from $1.3 billion at issuance. In total, 50 loans have fully defeased since issuance; in addition, 16.6% of the second largest loan has defeased. Currently, seven loans are in special servicing with significant losses expected on one loan. The largest loan (1.3%) is secured by four congregate care healthcare facilities located in Texas. The loan, which remains current, is cross-defaulted with another specially serviced congregate care facility located in San Antonio, Texas. The San Antonio loan is also current, but the facility is closed. Both loans are performing under a forbearance agreement. Fitch does not project losses on these loans at this time. The second largest asset (0.8%) is an office property in Pontiac, MI and is currently real-estate owned. The special servicer continues to market the asset for sale. Fitch expects significant losses upon liquidation of the asset as a result of a significant drop in the value of the property. Fitch projected losses on the specially serviced assets are expected to be absorbed by nonrated class K-1. GREEKTOWN HOLDINGS: Construction Delays Cue Moody's Review ---------------------------------------------------------- Moody's Investors Service placed Greektown Holdings, LLC's B1 corporate family rating, B1 probability of default rating, Ba3 first lien bank loan rating and B3 senior unsecured note rating on review for downgrade after the company's report of a construction delay related to the development of its permanent casino. The review considers that as a result of the delay, Greektown will be in covenant violation of the agreement with the Michigan Gaming Control Board, which could result in a forced sale of the casino. The delay could also result in a violation of Greektown's bank loan covenants given that the opening of the permanent facility will not occur as originally planned. The company recently asked the MGCB for a one year extension, however the timing of any response by the MGCB is not known at this time. To the extent that any MGCB decision is unfavorable to Greektown, the ratings could experience a multiple notch downgrade. Moody's previous rating action on Greektown occurred on Sept. 28, 2006 with the implementation of Moody's Loss Given Default methodology and related upgrade of Greektown's first lien bank loan rating to Ba3 from B1. Greektown Holdings, LLC, through its primary operating subsidiary Greektown Casino, LLC, operates the Greektown Casino in Detroit, Michigan. The company is 100% owned by Kewadin Greektown Casino LLC, an entity owned by the Sault Ste. Marie Tribe of Chippewa Indians. The tribe owns 99.625% of Greektown Casino, LLC while the remaining portion is owned by minority investors. GSAMP TRUST: Excessive Losses Cue S&P's Downgrades & Neg. Watch --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on three classes of mortgage pass-through certificates from GSAMP Trust 2004-SEA2. Concurrently, the rating on the class M-3 certificate is placed on CreditWatch with negative implications, and the class M-4 and M-5 certificate ratings remain on CreditWatch negative, where they were placed on Oct. 11, 2006. Lastly, the ratings on the remaining classes from this transaction are affirmed. The lowered ratings and CreditWatch placements are the result of excessive realized losses that have completely eroded overcollateralization. In addition to the reduction of overcollateralization, there have been significant write-downs to the class B-2 certificate. As of the Oct. 2006 distribution date, the B-2 certificate had been written down by approximately 87%. During the previous six remittance periods, realized losses have outpaced excess interest by approximately $1 million. Severely delinquent loans represent 18.72% of the current pool balance, and cumulative realized losses represent 3.88% of the original pool balance. Standard & Poor's will continue to monitor the performance of this transaction. If delinquencies continue to translate into realized losses and principal write-downs continue to occur, the rating agency will take further negative rating actions. Conversely, if realized losses cease to outpace monthly excess interest and the level of overcollateralization rebuilds toward its target balance, Standard & Poor's will affirm the ratings on these classes and remove them from CreditWatch. The affirmations reflect actual and projected credit support that is sufficient to maintain the current ratings. Credit support for this transaction is provided through a combination of excess spread, overcollateralization, and subordination. The underlying collateral consists of subprime, conventional, fixed-rate mortgage loans secured by first and second liens on one- to four-family residential properties. Ratings Lowered And Remaining On Creditwatch Negative GSAMP Trust 2004-SEA2 Rating Class To From ----- -- ---- M-4 BB/Watch Neg BBB/Watch Neg M-5 B/Watch Neg BB/Watch Neg Rating Lowered And Placed On Creditwatch Negative GSAMP Trust 2004-SEA2 Rating Class To From ----- -- ---- M-3 A/Watch Neg AA Ratings Affirmed GSAMP Trust 2004-SEA2 Class Rating ----- ------ A-1, A-2A, A-2B, M-1 AAA M-2 AA+ B-1 CCC GUITAR CENTER: Inks Asset Purchase Deal with The Woodwind --------------------------------------------------------- Guitar Center Inc. has signed an asset purchase agreement to acquire substantially all the assets of The Woodwind & The Brasswind under Section 363 of the United States Bankruptcy Code. Under the terms of the agreement, Guitar Center will acquire The Woodwind & The Brasswind's inventory of band and orchestra and combo instruments, accounts receivable, trade names and certain other intangible assets. The transaction is subject to a number of conditions, including bankruptcy court approval, and is also subject to overbid at a bankruptcy auction expected to be held in January 2007. "The acquisition of assets of The Woodwind & The Brasswind, including the Woodwind and Brasswind and Music123 websites, will enable us to further expand the already strong combo instrument business at Musician's Friend as well as build out our direct response band and orchestra business," Marty Albertson, Chairman and Chief Executive Officer of Guitar Center, said. "We are excited about the opportunity to broaden our customer base and continue the growth of our direct response business." The Woodwind & The Brasswind filed for bankruptcy protection in Indiana on Nov. 21, 2006. The proposed asset acquisition agreement was entered into by the Musician's Friend subsidiary of Guitar Center. Under the agreement, only very limited trade obligations and other pre-petition liabilities of The Woodwind & The Brasswind are being assumed. About The Woodwind & the Brasswind Headquartered in South Bend, Indiana, The Woodwind & the Brasswind -- http://www.wwbw.com/-- sells musical instruments and accessories. About Guitar Center Guitar Center Inc. -- http://www.guitarcenter.com/-- is a United States retailer of guitars, amplifiers, percussion instruments, keyboards and pro-audio and recording equipment. Its retail store subsidiary presently operates more than 195 Guitar Center stores across the United States. In addition, Guitar Center's Music & Arts division operates more than 90 stores specializing in band instruments for sale and rental, serving teachers, band directors, college professors and students. * * * As reported in the Troubled Company Reporter on Nov. 1, 2006, Moody's Investors Service upgraded the corporate family rating of Guitar Center, Inc. to Ba2 and moved the rating outlook to stable from positive. HARBORVIEW MORTGAGE: Moody's Rates Class B-7 Certificates at Ba1 ---------------------------------------------------------------- Moody's Investors Service assigned an Aaa rating to the senior certificates issued by HarborView Mortgage Loan Trust 2006-10 and ratings ranging from Aa1 to Ba1 to the subordinate certificates in the deal. The securitization is backed by first lien, adjustable-rate, option ARM mortgage loans originated by Paul Financial LLC., BankUnited, FSB, Residential Mortgage Capital, Loan Center of California, Inc., NL Inc. and various other originators. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization and excess spread. The ratings also benefit from an interest-rate cap agreement provided by The Bank of New York. The rating on the class 1A-1B and class 2A-1C is based primarily on a financial guarantee policy issued by Financial Security Assurance Inc., whose financial strength is rated Aaa. Moody's expects collateral losses to range from 1.05% to 1.25%. GMAC Mortgage, LLC. will service the loans. These are the rating actions: * Issuer: HarborView Mortgage Loan Trust 2006-10 * Mortgage Loan Pass-Through Certificates, Series 2006-10 Cl. 1A-1A, Assigned Aaa Cl. 1A-1B, Assigned Aaa Cl. 2A-1A, Assigned Aaa Cl. 2A-1B, Assigned Aaa Cl. 2A-1C, Assigned Aaa Cl. B-1, Assigned Aa1 Cl. B-2, Assigned Aa1 Cl. B-3, Assigned Aa1 Cl. B-4, Assigned Aa2 Cl. B-5, Assigned A1 Cl. B-6, Assigned A3 Cl. B-7, Assigned Ba1 The Class B-7 certificates were sold in privately negotiated transactions without registration under the Securities Act of 1933 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under Rule 144A. HASBRO INC: Earns $99.6 Million in Third Quarter of 2006 -------------------------------------------------------- Hasbro, Inc. has reported its third quarter financial results for 2006. In its financial statements, the company indicates that its worldwide net revenues for the quarter were $1.04 billion, up 5% compared to $988.1 million a year ago and included a $9.6 million favorable impact from foreign exchange. The company reported net income of $99.6 million, which includes stock-based compensation expense of $3.9 million, net of tax, due to the required implementation of SFAS 123R at the beginning of the year. Net earnings prior to fiscal 2006 did not include stock-based compensation expense. In the third quarter of 2005 net earnings on a reported basis were $92.1 million. This did not include the effect of stock-based compensation expense. The results in both years include the impact of the mark to market adjustment for the Lucas warrants. In the third quarter of 2006 there was a non-cash expense of $19.8 million share related to the Lucas warrants, compared to non-cash income of $570 thousand in 2005. Alfred J. Verrecchia, President and Chief Executive Officer, said, "We are pleased with our third quarter results. Net revenues were up 5%, with revenues excluding Star Wars up 13% for the quarter and year-to-date, driven in part by the success of Littlest Pet Shop, Playskool, Nerf, Play-Doh, Monopoly, Transformers and Clue. Star Wars has performed well and continues to be the number 1 action figure property with $69 million in revenue for the quarter and $182 million year-to-date, demonstrating the strength of the brand even in a non-movie year." "With the overall breadth and depth of our product portfolio we have been able to grow our business for the quarter and year-to- date, in spite of the revenue decline of $58 million for the quarter and $193 million year-to-date in Star Wars," Verrecchia concluded. "Earnings per diluted share were up a strong 23% in the quarter," said David Hargreaves, Chief Financial Officer. "Absent the Lucas warrants mark to market expense of $0.09 per diluted share, the underlying business performed even better with earnings per diluted share increasing 43% to $0.67 per diluted share for the quarter," he added. North American segment revenues, which include all of the company's toys and games business in the United States, Canada and Mexico, were $745.5 million for the quarter compared to $712.3 million a year ago, reflecting strong performances from Littlest Pet Shop, Playskool, Nerf, Play-Doh and Monopoly. The segment reported an operating profit of $111.6 million for the quarter compared to $85.3 million last year, as adjusted to include the impact of stock-based compensation. In addition to the higher revenues, the improvement in operating profit reflected declines in amortization and royalty expenses, partially off-set by increases in product development and advertising expenses. International segment revenues for the quarter were $280.4 million compared to $264.6 million a year ago and included a $9.3 million favorable impact from foreign exchange. Volume increases reflected strong performance from Littlest Pet Shop, Playskool, Transformers and Monopoly. The International segment reported an operating profit of $43.2 million compared to an operating profit of $32.9 million in 2005, as adjusted to include the impact of stock-based compensation expense. The improvement in operating profit is primarily due to decreases in royalty and amortization expense. The company reported third quarter Earnings Before Interest, Taxes, Depreciation and Amortization of $192.6 million compared to $187.9 million in 2005. During the quarter, the company repurchased approximately 6.6 million shares of common stock at a total cost of $131.0 million. Since June 2005, the company has repurchased 23.5 million shares at a total cost of $465.3 million. Headquartered in Pawtucket, Rhode Island, Hasbro, Inc. (NYSE: HAS) -- http://www.hasbro.com/-- provides children's and family leisure time entertainment products and services, including the design, manufacture and marketing of games and toys ranging from traditional to high-tech. The company has operations in Australia, France, Hong Kong, and Mexico, among others. * * * Moody's Investors Service affirmed the Baa3 long-term debt rating of Hasbro, Inc., and changed the ratings outlook to positive from stable to reflect the expectation for continued-strong operating performance and cash flows, leading to further debt reduction and credit metric improvement over the near-to-intermediate-term. Ratings affirmed include the Baa3 senior unsecured debt rating and the (P)Ba1 rating for subordinated debt. HAWAIIAN TELCOM: Limited Resources Cue Moody's Ratings Review ------------------------------------------------------------- Moody's Investors Service placed all debt ratings of Hawaiian Telcom Communications, Inc. on review for possible downgrade and downgraded the company's speculative grade liquidity rating to SGL-4 from SGL-3. These actions are based on Moody's concern that HI-Tel currently has limited resources to withstand the unexpected earnings and cash flow shortfalls arising from the continuing delay in creating fully-functioning back office systems. In particular, the ongoing lack of full back-office system functionality is contributing to numerous operational problems and distracting senior management which has resulted, and is expected to continue to result in, HI-Tel incurring significant incremental expenses and lost revenues. Consequently, the company's liquidity profile has weakened. Moody's anticipate that usage under the revolver will continue to increase over the next few quarters and that covenant compliance, already slim, will be further pressured. In addition, Moody's believes that the company's financial and operating profile could be permanently impaired if the systems issues are not resolved quickly. The review will focus on: -- the company's plans for remediating its systems issues with particular focus on timing and cost; -- the company's ability to quickly strengthen its liquidity profile and reduce reliance on its revolving credit facility; and, -- an updated assessment of the long-term profitability and cash flow generating capacity of HI-Tel's wireline businesses given damage to the business caused by ongoing problems with customer service as a result of the systems weaknesses. These ratings are placed under review for possible downgrade as a part of this rating action: -- Corporate Family Rating at B1 -- $200 Million Senior Secured Revolving Credit Facility due 2012 at Ba3 -- $300 Million Senior Secured Tranche A Term Loan due 2012 at Ba3 -- $450 Million Senior Secured Tranche B Term Loan due 2012 at Ba3 -- $150 Million 10.79% Senior Notes due 2013 at B3 -- $200 Million 9.75% Senior Notes due 2013 at B3 -- $150 Million 12.50% Senior Subordinated Notes due 2015 at B3 Hawaiian Telcom Communications, Inc. is an incumbent telecommunications service provider servicing approximately 615K access lines. The Company previously operated as a division of Verizon Communications, Inc., known as Verizon Hawaii, but was acquired by The Carlyle Group on May 2, 2005, in a $1.6 billion leveraged buy-out. The company is headquartered in Honolulu, Hawaii. HERTZ CORP: S&P Affirms Low-B Ratings & Removes CreditWatch ----------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on two synthetic securities related to Hertz Corp. and its related entities and removed them from CreditWatch, where they were placed with negative implications on June 30, 2006. The rating actions reflect the affirmation of the long-term corporate credit and senior unsecured debt ratings on Hertz Corp. and its related entities and their removal from CreditWatch negative on Nov. 16, 2006. The ratings on the affected synthetic securities listed below are weak-linked to the underlying collateral, Hertz Corp. debt. Ratings Affirmed And Off Watch Negative SATURNS Trust No. 2003-8 $25 Million Hertz Corp. Debenture-backed Callable Units and Interest Only Units Rating Class To From ----- -- ---- A BB- BB-/Watch Neg B BB- BB-/Watch Neg SATURNS Trust No. 2003-15 $25 Million 7.0% Class A Callable Units, Notional Amount 0.851% Class B Interest-Only Callable Units Rating Class To From ----- -- ---- A BB- BB-/Watch Neg B BB- BB-/Watch Neg IMAGIVISION MEDIA: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Imagivision Media, LLC 4100 West 76th Street Edina, MN 55435 Bankruptcy Case No.: 06-42731 Chapter 11 Petition Date: November 20, 2006 Court: District of Minnesota (Minneapolis) Debtor's Counsel: William A. Vincent, Esq. William A. Vincent, P.A. 17736 Excelsior Boulevard Minnetonka, MN 55345 Tel: (952) 401-8883 Fax: (952) 401-8889 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor does not have unsecured creditors who are not insiders. INFOUSA INC: Earns $11.1 Million in Quarter Ending September 30 --------------------------------------------------------------- infoUSA Inc. reports record third quarter 2006 financial results. infoUSA's earnings for the third quarter of 2006 were $11,148,000 versus $8,089,000 in the third quarter of 2005. "During the third quarter of 2006, we delivered record revenues of $106.4 million vs. $95.5 million for the same period in 2005, an increase of $10.9 million as compared to the third quarter of 2005 and a new record in our Company's history," Vin Gupta, Chairman of the Board commented. "Our third quarter operating income was $20 million versus $15.2 million during the corresponding quarter of 2005. The operating margin was up in the third quarter of 2006 due to seasonality in our large customer market. The strong revenue base is reflected in $63.6 million of unbilled revenue in the Company's pipeline for the next twelve months." For the first nine months of 2006, net sales were $309.8 million compared to $284.4 million for the same period last year. This represents a 9% increase in revenue. Operating income was $43 million for the first nine months of 2006 compared to $42.6 million for the first nine months of 2005. Expanded Advertising and Corporate Branding infoUSA is investing heavily in branding and advertising to promote SalesGenie.com, infoUSA.com, and Credit.net(R). infoUSA increased its advertising by $2 million over the third quarter of 2005 and by $7.4 million YTD over the same period last year. The increased spending was in radio, TV, Google, and other mass advertising. This advertising effort has led to an increase in expense, but as the subscription base builds and the advertising costs remain stable, infoUSA expects that sales and profitability will increase. About infoUSA Headquartered in Omaha, Nebraska, infoUSA Inc. (NASDAQ: IUSA) -- http://www.infoUSA.com/-- provides business and consumer information products, database marketing services, data processing services and sales and marketing solutions. Founded in 1972, infoUSA owns a proprietary database of 250 million consumers and 14 million businesses under one roof. * * * As reported in the Troubled Company Reporter on Nov. 21, 2006, Moody's affirmed the Ba2 rating on $275 million in first lien credit facilities of infoUSA Inc. Concurrently, Moody's has affirmed the corporate family rating of infoUSA at Ba3 and the outlook as stable. INT'L SHIPHOLDING: Moody's Assigns Loss-Given-Default Ratings ------------------------------------------------------------- In connection with Moody's Investors Service's implementation of its Probability-of-Default and Loss-Given-Default rating methodology for the Transportation sector, the rating agency confirmed its B2 Corporate Family Rating for International Shipholding Corp., and confirmed its Caa1 rating on the company's 7.75% Senior Unsecured Notes due on Oct. 15, 2007. Additionally, Moody's assigned an LGD6 rating to those bonds, suggesting noteholders will experience a 92% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Based in New Orleans, Louisiana, International Shipholding Corp. - - http://www.intship.com/-- through its subsidiaries, operates a diversified fleet of U.S. and foreign flag vessels that provide international and domestic maritime transportation services to commercial and governmental customers under medium-to long-term charters or contracts. JACK IN THE BOX: Dutch Offer Cues Moody's Negative Review --------------------------------------------------------- Moody's Investors Service placed all ratings of Jack-in-the-Box Inc. under review for possible downgrade. The review was prompted by the company's announcement that it will execute a modified Dutch tender offer for up to 5.5 millions shares of its common stock or a maximum aggregate purchase price of $335.5 million, which it will partially fund with a new $625 million bank credit facility that will be comprised of a $150 million revolver and $475 million term loan. Proceeds from the new credit facility will also be used to retire existing term debt outstanding. The company will offer to purchase its common stock at a price that is not greater than $61 and not less than $55 per share for a period of time that is expected to commence on Nov. 21, 2006 and expected to expire on Dec. 19, 2006. Ratings placed on review: -- Corporate family rating rated Ba2 -- Probability of Default rating rated Ba3 -- $275 million gtd. senior secured term loan B, due Jan. 8, 2011 rated Ba1, LGD2, 17% -- $200 million gtd. senior secured revolving credit facility, due Jan. 8, 2008, rated Ba1, LGD2, 17% The review for possible downgrade will focus on the negative implications of increasing debt levels associated with the proposed Dutch tender offer. The review will also focus on management's strategic plan in regards to future shareholder initiatives and what Moody's believes to be a growing emphasis towards increasing shareholder value to the potential detriment of bondholders. For the twelve month period ending July 9, 2006, Jack-in-the-Box's credit metrics based on Moody's standard analytical adjustments resulted in high leverage on a debt to EBITDA basis of about 4.2x, although EBIT coverage of interest of approximately 2.7x and retained cash flow to debt of around 16% were relatively reasonable. As of Oct. 1, 2006, the company reported cash and cash equivalents of approximately $233.9 million. Jack in the Box Inc, headquartered in San Diego, California, operates or franchises 2079 quick-service hamburger restaurants predominantly on the West Coast, in Texas, and in the Southeast. The company also operates or franchises 318 fast-casual Qdoba Mexican Grills and 55 Quick Stuff convenience stores. Revenue for the Fiscal Year ending October 3, 2006 exceeded $2.7 billion. JAZZ GOLF: Court OKs Asset Sale Proposal under Canadian Bankr. Act ------------------------------------------------------------------ The proposal authorizing the sale of the assets of Jazz Golf Equipment Inc. to 5330319 Manitoba Ltd., made pursuant to the Canadian Bankruptcy and Insolvency Act, was approved by the Hon. Albert Clearwater of the Manitoba Court of Queen's Bench at a hearing held on Nov. 22, 2006, in Winnipeg, Manitoba. As contemplated by the Proposal, Jazz will proceed to sell all of its assets and undertaking to 5330319 Manitoba Ltd., a private corporation financed by Ensis Growth Fund Inc. The transaction will close today, Nov. 23, 2006, at which time Jazz will cease to carry on active business and Newco will continue on the business of designing and selling golf equipment under its new name, Jazz Sports Limited. The consideration received for the transfer of assets will be consistent with the terms of the Proposal. The shares of Jazz presently listed on the TSXV will move to the NEX Board of the TSXV, where Jazz shares will trade under the symbol JZZ.H. As a condition of the sale of its assets, Jazz has undertaken to change its name to a name that does not include the words "Jazz Golf". About Jazz Golf Equipment Headquartered in Winnipeg, Manitoba, Jazz Golf Equipment Inc. (TSX VENTURE: JAZZ.A) -- http://www.jazzgolf.com/-- manufactures and distributes, primarily in Canada, high quality golf clubs and accessories. JETBLUE AIRWAYS: Moody's Junks Rating on $40-Mil. Facility Bonds ---------------------------------------------------------------- Moody's Investors Service assigned ratings of Caa1, LGD5, 88% to the approximately $40 million of Special Facility Revenue Bonds, Series 2006 to be issued by the New York City Industrial Development Agency. The Caa1 rating is the senior unsecured debt rating of JetBlue, as the obligor of the JFK Facility Bonds. Moody's affirmed the B2 corporate family rating for JetBlue Airways Corporation. The outlook remains negative. Under the structure, JetBlue will enter into a series of leases with the NYC Agency whereby payments from JetBlue will be passed through to JFK Facility Bond holders. In addition, JetBlue will unconditionally guarantee the timely payment of interest and principal of the bonds. Using Moody's Loss Given Default methodology, a LGD5 bucket implies that holders of a JetBlue senior unsecured claim could expect to experience a loss of between 70 and 90% in the event of a default. The Caa1 rating reflects the subordination of a senior unsecured claim at JetBlue to the substantial amount of secured debt in JetBlue's capital structure. The JFK Facility Bonds will be issued to reimburse JetBlue for a portion of the cost of construction of an airport facility that was substantially completed in June 2005 and is in use by JetBlue Airways Corporation at the JFK International Airport. While the Bonds are secured by a leasehold mortgage interest in the land and building improvements, Moody's views such security as having very limited value for bond holders. In the event of default, The Port Authority of New York and New Jersey would fully control critical decisions such as the potential re-assignment of the lease, although The Port Authority is required to adhere to certain standards as defined in the documents. "Because the holders of the JFK Facility Bonds do not have full control of the collateral and the holders would more likely pursue claims under the guaranty, Moody's views these obligations as a senior unsecured claim of JetBlue Airways", according to Bob Jankowitz at Moody's Investors Service. JetBlue's B2 corporate family rating reflects the airline's low- cost operations combined with an appealing product and strong brand image among consumers that provide it with a competitive advantage among air carriers in its high-density core markets. Nonetheless, rapid growth in the mostly debt-financed aircraft fleet, with operating margins low even by airline standards, have resulted in credit metrics that are weak for the current B2 rating category. "Although recent results showed some promise, a further ratings downgrade is possible absent improvement in key credit metrics including EBIT margin consistent with other B2 rated issuers, and EBIT to interest to sustainably greater than 1.0x", adds Bob Jankowitz at Moody's . The negative outlook reflects Moody's concerns that the company could face challenges executing its growth strategy with a new aircraft type, and returning to profitability over the near term while operating in the still high fuel cost environment. The rating outlook could be stabilized if substantial improvements to its operating results occur, including an EBIT margin greater than 7% over time and EBIT to interest expense sustainably greater than 1.5x, as well as a successful integration of the E190 aircraft. Ratings assigned: * New York City Industrial Development Agency Special Facility Revenue Bonds, Series 2006 (JetBlue Airways Corporation Project) rated at Caa1, LGD5, 88%. JetBlue Airways Corporation is headquartered in Forest Hills, New York. JOSEPH JEMSEK: Case Summary & 13 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Joseph Gregory Jemsek 2215 Sharon Lane Charlotte, NC 28211 Bankruptcy Case No.: 06-31986 Chapter 11 Petition Date: November 20, 2006 Court: Western District of North Carolina (Charlotte) Judge: J. Craig Whitley Debtor's Counsel: Joseph W. Grier, III, Esq. Grier, Furr & Crisp, P.A. 101 North Tryon Street, Suite 1240 One Independence Center Charlotte, NC 28246 Tel: (704) 332-0201 Fax: (7040 332-0215 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 13 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ SunTrust Bank $6,087,291 101 South Kings Drive Charlotte, NC 28204 First Citizens Bank & Trust Co. $1,633,546 Mecklenburg Commercial Banking c/o Loan Servicing Department - DAC20 P.O. Box 26592 Raleigh, NC 27611-6592 First Citizens Bank & Trust Co. $435,758 Mecklenburg Commercial Banking c/o Loan Servicing Department - DAC20 P.O. Box 26592 Raleigh, NC 27611-6592 First Citizens Bank & Trust Co. $279,988 Mecklenburg Commercial Banking c/o Loan Servicing Department - DAC20 P.O. Box 26592 Raleigh, NC 27611-6592 Scottish Bank $200,000 1057 Providence Road Charlotte, NC 28207 SunTrust Bank $77,735 P.O. Box 85052 Richmond, VA 23285-5160 Bank of America $45,270 MBNA P.O. Box 17054 Wilmington, DE 19884 Bank of America $34,183 201 North Tryon Street Charlotte, NC 28255 James A. Wilson $18,119 5322 Highgate Drive, Suite 243 Durham, NC 27713 Jenkins, Heather $0 c/o Robert A. Karney Karney, deBrun & Wilcox 1208 South Tryon Street Charlotte, NC 28203 Joseph Jabkiewicz, $0 c/o Eric A. Rogers Caudle & Spears, P.A. 121 West Trade Street, Suite 2600 Charlotte, NC 28202 Phillip Moore $0 Niki Taylor Moore DeVore, Acton & Stafford, PA 831E Morehead Street, Suite 245 Charlotte, NC 28202-2825 Blue Cross and Blue Shield of NC $0 P.O. Box 2291 Durham, NC 27702 JOSEPH STATKUS: Case Summary & Nine Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Joseph Kevin Statkus Norma Jean Bernadette Hoover-Statkus 11700 Caris Glenne Drive Herndon, VA 20170 Bankruptcy Case No.: 06-11554 Chapter 11 Petition Date: November 20, 2006 Court: Eastern District of Virginia (Alexandria) Judge: Robert G. Mayer Debtors' Counsel: Spencer D. Ault, Esq. Law Office of Spencer D. Ault 13193 Mountain Road Lovettsville, VA 20180 Tel: (703) 777-7800 Fax: (540) 822-3880 Total Assets: $1,578,670 Total Debts: $944,974 Debtors' Nine Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ USAA Federal Savings Bank 2003 Nissan Quest $17,182 P.O. Box 47504 San Antonio, TX 78265-7504 Navy Federal Credit Union Credit card $11,201 One Security Place Merrifield, VA 22119-0001 Citicorp Vendor Finance $9,171 c/o Busman & Busman, P.C. Navy Federal Credit Union Credit card $4,237 One Security Place Merrifield, VA 22119-0001 Discover Financial Credit card $4,134 Services LL P.O. Box 15316 Wilmington, DE 19850-5316 Presidential Resorts Maintenance fees $938 9220 Plank Road Spotsylvania, VA 22553 Equity Search, Inc. $506 8321 Old Courthouse Road Suite 220 Vienna, VA 22182 Caris Glenne HOA Hoa Fees $450 c/o Tom Cowperthwaite, Treas. 1109 Arboroak Place Herndon, VA 20170 County of Fairfax Personal property $376 Dept. of Tax Administration tax P.O. Box 10202 Fairfax, VA 22035-0202 LB-UBS COMMERCIAL: Moody's Holds Low-B Rating on 3 Cert. Classes ---------------------------------------------------------------- Moody's Investors Service upgraded the ratings of five classes and affirmed the ratings of 14 classes of LB-UBS Commercial Mortgage Trust 2004-C1, Commercial Mortgage Pass-Through Certificates, Series 2004-C1: - Class A-1, $104,382,849, Fixed, affirmed at Aaa - Class A-2, $213,000,000, Fixed, affirmed at Aaa - Class A-3, $113,000,000, Fixed, affirmed at Aaa - Class A-4, $751,262,000, WAC, affirmed at Aaa - Class X-CL, Notional, affirmed at Aaa - Class X-CP, Notional, affirmed at Aaa - Class X-ST, Notional, affirmed at Aaa - Class B, $12,463,000, WAC, upgraded to Aaa from Aa1 - Class C, $12,463,000, WAC, upgraded to Aaa from Aa2 - Class D, $16,023,000, WAC, upgraded to Aa1 from Aa3 - Class E, $21,365,000, WAC, upgraded to Aa3 from A1 - Class F, $12,463,000, WAC, upgraded to A1 from A2 - Class G, $24,926,000, WAC, affirmed at A3 - Class H, $19,584,000, WAC, affirmed at Baa1 - Class J, $14,244,000, WAC, affirmed at Baa2 - Class K, $16,023,000, WAC, affirmed at Baa3 - Class L, $7,122,000, WAC, affirmed at Ba1 - Class M, $5,341,000, WAC, affirmed at Ba2 - Class N, $3,561,000, WAC, affirmed at Ba3 As of the Nov. 17, 2006 distribution date, the transaction's aggregate certificate balance has decreased by approximately 3.4% to $1.38 billion from $1.42 billion at securitization. The Certificates are collateralized by 103 mortgage loans ranging in size from less than 1.0% of the pool to 15.8% of the pool, with the top 10 loans representing 59.4% of the pool. The pool includes five shadow rated investment grade loans comprising 44.2% of the pool. Four loans, representing 7.9% of the pool balance, have defeased and are collateralized by U.S. Government securities. The pool has not sustained any losses to date. Currently there is one loan, representing less than 1.0% of the pool, in special servicing. Moody's is estimating a loss of $2.3 million for this loan. Seventeen loans, representing 8.8% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2005 operating results for approximately 99.0% of the pool. Moody's loan to value ratio for the conduit component is 93.6%, compared to 96.2% at securitization. Moody's is upgrading Classes B, C, D, E and F due to improved overall pool performance and defeasance. The largest shadow rated loan is the UBS Center - Stamford Loan ($216.8 million - 15.8%), which is secured by the leasehold interest in a 682,000 square foot Class A office property located in Stamford, Connecticut. The property is 100% leased to UBS AG and serves as the US headquarters of UBS Investment Bank. The lease is triple net and expires in December 2017. The loan is structured with a 23.75 year amortization schedule and matures in Oct. 2016. The loan sponsor is Eaton Vance Management. Moody's current shadow rating is A3, the same as at securitization. The second shadow rated loan is the GIC Office Portfolio Loan ($200.0 million - 14.5%), which is a pari passu interest in a $700.0 million first mortgage loan. The loan is secured by 12 office properties totaling 6.4 million square feet and located in seven states. The highest geographic concentrations are Chicago, San Francisco and suburban Philadelphia. The portfolio is 90.6% occupied, essentially the same as at securitization. The Chicago concentration is comprised of two buildings -- the AT&T Corporate Center and the USG Building. The performance of these properties has declined slightly since securitization. The loan sponsor is Prime Plus Investments, Inc., a private REIT wholly owned by the Government of Singapore Investment Corporation Pte Ltd. The loan matures in January 2014 and is structured with an initial five- year interest only period. Moody's current shadow rating is A2, the same as at securitization. The third shadow rated loan is the MGM Tower Loan ($124.5 million - 9.0%), which is secured by a 777,000 square foot Class A office building located in the Century City office submarket of Los Angeles, California. The property was constructed in 2003 and was still in lease-up at securitization. The property is 95.5% occupied, compared to 77.0% at securitization. The largest tenants are MGM and International Lease Finance Corporation. The property is also encumbered by an $86 million B Note. The loan sponsor is JMB Realty Corporation. Moody's current shadow rating is Aa2, the same as at securitization. The fourth shadow rated loan is the Louis Joliet Mall Loan, which is secured by the borrower's interest in a 938,000 square foot regional mall located approximately 35 miles southwest of Chicago in Joliet, Illinois. The mall is anchored by Marshall Field's, Sears, J.C. Penney and Carson Pirie Scott, all of whom own their own pads and improvements and are not part of the collateral. The in-line tenant space is 93.3% occupied, compared to 92.7% at securitization. Performance has improved since securitization due to higher rents and stable expenses. The loan sponsor is Westfield America Inc. Moody's current shadow rating is A3, compared to Baa3 at securitization. The fifth shadow rated loan is the Southgate Mall Loan ($12.1 million - 0.9%), which is secured by a 473,000 square foot regional mall located in Missoula, Montana. The mall is anchored by Dillard's, Sears and J.C. Penney. The loan fully amortizes over a 20-year term. Moody's current shadow rating is Aa1, the same as at securitization. The top three non-defeased conduit loans represent 8.2% of the outstanding pool balance. I The largest conduit loan is the Passaic Street Industrial Park Loan ($44.8 million - 3.3%), which is secured by 10 industrial and warehouse properties located in Wood Ridge, New Jersey. The portfolio contains 2.2 million square feet and is 93.9% occupied, essentially the same as at securitization. The largest tenant is Rose Art Industries, Inc. The portfolio's performance has declined since securitization due to higher expenses. Moody's LTV is 98.1%, compared to 96.3% at securitization. II The second largest conduit loan is the Market Place at Four Corners Loan ($38.6 million - 2.8%), which is secured by a 471,000 square foot community retail center located approximately 20 miles southeast of Cleveland in Bainbridge Township, Ohio. The center is anchored by Wal-Mart and Kohl's, which together occupy 48.0% of the premises on long-term leases. The center is 98.5% occupied, compared to 95.9% at securitization. Performance has improved since securitization due to higher income and stable expenses. Moody's LTV is 87.5%, compared to 96.1% at securitization. III The third largest conduit loan is the Kurtell Medical Office Portfolio Loan ($29.0 million - 2.1%), which is secured by five medical office buildings and one out-patient surgical center located in Nashville, Tennessee and Orlando, Florida. The portfolio totals 212,000 square feet. Occupancy is currently 97.7%, compared to 94.7% at securitization. Moody's LTV is 99.8%, compared to 104.1% at securitization. The pool's collateral is a mix of office, retail, multifamily, U.S. Government securities (7.9%) and industrial and self storage. The collateral properties are located in 28 states and Washington, D.C. LEANDER JACKSON: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Leander Jackson Steven Jackson 22351 Murphy Chicago Heights, IL 60411-5817 Bankruptcy Case No.: 06-15243 Chapter 11 Petition Date: November 20, 2006 Court: Northern District of Illinois (Chicago) Judge: Susan Pierson Sonderby Debtors' Counsel: Lloyd J. Brooks, Esq. The Brooks Law Firm 15028 Woodlawn Avenue Dolton, IL 60419 Tel: (708) 849-1348 Fax: (708) 849-1398 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtors did not file a list of their 20 Largest Unsecured Creditors. LEAR CORP: Fitch Rates New $900-Mil. Sr. Unsecured Notes at B ------------------------------------------------------------- Fitch has assigned a rating of 'B/RR4' to Lear's $900 million in new senior unsecured notes. The notes are divided in to two tranches, with $300 million maturing in 2013 and $600 million maturing in 2016. The notes will be guaranteed by certain Lear direct and indirect subsidiaries. Proceeds will be used to tender for Lear's outstanding 8.125% unsecured senior notes due 2008 and a significant portion of the outstanding 8.11% unsecured senior notes due 2009, resulting in a slight increase in Lear's unsecured debt mix, but not enough to change Fitch's recovery analysis. The refinancing extends debt maturities by five to eight years, and together with Lear's bank facilities, provides substantial liquidity and time to focus on restructuring efforts. The Outlook is Negative. Lear will continue to face very difficult conditions in the U.S. market due to declining production at Ford and GM high commodity costs and Lear's restructuring efforts. New business wins and reduced capital expenditures will help support operating results during the restructuring process, but any improvement in the company's leverage position in 2007 is expected to be modest. The pending formation of a joint-venture to which Lear will contribute its interiors operations is viewed as a positive due to that unit's operating losses and high capital expenditure requirements. Fitch's current ratings are unaffected by the refinancing of like debt: -- Issuer Default Rating (IDR) at 'B'; -- Senior secured bank debt at 'BB/RR1'; -- Senior unsecured debt at 'B/RR4'. LEGACY ESTATE: Files Amended Disclosure Statement in California --------------------------------------------------------------- The Legacy Estate Group LLC and its Official Committee of Unsecured Creditors has filed an amended Disclosure Statement explaining their joint Chapter 11 Plan of Liquidation with the U.S. Bankruptcy Court for Northern District of California. The Court previously approved the sale of substantially all of the Debtor's assets to Kendall-Jackson Wine Estates Ltd for about $97 million. The Plan provides for the distribution of the Debtor's cash on hand, including the net proceeds from the purchase deal, in accordance of the priorities established by the Bankruptcy Code. Any excess of the proceeds will be distributed to equity security holders. Laminar Subordinated Claim Laminar Direct Capital L.P. made loans to the Debtor to finance its acquisition of two wineries, Byron Vineyard & Winery in Santa Maria, California and Arrowood Vineyards & Winery in Glen Ellen, California from Constellation Brands, Inc. Liens and security interests in substantially all of the Debtor's assets secured the loans. As a result of the debt incurred to finance the acquisitions, the Debtor became over-leveraged, was unable to service that debt and eventually defaulted in its obligations to Laminar. Laminar was entitled to enforce its legal rights and remedies against the Debtor, including foreclosure of its liens and security interests. In connection with the sale hearing, the Debtor, Laminar, the Creditors' Committee and Connaught Capital Partners, LLC, entered into a stipulation that will fix the amount of Laminar's claims under the credit agreements and the Bryan Legacy claim. The Court approved the Laminar Stipulation on Aug. 16, 2006. Laminar received $87.2 million from the sale proceeds. Its remaining subordinated claim amounted to $1.3 million. Treatment of Claims Under the Debtor's Amended Plan, all administrative claims will be paid in full. Holders of tax claims will receive a cash payment of the allowed amount of that claim. In addition, if all allowed unsecured claims are paid in full, then each allowed tax claim holder would receive a pro rate basis of interest on that claim. All holders of the allowed Red Barn Claims will be paid in full, including interest and attorneys' fees, if any. If a Red Barn Claim is known to be an allowed administrative claim or an allowed unsecured claim, that Red Barn Claim will receive the same treatment provided to other creditors holding similar allowed claims. Each holder of an allowed Class 2 Secured Claim will receive, at the Debtor's option: (a) 100% of the net proceeds from the sale of its collateral; (b) the return of the collateral; or (c) other less favorable treatment as agreed by the Debtor and secured claim holder. Priority claims will be paid in full. In addition, if all allowed unsecured claims are paid in full, then each holder of an allowed priority claim will receive interest on that claim at the legal rate of 4.35% from the bankruptcy filing through the date of payment in full to the extent of remaining available cash, on a pro rata basis with holders of allowed tax and unsecured claims and the Laminar Subordinated Claim. Holders of Allowed Class 5 Timely Filed Unsecured Claim will receive their pro rata share of available cash under one or more distributions, until paid in full. In addition, if all allowed class 7 Late Filed Claims are in full payment, then each holder of Allowed Class 5 claim, will receive interest on that claim at the legal rate of 4.35% from the bankruptcy filing through the date of payment in full to the extent of remaining available cash, on a pro rata basis with holders of allowed tax, priority and late filed unsecured claims and the Laminar Subordinated Claim. Pursuant to the Laminar Stipulation, holders of the Laminar Subordinated Claim will receive half of each additional dollar in excess of $1.15 million available for distribution to allowed Class 5 claims, until paid in full of the Laminar Subordinated Claim. In addition, if all allowed class 7 Late Filed Claims are in full payment, then each holder of Laminated Subordinated Claim, will receive interest on that claim at the legal rate of 4.35% from the bankruptcy filing through the date of payment in full to the extent of remaining available cash, on a pro rata basis with holders of allowed tax, priority and unsecured claims. All Allowed Class 7 Late Filed Claim holders will receive its pro rata share of all available cash remaining after payment in full of Class 5 and 6. In addition, if all allowed class 7 Late Filed Claims are in full payment, then each holder of Allowed Class 7 claim, will receive interest on that claim at the legal rate of 4.35% from the bankruptcy filing through the date of payment in full to the extent of remaining available cash, on a pro rata basis with holders of allowed tax, priority and Timely Filed Unsecured Claims and the Laminar Subordinated Claim. Equity Interest holders, who will lose all rights to control the management and governance of the Debtor, will receive its pro rata share of all available cash remaining after payment in full of all allowed claims. The Court will convene a hearing on Feb. 9, 2007, at 10:00 A.M., to consider approval of the Debtor's Amended Disclosure Statement. A full-text copy of the Debtor's Amended Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=061121204459 Headquartered in Saint Helena, California, The Legacy Estate Group LLC -- http://www.freemarkabbey.com/-- owns Freemark Abbey Winery, which produces a range of red, white, and dessert wines. Legacy Estate and Connaught Capital Partners, LLC, filed for chapter 11 protection on November 18, 2005 (Bankr. N.D. Calif. Case No. 05-14659). John Walshe Murray, Esq., Lovee Sarenas, Esq., and Robert A. Franklin, Esq., at the Law Offices of Murray and Murray represent the Debtors in their restructuring efforts. Lawyers at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts between $50 million and $100 million. LEVITZ HOME: Government Withdraws $1.3-Million Claim ---------------------------------------------------- On behalf of the U.S. Government, the Internal Revenue Service withdraws the Government's request for payment of a $1,350,262 administrative expense claim filed against Levitz Home Furnishings, Inc., and its debtor-affiliates. The claim was filed on March 8, 2006, for taxes and any interest or penalty due under the internal revenue laws of the United States. Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc. -- http://www.levitz.com/-- retails furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. The Company and its 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq., at Jones Day, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $245 million in assets and $456 million in debts. Jay R. Indyke, Esq., at Kronish Lieb Weiner & Hellman LLP represents the Official Committee of Unsecured Creditors. Levitz sold substantially all of its assets to Prentice Capital on Dec. 19, 2005. (Levitz Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) LEVITZ HOME: Moves Corporate Offices to the Woolworth Building -------------------------------------------------------------- Levitz Furniture will relocate its corporate headquarters to the Woolworth Building in downtown Manhattan. The announcement comes as the home furnishings leader continues its significant progress towards rebuilding the Levitz brand. Levitz Furniture expects the relocation will be complete by mid-December. The company will move its current corporate office in Woodbury, N.Y. into the entire 23rd floor of the Woolworth Building, located at 233 Broadway between Barclay Street and Park Place in downtown Manhattan. Levitz Furniture will take approximately 30,000 square feet in the building in a sublease from Reuters. The Company will continue to maintain a small corporate presence in Woodbury, mostly within its Information Technology area. "We are continuing our efforts to strengthen the Levitz brand, and this move to lower Manhattan represents one more important step," said Tom Baumlin, CEO of Levitz Furniture. "Over the past several months, we have attracted a world class management team and believe this move will further our efforts to continue to bring a superior level of creative talent to our organization. We are excited to tap into the energy of Manhattan and participate in the downtown area's rebuilding efforts as we reestablish Levitz Furniture as a premier source for furniture, bedding and home furnishings." Cushman & Wakefield Executive Director Andrew Peretz represented Levitz Furniture in its site selection and in lease negotiations with Reuters. "Tenants from all areas continue to realize the draw of downtown Manhattan," said Mr. Peretz. "With new retail, residential and office components coming online, downtown is one of the most progressive business districts in the nation, and forward-thinking companies like Levitz Furniture want to operate here." Built in 1913, the Woolworth Building is one of the 20 tallest buildings in New York City, and was the world's tallest building until 1930 when it was surpassed by 40 Wall Street. The building, which totals 54 stories and more than 855,000 square feet, was commissioned by Woolworth's founder Frank Woolworth as the retailer's new corporate headquarters. Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc. -- http://www.levitz.com/-- retails furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. The Company and its 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq., at Jones Day, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $245 million in assets and $456 million in debts. Jay R. Indyke, Esq., at Kronish Lieb Weiner & Hellman LLP represents the Official Committee of Unsecured Creditors. Levitz sold substantially all of its assets to Prentice Capital on Dec. 19, 2005. (Levitz Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) MAGNOLIA ENERGY: Files Schedules of Assets and Liabilities ---------------------------------------------------------- Magnolia Energy L.P. and its debtor-affiliates delivered its Schedules of Assets and Liabilities to the U.S. Bankruptcy Court for the District of Delaware disclosing: Magnolia Energy L.P.: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $44,113,151 B. Personal Property $435,362,460 C. Property Claimed as Exempt D. Creditors Holding $416,758,563 Secured Claims E. Creditors Holding $907,000 Unsecured Priority Claims F. Creditors Holding $214,361,601 Unsecured Nonpriority Claims ----------- ------------ Total $479,475,611 $632,027,164 Magnolia Generating Partners I LLC: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $0 B. Personal Property $0 C. Property Claimed as Exempt D. Creditors Holding $416,758,563 Secured Claims E. Creditors Holding $0 Unsecured Priority Claims F. Creditors Holding $215,268,601 Unsecured Nonpriority Claims --------- ------------ Total $0 $632,027,164 Magnolia Generating Partners II LLC: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $0 B. Personal Property $212,000,000 C. Property Claimed as Exempt D. Creditors Holding $416,758,563 Secured Claims E. Creditors Holding $0 Unsecured Priority Claims F. Creditors Holding $0 Unsecured Nonpriority Claims --------- ------------ Total $212,000,000 $416,758,563 Magnolia Generating Partners III LLC: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $0 B. Personal Property $0 C. Property Claimed as Exempt D. Creditors Holding $416,758,563 Secured Claims E. Creditors Holding $0 Unsecured Priority Claims F. Creditors Holding $0 Unsecured Nonpriority Claims --------- ------------ Total $0 $416,758,563 Headquartered in Ashland, Michigan, Magnolia Energy L.P., and three of its affiliates filed for chapter 11 protection on Sept. 29, 2006 (Bankr. D. Del. Case Nos. 06-11069 through 06-11072). Mark D. Collins, Esq., at Richards Layton & Finger, represents the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. MATRIA HEALTHCARE: Moody's Affirms Corporate Family Rating at B1 ---------------------------------------------------------------- Moody's Investors Service changed Matria Healthcare Incorporated's rating outlook to stable from negative. Concurrently, Moody's affirmed the company's B1 corporate family rating. Matria recently upsized its senior secured first lien term loan from $265 million to $330 million and used the proceeds to prepay all outstandings under its $65 million second lien term loan. In rating the revised capital structure and in accordance with Moody's Loss Given Default rating methodology Moody's lowered Matria's probability of default rating to B2 from B1. Additionally, Moody's revised the company's first lien credit facility ratings to B1 from Ba3 reflecting the new capital structure. More specifically, Moody's believes that the first lien bank debt would fully absorb losses in the event of a payment default since Matria's capital structure now lacks the cushion afforded by the presence of junior capital, which suggests a higher expected loss and results in lowered ratings. Ratings affirmed: -- Corporate family rating, B1 Ratings downgraded: -- Probability of default rating to B2 from B1 -- $30 million Revolving Credit Facility due 2011, to B1, LGD3, 33% from Ba3, LDG3, 38% -- $330 million Senior Secured Term Loan B due 2012, to B1, LGD3, 33% from Ba3, LDG3, 38% Ratings withdrawn: -- $65 million Second Lien Term Loan due 2012, B3, LGD5, 89% The outlook change to stable reflects the company's Facet Technologies and Dia Real divestitures, the use of such proceeds to reduce debt, the company's integration of CorSolutions, and its realization of expected cost synergies. The stable outlook also reflects Matria's revenue growth and margin improvement. Moody's affirmation of Matria's B1 corporate family rating reflects the company's growing contract backlog, a continued strong contract renewal retention rate over 95%, and increasing financial flexibility and reduced cash interest expense. Matria's significant near term earnout payments of $45 million related to its Winning Habits and Mia Vita acquisitions and the sizable mandatory debt repayments as percentage cash flow constrain the ratings. Sustainable revenue growth, operating margins above 18%, leverage below 3.5x and free cash flow-to-adjusted debt of over 10% would create upward rating pressure. Significant client attrition, price erosion due to increased competition or a material debt- financed acquisition could pressure the ratings or outlook. Moody's revised the ratings on Matria's first lien facility to B1 from Ba3, reflecting the changes to the company's capital structure. Moody's affirmed the first lien bank debt's loss given default rating of LGD-3, which reflects a loss equal to or greater than 30% and less than 50% in the event of a default. The ratings on the first lien bank debt benefit from a first priority claim on substantially all Matria's assets and are guaranteed by substantially all of the company's subsidiaries. Moody's notes that pricing on the upsized first lien term loan is unchanged and that Matria will benefit from $3.1 million in annualized interest costs savings due to the high LIBOR spread of the former second lien term loan. Matria Healthcare, Inc., headquartered in Marietta, Georgia, is a leading provider of disease management and wellness programs to health plans, employers and governments. For the twelve months ended Sept. 30, 2006, Matria's revenues were $324 million. MORGAN STANLEY: Credit Enhancement Cues Fitch to Lift Low-B Rating ------------------------------------------------------------------ Fitch Ratings-Chicago-20 November 2006: Fitch Ratings upgrades Morgan Stanley Capital I Inc., commercial mortgage pass-through certificates, series 1999-RM1: -- $10.7 million class G to 'AAA' from 'AA+'; -- $23.6 million class H to 'A+' from 'A'; -- $8.6 million class J to 'A-' from 'BBB+; -- $12.9 million class K to 'BBB' from 'BBB-'; -- $6.4 million class L to 'BBB-' from 'BB+'; and, -- $8.6 million class M to 'B+' from 'B'. These ratings are affirmed by Fitch: -- $319.6 million class A-2 at 'AAA'; -- Interest-only class X at 'AAA'; -- $43.0 million class B at 'AAA'; -- $45.1 million class C at 'AAA'; -- $12.9 million class D at 'AAA'; -- $34.4 million class E at 'AAA'; and, -- $17.2 million class F at 'AAA'. The $8.6 million class N remains at 'CCC'. Fitch does not rate the $7.6 million class O certificates, and class A-1 has paid in full. The upgrades reflect the increased credit enhancement levels from loan payoffs and amortization, and the defeasance of 18 loans since issuance. As of the October 2006 distribution date, the transaction's aggregate principal balance has decreased 34.8% to $559.2 million from $859.7 million at issuance. Currently, one asset is specially serviced and real-estate owned and losses are expected. The asset is a 168,838 square foot retail center in Madison, NC that is 73% occupied as of August 2006. In Oct. 2005 the asset lost a major tenant after the lease was rejected after bankruptcy filing. Although Fitch expects losses on the specially serviced loan, class O is more than sufficient to absorb the anticipated losses. MORRY WAKSBERG: Case Summary & 40 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: Morry Waksberg, M.D., Inc. 433 Camden Drive 4th Floor Beverly Hills, CA 90210 Bankruptcy Case No.: 06-16101 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Morry Waksberg, M.D. 06-16096 Chapter 11 Petition Date: November 21, 2006 Court: Central District Of California (Los Angeles) Judge: Sheri Bluebond Debtors' Counsel: Craig M. Rankin, Esq. Levene, Neale, Bender, Rankin & Brill LLP 10250 Constellation Boulevard, Suite 1700 Los Angeles, CA 90067 Tel: (310) 229-1234 Fax: (310) 229-1244 Estimated Assets Estimated Debts ---------------- --------------- Morry Waksberg, M.D., Inc. $1 Million to $1 Million to $100 Million $100 Million Morry Waksberg, M.D. $1 Million to $1 Million to $100 Million $100 Million A. Morry Waksberg, M.D., Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Reifman & Glass $500,000 30300 Northwestern Highway Suite 301 Farmington, MI 48334 Lawsuit Financial, LLC $311,750 29777 Telegraph Road Suite 1310 Southfield, MI 48034 Farkas, Glenn $250,000 6546 Firmament Avenue Van Nuys, CA 91406 Pomeroy, Keith $200,000 Renfrew, Yvonne $183,402 Whitehaven P.I. Fund $120,000 Pre-Settlement Funding $108,000 Hoge Fenton Jones & Appel $75,614 Pomeroy Investment Corp. $61,065 Express Lawsuit LLC $56,000 Hittelman, Paul $53,065 Gerstein, Robert S. $45,786 Krycler, Ervin, Taubman & $33,981 Walheim Noveck, Daniel $33,950 Weissman, Lyle Loan $22,000 Legal Plus $16,706 Account Funding T/A $14,019 Impact Recruit Knapp, Judy $14,000 Rutter Hobbs & Davidoff, Inc. $13,652 Platt, Arthur, M.D. Loan $12,500 B. Morry Waksberg, M.D.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Reifman & Glass $500,000 30300 Northwestern Highway Suite 301 Farmington, MI 48334 Franchise Tax Board $270,106 Special Procedures - Insolvency P.O. Box 2952 Sacramento, CA 95812-2952 Farkas, Glenn $250,000 6546 Firmament Avenue Van Nuys, CA 91406 Pomeroy, Keith $200,000 Whitehaven P.I. Fund $120,000 Pre-Settlement Funding $108,000 Hoge Fenton Jones & Appel $75,614 Pomeroy Investment Corp. $61,065 Express Lawsuit LLC $56,000 Gerstein, Robert S. $48,448 Acount Funding, Inc. $14,019 Knapp, Judy $14,000 Rutter Hobbs & Davidoff, Inc. $13,652 Schwartz, Kelley & Otarz $11,000 Parker, Mills & Patel $11,000 JAMS $8,509 Gittler & Bradford $8,369 Weiselman, David $8,000 Mark Nachman $7,500 LA & OC Adjustment Bureau $6,921 NALCO CO: S&P Holds B+ Corp. Credit Rating with Stable Outlook -------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Naperville, Illinois-based Nalco Co. to positive from stable and affirmed the existing 'B+' corporate credit and other ratings. The outlook revision recognizes the potential for further meaningful improvement of key cash flow protection measures. "The ratings could be raised within the next two years, if business conditions and financial prospects are supportive of a continued strengthening of credit quality metrics," said Standard & Poor's credit analyst Wesley E. Chinn. The overall creditworthiness of Nalco, a subsidiary of Nalco Finance Holdings LLC, reflects very aggressive debt leverage, challenging industry conditions in the paper chemicals business, and mature markets in certain geographic regions, especially Europe. Partially offsetting these weaknesses are Nalco's strong competitive position in water treatment and process chemicals, respectable operating margins, and its ability to generate meaningful discretionary cash flows, which are being used for debt reduction. The ratings incorporate Nalco's position as a global leader in providing raw water and wastewater treatment, process improvement services, and chemicals and equipment programs for offerings that are technology- and service-intensive. Nalco's well-established, defensible business position underpins a solid track record of operating profitability. Even when key end-markets experience cyclical downturns, results exhibit a meaningful degree of stability, indicating the resilience of this specialty chemicals service business. The industrial and institutional business is solid, and Nalco's energy services customers are experiencing strong industry conditions. However, overall revenue and earnings prospects are tempered by difficult operating conditions for the paper services segment, which continues to face a generally weak competitive pricing environment, especially in Europe. Ongoing cost-saving projects, the energy services business operating at a high rate, and organic growth in industrial and institutional services, especially in international markets, enhance Nalco's proven cash-generating capability. Moreover, additional debt reduction is likely in 2007. The ratings could be raised within the next 18 to 24 months, depending in part on the extent of the improvement in cash flow protection and debt leverage measures. Also key to an upgrade is the continuation of business prospects and financial policies that support Nalco's achieving and maintaining the ratio of funds from operations to total adjusted debt approaching 15%. NASDAQ STOCK: Makes $250 Mil. Partial Prepayment of Sr. Bank Debt ----------------------------------------------------------------- The NASDAQ Stock Market Inc. is repaying $250 million of its senior bank debt issued to finance acquisitions. Nasdaq said this is an early partial prepayment, made from the company's available cash resources; it will not trigger a prepayment penalty. The Nasdaq Stock Market Inc. -- http://www.nasdaq.com/-- is the largest electronic equity securities market in the United States with approximately 3,200 companies. * * * Standard & Poor's Ratings Services lowered in May 2006 its long-term counterparty credit rating and bank loan rating on The Nasdaq Stock Market Inc. to 'BB+' from 'BBB-'. The company was removed from CreditWatch Negative, where it was placed on April 11, 2006. S&P said the outlook is developing. Moody's Investors Service assigned in April 2006 ratings to three new bank facilities of The Nasdaq Stock Market Inc.: a $750 million Senior Secured Term Loan B, a $1,100 million Secured Term Loan C, and a $75 million Senior Secured Revolving Credit Facility. Moody's said each facility is rated Ba3 with a negative outlook. NEVADA DEPARTMENT: Fitch Cuts Rating on $445.8-Mil. Bonds to B3 --------------------------------------------------------------- Moody's has downgraded the underlying rating on the Nevada Department of Business and Industry's $445.8 million Las Vegas Monorail Project Revenue Bonds, First Tier Series 2000 to B3 from Ba1. This concludes our Watchlist review initiated on Oct. 24, 2006. The rating outlook is negative. The rating downgrade and negative outlook reflect the significantly below forecasted performance of both ridership and revenues and the expected depletion of a substantial amount of the Monorail's remaining working capital reserves this year. The rating also reflects our expectation that the system will be challenged to achieve the growth in ridership and revenues necessary to achieve financial self-sufficiency and meet its debt obligations debt service obligations through 2009 and beyond. The First Tier bonds are insured by Ambac and as such carry an insured rating of Aaa. Moody's will continue to maintain an underlying rating on the First Tier bonds. The 2nd Tier bonds outstanding in the amount of $148 million are unrated and are subordinated to the prior payment of 1st Tier debt service as well as debt service reserve fund replenishment in the flow of funds established in the Bond Indenture. Legal security: The bonds are secured by a first lien on the net revenues of the Monorail system. Interest rate derivatives: None. Strengths: * The Monorail serves many Las Vegas Strip hotels, attractions and the well- utilized convention center and helps alleviate traffic congestion * Moody's estimates that the system has sufficient cash balances and reserves to cover 1st and 2nd Tier debt service through 2009 * System operations are reliable and operating expenses are trending lower than budgeted in FY 2006 * Strong legal provisions in the financing documents include the obligation to hire an independent consultant if the rate covenant is not met and increase fares to meet payment obligations Challenges: * Ridership and revenues continue fall far below the original forecast and the system has limited economic ability to increase fares due to new competing alternatives along the Strip * At current ridership and revenue levels the system will deplete all reserves by 2009 with a payment default anticipated by FY 2010 once reserves are exhausted. Dramatic revenue growth is needed to support operations and First Tier debt service * Operating revenues for FY 2006 are 59% of budgeted amounts primarily due to lower ridership and fare revenue, but also due to lower than expected advertising revenue * Debt service payments grow steadily over time Recent developments: A sizeable fare increase to $5.00 per ride from $3.00 was implemented in January 2006. Combined with the introduction of double decker bases along the Las Vegas Strip by Clark County, which have seen an increased ridership of 2,000 per day, the 66% fare increase contributed to a ridership decline of 25% for FY 2006. FY 2006 project revenues and an additional $11.2 million in liquidated damages payment from Bombardier for periods after January 2004 when the system was not operational or not performing according to contract specifications will cover expenses and debt service, but not covenanted coverage of 1.4x for the 1st Tier bonds. The Monorail used $10 million of these settlement payments to pay expenses in FY 2005, which combined with farebox and advertising revenue was sufficient to pay operating expenses and 1st and 2nd Tier debt service. The FY 2007 budget assumes that operating revenues will increase by 10.5% over the estimated $34 million expected in FY2006. This assumes a ridership gain of 7% over FY 2006, which Moody's thinks may be somewhat optimistic. Operating expenses are estimated to increase by 6.3%, largely due to insurance and marketing and advertising costs. The Monorail is continuing to pursue new advertising revenues, including the development of partnerships with travel and ticket brokers in order to bolster operating revenues. Going forward Moody's expects that the Monorail will have sufficient cash reserves, including the use of the DSRF, to cover any operating deficits and debt service through 2009. Beyond FY 2009, absent a significant increase in operating revenues or a debt restructuring, Moody's expects that the Monorail may have a debt payment default. The B3 rating continues to acknowledge the system's improved record of safety and reliability since restarting operations in late Dec. 2004. Maintenance of the B3 rating assumes the Monorail will continue to perform at or near full system availability and that sufficient revenues will be available to pay debt service of the 1st Tier bonds. Pursuant to the Indenture if it fails to meet its rate covenant the Monorail must hire an independent traffic and revenue consultant to make recommendations as to how to comply with the covenants. The company is in the process of soliciting proposals in consultation with AMBAC and expects to hire a consultant in December. Market Position and Competitive Strategy: Significant improvements in ridership needed to support operations and debt service. Moody's breakeven analysis indicates that the Monorail would need to generate at least $60 million in revenues to support operating expenses, First Tier debt service and Second Tier debt service in 2007, or nearly twice as much as the $34 million in operating revenues expected in FY 2006. In Moody's view, this represents a significant challenge that will depend on continued system safety and availability and the success of ongoing marketing initiatives in coordination with hotel properties and the convention center that are expected to boost ridership and revenues over the next few years. Financial position and performance: Existing reserves available for operations and debt service. The Monorail has cash and reserves equal to roughly $60 million to pay for operating deficits and debt service on First Tier and Second Tier bonds. Reserves include $21 million in General Funds as well as $3.9 million in excess construction funds. The 1st Tier bonds have a $41.9 million Debt Service Reserve Fund, half of which is in the form of a surety provided by AMBAC. The 2nd Tier bonds have a $14.2 million DSRF, which is available only to those bonds. Capital program: No borrowing plans at this time. The Monorail is operating reliably and currently has no significant capital projects planned and no borrowing is expected, though a possible extension of the Monorail to Las Vegas McCarran International Airportis actively being considered. Background: The project bonds were issued in 2000 to finance the construction of the Monorail system on the east side of the Las Vegas Strip through a loan agreement between the issuer and the Las Vegas Monorail Corporation, a non-profit public benefit corporation governed by a five-member Board appointed by the Governor. The project was additionally financed through the issuance of $146 million Second Tier bonds and $48.5 million Subordinate Bonds, which are not rated by Moody's. A delayed opening in July 2004 and subsequent shut down of operations from September 8th through Dec. 24th, 2004 due to mechanical problems produced significantly weaker than expected ridership and revenue results during the first months of operation. Outlook: The negative outlook is based on Moody's expectation that ridership and revenues will likely remain significantly below original forecasted levels, and the Monorail will need a significant continued ramp up in ridership and revenues in order to meet operating and debts service obligations over the next several years. What could change the rating - up The rating could improve if ridership and revenues grow dramatically over the course of the next year and are sufficient to pay annual operating expenses and debt service. What could change the rating - down The rating could drop further, absent an improvement in ridership and growth in revenues necessary to support operating expenses and First Tier debt service. Key indicators: -- System type: Mass transit 4.2-mile elevated monorail train, with 7 stations, directly accessible by 8 hotels and convention center -- Bond security: First lien on monorail system net revenues -- Ridership: 9.4 million FY 2005 -- Ridership: 6.5 million projected FY 2006 -- Ridership: 7.4 million forecasted FY 2007 -- Total revenues: $34.3 million expected FY 2006 -- Total revenues: $37.5 million budgeted FY 2007 -- Farebox revenues: $ 27.4 million expected FY 2006 -- Farebox revenues: $ 28.7 million budgeted FY 2007 -- Per ride fare: $5.00 (up from $3.00 effective in January, 2006) --Rate covenant: 1.4 times -- First Tier Revenue Bonds outstanding: $445.8 million -- Total revenue bonds outstanding: $640.3 million NEW YORK IDA: Moody's Junks Rating on $40-Mil. Facility Bonds ------------------------------------------------------------- Moody's Investors Service assigned ratings of Caa1, LGD5, 88% to the approximately $40 million of Special Facility Revenue Bonds, Series 2006 to be issued by the New York City Industrial Development Agency. The Caa1 rating is the senior unsecured debt rating of JetBlue, as the obligor of the JFK Facility Bonds. Moody's affirmed the B2 corporate family rating for JetBlue Airways Corporation. The outlook remains negative. Under the structure, JetBlue will enter into a series of leases with the NYC Agency whereby payments from JetBlue will be passed through to JFK Facility Bond holders. In addition, JetBlue will unconditionally guarantee the timely payment of interest and principal of the bonds. Using Moody's Loss Given Default methodology, a LGD5 bucket implies that holders of a JetBlue senior unsecured claim could expect to experience a loss of between 70 and 90% in the event of a default. The Caa1 rating reflects the subordination of a senior unsecured claim at JetBlue to the substantial amount of secured debt in JetBlue's capital structure. The JFK Facility Bonds will be issued to reimburse JetBlue for a portion of the cost of construction of an airport facility that was substantially completed in June 2005 and is in use by JetBlue Airways Corporation at the JFK International Airport. While the Bonds are secured by a leasehold mortgage interest in the land and building improvements, Moody's views such security as having very limited value for bond holders. In the event of default, The Port Authority of New York and New Jersey would fully control critical decisions such as the potential re-assignment of the lease, although The Port Authority is required to adhere to certain standards as defined in the documents. "Because the holders of the JFK Facility Bonds do not have full control of the collateral and the holders would more likely pursue claims under the guaranty, Moody's views these obligations as a senior unsecured claim of JetBlue Airways", according to Bob Jankowitz at Moody's Investors Service. JetBlue's B2 corporate family rating reflects the airline's low- cost operations combined with an appealing product and strong brand image among consumers that provide it with a competitive advantage among air carriers in its high-density core markets. Nonetheless, rapid growth in the mostly debt-financed aircraft fleet, with operating margins low even by airline standards, have resulted in credit metrics that are weak for the current B2 rating category. "Although recent results showed some promise, a further ratings downgrade is possible absent improvement in key credit metrics including EBIT margin consistent with other B2 rated issuers, and EBIT to interest to sustainably greater than 1.0x", adds Bob Jankowitz at Moody's . The negative outlook reflects Moody's concerns that the company could face challenges executing its growth strategy with a new aircraft type, and returning to profitability over the near term while operating in the still high fuel cost environment. The rating outlook could be stabilized if substantial improvements to its operating results occur, including an EBIT margin greater than 7% over time and EBIT to interest expense sustainably greater than 1.5x, as well as a successful integration of the E190 aircraft. Ratings assigned: * New York City Industrial Development Agency Special Facility Revenue Bonds, Series 2006 (JetBlue Airways Corporation Project) rated at Caa1, LGD5, 88%. JetBlue Airways Corporation is headquartered in Forest Hills, New York. NEW YORK IDA: S&P Places B Rating to $40-Mil. Facility Bonds ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B' rating to $40 million of New York City Industrial Development Agency special facility revenue bonds, series 2006, maturing on May 15, 2021, and May 15, 2030; the amount for each maturity have yet to be determined. The bonds, which will be used to finance a hangar and other facilities, will be serviced by payments made by JetBlue Airways Corp. under a lease between the airline and the agency. "The JFK airport bonds are rated at the same level as the corporate credit rating on JetBlue because bondholders have the benefit of a security package not available to general unsecured creditors," said Standard & Poor's credit analyst Betsy Snyder. Standard & Poor's believe there is a substantial risk that, if challenged, the facility lease under which the Industrial Development Agency leases the land and facilities to JetBlue would be recharacterized as a financing in any JetBlue bankruptcy reorganization, which occurred in the case of a substantially similar lease and special facility revenue bonds in United Air Lines Inc.'s bankruptcy. In the event of a JetBlue bankruptcy, bondholders should nonetheless benefit from guarantees of the bonds by JetBlue, which are secured by JetBlue's leasehold interest in the facilities lease. The 'B' long-term corporate credit rating on JetBlue reflects a weaker financial profile after losses that began in 2005, with only modest improvement expected over the near to intermediate term; and the inherent risk characteristics of the U.S. airline industry. Ratings also incorporate the company's relatively low operating costs, despite ongoing high fuel prices, and continuing high demand for its product offering. Since the second half of 2004, the company's results have been hurt by high fuel prices, with only minimal fuel hedges in place as an offset. JetBlue has instituted a "Return to Profitability" plan that includes the sale of five A320 aircraft in the latter half of 2006, the deferral of 12 A320 aircraft that had been scheduled for delivery in the 2007-2009 period to 2011-2012, further aircraft sales and yet to be determined, and a greater focus on short- to medium-haul flying, all of which will slow down the company's growth rates from previously expected levels. The plan also includes revenue enhancements and nonfuel cost reductions. JetBlue's costs are expected to remain under pressure as long as fuel prices remain high. However, the company's credit ratios are expected to improve modestly over the near to intermediate term as benefits from its Return to Profitability plan are realized. If the company were to experience material losses, the outlook could be revised to negative. Revision to a positive outlook is not considered likely. NOMURA HOME: DBRS Rates $6.4-Million Class N3 Certs. at BB ---------------------------------------------------------- Dominion Bond Rating Service assigned these ratings to the Net Interest Margin Notes, Series 2006-FM2 issued by Nomura Home Equity Loan NIM 2006-FM2. -- $29.6 million Class N1 rated at A (low) -- $9.7 million Class N2 rated at BBB (low) -- $6.4 million Class N3 rated at BB The NIM Notes are backed by a 100% interest in the Class X and Class P Certificates issued by Nomura Home Equity Loan, Inc., Home Equity Loan Trust, Series 2006-FM2. The Class X Certificates will be entitled to all excess cash flows of the respective loan groups in the underlying trust, and the Class P Certificates will be entitled to all prepayment premiums or charges received in respect of the mortgage loans. The NIM Notes will also be entitled to the benefits of a NIM Cap Agreement with HSBC Bank USA, NA. The Trust will receive funds should LIBOR exceeds 5.32% per annum subject to a ceiling of 9.50% per annum. In addition, the NIM Notes will benefit from an underlying swap agreement, an underlying interest rate cap agreement and an underlying basis risk cap agreement with HSBC Bank USA, NA. Payments on the NIM Notes will be made on the 25th of each month commencing in November 2006. The interest payment amount will be distributed to the Noteholders, followed by the principal payment amount to the Noteholders until the principal balance of the NIM Notes is reduced to zero. Any remaining amounts may be paid to holders of preference shares, which are not rated by DBRS. NOVELIS CORPORATION: Moody's Affirms Corp. Family Rating at B1 -------------------------------------------------------------- Moody's Investors Service confirmed Novelis Inc.'s corporate family rating at B1, and its B1 PDR and also confirmed the Ba2 rating on its $500 million senior secured credit facility, and the Ba2 rating on its senior secured term loan. The $1.4 billion senior unsecured notes were upgraded from B3 to B2. Moody's also confirmed the Ba2 senior secured term loan rating for Novelis Corporation, guaranteed by Novelis Inc. At the same time, Moody's changed Novelis's speculative grading liquidity rating to SGL-2 from SGL-4. The outlook is stable. This concludes the review of debt ratings for possible downgrade, initiated on May 16, 2006, after Novelis's disclosure to further delay the filing of its financial statements, the downgrade review of which continued after Novelis's long term debt ratings were downgraded on Sept. 5, 2006. The confirmation reflects the progress Novelis has made in getting current on its financial reporting requirements and the elimination of any potential default under the senior unsecured notes, which could have forced an acceleration of payment. In addition, the confirmation reflects Novelis's substantial global footprint in the aluminum rolled products industry and Moody's expectation that improving performance will be evident in 2007 as the negative drag of the can price ceiling diminishes on contract restructuring. The upgrade of the senior unsecured notes reflects their improved standing in the waterfall under Moody's loss given default methodology following further paydown in the secured term loans and the increased proportion of these unsecured notes in the capital structure. The B1 corporate family rating reflects the challenges Novelis is facing in its 2006 performance and the resultant deterioration in earnings and debt protection metrics. Novelis' performance has suffered due to its remaining exposure to certain can contracts with price ceilings and the worse-than-expected impact of the differential between used beverage can prices and primary aluminum prices. In addition, the rating considers the increased cost profile from both an operational perspective and as a result of the increased costs associated with the review and restatement of Novelis's financial statements since its spin-off from Alcan, the increased interest costs due to waivers required under the bank agreements, and the step-up in the interest rates on the notes due to non- registration. However, the rating acknowledges the company's substantive global position in the aluminum rolled products markets and its debt reduction performance since its spin-off from Alcan. Moody's sees 2006 as a transition year for Novelis both operationally and from a management and reporting perspective. With the delayed filing and restatement of financial statements now behind the company, as well as the weak performance through the first three quarters of 2006, which resulted largely from price caps on some of its can sheet contracts, Moody's expects improved operating margins and a continued focus on debt reduction throughout 2007. The stable outlook reflects Moody's expectation that the current favorable business environment for aluminum rolled products for aerospace, automotive, commercial construction and industrial applications will continue into 2007 allowing for improved earnings and cash flow generation. Moody's also expects that losses associated with certain contracts with price ceilings, recorded at approximately $115 million for the 2006 third quarter alone, will be significantly reduced as roughly half of the affected contracts move to more market based pricing in 2007. Moody's also believes that hedging strategies implemented in the third quarter should help mitigate the degree of exposure to losses on the remaining contracts. The change to SGL-2 reflects Novelis's improved liquidity after the timely filing of its third quarter 10-Q and the improved cushion under its renegotiated financial covenants in its bank revolver and term loan facilities. The SGL-2 rating also captures the expectation that, despite negative free cash flow generation in Q2 and Q3, 2006, the company will demonstrate improved performance in 2007 as a substantial portion of contracts with price ceilings begin to move to a more market based pricing. * Novelis Inc: * Ratings Confirmed: -- Corporate Family Rating, B1 -- Probability of default rating. PDR-B1 -- Graduated. Sr. Sec. Revolving Credit Facility, Ba2, LGD2, 24% -- Graduated Sr. Sec Term Loan B, Ba2, LGD2, 24% * Ratings Upgraded -- Sr. Global Notes to B2, LGD5, 74% from B3, LGD5, 76% -- Speculative Grade Liquidity Rating to SGL-2 from SGL-4 * Novelis Corporation * Ratings Confirmed -- Graduated. Sr. Sec Term Loan B Ba2, LGD2, 24% Headquartered in Atlanta, Georgia, Novelis is a largest producer of aluminum rolled products. In 2005, the company had total shipments of approximately 3.1 million tons and generated approximately $8.3 billion in revenues. OAK PARK: Case Summary & Largest Unsecured Creditor --------------------------------------------------- Debtor: Oak Park Bright Child LP 618 Lindero Canyon Drive Oak Park, CA 91377 Bankruptcy Case No.: 06- 12172 Type of Business: The Debtor operates a family entertainment center. Chapter 11 Petition Date: November 20, 2006 Court: Central District Of California (San Fernando Valley) Judge: Kathleen Thompson Debtor's Counsel: Peter T. Steinberg, Esq. Steinberg, Nutter and Brent 23801 Calabasas Road, Suite 2031 Calabasas, CA 91302 Tel: (818) 876-8535 Estimated Assets: $1 Million to $2 Million Total Debts: $97,138 Debtor's Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Pacific Capital Management $97,138 1400 Rocky Ridge Drive #250 Roseville, CA 95661 OM GROUP: S&P Holds B Rating & Revises Outlook to Positive ---------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on OM Group Inc. to positive from stable. Standard & Poor's also affirmed the 'B+' corporate credit rating on this Cleveland, Ohio-based company. The outlook revision reflects the potential for a strengthening of the business risk profile as management invests the proceeds from the planned sale of its nickel assets into businesses capable of delivering more stable and predictable earnings. "Moreover, there are indications that management's financial policies and approach to strategic acquisitions favor less reliance on debt as it transforms OM Group's business model," said Standard & Poor's Ratings Services credit analyst Wesley E. Chinn. OPEN TEXT: Earns $7.3 Mil. in First Fiscal Quarter Ended Sept. 30 ----------------------------------------------------------------- Open Text Corp. filed its first fiscal quarter financial statements ended Sept. 30, 2006, with the Securities and Exchange Commission Nov. 9, 2006. Total revenue for the first quarter was $101.2 million, compared with $92.6 million for the same period in the prior fiscal year. License revenue in the first quarter was $28.8 million, compared with $24.9 million in the first quarter of the prior fiscal year. Adjusted net income in the quarter was $12.2 million compared with $6.3 million for the same period in the prior fiscal year. Net income in accordance with U.S. generally accepted accounting principles was $7.3 million, compared with a net loss of $12.9 million for the same period in the prior fiscal year. The cash, cash equivalents and short-term investments balance as of Sept. 30, 2006, was $111.2 million. Accounts receivable as of Sept. 30, 2006, totaled $76.7 million, compared with $73.6 million as of Sept. 30, 2005, and Days Sales Outstanding was 68 days in the first quarter of fiscal 2007, compared with 71 days in the first quarter of fiscal 2006. Operating cash flow in the first quarter of fiscal 2007 was $9.6 million compared with $300,000 in the first quarter of fiscal 2006. "With the addition of Hummingbird, we are the largest independent ECM provider. The combination of deep vertical solutions expertise, market independence and the ability to leverage Microsoft, Oracle and SAP, allows us to scale to the enterprise, offering customers comprehensive solutions and the capability of implementing an enterprise wide ECM strategy," Open Text president and chief executive officer John Shackleton said. "Now that we have completed the Hummingbird acquisition, our focus is on integrating the two organizations as quickly and smoothly as possible," Mr. Shackleton said. The majority of Hummingbird's integration will be completed during the second quarter of fiscal 2007, which ends on Dec. 31, 2006. As part of the integration, Open Text is reducing its worldwide workforce of 3,500 people by approximately 15%. The restructuring actions commenced in October 2006 and to date, approximately 60 percent of these reductions have been completed. The remaining staff reductions are expected to be completed by the end of November 2006. The staff reductions will be focused on redundant positions or areas of the business that are not consistent with the company's strategic focus. Open Text is also reducing 38 facilities by closing or consolidating offices in certain locations. "Actions are well underway to rationalize staff levels and consolidate facilities to meet our operating goals. Based on our expected run-rate in our second quarter, these actions will result in savings of approximately $50 million for the current fiscal year and on an annualized basis, approximately $80 million beginning in fiscal 2008," Open Text chief financial officer Paul McFeeters said. At Sept. 30, 2006, the Company's balance sheet showed $665.392 million, $193.251 million in total liabilities, $6.025 million in minority interest, and $466.116 million in total shareholders' equity. Full-text copies of the Company's first fiscal quarter financials are available for free at http://ResearchArchives.com/t/s?157c Headquartered in Waterloo, Ontario, Open Text Corp. (NASDAQ: OTEX, TSX: OTC) -- http://www.opentext.com/-- provides Enterprise Content Management solutions that bring together people, processes and information in global organizations. The company supports approximately 20 million seats across 13,000 deployments in 114 countries and 12 languages worldwide. It has a field office in Mexico. * * * As reported in the Troubled Company Reporter on Sept. 18, 2006, Moody's Investors Service assigns a first-time Ba3 rating to the senior secured facilities and B1 rating to the corporate family of Open Text Corp. ORION HEALTHCORP: Posts $488,000 Net Loss in 2006 Third Quarter --------------------------------------------------------------- Orion HealthCorp, Inc., incurred a $488,000 net loss for the third quarter ended Sept. 30, 2006, compared with a net loss of $6.1 million for the prior year period. The net loss for the three-month period ended Sept. 30, 2005, included a loss from operations of discontinued businesses of $4.2 million. For the three months ended Sept. 30, 2006, net operating revenues were $7.5 million compared with $7.3 million for the same period in the prior year. At Sept. 30, 2006, the Company's balance sheet showed $19,777,000 in total assets, $9,427,000 in total current liabilities, $3,940,000 in long-term liabilities and stockholders' equity of $6,410,00. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?158c Terrence L. Bauer, chief executive officer of Orion HealthCorp, said, "We believe that these results reflect the continued improvement in the financial performance of our company. We remain focused on building our core business, providing billing and collection services and practice management solutions to physicians, both through organic growth and strategic acquisition. Demand for revenue cycle management services continues to grow as there is escalating pressure on physicians to operate more efficiently and outsource the management of billing and collections. Furthermore, the quantity and quality of acquisition opportunities in our pipeline continue to improve as market consolidation activity remains robust." The results for the three months ended September 30, 2006 and 2005, respectively, include the consolidated results of Orion HealthCorp, with two of its business units: Integrated Physician Solutions, Inc., which provides business and management services to pediatric physician groups, and Medical Billing Services, Inc., which provides physician billing and collection services and practice management solutions, primarily to hospital-based physicians. The surgery center business operated under the name "SurgiCare" is reported as discontinued operations for the three months and nine months ended Sept. 30, 2006 and 2005. Going Concern Doubt UHY Mann Frankfort Stein and Lipp CPAs, LLP, in Houston, Texas, raised substantial doubt about Orion HealthCorp's ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's recurring losses from operations and negative cash flows. About Orion HealthCorp Orion HealthCorp, Inc. -- http://www.orionhealthcorp.com/-- provides complementary business services to physicians through three business units: SurgiCare, Inc., serving the freestanding ambulatory surgery center market; Integrated Physician Solutions, Inc., providing business services to pediatric practices and technology solutions to general and specialized medical practices; and Medical Billing Services, Inc., providing physician billing and collection services and practice management solutions to hospital-based physicians. ORION HEALTHCORP: Special Stockholders' Meeting Set for Nov. 27 --------------------------------------------------------------- A special meeting of stockholders of Orion HealthCorp, Inc., will be held on Nov. 27, 2006, at 8:00 a.m. local time, at 1805 Old Alabama Road in Roswell, Georgia. During the meeting, stockholders will be asked to consider and vote upon a proposal to: 1. amend the Company's certificate of incorporation to increase the aggregate number of shares of its authorized capital stock from 117,000,000 shares to 370,000,000 shares; 2. amend the Company's certificate of incorporation to increase the number of shares of Class A Common Stock authorized and available for issuance from 70,000,000 shares to 300,000,000 shares; 3. amend the Company's certificate of incorporation to authorize 50,000,000 shares of a new class of common stock, Class D Common Stock, which is convertible into its Class A Common Stock, and to provide for the rights and preferences of the Class D Common Stock; 4. issue shares of the Company's Class D Common Stock to investors in a private placement; 5. issue warrants to purchase shares of Class A Common Stock to an investor in a private placement; 6. issue shares of the Company's Class A Common Stock as a portion of the consideration to be paid for the acquisition of a medical billing services business; 7. amend the Company's 2004 Incentive Plan to increase the number of shares of its Class A Common Stock available for grants under the 2004 Incentive Plan from 2,200,000 shares to such number of shares representing 10% of its outstanding Class A Common Stock as of the date of closing of the private placement, on a fully diluted basis taking into account the shares issued in the private placement and the Rand acquisition, and to increase the maximum number of shares that can be granted to a participant in any calendar year under the 2004 Incentive Plan from 1,000,000 shares to 3,000,000 shares. Stockholders of record at the close of business on Oct. 20, 2006 are the stockholders entitled to vote at the Special Meeting. Going Concern Doubt UHY Mann Frankfort Stein and Lipp CPAs, LLP, in Houston, Texas, raised substantial doubt about Orion HealthCorp's ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's recurring losses from operations and negative cash flows. About Orion HealthCorp Orion HealthCorp, Inc. -- http://www.orionhealthcorp.com/-- provides complementary business services to physicians through three business units: SurgiCare, Inc., serving the freestanding ambulatory surgery center market; Integrated Physician Solutions, Inc., providing business services to pediatric practices and technology solutions to general and specialized medical practices; and Medical Billing Services, Inc., providing physician billing and collection services and practice management solutions to hospital-based physicians. OWENS CORNING: Can Enter Into Waiver Letter With JPMorgan --------------------------------------------------------- The Honorable Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware authorizes Owens Corning and its debtor- affiliates to enter into a Waiver Letter with JP Morgan Securities, Inc., and to pay associated fees pursuant to the Equity Commitment Agreement. As reported in the Troubled Company Reporter on Nov. 20, 2006, the occurrence of the effective date of the Debtors' Sixth Amended Plan of Reorganization is premised, among others, by the consummation of transactions contemplated in the Debtors' equity commitment agreement with J.P. Morgan Securities, Inc. The Equity Commitment Agreement contemplates a $2,187,000,000 rights offering, whereby certain holders of eligible Owens Corning bond and other unsecured claims would be offered the opportunity to subscribe for up to their pro rata share of 72,900,000 shares of Reorganized Owens Corning common stock at $30 per share. JPMorgan will purchase the unsold shares. The Rights Offering has since been fully consummated, and about 2,900,000 shares of Reorganized Owens Corning stock were purchased. The Equity Commitment Agreement requires as a condition precedent to JPMorgan's funding obligation that the order confirming the Sixth Amended Plan will have become final. JPMorgan may terminate the Agreement on or after Oct. 31, 2006, unless the Debtors, among other things, pay a $30,000,000 extension fee to extend the commitment until December 15. Norman L. Pernick, Esq., at Saul Ewing LLP, in Wilmington, Delaware, relates that the Debtors and the other Plan Proponents intend to close the Equity Commitment Agreement and pursue the effective date of the Plan by Oct. 31, 2006, so the Debtors will be able to make on that date or as soon thereafter as practicable, all payments or other distributions contemplated in the Plan. To avoid any potential termination of the Equity Commitment Agreement, the Debtors would potentially have little choice but to pay JPMorgan the extension fee, Mr. Pernick notes. The Debtors, after consulting their co-Proponents and other key constituents, entered into a waiver letter with JPMorgan, pursuant to which the Investor will waive the funding requirement that the Confirmation Order become final. In exchange, the Debtors will pay JPMorgan $15,000,000. The Waiver Fee will be considered a partial prepayment of, and credited in full against the payment of, the Extension Fee in the event the Debtors seek an extension of the commitment, Mr. Pernick says. Mr. Pernick notes that if the Debtors emerge from bankruptcy on October 31, their estates will save a substantial sum by avoiding the need to pay the entire extension fee. Mr. Pernick adds that the Waiver Letter has the support of various other key constituents, including the Asbestos Claimants Committee, the Future Claims Representative, and the Ad Hoc Bondholders' Committee. 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. 146; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) OWENS CORNING: Wants $2,000,000 Louisiana Accord Approved --------------------------------------------------------- Owens Corning and its debtors-affiliates ask the Honorable Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware to approve their settlement agreement with the state of Louisiana. The Settlement Agreement relates to Louisiana's Claim No. 7827, which was asserted against Owens Corning in April 2002 on account of certain alleged asbestos-related property damage, Kathleen P. Makowski, Esq., at Saul Ewing LLP, in Wilmington, Delaware, notes. The Settlement Agreement, if approved by the Court, will result in a substantial reduction of the claim amount from approximately $582,000,000 to $2,000,000, Ms. Makowski tells the Court. Pursuant to Court Management Procedures for Asbestos PD Claims, Louisiana provided documentation in 2003 to support Claim No. 7827, and projected that the claim amount should be approximately $68,000,000. In 2005, the Debtors objected to Louisiana's Claim. After several months of negotiation, the Debtors and Louisiana agreed to resolve the Claim. The Debtors agree to the allowance of Louisiana's Claim as a general unsecured non-priority claim solely against Owens Corning for $2,000,000. As a precondition to receiving payment on its Claim, Louisiana will release Owens Corning from any liability for asbestos-related property damage. 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. 146; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) OZBURN-HESSEY: Moody's Assigns Loss-Given-Default Ratings --------------------------------------------------------- In connection with Moody's Investors Service's implementation of its Probability-of-Default and Loss-Given-Default rating methodology for the Transportation sector, the rating agency confirmed its B3 Corporate Family Rating for Ozburn-Hessey Holding Company, LLC. In addition, Moody's revised its probability-of-default ratings and assigned loss-given-default ratings on these debentures: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Guaranteed Senior Secured Revolver Due 2010 B3 B1 LGD2 29% Guaranteed Senior Secured Term Loan Due 2012 B3 B1 LGD2 29% Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Based in Brentwood, Tennessee, Ozubrn-Hessey Holding Company, LLC provides supply chain management services from a network of distribution facilities throughout the US. Ozburn-Hessey maintains about 21 million sq. ft. of warehouse space. Customers include companies in the consumer products, electronics, food service, manufacturing, and pharmaceutical industries. PACER INTERNATIONAL: Moody's Assigns Loss-Given-Default Ratings --------------------------------------------------------------- In connection with Moody's Investors Service's implementation of its Probability-of-Default and Loss-Given-Default rating methodology for the Transportation sector, the rating agency confirmed its Ba3 Corporate Family Rating for Pacer International, Inc. Additionally, Moody's revised its probability-of-default ratings and assigned loss-given-default ratings on the company's bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Guaranteed Senior Secured Amortized Term Loan Due 2010 Ba3 Ba2 LGD2 28% Guaranteed Senior Secured Revolving Credit Facility Due 2008 Ba3 Ba2 LGD2 28% Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Based in Concord, California, Pacer International, Inc. -- http://www.pacer-international.com/-- through its subsidiaries, operates as a non-asset based logistics provider in North America. Its wholesale segment provides logistics services, including intermodal rail transportation and local cartage services primarily to intermodal marketing companies, large automotive intermediaries, and international shipping companies. The retail segment provides rail brokerage, truck brokerage and truck services, international freight forwarding services, warehousing and distribution services, and supply chain management services primarily to end-user customers. PEP BOYS: Improved Profitability Cue S&P's Outlook Revision ----------------------------------------------------------- Standard & Poor's Ratings Services revised the outlook for Philadelphia-based auto parts retailer Pep Boys-Manny, Moe & Jack to stable from negative. At the same time, the 'B-' corporate credit and all other ratings were affirmed. "The outlook revision reflects the company's recent improvement in profitability and operating trends," said Standard & Poor's credit analyst Stella Kapur. While top-line revenue for the first nine months ended Oct. 28, 2006, was flat year-over-year at $1.69 billion, profitability improved due to higher gross margins in the merchandise segment. However, it is important to note that the prior year was an easy comparison, given that Pep Boys' revenue and EBITDA had declined 1.7% and 51%, respectively in 2005. The improvement in gross margins was mainly attributable to reduced promotional activity, a marginal increase in tire prices, and changes in products and product sourcing. As a result, EBITDA for the first three quarters of 2006 was $78 million, up 23% from a year earlier. Although gross margins have improved in recent quarters, it will be challenging for the company to achieve further meaningful margin expansion without generating more sales growth, given the tough environment. Also, Pep Boys' store base still needs significant reinvestment, which makes it tougher for the company to compete for customers. Still, the recent improvement in gross margin and reduction in debt by $60 million since 2005 have resulted in some recovery in credit metrics. Total lease-adjusted debt to EBITDA at Oct. 28, 2006, was 7.6x, compared with 9.4x at the end of 2005. Debt to EBITDA is anticipated to improve to the mid- to high-6x area by the end of 2006. The ratings on Pep Boys reflect weak operating trends, the risks of operating in the highly competitive and consolidating auto parts retail sector, a highly leveraged capital structure, and somewhat limited financial flexibility. The company faces considerable challenges and needs to turn around its service segment and reinvest capital in its store base. PHILLIPS-VAN HEUSEN: Earns $50.8 Million in Third Quarter of 2006 ----------------------------------------------------------------- Phillips-Van Heusen Corporation reported third quarter 2006 GAAP net income of $50.8 million, compared with third quarter 2005 GAAP net income of $40.3 million. For the nine months, GAAP net income was $128.5 million in 2006 compared with $88.8 million in 2005. The Company reported that in the Calvin Klein licensing business, operating earnings increased 31% and operating margins were up almost 700 basis points. The Company's wholesale and retail businesses grew operating earnings a combined 17% on 6% sales growth, as strong product drove gross margin improvements in the quarter. Total revenues in the third quarter of 2006 increased 7% to $568.3 million from $533.2 million in the prior year. Revenue growth was driven by an 11% increase in Calvin Klein royalties due to continued growth from existing and new licensees. The comp store sales grew 11%. In addition, revenues benefited from the growth across all of the Company's wholesale sportswear businesses, but were partially offset by an anticipated sales decrease in the Company's wholesale dress shirt business reflecting the residual impact of the Federated/May door closings for the year. For the nine months, total revenues increased 6% to $1.5 billion in 2006 from $1.4 billion in 2005. The Company ended the quarter with $358.6 million in cash, an increase of $188.3 million compared with the prior year's third quarter. Receivables ended the quarter 11% below prior year levels. Inventories ended the quarter 7% up from last year and in line with the Company's sales growth projections for the fourth quarter. The Company's higher year over year cash position, coupled with higher investment rates of return, resulted in a 46% decrease in net interest expense for the third quarter. Commenting on the results, Emanuel Chirico, chief executive officer, noted, "We are extremely pleased with our third quarter results, which continue the positive trends we experienced in the first half of this year. The strength of the Calvin Klein brand and the execution of our business model for that brand continue to be key drivers in our earnings growth. The performance of Calvin Klein, along with the growth exhibited by our outlet retail and wholesale sportswear businesses, enabled us to again exceed our previous guidance." Mr. Chirico continued, "During the third quarter, we announced our agreement to acquire Superba Inc., a neckwear company with estimated 2006 revenues of $140 million. The deal is expected to be effective Jan. 1, 2007, and will be modestly accretive to 2007 earnings. This acquisition is consistent with our strategy of adding brands or product categories that are synergistic and complement our existing businesses, in this case, dress shirts." Mr. Chirico concluded, "Our brands continue to perform extremely well across all channels of distribution, enabling us to intensify the investments we are making in marketing our brands. During this upcoming holiday season, we are planning a $20 million increase in national advertising spending to support our Calvin Klein, Van Heusen, IZOD, and Arrow brands. We believe that in the context of the changing retail landscape it is critical to take our message directly to consumers. We feel that this continued commitment to the long-term strength of our brands will pay dividends in the future." 2006 Revenues Guidance The Company projects fourth quarter 2006 revenues to be in a range of $528 million to $532 million, which represents an increase of 15% to 16% over last year. Total revenues for the full year 2006 are expected to be $2.06 billion to $2.07 billion, which represents an increase of 8% over last year. The Company's 2006 revenues and earnings guidance does not reflect the impact of the pending acquisition of Superba Inc., which will not be expected to have a material effect on 2006 revenues and earnings. Phillips-Van Heusen Corporation -- http://www.pvh.com/-- owns and markets the Calvin Klein brand worldwide. It is a shirt company that markets a variety of goods under its own brands: Van Heusen, Calvin Klein, IZOD, Arrow, Bass and G.H. Bass & Co., Geoffrey Beene, Kenneth Cole New York, Reaction Kenneth Cole, BCBG Max Azria, BCBG Attitude, Sean John, MICHAEL by Michael Kors, Chaps, and Donald J. Trump Signature. * * * As reported in the Troubled Company Reporter on Oct 10, 2006 Moody's Investors Service's in connection with the implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. Canadian Retail sector, confirmed its Ba3 Corporate Family Rating for Phillips Van Heusen Corporation. PIER 1 IMPORTS: Gets NYSE Notice of Unusual Stock Trading --------------------------------------------------------- Pier 1 Imports Inc. received a notice from the New York Stock Exchange of an unusual trading activity in the Company's stock. The Company disclosed that the NYSE has asked it to respond by press release to the unusual activity. Pier 1 Imports says that it is not the Company's policy to comment on market rumors or speculation including unusual market activity. Based in Fort Worth, Texas, Pier 1 Imports, Inc. (NYSE:PIR) -- http://www.pier1.com/-- is a specialty retailer of imported decorative home furnishings and gifts with Pier 1 Imports(R) stores in 49 states, Puerto Rico, Canada, and Mexico and Pier 1 kids(R) stores in the United States. * * * As reported in the Troubled Company Reporter on Sept. 26, 2006, Moody's Investors Service downgraded Pier 1's corporate family rating to B3 from B1 following continued degradation in same store sales, which have resulted in modest operating results and negative free cash flow. The rating outlook is stable. PINNACLE ENT: Amends PNK Ownership Pact with Robert Johnson ----------------------------------------------------------- Pinnacle Entertainment Inc. entered into an Amended and Restated Limited Liability Operating Agreement with Robert L. Johnson regarding the ownership and operation of PNK (PA) LLC in connection with the Company's proposed Philadelphia gaming project. The Company disclosed that the parties' obligations under the Operating Agreement are conditioned upon, among other things, PNK PA being issued a gaming license in Philadelphia and approval of Mr. Johnson's proposed ownership interest in PNK PA without significant additional licensing fees by the relevant gaming authorities of Pennsylvania. If the conditions are satisfied, Pinnacle will own 66-2/3% of PNK PA and Mr. Johnson will own 33-1/3%. The Operating Agreement calls for certain equity cash contributions by the parties pro rata with their respective ownership interests aggregating up to $80 million, subject to increase under certain circumstances, the Company disclosed. The Operating Agreement also contemplates that Pinnacle and Mr. Johnson will enter into agreements with PNK PA, whereby Pinnacle will be entitled to receive certain development, construction, and operating fees and Mr. Johnson will be entitled to certain fees for marketing and promotion of the Philadelphia gaming project. The Company further disclosed that there is no material relationship, other than with respect to the transaction, between Mr. Johnson and Pinnacle or any of its affiliates, or any director or officer of Pinnacle. A full text-copy of the Amended and Restated Limited Liability Company Operating Agreement of PNK LLC may be viewed at no charge at http://ResearchArchives.com/t/s?1587 Headquartered in Las Vegas, Nevada, Pinnacle Entertainment, Inc., (NYSE: PNK) -- http://www.pnkinc.com/-- owns and operates casinos in Nevada, Louisiana, Indiana and Argentina, owns a hotel in Missouri, receives lease income from two card club casinos in the Los Angeles metropolitan area, has been licensed to operate a small casino in the Bahamas, and owns a casino site and has significant insurance claims related to a hurricane-damaged casino previously operated in Biloxi, Mississippi. Pinnacle opened a major casino resort in Lake Charles, Louisiana in May 2005 and a new replacement casino in Neuquen, Argentina in July 2005. * * * As reported in the Troubled Company Reporter on Oct. 4, 2006, Moody's Investors Service's confirmed Pinnacle Entertainment, Inc.'s B2 Corporate Family Rating. At the same time, Standard & Poor's Ratings Services affirmed its 'BB-' rating and '1' recovery rating following Pinnacle Entertainment Inc.'s $250 million senior secured bank facility add-on. PRO-PAC INC: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Pro-Pac, Inc. P.O. Box 18 2761 Buell Drive East Troy, WI 53120 Bankruptcy Case No.: 06-26608 Type of Business: The Debtor offers marketing consulting services. Chapter 11 Petition Date: November 20, 2006 Court: Eastern District of Wisconsin (Milwaukee) Judge: Susan V. Kelley Debtor's Counsel: Jerome R. Kerkman, Esq. Kerkman Law Office, Ltd. 757 North Broadway, Suite 600 Milwaukee, WI 53202-3612 Tel: (414) 277-8200 Fax: (414) 277-0100 Total Assets: $1,126,688 Total Debts: $969,121 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ SSI-Sintered Specialties $87,294 PO Box 5002 Janesville, WI 53547-5002 Signicast Corp. $72,772 Drawer #825 Milwaukee, WI 53278-0825 Unisource $40,801 7472 Collection Center Drive Chicago, IL 60693 Equity Management Services $21,706 Anixter Pentacon Inc. $9,515 EC Prime Source $8,325 Jensen Metal Products $7,981 Clow Stamping Company $6,897 Packaging Solutions, Inc. $3,603 Berge Plating Works Inc. $3,320 Alex Advertising $2,970 Weyerhaeuser Company $2,878 Continuous Motion Packaging $2,759 Staff Force, Inc. $2,601 Cometic Gasket, Inc. $2,052 Greater Bay Capital $1,995 Southwest Metal $1,929 Powder Finishers $1,865 AmeriGas $1,620 Uline $1,603 PW LLC: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------- Debtor: PW, LLC 100 Wilshire Boulevard, Suite 2000 Santa Monica, CA 90401 Bankruptcy Case No.: 06-16059 Chapter 11 Petition Date: November 20, 2006 Court: Central District Of California (Los Angeles) Judge: Sheri Bluebond Debtor's Counsel: Martin J. Brill, Esq. Levene, Neale, Bender, Rankin & Brill LLP 10250 Constellation Boulevard, Suite 1700 Los Angeles, CA 90067 Tel: (310) 229-1234 Fax: (310) 229-1224 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Williams & Kilkowski Services rendered $803,936 Attn: James Kilkowski 1900 Ave. of the Stars, #2500 Los Angeles, CA 90067 Walter Wentworth $715,000 6673 Emmett Terrace Los Angeles, CA 90068 William O'Connor Trade debt $292,225 c/o Troy & Gould, Ken Blumer 1801 Century Park East #1600 Los Angeles, CA 90067 Greenberg, Glusker Services rendered $205,596 1900 Avenue of the Stars 21st Floor Los Angeles, CA 90067 Charles Watkins $150,000 Peloria Investments Trade debt $150,000 White, Zuckerman, et al. $85,345 Armbruster & Goldsmith LLP $82,917 O'Melveny & Myers $81,584 Peitzman, Weg, et al. $73,110 Grubb & Ellis Co. $45,375 Marathon Communications $31,394 Robert Friedman, Esq. $25,283 McDermott Consulting $25,000 Robert Charles Lesser & Co. $17,864 City of Burbank $17,270 Rutter, Hobbs & Davidoff $14,703 Murphy/Jahn $13,369 Melissa Messer Design $10,154 Mt. Holly Partners $4,680 RADIATION THERAPY: Buys Michigan Facility Network for $45.83 Mil. ----------------------------------------------------------------- Radiation Therapy Services Inc., through its wholly owned subsidiary Michigan Radiation Therapy Management Services Inc., closed on a definitive purchase agreement to acquire seven radiation therapy treatment centers and one surgery center located in Southeastern Michigan for $45.83 million at closing. MRTMS purchased all of Farideh R. Bagne and Alexander Bagne's outstanding membership interests in Phoenix Management Company LLC and American Consolidated Technologies LLC, both Michigan limited liability companies. Of the purchase price, $6.2 million was allocated for three real estate properties and the remaining $39.63 million for equipment, goodwill and other intangibles. The purchase price is subject to reduction for amounts remitted by buyer to pay sellers' commercial indebtedness and for all of sellers' other liabilities and debts. Additionally, $3.3 million of the purchase price will be held in escrow pending receipt of a consent from a hospital regarding a ground lease at one of the centers and to satisfy any indemnification obligations of the sellers related to warranties, representations and covenants under the agreement. Upon receipt of the required hospital consent, MRTMS is also obligated to acquire all of sellers' ownership interests in Pontiac Investment Associates, a Michigan co-partnership, relating to the leasehold assets at one of the centers, for a purchase price of $2.95 million. The Company disclosed that no liabilities were assumed under the purchase agreement and that it used its existing credit facility to finance the acquisition. The three professional corporations associated with the seven treatment centers and the surgery center that the sellers' provided management services to simultaneously at closing issued all of its stock to an affiliate of the Company, Dr. Michael Katin, and redeemed all of the stock of its current owner. The eight physicians employed before closing by the professional corporations will continue to be employed after closing. The acquisition also provides for the transfer of eight Certificates of Need and of the ownership of the real estate of three of the treatment centers to MRTMS. The other four treatment centers and the surgery center are leased properties and the leases will continue in effect post-closing. In conjunction with the MIRO acquisition, the Business Operations and Support Services Agreements were amended to facilitate the transfer to Phoenix and ACT six Certificates of Need held by the three professional corporations and to facilitate the transfer at a later date by Phoenix of two Certificates of Need held by one of the professional corporations. Amendment of Credit Facility The Company entered Nov. 14, 2006, into Amendment No. 1 to Fourth Amended and Restated Credit Agreement, Limited Waiver, and Consent with each Subsidiary Guarantor, Bank of America N.A., as Administrative Agent and the Lenders party to the Credit Agreement, which amends its senior secured credit facility, among other things, to: -- exclude the MIRO Acquisition from the limitation for the fiscal year 2006. -- increase the Capital Expenditures limitation to $50 million for the fiscal year 2006. -- increase the allowance for purchase money indebtedness to $70 million. -- extended until Nov. 30, 2006, the deadline for receipt of certain of the Mortgages and Mortgage Property Support Documents with respect to the properties and any default under the Credit Agreement. The Company further disclosed that some of the lenders under the credit facility, or their respective affiliates, have provided commercial, investment banking, and financial advisory services to the Company and its affiliates from time to time in the ordinary course of business. Based in Fort Myers, Florida, Radiation Therapy Services, Inc. (Nasdaq: RTSX) -- http://www.rtsx.com/-- operates radiation treatment centers primarily under the name 21st Century Oncology. The Company provides radiation therapy services to cancer patients. The Company's 68 treatment centers are clustered into 22 local markets in 14 states, including Alabama, Arizona, California, Delaware, Florida, Kentucky, Maryland, Massachusetts, Nevada, New Jersey, New York, North Carolina, Rhode Island, and West Virginia. * * * As reported in the Troubled Company Reporter on Nov. 21, 2006, Standard & Poor's Ratings Services lowered its corporate credit rating on Radiation Therapy Services Inc. to 'BB-' from 'BB'. S&P said the rating outlook is stable. As reported in the Troubled Company Reporter on Nov. 9, 2006, Moody's Investors Service downgraded Radiation Therapy Services Inc.'s Corporate Family Rating to B2 from B1 in connection with the rating agency's implementation of its new Probability-of- Default and Loss-Given-Default rating methodology. RADNOR HOLDINGS: Tennenbaum Becomes Sole Bidder At Radnor Auction ----------------------------------------------------------------- Tennenbaum Capital Partners LLC becomes the sole bidder in an auction for Radnor Holdings Corporation's assets after rival bidder Four M Investments LLC, dropped out of the auction, Peg Brickley of Dow Jones Newswires reports. Gregory Bay, an attorney for Tennenbaum, told Dow Jones that the equity firm expected to complete its acquisition of Radnor Holdings by the end of the week and is in the process of sorting out the deal to be submitted and approved by a bankruptcy judge. According to Dow Jones, Radnor Holdings' Creditors Committee argued that Tennenbaum should not be awarded a position of advantage when it placed its $225 million bid on Radnor. The Committee accused Tennenbaum of "taking advantage of Radnor's distress and loading it up with debt", referring to Tennenbaum's ill-timed $120 million investment late last year. However, the Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware dismissed the argument saying that Tennenbaum was fair in doing its business with Radnor. Four M Investments, Dow Jones says, offered up to $250 million in its bid, but backed out after hearing Judge Walsh's ruling. A Four M top executive said that it made "little sense" to stay in the competition. About Tennenbaum Capital Based in Santa Monica, California, Tennenbaum Capital Partners -- http://www.tennenbaumcapital.com/-- is a private investment firm managing over $4 billion in private funds. The company focuses on investment opportunities between $50 million to $250 million. The firm's investment strategy is based on a long-term horizon and value-oriented approach. Tennenbaum's core strengths include an in-depth knowledge of equity and debt financing vehicles in the public and private markets with a focus on complex investments such as acquisitions and special situations. About Radnor Holdings Headquartered in Radnor, Pennsylvania, Radnor Holdings Corporation -- http://www.radnorholdings.com/-- manufactures and distributes a broad line of disposable food service products in the United States, and specialty chemicals worldwide. The Debtor and its affiliates filed for chapter 11 protection on Aug. 21, 2006 (Bankr. D. Del. Case No. 06-10894). Gregg M. Galardi, Esq., and Mark L. Desgrosseilliers, Esq., at Skadden, Arps, Slate, Meagher, represent the Debtors. Donald J. Detweiler, Esq., and Victoria Watson Counihan, Esq., at Greenberg Traurig, LLP, serves the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed total assets of $361,454,000 and total debts of $325,300,000. RAILAMERICA: Moody's Assigns Loss-Given-Default Ratings ------------------------------------------------------- In connection with Moody's Investors Service's implementation of its Probability-of-Default and Loss-Given-Default rating methodology for the Transportation sector, the rating agency revised its Ba3 Corporate Family Rating to B1 for RailAmerica Transportation Corp. In addition, Moody's revised its probability-of-default ratings and assigned loss-given-default ratings on these loans: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Guaranteed Senior Secured Term Loan B Due 2011 Ba3 Ba2 LGD2 26% Guaranteed Senior Secured Revolving Credit Facility Due 2010 Ba3 Ba2 LGD2 26% Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Based in Boca Raton, Florida, RailAmerica Transportation Corp. -- http://www.railamerica.com/-- is primarily engaged in the ownership and operation of short line and regional freight railroads in North America. Its short line freight railroads provide transportation services for both online customers and Class I railroads that interchange with its rail lines. As of Dec. 31, 2005, the company owned, leased, and operated a portfolio of 43 railroads with approximately 8,000 miles of track located in the United States and Canada. These properties are located in the southeastern, southwestern, midwestern, the Great Lakes, New England, and Pacific Coast regions of the United States. RC2 CORP: Earns $19.4 Million in 2006 Third Quarter --------------------------------------------------- RC2 Corporation reported $19.4 million of net income for the third quarter Sept. 30, 2006. For the nine months ended Sept. 30, 2006, net income was $36 million. The results for the third quarter and nine months ended Sept. 30, 2006 include approximately $1.0 million and $3.2 million respectively, in compensation expense for stock options. Results for 2005 do not include compensation expense for stock options. Net income reported for the 2005 third quarter was $18.3 million. For the nine months ended Sept. 30, 2005, net income was $35.9 million. Third Quarter Operating Results Net sales for the third quarter increased 12.5% to $160.5 million compared with $142.6 million for the third quarter a year ago. Current year third quarter net sales excluding $0.1 million in net sales from sold and discontinued product lines increased 13.6% compared with third quarter 2005 net sales excluding $1.4 million in net sales from sold and discontinued product lines. The net sales increase was attributable to increases in the children's toys and infant products categories, partially offset by a decline in the collectible products category. Sales in the children's toys category increased by 28.4%, primarily driven by the Thomas & Friends, John Deere and Bob the Builder toy product lines. Sales in the infant products category increased by 9.0%, primarily driven by The First Years' Take & Toss(R) toddler self- feeding system and Soothie(TM) bottle system and Learning Curve's Lamaze infant toys. As expected, sales in the collectible products category continued to decrease. Gross margin decreased to 47.2% from 48.9% in the prior year quarter. The 2006 third quarter gross margin reflects the impact of a less favorable product and distribution mix and higher product costs, especially in die-cast products, than that experienced in the third quarter of 2005. Selling, general and administrative expenses as a percentage of net sales decreased to 27.3% in the third quarter of 2006 compared with 28.0% in the third quarter of 2005. Selling, general and administrative expenses for the 2006 third quarter include approximately $0.9 million in compensation expense for stock options, while results for the 2005 third quarter do not include any compensation expense for stock options. Operating income increased to $31.7 million from $30.9 million in the year ago period, but as a percentage of net sales, decreased to 19.8% from 21.7% in the prior year third quarter. Operating income for the quarter ended September 30, 2005 includes $2.0 million in gain on sale of assets and $0.6 million in catch-up amortization expense. Excluding the gain on sale of assets, operating income for the quarter ended September 30, 2005 was $28.9 million or 20.3% of net sales. Year to Date Operating Results Net sales for the nine months ended Sept. 30, 2006 increased 8.3% to $376.7 million compared with $347.9 million for the nine months ended Sept. 30, 2005. Current year to date net sales excluding $0.3 million in net sales from sold and discontinued product lines, increased 9.5% compared with net sales for the nine months ended Sept. 30, 2005 excluding $4.2 million in net sales from sold and discontinued product lines. The increase was attributable to the sales increases in the children's toys and infant products categories, partially offset by a decline in the collectible products category. Gross margin for the nine months ended Sept. 30, 2006 decreased to 47.2% as compared with 49.3% for the comparable period in 2005, due to a less favorable product and distribution mix and higher product costs, especially in die-cast products. Selling, general and administrative expenses as a percentage of net sales were 31.1% for the first nine months of 2006 as compared with 32.2% for the same period in 2005. Selling, general and administrative expenses for the first nine months of 2006 include approximately $3.0 million in compensation expense for stock options and approximately $1.0 million in expenses related to litigation involving The First Years which preceded its acquisition by RC2. Operating income decreased to $59.7 million from $60.5 million in the year ago period, and as a percentage of net sales, decreased to 15.8% from 17.4% in the prior year first nine months, primarily as a result of the stock option and litigation expenses in the first nine months of 2006. Operating income for the 2005 year to date period also includes approximately $2.0 million in gain on the sale of assets and approximately $0.6 million in catch-up amortization expense. Operating income for the nine months ended Sept. 30, 2005, excluding the gain on sale of assets, was $58.6 million or 16.8% of net sales. Cash and Debt As of Sept. 30, 2006, the company's outstanding debt balance was $58.8 million and its cash balances exceeded $20 million. The comparable figures at the end of the 2006 second quarter were $54 million and $14 million, respectively. Also during the quarter, the company amended its credit facility, reducing its applicable margin on borrowings, modifying the definition of certain cash flow measures to exclude non-cash expense related to equity awards and adding an accordion borrowing element. Under the amended facility the company has additional borrowing capacity of $75.0 million. The company expects to reduce outstanding debt in the fourth quarter of 2006 and in the first quarter of 2007. Curt Stoelting, chief executive officer of RC2 commented, "We are very pleased with our third quarter results and our performance through the first nine months of 2006. In the seasonally-high third quarter, our teams introduced new products and expanded distribution for our key product lines which delivered a comparable increase of over 10% in sales and profits. These results reflect our commitment to profitable organic growth despite declining sales in the collectible products category and product cost increases, especially in our die-cast products." "In the fourth quarter, we expect that die-cast products will continue to put downward pressure on our gross margins. We are encouraged by recent declines in petroleum prices but remain concerned about increasing inflation in China which continues to pressure our product costs. We remain focused on continuing our efforts to maintain and improve our margins by optimizing product development efforts and supply chain costs while eliminating low- performing products and reducing investment in low-growth product lines." Mr. Stoelting concluded, "We are well-positioned for 2007. We have noted very positive customer reactions to our 2007 product lines including the new products that we debuted at the American International Fall Toy Show in New York. We remain confident in our long-term strategy and business model which is focused on introducing new products based upon consumer insights. We are building a growing portfolio of branded product lines which provide stability in our earnings and cash flow and allow us the opportunity to achieve sustainable organic growth. Our strong balance sheet gives us financial flexibility to expand our business and create value for our shareholders." Financial Outlook The 2006 outlook remains the same as presented throughout the year. Net sales for 2005 excluding sold and discontinued product lines totaled $499.7 million. From this base level of 2005 net sales, the company has experienced continued sales growth in 2006. Overall sales increases are dependent on a number of factors including continued success and expansion of existing product lines, successful introductions of new products and product lines and renewal of key licenses. Other key factors include seasonality, overall economic conditions including consumer retail spending and shifts in the timing of that spending and the timing and level of retailer orders. Based on current sales and margin estimates, the company currently expects that full year 2006 diluted earnings per share will range from $2.60 to $2.70. This amount includes an estimated $0.12 per diluted share impact of expensing stock options under SFAS 123(R) which took effect Jan. 1, 2006. Pro forma compensation expense for the year ended Dec. 31, 2005 under SFAS 123 (R) would have been approximately $2.1 million, net of tax benefit, or approximately $0.10 per diluted share, which would have resulted in diluted earnings per share of $2.37 for 2005. About RC2 Corp. Based in Oak Brook, Illinois, RC2 Corporation (NASDAQ:RCRC) -- http://www.rc2corp.com/-- designs, produces and markets innovative, high-quality toys, collectibles, hobby and infant care products that are targeted to consumers of all ages. RC2's infant and preschool products are marketed under its Learning Curve(R) family of brands which includes The First Years(R) by Learning Curve and Lamaze brands as well as popular and classic licensed properties such as Thomas & Friends, Bob the Builder, Winnie the Pooh, John Deere, and Sesame Street. RC2 markets its collectible and hobby products under a portfolio of brands including Johnny Lightning(R), Racing Champions(R), Ertl(R), Ertl Collectibles(R), AMT(R), Press Pass(R), JoyRide(R) and JoyRide Studios(R). RC2 reaches its target consumers through multiple channels of distribution supporting more than 25,000 retail outlets throughout North America, Europe, Australia, and Asia Pacific. * * * As reported in the Troubled Company Reporter on Sept. 27, 2006, Moody's Investors Service revised its Ba2 Corporate Family Rating to Ba3 for RC2 Corporation, and held its Ba2 rating on the company's Senior Secured Revolving Credit Facility Due 2008. In addition, Moody's assigned an LGD3 rating to the credit facility, suggesting noteholders will experience a 32% loss in the event of a default. Moody's also held its Ba2 rating on RC2 Corp.'s Senior Secured Term Loan Due 2008, and assigned an LGD3 rating to these notes, suggesting bondholders will experience a 32% loss in the event of a default. RESI SECURITIES: S&P Lifts Ratings on Eight Transaction Classes --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on eight classes of real estate synthetic investment securities issued by RESI Finance L.P.'s series 2003-CB1 and 2004-A. In addition, the ratings on the remaining classes from these series and on all other RESI Finance L.P. transactions are affirmed. The raised ratings reflect the transactions' superior performance and increased percentages of loss protection provided through remaining credit support. Because the most subordinate classes will receive no principal allocations until the balances of all other class B certificates have been reduced to zero, the remaining percentages of credit enhancement should increase over time unless significant losses occur. As of the Oct. 2006 distribution date, prepayments had reduced the pool balances of both series to less than 47% of their original amounts. These prepayments have increased the percentages of loss protection provided by the remaining credit support. All series have experienced low delinquency levels, ranging from 0.044% to 0.525% of the current pool balances. The level of severely delinquent loans ranged from zero to 0.176%. In addition, realized losses, as a percentage of the original pool balances, have been very low, ranging from zero to 0.011%. The remaining credit support should be sufficient to support the certificates at the raised and affirmed rating levels. These transactions are RESIs, synthetic securitizations of jumbo, A-quality, fixed-rate first-lien residential mortgage loans. Unlike traditional mortgage-backed securitizations, the actual cash flow from the reference portfolio for a RESI is not paid to the holders of the securities. Rather, the proceeds from the issuance of the securities are invested in eligible investments. Interest payable to the securityholders is paid from income earned on the eligible investments and payments from Bank of America under a financial guarantee contract. Ratings Raised RESI Finance L.P. Real Estate Synthetic Investment Securities Rating Series Class To From ------ ----- -- ---- 2003-CB1 B3 AA- A+ 2003-CB1 B4 A+ A 2003-CB1 B5 A A- 2003-CB1 B6 A- BBB+ 2003-CB1 B7 BBB- BB+ 2003-CB1 B8 BB+ BB 2004-A B3 A+ A 2004-A B4 A A- Ratings Affirmed RESI Finance L.P. Real Estate Synthetic Investment Securities Series Class Rating ------ ----- ------ 2003-A B3, B4, B5, B6, B7 AAA 2003-A B8 AA 2003-A B9 AA- 2003-A B10 A- 2003-A B11 BB+ 2003-B B3 AAA 2003-B B4 AA 2003-B B5 A 2003-B B6 A- 2003-B B7 BBB 2003-B B8 BBB- 2003-B B9 BB 2003-B B10 BB- 2003-B B11 B- 2003-CB1 B9 BB- 2003-CB1 B10 B+ 2003-CB1 B11 B 2003-C B3 A 2003-C B4 A- 2003-C B5 BBB 2003-C B6 BBB- 2003-C B7 BB 2003-C B8 BB- 2003-C B9 B+ 2003-C B10 B 2003-C B11 B- 2003-D B3 A 2003-D B4 A- 2003-D B5 BBB 2003-D B6 BBB- 2003-D B7 BB 2003-D B8 BB- 2003-D B9, B10 B+ 2003-D B11 B 2004-A B5 BBB 2004-A B6 BBB- 2004-A B7 BB 2004-A B8 BB- 2004-A B9 B+ 2004-A B10 B 2004-A B11 B- 2004-B B3 A 2004-B B4 A- 2004-B B5 BBB 2004-B B6 BBB- 2004-B B7 BB+ 2004-B B8 BB 2004-B B9 BB- 2004-B B10 B+ 2004-B B11 B 2004-C B3 A 2004-C B4 A- 2004-C B5 BBB 2004-C B6 BBB- 2004-C B7 BB 2004-C B8 BB- 2004-C B9 B+ 2004-C B10 B 2004-C B11 B- 2005-A B3 A 2005-A B4 A- 2005-A B5 BBB- 2005-A B6 BB+ 2005-A B7 BB 2005-A B8 BB- 2005-A B9 B+ 2005-A B10 B 2005-A B11 B- 2005-B B3 AA- 2005-B B4 A+ 2005-B B5 BBB+ 2005-B B6 BBB 2005-B B7 BB 2005-B B8 BB- 2005-B B9 B+ 2005-B B10, B-11 B 2005-C B3 A 2005-C B4 A- 2005-C B5 BBB 2005-C B6 BBB- 2005-C B7 BB 2005-C B8 BB- 2005-C B9 B+ 2005-C B10 B 2005-C B11 B- 2005-D B3 A 2005-D B4 A- 2005-D B5 BBB 2005-D B6 BBB- 2005-D B7 BB 2005-D B8 BB- 2005-D B9 B+ 2005-D B10 B 2005-D B11 B- 2006-A B3 A 2006-A B4 A- 2006-A B5 BBB 2006-A B6 BBB- 2006-A B7 BB 2006-A B8 BB- 2006-A B9 B+ 2006-A B10 B 2006-A B11 B- 2006-B B3 A 2006-B B4 A- 2006-B B5 BBB 2006-B B6 BBB- 2006-B B7 BB 2006-B B8 BB- 2006-B B9 B+ 2006-B B10 B 2006-B B11 B- 2006-C B3 A 2006-C B4 A- 2006-C B5 BBB 2006-C B6 BBB- 2006-C B7 BB+ 2006-C B8 BB 2006-C B9 BB- 2006-C B10 B+ 2006-C B11 B 2006-C B12 B- RICHMOND REAL: Case Summary & 13 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Richmond Real Estate Limited Partnership 67300-67500 Main Street Richmond, MI 49408 Bankruptcy Case No.: 06-12786 Type of Business: The Debtor owns a shopping center in Richmond, Michigan, that is anchored by Kmart, CVS and Radio Shack. The Debtor is an affiliate of Scarborough-St. James Corporation. Scarborough filed for Chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17966). Chapter 11 Petition Date: November 22, 2006 Court: Southern District of New York (Manhattan) Debtor's Counsel: Todd E. Duffy, Esq. Duffy & Amedeo LLP Seven Penn Plaza Suite 420 New York, NY 10001 Tel: (212) 268-2685 Fax: (212) 500-7972 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million Debtor's 13 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ MCANY of Richmond Fund II Realty LP $8,608,890 c/o Sherman Hill Road, Suite A 104C Woodbury, CT 06798 Attn: Benedict Silverman Carmen L.L.C. $2,013,000 18700 West Ten Mile Road Southfield, MI 48075 Attn: Peter Beer Warren Bank $2,013,000 38880 Garfield Road Clinton Township, MI 48038 First Richborough Realty Corporation $1,400,000 c/o LeClair Ryan, P.C. 830 Third Avenue, 5th Floor New York, NY 10022 Scarborough St. James Corporation $1,400,000 c/o LeClair Ryan, P.C. 830 Third Avenue, 5th Floor New York, NY 10022 Vidar Limited, L.L.C. $510,000 [Address not provided] Carmen L.L.C. $250,000 18700 West Ten Mile Road Southfield, MI 48075 Attn: Peter Beer Robert Eisenhardt $113,000 Robert Eisenhardt, Inc. 9738 Gratiot Avenue Columbus, MI 48063 IRA of Heide Harlow $100,000 c/o Heide Harlow 25857 Collins Avenue Chestertown, MD 21620 C&R Maintenance, Inc. $89,000 dba Rizzo Services 22449 Groesbeck Warren, MI 48089 Debra J. Karas $25,000 37 West Street Marblehead, MA 01945 Applied Environmental $5,000 2890 Carpenter Road, #1000 Ann Arbor, MI 48108 Alan Ritter & Company $5,000 25 Smith Street Nanuet, NY 10954 RIGEL CORP: Chapter 7 Trustee Wants Cavanagh as Special Counsel --------------------------------------------------------------- Anthony H. Mason, the chapter 7 trustee appointed in Rigel Corp.'s bankruptcy case, asks the U.S. Bankruptcy Court for the District of Arizona for permission to employ The Cavanagh Law Firm P.A. as his special counsel. The Trustee wants to employ the firm's attorneys, Jeffrey B. Smith, Esq., and Peter Guild, Esq., to assist in a litigation concerning tax refund claims pending before the Arizona Tax Court. Cavanagh will undertake this representation on a contingency fee basis. The contingency fee will be computed on a sliding scale: -- The base contingency fee for any recovery on the Refund Claims will be 14% of the gross recovery before expenses. -- If an appeal to the Arizona Court of Appeals is filed by either party to the Tax Court Litigation, the contingency fee will be 16% of the gross recovery before expenses. -- If a petition for review is filed in the Arizona Supreme Court by either party to the Tax Court Litigation, the contingency fee will be 18% of the gross recovery before expenses. The fee arrangement pertains to all recoveries of the Debtor from the pending tax court litigation, and all recoveries for all time periods through the filing of the petition. In addition to the Refund Claims, the Tax Court Litigation also includes deficiency assessments for Arizona use and business taxes asserted by the Arizona Department of Revenue owed by Rigel for the audit period covering Aug. 1, 1999, through Sept. 30, 2001. The Trustee and Cavanagh agree that Cavanagh's representation concerning the deficiency assessments will not be on a contingency fee basis. For deficiency assessments services, Mr. Guild and Mr. Smith will each bill $275 per hour. All other professionals of Cavanagh will bill at their normal hourly rates. The firm tells the Court that it will not seek reimbursement over $10,000 from the Debtor. Mr. Guild assures the Court that his firm does not hold any interest adverse to the Debtor, its creditors or estate. The attorneys can be reached at: Peter C. Guild, Esq. Jeffrey B. Smith, Esq. Cavanagh Law Firm 1850 North Central Avenue, Suite 2400 Phoenix, Arizona 85004 Tel: (602) 322-4000 Fax: (602) 322-4100 http://www.cavanaghlaw.com/ Headquartered in Tempe, Arizona, Rigel Corporation, is a Krispy Kreme franchisee. The Company also operates Godfather's Pizza, KFC, and Bruegger's Bagels' franchises. The Company filed for chapter 11 protection on Aug. 9, 2006 (Bankr. D. Ariz. Case NO. 06-02480). Michael W. Carmel, Esq., at Michael W. Carmel, Ltd., represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. The Court converted the Debtor's chapter 11 case to a chapter 7 proceeding on Aug. 15, 2006. Anthony H. Mason is the Chapter 7 Trustee. RONCO CORP: Posts $4.6 Million Net Loss in Quarter Ended Sept. 30 ----------------------------------------------------------------- Ronco Corporation reported a $4.6 million net loss for the three months ended Sept. 30, 2006, compared with a $3.1 million loss for the comparable three months ended Sept. 30, 2005. The increase in net loss of approximately $1.5 million for the three months ended Sept. 30, 2006 is due to the decrease in gross profit partially offset by a decrease in operating expenses. In addition, the Company did not record any tax benefit in 2006 as compared to 2005 when it recognized $2.1 million in tax benefit. Net sales for the three months ended Sept. 30, 2006 was $9.6 million, compared with $13.1 million for the three months ended Sept. 30, 2005. The decline of $3.5 million, or 27%, in net sales for the three months ended Sept. 30, 2006 is primarily due to a decline in direct response sales of the Company's rotisserie ovens by approximately $1.7 million, a decline in direct response sales of its cutlery product line by $3.2 million and a decline of approximately $.2 million in list sales and commissions on advertising. The decrease in direct response sales was partially offset by an increase in wholesale sales by approximately $1.6 million. Management disclosed that net sales declined primarily due to the fact that infomercials for its rotisserie and cutlery lines are more than 2 years old and the Company has not provided other products with any significant marketing support during the last several years. The Company's balance sheet at Sept. 30, 2006, showed $28,640,413 in total assets, $18,318,078 in total current liabilities, $10,270,858 in long-term liabilities, and stockholders' equity of $51,477,000. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?158f Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 19, 2006, Mahoney Cohen & Company, CPA, P.C., expressed substantial about Ronco Corp's ability to continue as a going concern after auditing the company's financial statements for the fiscal years ended June 30, 2006 and 2005. The auditing firm pointed to the company's net loss of approximately $44.42 million in fiscal 2006 and working capital deficiency of approximately $12.86 million at June 30, 2006. About Ronco Corp Ronco Corporation -- http://www.ronco.com/-- develops, markets and distributes branded consumer products for the kitchen and home. Its products are sold primarily through direct response television marketing by broadcasting 30-minute long advertisements commonly referred to as "infomercials." SAINT VINCENTS: Excl. Plan-Filing Period Stretched to December 20 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extended Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates' exclusive right to: * file a plan of reorganization, to and including Dec. 20, 2006; and * solicit acceptances of that plan, to and including March 17, 2007. Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in New York, told the Judge Adlai S. Hardin that the exclusive periods should be extended because even with the complexities of the Debtors' bankruptcy case, they have made substantial progress: (1) in negotiating a plan of reorganization with various creditor constituencies, the Official Committee of Unsecured Creditors, and the Official Committee of Tort Claimants; and (2) in turning their businesses around, both operationally and by repairing seriously stressed relations with many parties-in-interest. The Creditors' Committee and the Tort Committee consented to an extension of the Exclusive Periods. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 39 Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SAINT VINCENTS: Trade Creditors Sell Claims Totaling $915,169 ------------------------------------------------------------- From November 1 to 15, 2006, the Clerk of the U.S. Bankruptcy Court for the Southern District of New York recorded claim transfers made by five creditors to: (a) ASM Capital, located at 7600 Jericho Turnpike, Suite 302, in Woodbury, New York: Transferor Claim Amount ---------- ------------ Ortho Rehab, Inc. $18,128 Putney,Twombly,Hall & Hirson LLP 217,318 Ventana Medical 49,194 (b) Cargill Financial Services International, Inc., located at 12700 Whitewater Drive, in Minnetonka, Minnesota: Transferor Claim Amount ---------- ------------ Aslan Capital Master Fund, LP $499,298 Lifespire, Inc. Supp WK 131,231 Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 38 Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SALOMON HOME: S&P Cuts Rating on Class M-3 Certificates to BB ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class M-3 certificate from Salomon Home Equity Loan Trust Series 2002- WMC1 and placed it on CreditWatch with negative implications. Concurrently, the ratings on the remaining classes from this transaction are affirmed. The lowered rating is the result of realized losses that have continually depleted overcollateralization. During the previous six remittance periods, monthly losses exceeded excess interest by approximately 3.0x. As of the Oct. 2006 distribution date, overcollateralization was below its target balance by approximately 40%. Total delinquencies represent 37.49% of the current pool balance, with 12.85% categorized as seriously delinquent. Cumulative realized losses represent 2.68% of the original pool balance. Standard & Poor's will continue to closely monitor the performance of this transaction. If losses continue to outpace excess spread, negative rating actions can be expected. Conversely, if excess spread covers losses and overcollateralization builds toward its target balance, the rating agency will affirm the rating and remove it from CreditWatch. The affirmations reflect actual and projected credit support that is sufficient to maintain the current ratings. Credit support for this transaction is provided through a combination of subordination, excess spread, and overcollateralization. The collateral consists of 30-year, fixed- and/or adjustable-rate subprime mortgage loans secured by first liens on residential properties. Rating Lowered And Placed On Creditwatch Negative Salomon Home Equity Loan Trust Series 2002-WMC1 Rating Class To From ----- -- ---- M-3 BB/Watch Neg BBB+ Ratings Affirmed Salomon Home Equity Loan Trust Series 2002-WMC1 Class Rating ----- ------ M-1 AAA M-2 A SATURNS TRUST: S&P Affirms BB+ Rating on $26-Mil. Callable Units ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on SATURNS Trust No. 2001-2 and PreferredPLUS Trust Series CZN-1 and removed them from CreditWatch, where they were placed with negative implications on Sept. 25, 2006. The rating actions follow the Nov. 14, 2006, affirmation of the corporate credit and senior unsecured debt ratings on Citizens Communications Co. and their removal from CreditWatch negative. Saturns Trust No. 2001-2 and PreferredPLUS Trust Series CZN-1 are synthetic transactions that are weak-linked to the underlying securities, Citizens Communications Co.'s 7.05% debentures due Oct. 1, 2046. Ratings Affirmed And Removed From Creditwatch Negative Saturns Trust No. 2001-2 $26 Million Callable Units Series 2001-2 Rating Class To From ----- -- ---- Units BB+ BB+/Watch Neg PreferredPlus Trust Series CZN-1 $34 Million PreferredPlus 8.375% Trust Certificates Rating Class To From ----- -- ---- Certs BB+ BB+/Watch Neg SEA CONTAINERS: Can Assign Admin. Status to Claims Until Dec. 19 ---------------------------------------------------------------- The Honorable Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware grants, on an interim basis, Sea Containers, Inc. and its debtor-affiliates' request to accord administrative priority expense status to all Intercompany Claims, through and including Dec. 19, 2006. As reported in the Troubled Company Reporter on Oct. 30, 2006, in the normal operations of their business, the Debtors engage in intercompany transactions involving intercompany trade and intercompany cash and capital needs. As a result, there are numerous intercompany claims that reflect intercompany receivables and payments made in the ordinary course of the Debtors' businesses. These Intercompany Transactions include, but are not limited to expense allocation and advances. At any given time, there may be Intercompany Claims owing among the Debtors. The Debtors maintain records of all Intercompany Transactions and can ascertain, trace and account for all Intercompany Transactions. 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. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SEA CONTAINERS: Reports Initial Consolidated Cash Flow Forecast --------------------------------------------------------------- Sea Containers, Ltd., and its subsidiaries Sea Containers Services, Ltd., and Sea Containers Caribbean, Inc., delivered a consolidated cash flow forecast with the U.S. Bankruptcy Court for the District of Delaware on Nov. 1, 2006. Ian C. Durant, vice president for finance and chief financial officer of Sea Containers Ltd., disclosed in a regulatory filing with the Securities and Exchange Commission that certain assets of the Debtors and their non-debtor subsidiaries may be sold during the next twelve months, which may result in additional available cash for the Debtors. Period Forecast Closing Cash ------ --------------------- October 2006 $49,100,000 November 2006 48,200,000 December 2006 49,800,000 January 2007 48,100,000 February 2007 43,900,000 March 2007 38,200,000 April 2007 34,700,000 May 2007 29,900,000 June 2007 24,100,000 July 2007 13,600,000 August 2007 10,600,000 September 2007 6,200,000 October 2007 3,600,000 A full-text copy of the Consolidated Cash Flow Forecast is available for free at http://researcharchives.com/t/s?152f 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. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SERACARE LIFE: Hires AccuVal Associates as Inventory Appraiser -------------------------------------------------------------- SeraCare Life Sciences, Inc., obtained authority from the U.S. Bankruptcy Court for the Southern District of California to employ AccuVal Associates, Inc., as its inventory appraiser. As reported in the Troubled Company Reporter on Sept. 13, 2006, AccuVal Associates is expected to advise and assist the Debtor in the allocation of the acquisition purchase price paid for the assets of Celliance Milford, for financial reporting purposes. Richard E. Schmitt, President and CEO of AccuVal Associates, discloses that the firm has agreed to perform services for a $20,000 flat fee plus out-of-pocket expenses that will not exceed to $4,500. Mr. Schmitt assures the Court that AccuVal Associates is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Based in Oceanside, California, SeraCare Life Sciences, Inc. -- http://www.seracare.com/-- develops and manufactures biological based materials and services for diagnostic tests, commercial bioproduction of therapeutic drugs, and medical research. The Company filed for chapter 11 protection on March 22, 2006 (Bankr. S.D. Calif. Case No. 06-00510). Garrick A. Hollander, Esq., Paul J. Couchot, Esq., and Peter W. Lianides, Esq., represent the Debtor. The Official Committee of Unsecured Creditors selected Henry C. Kevane, Esq., and Maxim B. Litvak, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, as its counsel. When the Debtor filed for protection from its creditors, it listed $119.2 million in assets and $33.5 million in debts. SERACARE LIFE: Hires Prolman Group to Provide Financial Services ---------------------------------------------------------------- SeraCare Life Sciences, Inc., obtained authority from the U.S. Bankruptcy Court for the Southern District of California to employ Prolman Group, Inc., dba Prolman Associates, to provide financial services for a specific purpose. As reported in the Troubled Company Reporter on Sept. 13, 2006, the Debtor lacked the internal resources necessary to compile and analyze financial information required to support its efforts to secure new financing needed to exit bankruptcy. Prolman Group's will prepare a financing package that contains an overview of the Debtor's business and assets, including accounts receivable, inventory and equipment that may be used to collateralize a loan, which package may be presented to potential lenders for the purposes of soliciting financing proposals. The firm's professionals bill: Professional Hourly Rate ------------ ----------- David A. Prolman $350 Bette Hiramatsu $295 Mr. Prolman, President of Prolman Group, discloses that the firm has agreed to cap its fees at $94,000, plus out-of-pocket expenses. Mr. Prolman assured the Court that his firm does not hold any interest materially adverse to the Debtor or its estate. Based in Oceanside, California, SeraCare Life Sciences, Inc. -- http://www.seracare.com/-- develops and manufactures biological based materials and services for diagnostic tests, commercial bioproduction of therapeutic drugs, and medical research. The Company filed for chapter 11 protection on March 22, 2006 (Bankr. S.D. Calif. Case No. 06-00510). Garrick A. Hollander, Esq., Paul J. Couchot, Esq., and Peter W. Lianides, Esq., represent the Debtor. The Official Committee of Unsecured Creditors selected Henry C. Kevane, Esq., and Maxim B. Litvak, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, as its counsel. When the Debtor filed for protection from its creditors, it listed $119.2 million in assets and $33.5 million in debts. SIRVA WORLDWIDE: Moody's Assigns Loss-Given-Default Ratings ----------------------------------------------------------- In connection with Moody's Investors Service's implementation of its Probability-of-Default and Loss-Given-Default rating methodology for the Transportation sector, the rating agency held its B2 Corporate Family Rating for SIRVA Worldwide, Inc. Additionally, Moody's confirmed its probability-of-default ratings and assigned loss-given-default ratings on the company's debentures: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Guaranteed Senior Secured Revolver Due 2009 B2 B2 LGD3 46% Guaranteed Senior Secured Term Loan B Due 2010 B2 B2 LGD3 46% Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Based in Westmont, Illinois, SIRVA Worldwide, Inc. -- http://www.sirva.com/-- a wholly owned operating subsidiary of SIRVA, Inc., provides relocation services and moving services to consumers, corporations, and governments worldwide. Its relocation services include counseling to the transferee, referrals to real estate brokers and agents for assisting the transferees with the sale and purchase of their home, mortgage originations, expense management, movement of household goods, global program management, and the provision of destination 'settling in' services. SOLECTRON CAPITAL: Moody's Affirms B1 Corporate Family Rating ------------------------------------------------------------- Moody's Investors Service affirmed the B1 Corporate Family Rating of Solectron Corporation and other ratings affirmed included the B3 ratings of its $450 million Convertible Senior Notes due 2034 and the $150 million Senior Subordinated Notes due 2016 guaranteed by it. The ratings reflect both the overall probability of default of the company, to which Moody's assigns a PDR of B1, and a loss given default of LGD 4. The rating outlook was revised to positive. The change in the outlook reflects: -- significant de-leveraging over the past 2-3 years which resulted in improved credit ratios (leverage and coverage); -- recent improvements though still modest in financial performance especially over the second half of fiscal 2006; -- the expectation of stronger performance in fiscal 2007 in terms of revenue growth, profitability and free-cash-flow generation; -- a liquid balance sheet with a net cash position and no significant maturity over the next 3 years; and, -- the franchise value of Solectron as a tier one EMS provider in the electronic supply chain. The outlook also incorporates the report of Solectron's restructuring program which is scheduled to be completed in the current fiscal year. The company expects to consolidate and/or close down 700,000 square feet of facilities in US and Western Europe and reduce headcount by about 1400 persons. About $60 million of total charges are associated with this phase with annual cost savings estimated at about $30 million. The B1 rating continues to reflect: -- the intensely competitive landscape in the EMS industry with Asian competitors posing a more serious threat; -- the volatile nature of the EMS industry and the on-going consolidating trend by EMS' OEM customers which further accentuates the lumpiness of the sector's key customers; -- Solectron's modest revenue growth of 1.1% in an environment of favorable end-market demand of over 10% CAGR, coupled with a preponderance of revenues in the traditional end- markets; -- still weak albeit improving profitability and return measures; and, -- negative free cash flow partly impacted by inventory build up in fiscal 2006. Ratings affirmed: -- Corporate family rating B1; -- Probability-of-default rating B1; -- $450 million 0.5% Convertible Senior Notes due 2034 at B3, LGD5, 89%; and, -- $150 million 8.0% Senior Subordinated Notes due 2016, B3, LGD5, 89%. Ratings withdrawn on Nov. 15, 2006: -- $64 million 7.97% Subordinated Debentures due Nov. 2006, B3, LGD6, 95%. The rating could be revised upward if: -- there is further evidence of revenue stability and growth and diversification partly due to growth in non-traditional end-markets; and, -- improvement in profitability and return metrics and better working capital management to result in positive free-cash-flow. Moody's will also be monitoring the success of the company's restructuring program and its impact on profitability. Moody's does not foresee Solectron's corporate family rating to falling below the current B1 unless significant developments resulting in deterioration of revenue, return and cash flow measures. Solectron Corporation, headquartered in Milpitas, California, is a leading electronics manufacturing and services i.e. customized, integrated manufacturing and supply chain management services, provider to OEMs in the electronics industry. For the twelve months ended Aug. 2006, the company generated approximately $10.5 billion in net sales and $342 million in adjusted EBITDA. SONTRA MEDICAL: Must Raise Capital to Dodge Bankruptcy Threat ------------------------------------------------------------- Sontra Medical Corporation is meeting with several potential private investors to raise capital to meet its working capital and its forecasted operating costs and expenses beyond Dec. 31, 2006. The Company has engaged a financial consultant to provide introductions to potential investors. Over the past year, the Company has experienced a decline in investors interested in making an investment in the Company. If it does not raise additional capital by Dec. 31, 2006 (as debt or equity), then the Company will run out of cash and will be unable to continue operations. Sontra is continuing to pursue additional capital through several potential identified investors but have not received a commitment for financing at this time. If it does not raise additional capital, the Board of Directors of the Company may decide to initiate an orderly wind-down of business operations or to file for bankruptcy protection under the United States Bankruptcy Code. In the event that the Company winds down or files for bankruptcy, there would likely be little or no proceeds available for its stockholders. "While we have worked, and continue diligently working, to raise additional cash for the Company's development and working capital needs, we have also remained focused on the development and on- going clinical evaluations of our Symphony Continuous Glucose Monitor (CTGM)," stated Thomas W. Davison, PhD, Sontra's President and Chief Executive Officer. Dr. Davison added, "Clinical trials of our Symphony Continuous Transdermal Glucose Monitor are underway at a major Boston, Massachusetts Medical Center. The study has enrolled 30 patients and preliminary data analysis verified that the Symphony system is effective for continuous glucose monitoring in patients undergoing open heart surgery in the operating room and cardiac care unit. Recently, we expanded this clinical trial to enroll up to 65 cardiac surgery patients. Assuming we are successful in obtaining the necessary capital to continue the Company's operations, we expect to initiate a multi-center clinical study in the first quarter of 2007 that will enroll critically ill patients in surgical and medical intensive care units." Quarterly Results For the quarter ended Sept. 30, 2006, the net loss applicable to Sontra's common stockholders was $1,389,882 as compared to $1,510,797 for the same period in 2005. For the nine months ended Sept. 30, 2006, the net loss applicable to common stockholders was $4,229,286, as compared to $4,556,259 for the same period in 2005. As of Sept. 30, 2006, the Company had a total of $1,677,256 in cash and short-term investments. On July 24, 2006, the Company's Board of Directors approved a 1-for-10 reverse stock split. The reverse stock split was effective at 5:00 p.m. on Aug. 10, 2006, and the Company's common stock began trading on a split-adjusted basis on Aug. 11, 2006. All share and per share information presented herein have been retroactively restated to reflect the reverse stock split. The Company expects that cash and short-term investments of $1,677,256 at Sept. 30, 2006 ($1,216,029 at Nov. 20, 2006) will be sufficient to meet its cash requirements through December 2006. About Sontra Medical Based in Franklin, Massachusetts, Sontra Medical Corporation (Nasdaq: SONT) -- http://www.sontra.com/-- develops platform technology for transdermal science. In addition, the Company owns technology for transdermal delivery of large molecule drugs and vaccines. SPIRIT AEROSYSTEMS: S&P Lifts Corp. Credit Rating to BB from BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Spirit AeroSystems Inc. to 'BB' from 'BB-' and removed it from CreditWatch, where it was placed with positive implications on July 6, 2006. The outlook is positive. The rating action, indicated by Standard & Poor's on Sept. 2006, follows the pricing of Spirit's IPO at $26 per share of common stock, which raised about $270 million for the firm and $1.2 billion for selling shareholders, including Onex Corp., Spirit's majority owner. At the same time, Standard & Poor's affirmed its 'BB+' bank loan and '1' recovery ratings on Spirit's new $983 million bank financing; these ratings were not on CreditWatch. The ratings on the previous bank facility are being withdrawn. The aerospace supplier will have about $600 million of debt outstanding following a $100 million pay-down of the term loan B from the IPO proceeds, which will also be used for certain payments related to a union equity participation program that will be triggered by the IPO. "The upgrade is based on better-than-expected financial performance, continued favorable conditions in the commercial aircraft market, the improved competitive position of Boeing Co., Spirit's primary customer, and a stronger capital structure following the IPO," said Standard & Poor's credit analyst Roman Szuper. The ratings on Spirit reflect participation in the cyclical and competitive commercial aerospace industry, reliance on one customer (Boeing) for about 90% of sales, and significant near- term expenditures related to development of Boeing's new 787 jetliner scheduled to enter service in 2008. Those factors are offset somewhat by the company's position as the largest independent supplier of structures for commercial aircraft and substantial customer advances to fund most of the 787 development costs. A continued favorable environment in the commercial aircraft market and further improvement in Spirit's financial performance could result in stronger credit measures, warranting an upgrade in the intermediate term. An outlook revision to stable is not likely, but could be driven by major problems on the 787. STANFIELD CLO: Moody's Lifts Rating on $29MM Notes to A1 from Ba2 ----------------------------------------------------------------- Moody's Investors Service upgraded these notes issued by Stanfield CLO, Ltd.: -- $50,000,000 Million Class B-l Floating Rate Notes Due 2014 -- Prior Rating: A3, on watch for possible upgrade -- Current Rating: Aaa -- $14,000,000 Million Class B-2 Fixed Rate Notes Due 2014 -- Prior Rating: A3, on watch for possible upgrade -- Current Rating: Aaa -- $7,000,000 Million Class C-l Floating Rate Notes Due 2014 -- Prior Rating: Ba2, on watch for possible upgrade -- Current Rating: A1, on watch for possible upgrade -- $22,000,000 Million Class C-2 Fixed Rate Notes Due 2014 -- Prior Rating: Ba2, on watch for possible upgrade -- Current Rating: A1, on watch for possible upgrade Moody's noted that the rating action is primarily due to the ongoing delevering of the transaction. TALECRIS BIO: Moody's Puts B3 Rating on Proposed $330-Mil. Loan --------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to Talecris Biotherapeutics, Inc.'s newly proposed $330 million Second Lien Term Loan, due 2014, which has been added as part of a recently restructured transaction. At the same time, Moody's affirmed Talecris' B2 Corporate Family Rating and affirmed the B2 rating on a downsized $700 million First Lien Term Loan, due 2013. The affirmation of the ratings recognizes some reduction in a still sizable dividend of over $800 million. The affirmation also assumes that despite an expected initial draw on the slightly upsized $325 million First Lien ABL revolver, liquidity will remain at previously expected levels. Moody's does not rate the company's ABL Revolver. Talecris' rating outlook is stable. The ratings are subject to review of final documentation. * Talecris Biotherapeutics, Inc. * Rating assigned: -- $330 million Second Lien Term Loan at B3, LGD4, 69% * Ratings affirmed: -- Corporate family rating at B2 -- $700 million First Lien Term Loan at B2, LGD4, 57% -- PDR at B2 Talecris manufactures and markets plasma-derived, protein-based products for individuals suffering from life-threatening diseases and currently ranks number three in global sales of plasma-derived products, behind Baxter and CSL Limited. As the largest "pure play" plasma products manufacturer and one of five major global players, Talecris is larger than most companies with a B2 corporate family rating. Talecris began operations on April 1, 2005, when the US assets of Bayer AG's worldwide plasma derived products business were acquired by financial sponsors -- Cerberus Capital Management and Ampersand Ventures. Talecris' ratings are adversely affected by the aggressive financial policies of the company. The company is assuming a significant amount of debt, which is being used to finance a large, one-time dividend payment to their equity sponsors as well as an acquisition of plasma collection centers from International BioResources, LLC. Moody's believes that despite the improving fundamentals in the US plasma protein market - as well as the high barriers to entry in the market - the company's limited operating history as a standalone company is a significant credit concern. In addition, high reliance on raw plasma and the early integration of plasma collection with manufacturing are key operating risks. Finally, the company's high leverage and weak financial strength and financial policy ratios - some of which are positioned at the low end of the Caa category -- are key rating factors. As a result of these concerns, Moody's believes that the B2 corporate family rating is appropriate despite a B1 indicated rating under the Global Methodology for the Medical Products and Device Industry. The ratings are prospective and assume the company will achieve stronger operating results over the forecast period. Moody's expect the company to generate negative free cash flow during FY 2007 and 2008 due to IBR earn-outs, which could be settled in stock, as well as increased capital spending associated with both plasma collection and production facilities. The stable outlook assumes that the company will be able to generate stronger operating and free cash flow by 2009, and as a result, will be able to begin reducing debt. In addition, the stable outlook assumes that borrowings associated with higher capital spending will only occur if the company is on track with its transition to a standalone company and its vertical integration strategy. Given the company's limited history as a standalone entity and the likelihood that financial strength and financial policy ratios may not materially improve until plasma levels increase, a rating upgrade is not likely in the near to intermediate term. Over time, a combination of demonstrating sustained success as a standalone company, execution of its vertical integration, as well as stronger financial strength and financial policy ratios could result in a rating upgrade. The newly proposed bank term loan rating remains highly sensitive to any incremental increase in the first lien revolver borrowings because the revolver is backed by a stronger group of assets. In addition, Moody's believes that adequate liquidity is critical to maintain these ratings. Therefore, if revolver borrowings materially exceed the $165 million level currently anticipated by Moody's, it could create ratings pressure. Moody's believes that lower than expected operating cash flow could result in higher borrowing needs. If financial strength ratios -- including cash flow from operations to total debt, free cash flow to total debt, and EBIT/interest drop below anticipated levels, the ratings could face pressure. Talecris Biotherapeutics, Inc., manufactures plasma-derived, protein-based products for individuals suffering from life- threatening diseases. TELESOURCE INT'L: Sept. 30 Capital Deficit Increases to $10.4 Mil. ------------------------------------------------------------------ Telesource International Inc. filed its third quarter financial statements ended Sept. 30, 2006, with the Securities and Exchange Commission on Nov. 9, 2006. At Sept. 30, 2006, the Company's balance sheet showed $10,603,121 in total assets and $21,081,912 in total liabilities, resulting in a $10,478,791 stockholders' deficit. The Company had a $9,829,953 deficit at June 30, 2006, and an $8,243,717 deficit at Dec. 31, 2005. The Sept. 30 balance sheet also showed strained liquidity with $6,507,263 in total current assets and $16,001,912 in total current liabilities. Results of Operations Revenues Service fees for power generation plant increased 38.2% to $1,442,560 from $1,043,655 for the three months ended Sept. 30, 2006 compared with the three months ended Sept. 30, 2005. This increase is due to more energy demand in the Fiji plants. Construction revenues decreased to $0 from $26,110 for the three months ended Sept. 30, 2006, compared with Sept. 30, 2005. The decrease was due to the completion of all major construction projects in 2005. The Company did not enter into any new construction contracts during 2005 or the first nine months of 2006 and has altered its construction strategy to enter into only limited construction projects in partnership with its major investor, Sayed Hamid Behbehani & Sons Co. W.L.L. Finance lease revenues decreased 24.6% to $148,241 from $196,667 for the three months ended Sept. 30, 2006, compared with the three months ended Sept. 30, 2005. The decrease is due to the declining balance of minimum lease payments, which are amortized over the term of the Tinian power plant contract to yield a constant rate of return. Expenses Power Generation Plant operations and maintenance costs increased 3.9% to $959,678 for the three months ended Sept. 30, 2006, from $923,326 for the three months ended Sept. 30, 2005, resulting from an engine overhaul in the plants located in Fiji. Total construction costs decreased to $0 from $109,260 for the three months ended Sept. 30, 2006, compared with Sept. 30, 2005. Construction costs include related party activity totaling $0 and $83,357 for the three months ended Sept. 30, 2006, and 2005, respectively, which were paid to Sayed Hamid for goods and materials purchased on the prison project located in Saipan. Construction costs as a percentage of construction revenues were 0.0% and 418.5% for the three months ended Sept. 30, 2006, and 2005, respectively. Salaries and employee benefits increased 1.6% to $236,279 for the three months ended Sept. 30, 2006, from $232,481 for the three months ended Sept. 30, 2005. Occupancy and equipment expenses decreased 58.0% to $55,108 from $131,283 for the three months ended Sept. 30, 2006, as compared with Sept. 30, 2005. The decrease in occupancy and equipment cost during the first nine months of 2006 is primarily related to reductions in the operating costs associated with the Saipan office. General and administrative expenses decreased 5.3% to $682,269 for the three months ended Sept. 30, 2006, from $720,161 for the three months ended Sept. 30, 2005. The decrease is attributed to a reduction in infrastructure costs resulting from the completion of construction projects as well as cost cutting efforts directed by management. Other expense decreased 26.2%to $183,097 for the three-month period ended Sept. 30, 2006, from $248,055 through the three month period ended Sept. 30, 2005, due primarily to a gain on sale of fixed assets in Saipan. Net losses available to common stockholders were $709,077 for the three months ended Sept. 30, 2006, and $1,151,774 for the three months ended Sept. 30, 2005. The lower net loss during the first half of 2006 versus 2005 was driven higher revenues and lower costs of revenues and operating expenses. Subsequent Events The Company borrowed an additional $336,000 from Sayed Hamid affiliated companies subsequent to Sept. 30, 2006. The Company's shareholders voted Oct. 31 to retain the existing members of the Board of Directors. In addition, the shareholders approved an increase in the number of authorized shares of common stock from 100,000,000 to 200,000,000. Full-text copies of the Company's third quarter financials are available for free at http://ResearchArchives.com/t/s?158a Going Concern Doubt As reported in the Troubled Company Reporter on Aug. 3, 2006, L J Soldinger Associates LLC, in Deer Park, Illinois, raised substantial doubt about Telesource International Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005, and 2004. The auditor pointed to the Company's recurring operating losses and capital deficiency. About Telesource International Telesource International, Inc. (Pink Sheeet: TSCI) has three main operating segments: i) power generation, ii) construction of power plants and construction services, and iii) brokerage of goods and services. Sayed Hamid Behbehani & Sons Co. W.L.L., a Kuwait-based civil, electrical and mechanical construction company, currently controls over 85% of the Company's shares. Telesource International is located in Lombard, Illinois, U.S.A., the Company's headquarters, where it operates a small service for the procurement, export and shipping of U.S. fabricated products for use by the Company's subsidiaries or for resale to customers outside of the mainland. Telesource Fiji, Ltd., a subsidiary, is located on the island of Fiji where it maintains and operates diesel fired electric power generation plants for the sale of electricity in the country. The Company also is attempting to develop future construction and other energy related business activities in Fiji. Telesource CNMI, Inc., is on the island of Tinian, an island in the Commonwealth of Mariana Islands (U.S. Territory), where it operates a diesel fired electric power generation plant for the sale of electricity to the local power grid. In Saipan, the Company maintains offices for coordinating marketing and development activities in the region and is responsible for all operations including the development of future construction projects and energy conversion opportunities in the region. TRAILER BRIDGE: Moody's Assigns Loss-Given-Default Ratings ---------------------------------------------------------- In connection with Moody's Investors Service's implementation of its Probability-of-Default and Loss-Given-Default rating methodology for the Transportation sector, the rating agency confirmed its B3 Corporate Family Rating for Trailer Bridge, Inc., and held its B3 rating on the company's Guaranteed Senior Secured Global Notes Due 2011. Additionally, Moody's assigned an LGD3 rating to those bonds, suggesting bondholders will experience a 46% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Based in Jacksonville, Florida, Trailer Bridge, Inc. -- http://www.trailerbridge.com/-- an integrated trucking and marine freight carrier, provides truckload freight transportation primarily between the continental United States and Puerto Rico. The company offers highway transportation services in the continental United States, and marine transportation between Jacksonville, Florida and San Juan, Puerto Rico. It provides southbound containers and trailers, as well as moves new automobiles, used automobiles, noncontainerized or freight not in trailers, and freight moving in shipper-owned or leased equipment. TRANSPORT INDUSTRIES: Moody's Assigns Loss-Given-Default Ratings ---------------------------------------------------------------- In connection with Moody's Investors Service's implementation of its Probability-of-Default and Loss-Given-Default rating methodology for the Transportation sector, the rating agency revised its B2 Corporate Family Rating to B3 for Transport Industries, L.P. In addition, Moody's revised its probability-of-default ratings and assigned loss-given-default ratings on these debentures: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Guaranteed Senior Secured Revolver Due 2010 B2 B1 LGD2 26% Guaranteed Senior Secured Term Loan Due 2011 B2 B1 LGD2 26% Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Based in Dallas, Texas, Transport Industries, L.P. is a third party provider of single-source, dedicated "closed loop" transportation services to the food retail and distribution industry through its Dedicated Transport Services business. The company also provides non-asset-based freight transportation through its Truckload Management Services segment, and warehouse and distribution logistics services through its Distribution Services segment. TI is a wholly-owned subsidiary of Transport Industries Holdings, L.P. TRAVELCENTERS: Moody's Assigns Loss-Given-Default Ratings --------------------------------------------------------- In connection with Moody's Investors Service's implementation of its Probability-of-Default and Loss-Given-Default rating methodology for the Transportation sector, the rating agency revised its B1 Corporate Family Rating B2 for TravelCenters of America, Inc. Additionally, Moody's held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Guaranteed Senior Secured Term Loan C Due 2011 B1 B1 LGD3 37% Guaranteed Senior Secured Revolver Due 2008 B1 B1 LGD3 37% Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Based in Westlake, Ohio, TravelCenters of America, Inc. (NYSE: HPT) is a network of full-service travel centers in North America. The company has more than 11,500 employees at 162 locations in 40 states and Canada. The company's cross country network of 162 hospitality and fuel service areas are primarily located along the U.S. Interstate Highway System. The TA network includes 161 locations in 40 states and one site in Ontario, Canada. UNITEDHEALTH GROUP: Earns $1.1 Billion in Quarter Ended Sept. 30 ---------------------------------------------------------------- UnitedHealth Group achieved record results in the third quarter of 2006. For the quarter ended Sept. 30, 2006, the Company reported net earnings of $1,101,000,000, compared to net earnings of $800,000,000 for the same period last year. Diversified business growth was well-matched with effective cost management, advances in the integration of acquisitions and accelerating gains in profitability from seasonally strong product offerings in the third quarter, leading to a further advance in the Company's full-year earnings outlook. UnitedHealth Group now expects full-year earnings per share growth of at least 25% in 2006. Revenues for the three months ended Sept. 30, 2006, reached $18,008,000,000, compared to revenues of $11,601,000,000 for the same period last year. Third quarter operating costs of $2.6 billion decreased by $60 million from their level in the second quarter of 2006. Third quarter operating costs included an insurance recovery of approximately $40 million received by the Company's PacifiCare entity and a contribution to the United Health Foundation of more than $20 million. During the third quarter, the Company realized net favorable development of $10 million in its previous estimates of medical costs incurred in 2005. The Company also realized $70 million in net favorable development related to estimates of medical costs incurred in the first two quarters of 2006. Reported cash flows from operations were $315 million for the third quarter, bringing year-to-date operating cash flows to $4.92 billion. Third quarter 2006 annualized return on equity was 23%, up 1% from the second quarter of 2006. "The broad and evolving health care markets are increasingly engaging the capabilities which we have cultivated, even as our business execution steadily continues to improve," Stephen J. Hemsley, president and chief operating officer, stated. "We anticipate continued strong growth into 2007, with total revenues in the area of $79 billion and 2007 earnings per share growth of 15 percent above the range of $2.95 to $2.97 per share we now project for 2006." "The actions we reported establish a blueprint for the Company's governance and internal controls," Richard Burke, chairman of the Board of Directors of UnitedHealth Group, said. "We deeply regret the deficiencies relative to our historical stock option programs cited in the Independent Committee's report and apologize to all our stakeholders for them. The actions we adopted are designed to help ensure that UnitedHealth Group meets the highest possible standards of corporate governance, in compensation matters and other areas. The Company is likely to delay the filing of its quarterly reports on Form 10-Q for the second and third quarters of 2006, in order to complete its analysis of its previously filed financial statements in light of the Independent Committee of the Board's report on stock option practices. About UnitedHealth Group Minneapolis, Minn.-based UnitedHealth Group Inc. (NYSE: UNH) -- http://www.unitedhealthgroup.com/-- offers a broad spectrum of products and services through six operating businesses: UnitedHealthcare, Ovations, AmeriChoice, Uniprise, Specialized Care Services and Ingenix. Through its family of businesses, UnitedHealth Group serves approximately 70 million individuals nationwide. * * * As reported in the Troubled Company Reporter on Nov. 10, 2006, Fitch Ratings is currently maintaining all ratings of UnitedHealth Group on Rating Watch Negative. Despite the company's disclosure that the restatement of earnings will be material, Fitch notes that this is a non-cash charge that does not affect overall shareholder capital or the company's ability to service its debt obligations. Although the additional taxes, interest and penalties related to the accounting adjustment will certainly have cash flow implications, given management estimates, Fitch does not consider the amount to be sufficient to significantly impede the company's ability to meet its obligations. Fitch continues to consider UNH's cash flow coverage, although adversely affected by issues surrounding the company's stock option granting practices, to be more than sufficient to justify the company's current ratings given its financial leverage. Fitch considers the company's disclosure of a material weakness under Sarbanes-Oxley 404 to be troubling. Clearly, such weaknesses in governance can tarnish a company's image, sometimes adversely affecting the company's ability to attract and retain business, and often lead to difficulties similar to those being faced by UNH's management. However, although too late to aid the company in heading off its current difficulties, Fitch views recent and ongoing changes within the company's governance practices as important in bolstering the company's governance going forward. Fitch originally placed UNH's ratings on Rating Watch Negative on August 30, 2006, following the company's announcement that it had received a notice of default from a group of persons claiming to hold certain of its debt securities alleging a violation of UNH's indenture governing its debt securities. The company has stated that it believes it is not in default. The company received a purported notice of acceleration on Nov. 2, 2006, from the holders who previously sent the notice of default that purports to declare an acceleration of the Company's 5.80% Notes due March 15, 2036 as a result of the Company's not filing its quarterly report on Form 10-Q for the quarter ended June 30, 2006. Given developments to date, Fitch is working under the assumption that this issue will be tied up in litigation for some time. UNIVERSAL COMPRESSION: S&P Lifts Credit Rating to 'BB' from 'BB-' ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Universal Compression Holdings Inc. to 'BB' from 'BB-'. At the same time, Standard & Poor's assigned its 'BB' rating and '3' recovery rating to Universal's $500 million revolving credit facility. The Houston, Texas-based oilfield services company had approximately $807 million in debt outstanding following the IPO of its subsidiary Universal Compression Partners L.P. The '3' recovery rating indicates the expectation of meaningful recovery of principal in the event of a payment default. "The upgrade reflects Universal's improved credit metrics and operating performance," said Standard & Poor's credit analyst Aniki Saha-Yannopoulos. Standard & Poor's also said that it expects Universal to use its discretionary cash flow for share repurchases and some debt reduction as well as business reinvestment. "We assume that the company will keep its consolidated credit measures within the appropriate range for the rating, and acquisitions at the UCLP level will be partially equity financed," said Ms. Saha-Yannopoulos. UNIVERSITY HEIGHTS: Court Fixes February 20 as Claims Bar Date -------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of New York set Feb. 20, 2007, as the deadline for all creditors owed money by University Heights Association Inc. to file formal written proofs of claim or interest on account of claims arising prior to Oct. 12, 2006. Proofs of claim must be received by: Office of the Clerk U.S. Bankruptcy Court Northern District of New York 74 Chapel Street Suite 200 Albany, NY 12207 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: Gets Okay to Hire Walter Kresge as Appraiser ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of New York authorized University Heights Association Inc. to employ Walter F. Kresge as its real estate appraiser. The Debtor informs the Court that its primary assets include parcels of real property known as the University Heights Campus. The said campus is a key component of a plan of reorganization. As a result, the Debtor needs to determine the value portions of its real property. Its value, the Debtor says, will be a motivating factor in the decisions it makes with respect to its property. Mr. Kresge will provide appraisal services for the Debtor including, but not limited to, appraisal of parcel of the Debtor's real property and the valuation of various aspects of the real property. Mr. Kresge will bill the Debtor at $100 per hour for his work. Mr. Kresge assures the Court that he is a "disinterested person" as that term is defined in Section 101(4) 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. WACHOVIA BANK: Moody's Holds Low-B Ratings on Six Cert. Classes --------------------------------------------------------------- Moody's Investors Service upgraded the ratings of three classes and affirmed ratings of 18 classes of Wachovia Bank Commercial Mortgage Securities Trust 2004-C10, Commercial Mortgage Pass- Through Certificates, Series 2004-C10: - Class A-1, $47,738,368, Fixed, affirmed at Aaa - Class A-2, $104,012,000, Fixed, affirmed at Aaa - Class A-3, $71,285,000 Fixed, affirmed at Aaa - Class A-4, $579,236,000, Fixed, affirmed at Aaa - Class A-1A, $246,654,466,Fixed, affirmed at Aaa - Class X-C, Notional, affirmed at Aaa - Class X-P, Notional, affirmed at Aaa - Class B, $38,703,000, Fixed, upgraded to Aaa from Aa1 - Class C, $16,127,000, Fixed, upgraded to Aa2 from Aa3 - Class D, $32,252,000, affirmed at A2 - Class E, $16,126,000, Fixed, affirmed at A3 - Class F, $19,352,000, Fixed, affirmed at Baa1 - Class G, $14,513,000, Fixed, affirmed at Baa2 - Class H, $17,739,000, Fixed, affirmed at Baa3 - Class J, $12,901,000, Fixed, affirmed at Ba1 - Class K, $8,063,000, Fixed, affirmed at Ba2 - Class L, $6,451,000, Fixed, affirmed at Ba3 - Class M, $4,838,000, Fixed, affirmed at B1 - Class N, $4,838,000, Fixed, affirmed at B2 - Class O, $4,838,000, Fixed, affirmed at B3 - Class SL,$23,659,271, Fixed, upgraded to A3 from Baa2 As of the November 17, 2006 distribution date, the transaction's aggregate certificate balance has decreased by approximately 1.9% to $1.29 billion from $1.31 billion at securitization. The Certificates are collateralized by 102 mortgage loans ranging in size from less than 1.0% of the pool to 7.8% of the pool, with the top 10 loans representing 53.9% of the pool. The pool includes five shadow rated investment grade loans comprising 20.0% of the pool. Five loans, representing 15.7% of the pool balance, have defeased and are collateralized by U.S. Government securities. Included among these loans is the 11 Madison Ave. Loan, the largest loan in the pool. The pool has not sustained any losses to date. There is one loan in special servicing representing 0.1% of the pool. No losses are expected from this loan currently. Nine loans, representing 3.7% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2005 operating results for 100.0% of the pool. Moody's loan to value ratio for the conduit component is 89.3%, compared to 94.2% at securitization. Moody's is upgrading Classes B and C due to defeasance, increased credit support and improved overall pool performance. Class B was upgraded on Aug. 2, 2006 and placed on review for further possible upgrade based on a Q tool based portfolio review (see "US CMBS: Q Tool Based Portfolio Review Results in Numerous Upgrades," Moody's Special Report, Aug. 2, 2006. Additionally, as a result of the improvement in performance and amortization associated with the Starrett-Lehigh Building Loan, Moody's is upgrading non-pooled Class SL. The largest shadow rated loan is the Starrett-Lehigh Building Loan ($98.8 million - 7.8%), which is secured by a 19-story, 2.3 million square foot Class B office building, which occupies an entire city block on West 26th Street and 11th Avenue in New York City. The loan represents a 62.5% pari passu interest in the senior portion of a first mortgage loan totaling $158.0 million. In addition there is also a $23.7 million subordinate B Note included within the trust. Built in 1931 and renovated in 2003, the building is 88.0% occupied as of September 2006, compared to 74.3% at securitization. Major tenants include U.S. Customs, Tommy Hilfiger USA, Martha Stewart Omnimedia and the F.B.I. The sponsor is Mark Karasik. The loan was interest only for the first 24 months, but now amortizes on a 26-year amortization schedule. Moody's current shadow rating is Aa3, compared to A1 at securitization. Moody's is upgrading non-pooled Class SL to A3, from Baa2. The second shadow rated loan is the IBM Center Loan ($78.9 million - 6.2%), which is secured by a 785,000 square foot Class B office building located in Atlanta, Georgia. Completed in 1988, the property is located approximately eight miles north of the Atlanta CBD near the intersection of I-75 and Northside Parkway. Situated on a 57-acre campus, the facility serves as IBM's regional marketing headquarters. IBM's lease is co-terminus with the loan maturity date. The lease, which is net and includes 100.0% of the building, expires in September 2014. The sponsor is Jamestown Companies. The loan was interest only for the first 24 months and will be interest only for the last 24 months of its loan term. In the interim the loan amortizes based on a 28-year schedule. Moody's current shadow rating is Baa2, the same as at securitization. The remaining three shadow rated loans comprise 6.3% of the pool. The 520 Eighth Ave. Loan ($49.0% - 3.9%), secured by three contiguous Class B New York City office buildings is shadow rated Aa3. The Cole Portfolio Loan, secured by a portfolio of 11 free standing retail buildings located in various locations, is shadow rated Baa2. The Studio Village Shopping Center Loan, secured by a 203,000 square foot retail center located in Culver City, California, is shadow rated Aaa. The top three non-defeased conduit loans represent 18.1% of the outstanding pool balance. I The largest conduit loan is the Phillips Point Office Building Loan, which is secured by a 14-story, 421,650 square foot Class A office building located in West Palm Beach, Florida. The building is 96.0% occupied, the same as at securitization. The largest tenants are Gunster Yoakley & Stewart, Pennsylvania and Conopco. The loan sponsors are Benjamin Winter and Melvin Heller. Moody's LTV is 90.5%, compared to 98.4% at securitization. II The second largest conduit loan is the North Riverside Park Mall Loan ($80.0 million - 6.3%), which is secured by a 440,421 square foot portion of a 1.0 million square foot regional mall located in North Riverside, Illinois, 11 miles west of the Chicago CBD. The mall is anchored by J.C. Penney, Carson Pirie Scott & Co and Sears. Built in 1974, the mall was renovated and expanded in 2001. As of July 2006 overall mall occupancy was 89.4%, compared to 94% at securitization. The loan sponsors are Jeffrey Feil and Lloyd Goldman. Moody's LTV is 87.4%, compared to 83.2% at securitization. III The third largest conduit loan is Villa del Sol Apartments Loan ($45.0 million - 3.5%), which is secured by a 562-unit garden style apartment complex located in Santa Ana, California, approximately 35 miles southeast of downtown Los Angeles, California. As of July 2006 the property is 99.0% occupied, compared to 98% at securitization. The loan was interest only for the first 24 months, but now amortizes on a 30-year schedule. Moody's LTV is 93.8%, compared to 97.2% at securitization. The pool's collateral is a mix of office and mixed use, retail, multifamily and mobile home, U.S. Government securities, lodging and industrial and self storage. WESTINGHOUSE AIRBRAKE: Moody's Assigns Loss-Given-Default Ratings ----------------------------------------------------------------- In connection with Moody's Investors Service's implementation of its Probability-of-Default and Loss-Given-Default rating methodology for the Transportation sector, the rating agency held its Ba2 Corporate Family Rating for Westinghouse Airbrake Technologies, and held its Ba2 rating on the company's 6.875% Guaranteed Senior Unsecured Notes Due 2013. Additionally, Moody's assigned an LGD4 rating to those bonds, suggesting noteholders will experience a 56% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Based in Wilmerding, Pennyslvania, Westinghouse Airbrake Technologies dba Wabtec Corporation -- http://www.wabtec.com/-- provides various technology-based equipments for the rail industry worldwide. It manufactures and services components for new and existing freight cars and locomotives, and passenger transit vehicles, such as subway cars and buses. WILLIAM HACHMANN: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: William E. Hachmann and Jean A. Hachmann 44 North Vail Avenue, #506 Arlington Heights, IL 60005 Bankruptcy Case No.: 06-15329 Chapter 11 Petition Date: November 21, 2006 Court: Northern District of Illinois (Chicago) Judge: Susan Pierson Sonderby Debtor's Counsel: Gina B. Krol, Esq. Cohen & Krol 105 West Madison Street, Suite 1100 Chicago, IL 60602 Tel: (312) 368-0300 Fax: (312) 368-4559 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ M&R Marking Systems, LLC Express Marking, Inc. $134,241 100 Springfield Avenue 764 W. Algonquin Road Piscataway, NJ 08855 Arlington Heights, IL 60006 LaSalle Bank Express Marking, Inc. $107,000 Commercial Loan Operations P. O. Box 2549 Chicago, IL 60690 Consolidated Stamp, Inc. Express Marking, Inc. $106,752 7220 Wilson Avenue 764 W. Algonquin Road Harwood Heights, IL 60706 Arlington Heights, IL 60006 Wells Fargo Express Marking, Inc. $100,417 WF Business Direct P. O. Box 348750 Sacramento, CA 95834 Consolidated Stamp Express Marking, $54,232 Inc. - Illinois Media Solution Services, LLC Judgment - State of $50,000 New York American Express Express Marking, Inc. $47,447 Citibank Platinum $42,872 Citibank Aadvantage Express Marking, Inc. $25,950 Business Card MBNA America $24,554 American Express Express Marking, Inc. $21,784 LaSalle Bank, N.A. Unique Personalized $19,309 Products Chase Bank $17,000 Chase Bank $16,451 Sears Gold Mastercard $15,796 American Express Blue $12,735 American Express $12,006 Discover Card $11,998 Consolidated Stamp Express Marking, $11,419 Inc. - Florida Capital One, F.S.B. Unique Personalized $9,818 Products WOODWIND & BRASSWIND: Inks Deal Selling Assets to Guitar Center --------------------------------------------------------------- Guitar Center Inc. has signed an asset purchase agreement to acquire substantially all the assets of The Woodwind & The Brasswind under section 363 of the United States Bankruptcy Code. Under the terms of the agreement, Guitar Center will acquire The Woodwind & The Brasswind's inventory of band and orchestra and combo instruments, accounts receivable, trade names and certain other intangible assets. The transaction is subject to a number of conditions, including bankruptcy court approval, and is also subject to overbid at a bankruptcy auction expected to be held in January 2007. "The acquisition of assets of The Woodwind & The Brasswind, including the Woodwind and Brasswind and Music123 websites, will enable us to further expand the already strong combo instrument business at Musician's Friend as well as build out our direct response band and orchestra business," Marty Albertson, Chairman and Chief Executive Officer of Guitar Center, said. "We are excited about the opportunity to broaden our customer base and continue the growth of our direct response business." The Woodwind & The Brasswind filed for bankruptcy protection in Indiana on Nov. 21, 2006. The proposed asset acquisition agreement was entered into by the Musician's Friend subsidiary of Guitar Center. Under the agreement, only very limited trade obligations and other pre-petition liabilities of The Woodwind & The Brasswind are being assumed. About Guitar Center Guitar Center Inc. -- http://www.guitarcenter.com/-- is a United States retailer of guitars, amplifiers, percussion instruments, keyboards and pro-audio and recording equipment. Its retail store subsidiary presently operates more than 195 Guitar Center stores across the United States. In addition, Guitar Center's Music & Arts division operates more than 90 stores specializing in band instruments for sale and rental, serving teachers, band directors, college professors and students. About The Woodwind & the Brasswind Headquartered in South Bend, Indiana, The Woodwind & the Brasswind -- http://www.wwbw.com/-- sells musical instruments and accessories. YOSHIHIKO KOKURA: Chapter 15 Petition Summary --------------------------------------------- Petitioner: Maruhito Kondo, Esq. Maruhito Kondo Law Office 7th Floor, 21 Chuo Building 821, Ginza 1-chome, Chuo-ku, Tokyo 104-0061, Japan Debtor: Yoshihiko Kokura 6-11, Kanahori-cho, Hakodate-shi, Hokkaido (Hakodate-Shounen-Keimusho), Japan Case No.: 06-00849 Type of Business: Pursuant to an order of the Tokyo District Court (Heisei 16 (Fu) No. 16333) dated Oct. 22, 2004, Mr. Kokura was declared insolvent under Article 126 of the Bankruptcy Law of Japan (Law No. 71, 1922) and Mr. Kondo, the foreign representative, was appointed Bankruptcy Trustee of the Bankruptcy Estate of Kokura, under Article 142 of the Bankruptcy Law of Japan. Mr. Kokura owns the real property identified as Apartment No. 32G-4 of the "Bay Villas" condominium project located at Kapalua in Maui, Hawaii. Chapter 15 Petition Date: November 21, 2006 U.S. Bankruptcy Court: District of Hawaii (Honolulu) Petitioner's Counsel: Emma S. Matsunaga, Esq. Kessner, Duca et.al 220 South King, 19th Floor Honolulu, HI 96813 Tel: (808) 536-1900 Fax: 9808) 529-7177 Estimated Assets: $100,000 to $1 Million Estimated Debts: More than $100 Million * AlixPartners Marks 25 Years, to Open Office in India Next Year ---------------------------------------------------------------- AlixPartners plans to open an office in India sometime in 2007. The firm presently has 12 offices around the world, including six in the United States, five in Europe and one in Japan. Two senior AlixPartners executives will be there next week at the India Economic Summit 2006, and will be available to discuss "lessons learned" from the firm's 25 years of helping companies perform complex financial restructuring and large-scale operational improvements, including for financial institutions and private equity funds. The AlixPartners executives attending the conference, which takes place Nov. 26 to 28 and is jointly hosted by the World Economic Forum and the Confederation of Indian Industry, are: Managing Director C.V. Ramachandran and India Initiative Director Sanjay Shetty, both from AlixPartners' headquarters office in Detroit. "When many people think of India today, the first adjective they think of is 'booming,'" said Ramachandran. "And, of course, to a large degree that's true. However, along with rapid growth and expansion comes an increased amount of risk -- both financial and operating -- as well as a more complex web of stakeholders. As a result, restructuring in India is inevitable." In the U.S. over the past quarter century and, more recently, in Europe, a similar situation of increased risk has translated into a large number of corporate restructurings, Ramachandran went on to note. "Since 1981, the year AlixPartners literally helped establish the turnaround industry," he said, "we've worked to streamline the restructuring process, to bring more transparency to it and, in general, to help institutions bring, as we put it, 'the greatest good to the greatest number.' The result has been stronger companies and institutions, and saved jobs. In other words, a strong social benefit." Another lesson from AlixPartners' background that Ramachandran and Shetty will be discussing next week is how Indian firms can maximize the value of mergers and acquisitions, a topic of great interest on the subcontinent, given such recent announcements as Tata Steel Ltd.'s attempt to acquire Anglo-Dutch steelmaker Corus Group PLC. "With global private equity firms such as Blackstone, Warburg Pincus and Henderson Private Capital now making India one of their highest priorities, we think they'll be quite interested in the time-tested experience a firm like AlixPartners can bring to the party," continued Ramachandran. "One thing we learned long ago at AlixPartners," said Shetty, "is the reason so many mergers fail to deliver their intended financial results is that there's not enough true, experienced focus on the operations that will actually deliver the financials." Finally, Ramachandran and Shetty will also be discussing what they call the "India Opportunity," the continuing, but also fast- changing, opportunity for foreign-based firms to maximize India as a low-cost platform not just for services but for manufactured products as well. About AlixPartners AlixPartners LLP -- http://www.alixpartners.com/-- is a global performance improvement, corporate turnaround and financial advisory services firm. The AlixPartners' "one-stop-shop" suite of services range from operational performance improvement and financial restructuring across all major corporate disciplines (manufacturing, supply chain, IT, working capital, sales & marketing, etc.), to financial advisory services (including financial reporting, corporate governance and investigations) to restructuring and claims management. The firm has more than 500 employees, with offices in Chicago, Dallas, Detroit, D�sseldorf, London, Los Angeles, Milan, Munich, New York, Paris, San Francisco and Tokyo, and affiliates in Sao Paulo and Melbourne. * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ------------------------------------------------------------- Recent chapter 11 cases filed with assets and liabilities below $1,000,000: In re Broken Arrow Farm, LLC Bankr. M.D. Ala. Case No. 06-11295 Chapter 11 Petition filed November 15, 2006 See http://bankrupt.com/misc/almb06-11295.pdf In re Derley Construction Inc. Bankr. M.D. N.C. Case No. 06-51591 Chapter 11 Petition filed November 15, 2006 See http://bankrupt.com/misc/ncmb06-51591.pdf In re Larry B. Lawson Bankr. M.D. N.C. Case No. 06-51592 Chapter 11 Petition filed November 15, 2006 See http://bankrupt.com/misc/ncmb06-51592.pdf In re Sabbag Investors LLC Bankr. E.D. Mich. Case No. 06-56866 Chapter 11 Petition filed November 15, 2006 See http://bankrupt.com/misc/mieb06-56866.pdf In re Virginia Fay Wofford Bankr. N.D. Ala. Case No. 06-41713 Chapter 11 Petition filed November 15, 2006 See http://bankrupt.com/misc/alnb06-41713.pdf In re Barrett Sutherland Acquisition LLC Bankr. D. Kans. Case No. 06-21882 Chapter 11 Petition filed November 16, 2006 See http://bankrupt.com/misc/ksb06-21882.pdf In re Colby's Greenhouse, Inc. Bankr. E.D. Wash. Case No. 06-02914 Chapter 11 Petition filed November 16, 2006 See http://bankrupt.com/misc/waeb06-02914.pdf In re Custom Interiors, Inc. Bankr. E.D. Mich. Case No. 06-56945 Chapter 11 Petition filed November 16, 2006 See http://bankrupt.com/misc/mieb06-56945.pdf In re George Warren McDaniel Bankr. W.D. Va. Case No. 06-61780 Chapter 11 Petition filed November 16, 2006 See http://bankrupt.com/misc/vawb06-61780.pdf In re Latin Heat Entertainment, Inc. Bankr. C.D. Calif. Case No. 06-12130 Chapter 11 Petition filed November 16, 2006 See http://bankrupt.com/misc/cacb06-12130.pdf In re Murfreesboro Surgical Associates, LLC Bankr. M.D. Tenn. Case No. 06-06760 Chapter 11 Petition filed November 16, 2006 See http://bankrupt.com/misc/tnmb06-06760.pdf In re Richard E. Osterwalder Bankr. N.D. Ohio Case No. 06-33343 Chapter 11 Petition filed November 16, 2006 See http://bankrupt.com/misc/ohnb06-33343.pdf In re Vesey, Inc. Bankr. D. Mass. Case No. 06-14269 Chapter 11 Petition filed November 16, 2006 See http://bankrupt.com/misc/mab06-14269.pdf In re Christopher T. Hajec Bankr. D. Mass. Case No. 06-42531 Chapter 11 Petition filed November 17, 2006 See http://bankrupt.com/misc/mab06-42531.pdf In re Sun Canyon, Inc. Bankr. S.D.N.Y. Case No. 06-36256 Chapter 11 Petition filed November 17, 2006 See http://bankrupt.com/misc/nysb06-36256.pdf In re Alec Taylor Catering, Inc. Bankr. D. Ariz. Case No. 06-03884 Chapter 11 Petition filed November 20, 2006 See http://bankrupt.com/misc/azb06-03884.pdf In re Chameleon Data Corp. Bankr. W.D. Wash. Case No. 06-14140 Chapter 11 Petition filed November 20, 2006 See http://bankrupt.com/misc/wawb06-14140.pdf In re Clark's Plumbing Construction & Maintenance Bankr. S.D. Ga. Case No. 06-11793 Chapter 11 Petition filed November 20, 2006 See http://bankrupt.com/misc/gasb06-11793.pdf In re HighVision, Inc. Bankr. W.D. Pa. Case No. 06-25847 Chapter 11 Petition filed November 20, 2006 See http://bankrupt.com/misc/pawb06-25847.pdf In re Laffer Inc. Bankr. D. Minn. Case No. 06-42711 Chapter 11 Petition filed November 20, 2006 See http://bankrupt.com/misc/mnb06-42711.pdf In re Randall Dewayne Downham Bankr. S.D. Ind. Case No. 06-07488 Chapter 11 Petition filed November 20, 2006 See http://bankrupt.com/misc/insb06-07488.pdf In re Shannon L. Harris Bankr. N.D. Calif. Case No. 06-10843 Chapter 11 Petition filed November 20, 2006 See http://bankrupt.com/misc/canb06-10843.pdf In re Star Recruiting-Employment Services, Inc. Bankr. E.D. N.C. Case No. 06-01887 Chapter 11 Petition filed November 20, 2006 See http://bankrupt.com/misc/nceb06-01887.pdf In re Andrew Arnett Lampe Bankr. D. Ariz. Case No. 06-03899 Chapter 11 Petition filed November 21, 2006 See http://bankrupt.com/misc/azb06-03899.pdf In re Vera Inc. Bankr. E.D. Mich. Case No. 06-57242 Chapter 11 Petition filed November 21, 2006 See http://bankrupt.com/misc/mieb06-57242.pdf ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Marie Therese V. Profetana, Robert Max Victor M. Quiblat II, Shimero R. Jainga, Joel Anthony G. Lopez, Melvin C. Tabao, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, Ronald C. Sy, Jason A. Nieva, Lucilo M. Pinili, Jr., Tara Marie A. Martin, and Peter A. Chapman, Editors. Copyright 2006. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $725 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***