/raid1/www/Hosts/bankrupt/TCR_Public/061226.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, December 26, 2006, Vol. 10, No. 306
Headlines
A L HEATH: Case Summary & 20 Largest Unsecured Creditors
ADELPHIA COMMS: Settlement Parties Extend Effective Date Deadline
AHOLD LEASE: S&P Holds BB+ Rating on Class A-1 & A-2 Certificates
ALLIED WASTE: Moody's Lifts Speculative Grade Liquidity Rating
AMERICAN HOME: Moody's Puts Rating Under Review and May Downgrade
ANADARKO PETROLEUM: Moody's Reviews Ratings and May Downgrade
ASARCO LLC: Agrees Any Montana Edict Doesn't Infer Money Judgment
BA ENERGY: IPO Postponement Prompts Moody's to Withdraw Ratings
BCE INC: Loral Space & PSP to Buy Telesat Unit for CDN$3.2 Billion
BEACON INSURANCE: A.M. Best Puts Rating Under Positive Review
BEAR STEARNS: Fitch Holds Low-B Ratings on Two Class Certificates
BEXAR COUNTY: Moody's Downgrades Ratings on $31.9 Million Bonds
BI-LO LLC: Poor Performance Prompts S&P's Negative Outlook
CAPITALSOURCE REAL: Fitch Rates $47.45 Mil. Class J Notes at BB
CASCADES INC: Moody's Holds Ba2 Corporate Family Rating
CBA COMMERCIAL: S&P Junks Rating on Series 2004-1 Class M-7 Certs.
CBA COMMERCIAL: S&P Junks Rating on Series 2005-1 Class M-8 Certs.
CENTRAL GARDEN: Earns $65.5 Million in Year Ended Sept. 30
CITGO PETROLEUM: Fitch Upgrades Issuer Default Rating to BB
CITICORP MORTGAGE: Fitch Puts Low-B Ratings on Two Certificates
CLARKE AMERICAN: S&P Puts B+ Rating on Negative CreditWatch
COLLINS & AIKMAN: To File First Amended Joint Plan in Detroit
COLLINS & AIKMAN: Court Okays Severance Plan for Affected Workers
CONTECH CONSTRUCTION: Moody's Revises Outlook to Negative
CONVERIUM HOLDINGS: Moody's Concludes Review & Upgrades Ratings
COPANO ENERGY: Expands Commodity Hedging Portfolio
COPANO ENERGY: Sells 375,000 Additional Common Units
CREDIT SUISSE: Fitch Holds Junk Rating on $8.4 Mil. Class M Certs.
CREDIT SUISSE: Two Classes Get S&P's Default Rating
DAIMLERCHRYSLER: Praises U.S. ITC's Ruling to Revoke Steel Duties
DEAN POTTER: Case Summary & Three Largest Unsecured Creditors
DELPHI CORP: Seeks Court's Approval on Plan Support Agreements
DELPHI CORP: Court Permits Stafford Facility Closure
DELTA AIR: Court Approves New Gate Gourmet Catering Agreement
DELTA AIR: Court Approves SSI as Committee's Search Consultant
DELTA AIR: Wants to Amend and Assume SAP Software License Pact
DEVELOPERS DIVERSIFIED: Declares Class H and Class I Dividends
DURA AUTOMOTIVE: Wants Until January 31 to File Schedules
DURA AUTOMOTIVE: Wants to File Lear Settlement Pact Under Seal
EASTMAN HILL: Fitch Holds Junk Rating on $53.05 Million Notes
ENHERENT CORP: Sept. 30 Balance Sheet Upside Down by $1.18 Mil.
EUROFRESH INC: Poor Performance Cues Moody's to Junk Ratings
FEDERAL-MOGUL: Judge Fitzgerald Denies Plan B Settlement Approval
FEDERAL-MOGUL: Trustee Appoints Trizec to Asbestos Claimants Panel
FEMWELL GROUP: Case Summary & 20 Largest Unsecured Creditors
FERRO CORPORATION: Files 2006 Third Quarter Financial Report
FIRSTLINE CORPORATION: Court Approves Panel's Disclosure Statement
FIRSTLINE CORPORATION: Confirmation Hearing Set for January 16
FORD MOTOR: Changan Ford Mazda Names Jeffrey Shen as President
FORD MOTOR: Inks MOU's with Cooper-Standard and Flex-N-Gate
FORD MOTOR: Applauds U.S. ITC's Ruling to Revoke Steel Duties
GENERAL MOTORS: Europe Unit Eyes Astra Export to North America
GENERAL MOTORS: Applauds Trade Commissions Ruling to Revoke Duties
GIRASOLAR INC: Sept. 30 Balance Sheet Upside-Down by $1.4 Million
GLIMCHER REALTY: Increases Credit Facility to $470 Million
GMAC COMMERCIAL: Fitch Upgrades Rating on $8.1 Mil. Class L Certs.
GMAC COMMERCIAL: S&P Holds Low-B Ratings on 6 Certificate Classes
GOODRICH TRADING: Case Summary & 20 Largest Unsecured Creditors
GRADY DUPREE: Case Summary & 12 Largest Unsecured Creditors
GS MORTGAGE: S&P Holds Rating on Class F Certificates at BB+
HARRAH'S ENTERTAINMENT: S&P Cuts Ratings & Retains Negative Watch
HEALTHNOW NEW YORK: Good Performance Cues S&P to Lift Ratings
HUDSON COUNTY: Failure to Cover Operations Cue S&P to Cut Rating
INTERSTATE BAKERIES: Creditors' Panel Wants to Reconstitute Board
JOSE ORTEGA: Voluntary Chapter 11 Case Summary
JP MORGAN: Fitch Holds Junk Rating on $2.4 Million Class H Certs.
JPMCC 2005-LDP5: Fitch Holds Low-B Ratings on Six Cert. Classes
KNOBLAUCH BUILDERS: Case Summary & 20 Largest Unsecured Creditors
KYPHON INC: S&P Rates $675 Million Senior Secured Facility at B+
MARCLAR N GROUP: Case Summary & 20 Largest Unsecured Creditors
MERIDIAN AUTOMOTIVE: Expects to Emerge from Ch. 11 on December 29
MORGAN STANLEY: Fitch Holds Junk Rating on $5.3MM Class M Certs.
NATIONAL ENERGY: Issues 10,868,562 Common Shares to Charter
NAUTILUS RMBS: Fitch Holds Rating on $17 Mil. Class C Notes at BB
NORAMPAC INC: Moody's to Lift Ratings on Acquisition Completion
NORTHWEST AIRLINES: Amends Airline Services Pact with Pinnacle
PACIFIC LUMBER: Revenue Concerns Prompt S&P's Negative Outlook
PATRIOT MEDIA: Moody's Holds Corporate Family Rating at B1
PEABODY ENERGY: Prices $675 Million Junior Subordinated Debentures
PINNACLE AIRLINES: Amends Airline Services Pact with Northwest
PRECISE MECHANICALS: Case Summary & 20 Largest Unsecured Creditors
RADIO ONE: Moody's Holds Corporate Family Rating at Ba3
SUNCOM WIRELESS: To Appeal NYSE's Decision to Suspend Stock
WEIGHT WATCHERS: Commences Tender Offer for 8.3 Mil. Common Shares
WEIGHT WATCHERS: S&P Places Ratings on Negative CreditWatch
* Large Companies with Insolvent Balance Sheets
*********
A L HEATH: Case Summary & 20 Largest Unsecured Creditors
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Debtor: A L Heath Construction Co. Inc.
366 Becnel Lane
Shepherdsville, KY 40165
Bankruptcy Case No.: 06-33449
Chapter 11 Petition Date: December 11, 2006
Court: Western District of Kentucky (Louisville)
Judge: Joan A. Lloyd
Debtor's Counsel: Neil Charles Bordy, Esq.
Seiller Waterman LLC
2200 Meidinger Tower
462 South 4th Street
Louisville, KY 40202
Tel: (502) 584-7400
Estimated Assets: $100,000 to $1 Million
Estimated Debts: $1 Million to $100 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Red Top Rentals Inc. $242,487
5925 Stockberger Place
Indianapolis, IN 46241
Glenda Heath $184,000
341 Meadowbrook Drive
Shepherdsville, KY 40165
Internal Revenue Service $128,000
P.O. Box 21126
Philadelphia, PA 19114
Quality Stone & Ready Mix $111,050
3260 North Preston Highway
Shepherdsville, KY 40165
Fifth Third Bank $104,484
P.O. Box 740523
Cincinnati, OH 45274-0523
Mago Construction Co. $103,564
Water Works Supplies $97,551
Thorn Orwick $66,918
Wells Fargo $63,400
Job Rentals & Sales LLC $49,692
Chase $48,522
Trek Holdings $45,660
A&M Oil $44,775
Kentucky Revenue Cabinet $29,946
Hanson Aggregate Mideast $29,378
Campbell Concrete $26,980
Sherman Dixie Concrete Ind. $26,829
HTA Enterprise Inc. $26,773
Lewis Concrete Construction $24,247
AJ Enterprises $23,813
ADELPHIA COMMS: Settlement Parties Extend Effective Date Deadline
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Adelphia Communications Corporation has been informed by the
Official Committee of Unsecured Creditors that the Settlement
Parties have extended the deadline for the Effective Date
contained in Section 12.2(c) of the First Modified Fifth Amended
Joint Chapter 11 Plan of Reorganization from Dec. 22, 2006 to
Jan. 12, 2007.
The occurrence of the Effective Date of the Plan is subject to
conditions, many of which are outside the control of Adelphia,
including the entry of an order by the U.S. Bankruptcy Court for
the Southern District of New York confirming the Plan. There can
be no assurance whether or when such an order will be entered or
the Effective Date will occur.
Based in Coudersport, Pa., Adelphia Communications Corporation
(OTC: ADELQ) -- http://www.adelphia.com/-- is the fifth-largest
cable television company in the country. Adelphia serves
customers in 30 states and Puerto Rico, and offers analog and
digital video services, high-speed Internet access and other
advanced services over its broadband networks. The Company and
its more than 200 affiliates filed for Chapter 11 protection in
the Southern District of New York on June 25, 2002. Those cases
are jointly administered under case number 02-41729. Willkie Farr
& Gallagher represents the ACOM Debtors. PricewaterhouseCoopers
serves as the Debtors' financial advisor. Kasowitz, Benson,
Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP
represent the Official Committee of Unsecured Creditors.
Adelphia Cablevision Associates of Radnor, L.P., and 20 of its
affiliates, collectively known as Rigas Manged Entities, are
entities that were previously held or controlled by members of the
Rigas family. In March 2006, the rights and titles to these
entities were transferred to certain subsidiaries of Adelphia
Cablevision, LLC. The RME Debtors filed for chapter 11 protection
on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through
06-10642). Their cases are jointly administered under Adelphia
Communications and its debtor-affiliates chapter 11 cases.
AHOLD LEASE: S&P Holds BB+ Rating on Class A-1 & A-2 Certificates
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Standard & Poor's Ratings Services affirmed its 'BB+' ratings on
classes A-1 and A-2 of Ahold Lease 2001-A Pass Through Trusts'
commercial mortgage pass-through certificates from series
2001-A and revised its outlook to positive from stable.
The ratings on classes A-1 and A-2 are dependent on the corporate
credit rating assigned to Koninklijke Ahold N.V. (Ahold;
BB+/Positive/B). The outlook on Ahold was revised to positive
from stable on Dec. 20, 2006. Ahold guarantees the leases that
serve as the source of payment on the rated securities.
ALLIED WASTE: Moody's Lifts Speculative Grade Liquidity Rating
--------------------------------------------------------------
Moody's Investors Service upgraded the Speculative Grade Liquidity
Rating for Allied Waste Industries, Inc. to SGL-1 from SGL-2. The
upgrade reflects Moody's expectations of very good liquidity over
the next twelve months supported by improving free cash generation
after capital expenditures, dividends on the remaining convertible
preferred shares, and de minimis mandatory debt maturities in the
period. Liquidity further benefits from expectations of
sufficient cash on hand and ample remaining availability under the
company's revolving credit facility net of letters of credit and
expected borrowings.
Allied's cash flow generation continues to benefit from the
company's volume growth and ongoing pricing initiatives, supported
by a favorable pricing environment across the industry. The
company generated free cash flow of $119 million for the twelve
months ended September 30, 2006. Moody's expects that for the
next twelve months, free cash flow combined with existing cash
balances and significant revolver availability will provide
additional liquidity to fund capital expenditures and working
capital needs. Moody's expects capital expenditures to continue
at or above the current level of about $700 million a year. Allied
had unrestricted cash of about $77 million at September 30, 2006,
and Moody's expects cash on hand during the forward four quarters
to remain in excess of $50 million throughout the period.
The liquidity rating could be downgraded if declines in cash flow,
increases in capital expenditures or dividends, or debt financed
acquisitions are in excess of Moody's expectations. The ratings
could also be pressured by uncertainties relating to an
outstanding tax dispute with the Internal Revenue Service, for
which the company has reserved about $310 million (excluding
potential penalties), and significant debt maturities of about
$910 million in 2008.
Allied Waste, headquartered in Phoenix, Arizona, is a vertically
integrated, non-hazardous waste management company. The company
provides collection, transfer, recycling and disposal services for
approximately 10 million residential, commercial, and industrial
customers in 37 states. Allied's Corporate Family rating is B2
and the ratings outlook is stable. The company had revenues of
approximately $6.0 billion for the twelve months ended September
30, 2006.
AMERICAN HOME: Moody's Puts Rating Under Review and May Downgrade
-----------------------------------------------------------------
Moody's Investors Service has placed on review for possible
downgrade one class of certificates from one of the American Home
Mortgage Assets Trust deals from 2005. Backed by Alt-A collateral
in a shifting interest structure, the pool is divided among two
groups that are not cross-collateralized.
Although the pool has not experienced any losses to date, the
Class 2-B-4 certificate is being reviewed for downgrade based on
the higher than expected number of loans currently in REO.
Moody's notes the large size of loans in REO and the potential
negative impact of a high severity of loss on these loans.
Complete rating action:
Issuer: American Home Mortgage Assets Trust 2005-2
Review for Possible Downgrade:
Class 2-B-4, current rating Ba1.
ANADARKO PETROLEUM: Moody's Reviews Ratings and May Downgrade
-------------------------------------------------------------
Moody's Investors Service placed under review for downgrade
Anadarko Petroleum Corporation's Baa2 long-term debt and Prime-2
commercial paper ratings. Securities under review include the
bonds, debentures, preferred stock (rated Ba1), and shelf
registration of the company and its guaranteed subsidiaries. The
ratings review is prompted by the company's shift in its de-
leveraging strategy to focus mainly on asset sales as a source of
debt reduction, following its $22.6 billion acquisitions of Kerr-
McGee and Western Gas Resources earlier in 2006.
Post-acquisition in August 2006, Anadarko indicated it would seek
to reduce leverage via a combination of some $15 billion in
proceeds from asset sales and new equity issuance. Management
more recently announced that it expected property sales would be
the primary means of reducing debt in 2007, citing portfolio
benefits, expected proceeds in the range of $11 - $15 billion
after-tax, and a targeted debt balance of $12 billion or lower
(unadjusted) by the end of 2007.
In Moody's view, the asset divestiture strategy provides less
certainty and more risk to debt holders than a de-leveraging
strategy based on a more tangible and predictable balance of asset
sales and new equity issuance. Moody's rating review will focus
on the likely certainty and timing of the asset sales program and
on the company's ability to achieve markedly lower leverage by the
end of 2007 as was incorporated into the current Baa2 long-term
rating. Moody's believes that the rating review will not result
in a downgrade of the company's long-term debt by more than one
notch.
Anadarko Petroleum Corporation, a leading independent petroleum
exploration and production company, is headquartered in The
Woodlands, Texas.
ASARCO LLC: Agrees Any Montana Edict Doesn't Infer Money Judgment
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To resolve the Adversary Proceeding, Debtors ASARCO LLC and
American Smelting and Refining Company and the State of Montana
Department of Environmental Quality stipulate that:
(a) the Action filed in the Montana First Judicial District
Court, in Lewis & Clark County, will proceed to judgment,
provided that the Stipulation will not be interpreted to
create any inference that any relief rendered by the
Montana Court is not a money judgment;
(b) MDEQ will not be permitted to seek to enforce a money
judgment in the Montana Action;
(c) the parties agree to defer the issue of whether any
judgment constitutes a money judgment for purposes of
applicable provisions of the Bankruptcy Code until the
earlier of:
* the time the issue is raised through the claims
reconciliation process;
* the time the issue is raised through prosecution of a
plan of reorganization in the Debtors' bankruptcy
cases; and
* the date a judgment or other judicial relief is
rendered by the Montana Court regarding the merits of
the Montana Action;
(d) parties reserve their rights as to which Court has
jurisdiction to decide whether enforcement of any judgment
in the Montana Action constitutes an enforcement of a
money judgment; and
(e) the Stipulation will apply only with respect to the
Montana Action.
In a separate filing, the Debtors notify the Court that they are
dismissing the Adversary Proceeding against Atlantic Richfield
Company and ARCO Environmental Remediation LLC without prejudice
in accordance with Rule 41(a)(1) of the Federal Rules of Civil
Procedure.
As reported in the Troubled Company Reporter on Nov. 7, 2006, the
State of Montana ex rel Department of Environmental Quality
filed March 21, 2003, a complaint in the Montana First Judicial
District Court, Lewis & Clark County, against Atlantic Richfield
Company, ARCO Environmental Remediation LLC, and Debtors ASARCO
LLC and American Smelting and Refining Company.
Under the Complaint, Montana DEQ sought money judgment and
various other relief in connection with an alleged contamination
and threats of contamination at, and resulting from, the Upper
Blackfoot Mining Complex in Lewis & Clark County, Montana.
In March 2006, Atlantic Richfield asked the Bankruptcy Court to:
-- lift the automatic stay so that it can file cross-claims
against the Debtors in the Montana Litigation; or
-- in the alternative, declare that the time in which it is
required to file the Cross-Claims is tolled and that the
Cross-Claims are reserved notwithstanding the Debtors'
bankruptcy filings.
The Debtors and Atlantic Richfield subsequently resolved the Lift
Stay Motion, and set an expiration date for Atlantic Richfield to
file its Cross-Claims.
In May 2006, the Debtors responded to the Montana Litigation and
asserted that because of their pending bankruptcy cases, the
claims asserted by the Montana DEQ are subject to, and
dischargeable in, their bankruptcy proceeding.
The Montana DEQ argued that the automatic stay does not apply to
the Montana Litigation by virtue of the police and regulatory
powers exception as provided for in Section 362(b)(4) of the
Bankruptcy Code. Atlantic Richfield joined in Montana DEQ's
Motion to Strike the Debtors' bankruptcy affirmative defense.
In response, the Debtors proposed a stipulation, which provided
that the Montana Litigation could go forward in certain respects,
provided that in no event could a "money judgment" be executed on
by any prevailing party against property of the Debtors' estate
without first obtaining Court approval. The Montana DEQ has
refused to agree to the stipulation.
About ASARCO LLC
Tucson, Ariz.-based ASARCO LLC -- http://www.asarco.com/-- is an
integrated copper mining, smelting and refining company. Grupo
Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company
filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex.
Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq.,
and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel
Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble,
Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the
Debtor in its restructuring efforts. Lehman Brothers Inc.
provides the ASARCO with financial advisory services and
investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee. When the Debtor filed for protection
from its creditors, it listed $600 million in total assets and
$1 billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No.
05-21346) also filed for chapter 11 protection, and ASARCO has
asked that the three subsidiary cases be jointly administered
with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case
was converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7
Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for chapter 11
protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to
06-20776).
(ASARCO Bankruptcy News, Issue No. 34; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
BA ENERGY: IPO Postponement Prompts Moody's to Withdraw Ratings
---------------------------------------------------------------
Moody's Investors Service withdrew its debt ratings for BA Energy
Inc. due to the postponement of its initial public offering until
at least first quarter 2007.
Ratings withdrawn include BA Energy's B1 Corporate Family Rating
and B1 senior secured ratings for its postponed $450 million
senior secured Term Loan B and CDN$60 million senior secured
revolving credit.
The ratings were assigned fully subject to BA completing an
initial public offering in fourth quarter 2006 for gross proceeds
of at least CDN$220 million to CDN$240 million and arrangement of
a planned CDN$150 million in contingent common equity commitments.
Completion of the credit facilities was also subject to those
actions.
Along with substantial private equity already arranged, proceeds
of the IPO and debt facilities were to fund BA's estimated CDN$1.1
billion in Phase I construction costs for its 77,500 barrels per
day bitumen upgrader project (Heartland) located in the Athabasca
oil sands region of Alberta, Canada. BA Energy is headquartered
in Calgary, Alberta, Canada.
BCE INC: Loral Space & PSP to Buy Telesat Unit for CDN$3.2 Billion
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Loral Space & Communications Inc. and PSP Investments, the pension
fund manager for various Canadian public services, have decided to
buy BCE Inc.'s Telesat Canada satellite unit for CDN$3.25 billion,
reports Alex Armitage and Chris Fournier of Bloomberg News.
Telesat will be merged with Loral Skynet's assets. Consequently,
Loral Space will hold a 64% interest in Telesat, and PSP will hold
the remaining interest. The companies will also assume Telesat's
CDN$172 million debt aside from financing the cash purchase with
debt from Morgan Stanley and UBS AG, Bloomberg relates.
In addition, both companies will contribute cash equity to the new
company, with PSP Investments giving in CDN$596 million, and Loral
Space contributing CDN$271 million, Bloomberg says.
Greg MacDonald, National Bank Financial analyst, told Bloomberg in
an interview that Telesat's selling price was CDN$600 to
CDN$800 million more than their expected selling price of
CDN$2.6 billion.
Telesat will still be headed by its chief executive officer Daniel
Goldberg, Michael Targoff, Loral's chief executive officer, told
Bloomberg. According to Mr. Targoff, the company is capitalizing
on the surge of satellite construction due to increased demand for
broadband services.
Trimming Down
BCE wanted to hand over its satellite division to the purchasing
companies in order to focus on its core businesses. The
telecommunications company decided to sell off Telesat so as to
reverse former CEO Jean Monty's CDN$13 billion expansion,
Bloomberg says.
The new company will have a combined trailing 12-month revenue for
the period ended Sept. 30 of approximately CDN$658 million, and a
contracted business of CDN$5.6 billion. BCE Vice President of
Communications William Fox declined to comment however, what the
company intends to do with the sale proceeds.
About Loral Space
Based in New York City, Loral Space & Communications (NASDAQ:
LORL) -- http://www.loral.com/-- is a satellite communications
company. It owns and operates a fleet of telecommunications
satellites used to broadcast video entertainment programming,
distribute broadband data, and provide access to Internet services
and other value-added communications services. Loral also is a
world-class leader in the design and manufacture of satellites and
satellite systems for commercial and government applications
including direct-to-home television, broadband communications,
wireless telephony, weather monitoring and air traffic management.
The company and various affiliates filed for chapter 11
protection (Bankr. S.D.N.Y. Case No. 03-41710) on July 15, 2003.
Stephen Karotkin, Esq., and Lori R. Fife, Esq., at Weil, Gotshal
& Manges LLP, represented the Debtors in their successful
restructuring and prosecution of their Fourth Amended Joint Plan
of Reorganization to confirmation on Aug. 1, 2005. As of
Dec. 31, 2004, the company listed assets totaling approximately
$1.2 billion and liabilities totaling approximately $2.3 billion.
About BCE Inc.
Headquartered in Montreal, Canada, Bell Canada International Inc.
(NEX:BI.H) -- http://www.bci.ca/-- provides a suite of
communication services to residential and business customers in
Canada. Under the Bell brand, the company's services include
local, long distance and wireless phone services, high-speed and
wireless Internet access, IP-broadband services, information and
communications technology services and direct-to-home satellite
and VDSL television services. Other BCE businesses include
Canada's premier media company, Bell Globemedia, and Telesat
Canada, a pioneer and world leader in satellite operations and
systems management.
The company is operating under a Plan of Arrangement approved by
the Ontario Superior Court of Justice, pursuant to which BCI
intends to monetize its assets in an orderly fashion and resolve
outstanding claims against it in an expeditious manner with the
ultimate objective of distributing the net proceeds to its
shareholders and dissolving the company.
BEACON INSURANCE: A.M. Best Puts Rating Under Positive Review
-------------------------------------------------------------
A.M. Best Co. has placed the financial strength rating of B-
(Fair) of the Beacon Insurance Group (Wichita Falls, TX) and its
members, Beacon National Insurance Company, Beacon Lloyds
Insurance Company, First Preferred Insurance Company and Petrolia
Insurance Company, under review with positive implications.
This rating action follows the announcement by State Automobile
Mutual Insurance Company (Columbus, OH) that it has agreed to
acquire Beacon. Closing is expected in first quarter 2007,
subject to regulatory approval. Beacon offers coverage in Texas
and Arkansas for personal lines automobile and property,
commercial auto liability and multi-peril and small commercial
risks.
A.M. Best Co., established in 1899, is the world's oldest and most
authoritative insurance rating and information source.
BEAR STEARNS: Fitch Holds Low-B Ratings on Two Class Certificates
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Fitch Ratings has upgraded Bear Stearns Commercial Mortgage
Securities Inc.'s commercial mortgage pass-through certificates,
series 2000-WF2, as:
-- $28.3 million class B to 'AAA' from 'AA';
-- $26.2 million class C to 'AA' from 'A';
-- $8.4 million class D to 'A+' from 'A-';
-- $23.1 million class E to 'A-' from 'BBB';
-- $7.3 million class F to 'BBB+' from 'BBB-'.
In addition, Fitch affirms the ratings on these classes:
-- $68.6 million class A-1 'AAA';
-- $529.4 million class A-2 'AAA';
-- Interest only class X 'AAA';
-- $4.2 million class L 'B';
-- $2.1 million class M 'B-'.
Fitch does not rate classes G, H, I, J, K and N.
The rating upgrades reflect the improved credit enhancement levels
as a result of loan payoff, amortization, and the defeasance of 5
loans (4.5%) since Fitch's last rating action. As of January 2006
distribution date, the pool has paid down 12.56%, to $733.2
million from $838.5 million at issuance. The certificates are
collateralized by 144 loans. The transaction's highest geographic
concentration is in California (36%), with equal dispersion across
northern and southern California.
Fitch reviewed the two credit assessed loans in the pool, the MHC
loan (11%) and the FM Global loan (4%). Both loans maintain their
investment grade credit assessments.
The MHC loan is secured by a portfolio of six manufactured housing
communities located in Florida, California and Illinois. The loan
continues to perform well with a Fitch stressed year-end (YE) 2004
weighted average debt service coverage ratio (WADSCR) of 1.52
times (x) up from 1.38x at issuance. Occupancy declined to 86%.
The FM Global headquarters loan is secured by a 328,359 square
foot office building located in Johnston, Rhode Island. The Fitch
stressed DSCR for YE 2004 was 4.53x, which is attributed to both
the continued loan performance since issuance, and the nine year
hyper-amortizing nature of the loan.
The transaction contains two specially serviced loans (0.7%) from
which no losses are currently expected.
BEXAR COUNTY: Moody's Downgrades Ratings on $31.9 Million Bonds
---------------------------------------------------------------
Moody's Investors Service has downgraded the ratings on Bexar
County Housing Finance Corporation Multifamily Housing Revenue
Bonds (American Opportunity for Housing - Colinas LLC Project) to
Ba1 for Series 2001A ($28.1 million) and to B1 for Series 2001C
($3.8 million). The downgrades are reflective of declining debt
service coverages, a softening submarket and the under funding of
the debt service fund for the Series 2001C bonds. The outlook on
both Series has been changed to stable as the new ratings reflect
the properties weakened position.
The bonds are secured by the revenues from three cross
collateralized properties, Las Colinas Apartments, Huebner Oaks
Apartments and Perrin Crest Apartments, as well as by funds and
investments pledged to the trustee under the indenture as security
for the bonds. Las Colinas is a 232-unit garden style apartment
complex built in 1978, composed of 30 two-story buildings and is
located approximately 20 miles north west of the San Antonio
central business district. Huebner Oaks is a 344-unit garden
style apartment complex built in 1984, composed of 23 two-story
buildings and is located approximately 12 miles north west of the
San Antonio central business district. Perrin Crest is a 200-unit
garden style apartment complex built in 1985, composed of 13 two-
story buildings and is located approximately 12 miles north east
of the San Antonio central business district.
Legal Security: The bonds are limited obligations payable solely
from the revenues, receipts and security pledged in the Trust
Indenture.
Credit Strengths
"Debt service reserves are fully funded.
"Excess cash in the surplus fund of $80,608 as of Dec. 14, 2006,
and a reserve and replacement balance of $155,622 as of Dec. 14,
2006.
Credit Challenges
"The debt service fund for the Series 2001C bonds was under funded
by $80,637.24 as of 12/14/2006
"Weighted occupancy for the three projects was 87.1% in November
2006.
"Debt service coverage declined to 1.28x for Series 2001A and
1.10x for 2001C in 2005; interim financial statements indicate
further deterioration in 2006.
Recent Developments/Results:
The certificate of occupancy for the 16 units damaged by fire has
been issued and all units are inhabitable. However, the projects
are facing financial stress and the Series 2001C bond's debt
service fund is under funded. This stress is underscored by a
weighted average occupancy of 87.1% and debt service coverage
levels of 1.28x MADS for senior bonds and 1.10x MADS for
subordinate bonds (from 2005 audited financials). Interim
statements indicate the debt service coverage for 2006 will be
even lower - and the under funded debt service fund indicates
coverage of less than 1.0x for the Series 2001C bonds if recent
months were annualized. Additionally, rental income has been
progressively worse throughout the year and new concessions are
being offered. Moody's believes the under funding of a debt
service fund is a sign of severe financial stress and is a primary
factor in the downgrade.
Torto Wheaton Research forecasts rent growth of 0.70% in 2007 and
0.90% in 2008 for the Huebener Oaks' and Las Colinas' submarket.
Occupancy in the submarket is forecasted to decline from 94.3% in
2006 to 91.5% in 2007. Perrin Crest's submarket is forecasted to
perform better with 2.2% rent growth in 2007 and 3.3% in 2008.
Occupancy is forecasted to decline to 93.3%. Moody's anticipates
Huebener Oaks and Las Colinas will likely have weak revenue growth
in the near term, which will exacerbate financial weaknesses.
Perrin Crest, which was 75.5% occupied in November (2006) has yet
to lease up all of the repaired units. With rents forecasted to
increase in the submarket, Moody's expects occupancy to increase,
partially mitigating the weakness of the other two properties.
What could change the rating - UP
The full lease-up of the repaired units at Perrin Crest, stable
weighted average occupancy, improved debt service coverage and a
fully funded debt service funds.
What could change the rating - DOWN
More declines in debt service coverage levels; or weakened
occupancy; or the tapping of debt service reserves.
Outlook
The outlook for the bonds is stable as the new ratings incorporate
a weakened financial position and a softening submarket.
BI-LO LLC: Poor Performance Prompts S&P's Negative Outlook
----------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on BI-LO
LLC to Negative following BI-LO's recent weaker-than-anticipated
operating performance and limited availability under its debt-to-
EBITDA covenant. The 'B' corporate credit rating was affirmed.
"BI-LO's same-store sales and profitability have been negatively
impacted by increased promotional activity from its competitors
and by new competitor-store openings," said Standard & Poor's
credit analyst Stella Kapur.
Additionally, the company's consolidated debt-to-EBITDA leverage
covenant under its bank facility agreement stepped down in the
third quarter of 2006, leaving limited cushion available. "As a
result, BI-LO may need to request a covenant waiver if operating
trends do not improve," said Ms. Kapur.
The company's liquidity remains adequate for the 'B' rating, with
$48 million in net cash at Oct. 7, 2006, and an anticipated
$33 million of equity contribution expected before the end of
2006. However, a turnaround in operating performance would be
required before a stable outlook would be considered.
CAPITALSOURCE REAL: Fitch Rates $47.45 Mil. Class J Notes at BB
---------------------------------------------------------------
Fitch assigns the following ratings to CapitalSource Real Estate
Loan Trust 2006-A, CapitalSource or the issuer:
-- $200,000,000 class A-1R revolving senior secured floating
rate term notes due 2037 'AAA';
-- $70,375,000 class A-1A senior secured floating rate term
notes due 2037 'AAA';
-- $500,000,000 class A-2A senior secured floating rate term
notes due 2037 'AAA';
-- $125,000,000 class A-2B senior secured floating rate term
notes due 2037 'AAA';
-- $82,875,000 class B second priority floating rate term
notes due 2037 'AA';
-- $62,400,000 class C third priority floating rate
capitalized interest term notes due 2037 'A+';
-- $30,225,000 class D fourth priority floating rate
capitalized interest term notes due 2037 'A';
-- $30,225,000 class E fifth priority floating rate
capitalized interest term notes due 2037 'A-';
-- $26,650,000 class F sixth priority floating rate
capitalized interest term notes due 2037 'BBB+';
-- $33,150,000 class G seventh priority floating rate
capitalized interest term notes due 2037 'BBB';
-- $31,200,000 class H eighth priority floating rate
capitalized interest term notes due 2037 'BBB-';
-- $47,450,000 class J ninth priority floating rate
capitalized interest term notes due 2037 'BB'.
CASCADES INC: Moody's Holds Ba2 Corporate Family Rating
-------------------------------------------------------
Moody's Investors Service confirmed Cascades Inc.'s Ba2 corporate
family rating and its Ba3 senior unsecured rating.
Moody's also assigned Baa3 ratings to Cascades' new
CDN$650 million senior secured revolver and CDN$100 million senior
secured term loan.
Finally, Moody's announced that it will upgrade Norampac's senior
unsecured rating to Ba3 from B1 upon completion of the acquisition
by Cascades of the 50% of Norampac it does not already own, and on
the basis that the Norampac notes will become a direct obligation
of Cascades when the liquidation of Norampac into Cascades is
complete.
The ratings reflect the overall probability of default of
Cascades, to which Moody's affirms the PDR of Ba2. The senior
unsecured ratings of Ba3 reflect a loss given default of LGD5
(72%) and the senior secured ratings of Baa3 reflect a loss given
default of LGD2 (18%). The existing revolver and term loan
ratings of Cascades and Norampac will be withdrawn when the
acquisition of Norampac is complete. This completes the review of
Cascades begun on Dec. 5, 2006, when the acquisition of Norampac
was announced. The rating outlook is stable.
Cascades' Ba2 corporate family rating reflects the diversity
derived from its boxboard, packaging and tissue businesses and,
with its full consolidation of Norampac, its significant position
in the Canadian containerboard segment. The ratings also consider
that Cascades and Norampac will have paid down approximately
CDN$190 million of debt this year, prior to Cascades increasing
debt to fund a portion of the Norampac acquisition.
At the same time, the ratings consider the CDN$310 million of
incremental debt taken on to fund the acquisition and Cascades'
debt protection measures, which are slightly weak for the rating.
However, Moody's notes that Cascades is issuing CDN$250 million of
new equity and that, notwithstanding the incremental debt taken on
to fund the acquisition, its debt protection measures improve
somewhat given the full consolidation of Norampac's more lowly
levered operations, coupled with access to 100% of Norampac's cash
flow. The Ba2 rating also reflects Cascades' exposure to the
stronger Canadian dollar, to cyclical pricing, particularly in the
containerboard and boxboard segments, and to volatile raw material
costs, especially recycled fibers, as well as energy and
chemicals. The ratings also reflect the company's penchant for
conducting relatively small, but debt financed acquisitions. The
rating outlook is stable.
Ratings confirmed:
Cascades Inc.
Corporate Family Rating: Ba2
PDR: Ba2
$675 million Sr. Unsecured Notes due 2013, Ba3
Ratings to be upgraded upon completion of the acquisition of
Norampac:
Norampac Inc.
$250 million 6.75% Sr. Unsecured Notes due 2013, to Ba3 from B1
Ratings to be withdrawn upon completion of the acquisition of
Norampac:
Cascades Inc.
CDN$450 mm Revolving Facility due 2010, Ba1
CDN$100 mm Term Loan Facility due 2012, Ba1
Norampac Inc.
Corporate Family Rating, Ba3, RUR, Direction Uncertain
PDR: Ba3, RUR, Direction Uncertain
CDN$325 mm Revolving Facility due 2011, Ba2, RUR, Direction
Uncertain
The most recent rating action for Cascades was to place its
ratings under review for possible downgrade on Dec. 5, 2006. The
most recent rating action for Norampac was to place its ratings
under review, with direction uncertain, also on Dec. 5, 2006
Headquartered in Montreal, Quebec, Norampac is a containerboard
producer and had sales in 2005 of CDN$1.3 billion.
Headquartered in Kingsey Falls, Quebec, Cascades Inc. is a
packaging and paper company producing boxboard, containerboard,
specialty packaging products and tissue, and had sales in 2005 of
CDN$3.5 billion.
CBA COMMERCIAL: S&P Junks Rating on Series 2004-1 Class M-7 Certs.
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on two
classes of commercial mortgage pass-through certificates from CBA
Commercial Assets' series 2004-1. Concurrently, ratings were
affirmed on nine other classes from the same transaction.
The lowered ratings reflect anticipated losses on the specially
serviced assets, as well as unfavorable collateral performance.
The anticipated losses on the specially serviced assets will
likely result in a principal loss to class M-7 and will
significantly erode credit support for class M-6. The unfavorable
collateral performance relates to the pool's delinquency rate
relative to available credit enhancement.
The affirmed ratings reflect credit enhancement that provides
adequate support through various stress scenarios.
As of the Nov. 27, 2006, remittance report, there are 14 assets
with the special servicer, Midland Loan Services Inc. (Midland).
Eight loans (4.48% of the pool) are current, three of which have
paid late but are in their grace period. The remaining assets are
categorized as follows: one is 30-days delinquent (0.33%); two are
60-days delinquent (1.22%); two are categorized as foreclosures
(1.17%); and one is listed as REO (0.56%). Many of the specially
serviced assets are in the process of being returned to the master
servicer (also Midland). Appraisal reduction amounts (ARAs) are
in effect against the foreclosed and REO assets. Losses in the
range of the ARAs are expected on both assets.
As of the Nov. 27, 2006, remittance report, the collateral pool
consisted of 205 loans with an aggregate principal balance of $78
million, compared with 265 loans with a balance of $102 million at
issuance. The top 10 loans make up 15.2% of the collateral pool.
The pool exhibits geographic concentration in California (29.3%)
and Texas (11.8%). Property concentrations are found in
multifamily (67.6%) and retail (11.0%) assets. Floating-rate
loans account for 98% of the collateral pool.
Standard & Poor's stressed loans with credit issues as part of its
pool analysis. The resultant credit enhancement levels support
the lowered and affirmed ratings.
Ratings Lowered
CBA Commercial Assets LLC
Commercial mortgage pass-through certificates
series 2004-1
Rating
------
Class To From Credit enhancement(%)
----- -- ---- ---------------------
M-6 BB- BB 1.63
M-7 CCC- B 0.49
Ratings Affirmed
CBA Commercial Assets LLC
Commercial mortgage pass-through certificates
series 2004-1
Class Rating Credit enhancement(%)
----- ------ ---------------------
A-1 AAA 23.54
A-2 AAA 23.54
A-3 AAA 23.54
M-1 AA 19.78
M-2 A+ 15.20
M-3 A 10.46
M-4 BBB+ 6.37
M-5 BBB 5.39
IO AAA N/A
N/A - Not applicable.
CBA COMMERCIAL: S&P Junks Rating on Series 2005-1 Class M-8 Certs.
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on two
classes of commercial mortgage pass-through certificates from CBA
Commercial Assets' series 2005-1. Concurrently, ratings were
affirmed on nine other classes from the same transaction.
The lowered ratings reflect anticipated losses upon the resolution
of several of the specially serviced assets, as well as
unfavorable collateral performance. The anticipated losses on the
specially serviced assets will likely result in a principal loss
to class M-8 and will significantly erode credit support for class
M-7. The unfavorable collateral performance relates to the pool's
delinquency rate relative to available credit enhancement.
The affirmed ratings reflect credit enhancement that provides
adequate support through various stress scenarios.
As of the Nov. 27, 2006, remittance report, there are 29 assets
with the special servicer, Midland Loan Services Inc. Eleven
(2.17% of pool) of these assets are current, but six of them have
paid late and are in their grace period. The remaining assets are
categorized as follows: two are 30-days delinquent (0.31%); three
are 60-days delinquent (0.6%); and 13 are 90-plus-days delinquent
(3.26%). Many of the assets that are with the special
servicer are in the process of being returned to the master
servicer (also Midland). There is a high likelihood that there
will be losses on six assets, including the 1510 Nunneley asset, a
multifamily property in Wichita Falls, Texas. A recent appraisal
for this property suggests a significant loss upon resolution.
As of the Nov. 27, 2006, remittance report, the collateral pool
consisted of 500 loans with an aggregate principal balance of
$188.2 million, compared with 572 loans with a balance of $214.9
million at issuance. The top 10 loans make up 10.7% of the
collateral pool. The pool exhibits geographic concentration in
California (22.1%). Property concentrations are found in
multifamily (63.4%) and mixed-use assets (14.5%). Floating-rate
loans account for 95.8% of the collateral pool.
Standard & Poor's stressed loans with credit issues as part of its
pool analysis. The resultant credit enhancement levels support
the lowered and affirmed ratings.
Ratings Lowered
CBA Commercial Assets 2005-1
Commercial mortgage pass-through
certificates series 2005-1
Rating
------
Class To From Credit enhancement(%)
----- -- ---- ---------------------
M-7 B BB 1.57
M-8 CCC- B 0.57
Ratings Affirmed
CBA Commercial Assets 2005-1
Commercial mortgage pass-through
certificates series 2005-1
Class Rating Credit enhancement(%)
----- ------ ---------------------
A AAA 18.40
M-1 AA+ 14.41
M-2 AA 11.41
M-3 AA- 9.98
M-4 A 7.98
M-5 BBB 5.28
M-6 BBB- 4.56
X-1 AAA N/A
X-2 AAA N/A
N/A - Not applicable.
CENTRAL GARDEN: Earns $65.5 Million in Year Ended Sept. 30
----------------------------------------------------------
Central Garden & Pet Company reported fourth quarter and full year
results for its fiscal year ended Sept. 30, 2006.
Net income for the year increased 22% to $65.5 million from
$53.8 million in the prior year. Net sales for fiscal year 2006
were $1.62 billion, an increase of 17% from $1.38 billion in
fiscal 2005.
Operating income increased 37% to $137 million compared to last
year. These results include $7.6 million in costs associated with
the profit acceleration program, $5.1 million in costs related to
equity compensation, a $9.9 million gain related to the Axelrod
litigation settlement and an offsetting $9.9 million in costs
associated with increased discretionary brand building and
strategic work. Depreciation and amortization for the year was
$24.0 million compared to $19.6 million in the prior year.
Branded product sales increased 23%. Sales of other manufacturers'
products, as anticipated, declined 1%. Organic sales growth,
adjusted for the disposition of an operating unit and the
reduction of certain third party accounts related to our garden
distribution operations in fiscal 2005, was 7% for the year.
For the fourth quarter of fiscal 2006, the company reported net
sales of $421 million, an increase of 30% from $323 million in the
comparable 2005 period. Income from operations for the quarter
increased 68% to $21.4 million from $12.7 million in the year ago
period. Net income for the quarter decreased 10% to $6.0 million,
from $6.7 million in the year ago period.
Excluding the $9 million spent for discretionary brand building
and strategic work in the fourth quarter, operating income was
$30.4 million. The quarter's results also include costs of
approximately $2.1 million associated with its profit acceleration
program and $1.1 million in costs related to equity compensation.
Depreciation and amortization for the quarter was $5.3 million
compared to $5.4 million in the year ago period. Branded product
sales increased 38%. Sales of other manufacturers' products
increased 3%. Organic sales growth was 14%.
"We had both an excellent fourth quarter and fiscal year
characterized by strong sales and record profits," noted Glenn
Novotny, President and Chief Executive Officer of Central Garden
and Pet. "Throughout the year, we focused on strengthening our
brands through our commitment to innovation and contribution from
strategic acquisitions. We also improved our effectiveness and
efficiency, expanding our operating margins by 110 basis points
and improving our return on invested capital by 90 basis points
for the year."
"We project fiscal 2007 to be another solid year in terms of sales
growth. We are, however, experiencing significantly higher-than-
expected grain costs associated primarily with our wild bird feed
operations," noted Mr. Novotny. "Mixed crop yields, global
shortages combined with increased demand for bio-fuel crops, such
as corn, for ethanol plants, has resulted in skyrocketing grain
costs. Grain costs, associated primarily with our wild bird feed
operations, have increased up to approximately 40% over the past
30 to 90 days. After including expected price increases at
retail, we project an $8 to $10 million operating profit reduction
for the year. However, despite this pressure, we believe we will
grow operating earnings by approximately 20% and continue to
expand margins."
At Sept. 30, 2006, the company's balance sheet showed $1.5 billion
in total assets, $802.3 million in total liabilities, $3 million
in convertible redeemable preferred stock, $1.2 million in
minority interest, and $727.4 million in total stockholders'
equity.
Full-text copies of the company's consolidated financial
statements for the year ended Sept. 30, 2006, are available for
free at http://researcharchives.com/t/s?1788
About Central Garden
Headquartered in Walnut Creek, California, Central Garden & Pet
Company (NASDAQ: CENT) -- http://www.central.com/-- markets and
produces branded products for the lawn & garden and pet supplies
markets. Products are sold to specialty independent and mass
retailers. The company also provides a host of other regional and
application-specific garden and pet brands and supplies. The
company has approximately 5,000 employees, primarily in North
America and Europe.
* * *
As reported in the Troubled Company Reporter on Sept. 28, 2006,
Moody's Investors Service affirmed its Ba3 corporate family rating
for Central Garden and Pet Company. Additionally, Moody's held
its Ba2 probability-of-default rating on the company's
$350 million senior secured revolver.
CITGO PETROLEUM: Fitch Upgrades Issuer Default Rating to BB
-----------------------------------------------------------
Fitch Ratings has raised the rating of CITGO Petroleum Corp's
Issuer Default Rating to 'BB' from 'BB-'. Fitch has also raised
the ratings on the company's senior secured revolving credit
facilities, term loan, and fixed rate Industrial Revenue Bonds
from 'BB+' to 'BBB-'. The Rating Outlook is Stable.
Fitch rates the debt of CITGO as:
-- IDR 'BB';
-- $1.15 billion senior secured revolving credit facility
maturing in 2010 'BBB-';
-- $700 million secured term-loan B maturing in 2012 'BBB-';
-- Fixed-rate IRBs 'BBB-'.
The main drivers behind the upgrade include: the continued
strength of U.S. refining margins, CITGO's competitive position as
the owner of three heavy-conversion capacity refineries, and
record-high market valuations for refining assets, which enhances
CITGO's secured facilities. Fitch's ongoing concerns with CITGO's
ratings revolve primarily around the link between CITGO and the
Bolivarian Republic of Venezuela (long-term foreign currency
rating of 'BB-' by Fitch). CITGO currently sends most of its
excess cash to its parent, something which could limit CITGO's
financial flexibility during an industry downturn. For the most
recent 12 months ending Sept. 30, 2006, CITGO paid
$1.94 billion in distributions to its parent. A significant part
of this distribution was paid for from the company's recent sale
of its 41.25% stake in the CITGO-Lyondell joint-venture refinery
in Houston.
CITGO's variable-rate IRBs are supported by letters of credit
under the company's current credit facilities and are not rated by
Fitch. CITGO's secured facilities are backed by the company's
current assets (accounts receivable and inventories) as well as
the Lake Charles, Louisiana and Corpus Christi, Texas refineries.
Covenants include a maximum debt-to-capitalization of 55% and a
minimum EBITDA-to-interest coverage of 3.00 to 1.00. The
agreements also contain a carve-out provision to allow for
additional debt totaling the greater of $200 million or 10% of
CITGO's net worth as well as a $250 million accounts receivable
securitization program.
Under existing covenants, Venezuela can upstream net proceeds of
up to $3.0 billion from asset sales by CITGO, excluding the Lake
Charles and Corpus Christi refineries. While the value of the
working capital as well as Lake Charles and Corpus Christi provide
significant collateral coverage for the secured lenders, CITGO's
ratings are also supported by the company's overall diverse and
complex refining base. Given the strategic importance of CITGO's
refineries to Venezuela, the continued strong refining margin
environment, and limits created by existing covenants, Fitch's
current ratings assume that the Lemont refinery will not be sold
in the near term.
CITGO's refineries have the capacity to process a high percentage
of heavy sour crude, primarily from Venezuela. Heavy crudes
typically sell at a 25% to 35% discount to lighter crudes such as
the benchmarks West Texas Intermediate and Brent. CITGO's
discounts, however, are limited somewhat by the crude contracts
with Venezuela which account for approximately 50% of CITGO's
crude throughput. CITGO remains a critical piece of PDVSA's
integrated oil strategy.
In addition to the Venezuelan related concerns, CITGO remains
subject to other industry-wide risks. The company is making
significant investments to meet ongoing regulations including low
sulfur fuels as well as its recent consent decrees to reduce
emissions from its refineries. A key risk for CITGO lies in its
decision to defer investments needed to meet ultra low sulfur
diesel specifications at its Corpus Christi and Lemont refineries
until later in the decade. Any unanticipated acceleration of
construction costs or schedules could make it difficult for the
company to complete its projects on time and under budget. The
company also remains subject to both planned and unplanned
shutdowns of its refineries, and with two of three refineries
located on the Gulf coast, hurricanes are also a concern.
CITGO is one of the largest independent crude oil refiners in the
U.S. with three modern, highly complex crude oil refineries and
two asphalt refineries. Following the sale of its stake in the
CITGO-Lyondell joint-venture refinery in Houston, CITGO now owns
859,000 barrels per day of crude refining capacity. CITGO branded
fuels are marketed through more than 11,000 independently owned
and operated retail sites. CITGO is owned by PDV America, an
indirect, wholly owned subsidiary of Petroleos de Venezuela S.A.
(PDVSA), the state-owned oil company of Venezuela. The long-term
foreign currency rating of both PDVSA and Venezuela is 'BB-' with
a Stable Rating Outlook.
CITICORP MORTGAGE: Fitch Puts Low-B Ratings on Two Certificates
---------------------------------------------------------------
Citicorp Mortgage Securities, Inc.'s REMIC pass-through
certificates, series 2006-7 are rated by Fitch as:
-- $301,790,234 classes IA-1, IA-IO, IIA 1, IIA-IO, IIIA 1,
IIIA IO and A-PO (senior certificates) 'AAA';
-- $4,655,000 class B-1 'AA';
-- $1,551,000 class B-2 'A';
-- $775,000 class B-3 'BBB';
-- $465,000 class B-4 'BB';
-- $465,000 class B-5 'B'.
The $466,417 class B-6 is not rated by Fitch.
The 'AAA' rating on the senior certificates reflects the 2.70%
subordination provided by the 1.50% class B-1, the 0.50% class B-
2, the 0.25% class B-3, the 0.15% privately offered class B-4, the
0.15% privately offered class B-5, and the 0.15% privately offered
class B-6. In addition, the ratings reflect the quality of the
mortgage collateral, strength of the legal and financial
structures, and CitiMortgage, Inc.'s servicing capabilities (rated
'RPS1' by Fitch) as primary servicer.
As of the cut-off date, Dec. 1, 2006, the mortgage pool consists
of 565 conventional, fully amortizing, 15-30 year fixed-rate
mortgage loans secured by first liens on one- to four-family
residential properties with an aggregate principal balance of
approximately $310,167,651, located primarily in California
(30.39%), New York (20.81%) and Massachusetts(5.82%). The
weighted average current loan to value ratio (CLTV) of the
mortgage loans is 68.04%. Approximately 24.05% of the loans were
originated under a reduced documentation program. Condo
properties account for 5.77% of the total pool. Cash-out
refinance loans and investor properties represent 20.62% and 0.14%
of the pool, respectively. The average balance of the mortgage
loans in the pool is approximately $548,969. T he weighted average
coupon of the loans is 6.401% and the weighted average remaining
term is 338 months.
None of the mortgage loans are 'high cost' loans as defined under
any local, state or federal laws.
The mortgage loans were originated or acquired by CMI and in turn
sold to CMSI. A special purpose corporation, CMSI, deposited the
loans into the trust, which then issued the certificates. U.S.
Bank National Association will serve as trustee. For federal
income tax purposes, an election will be made to treat the trust
fund as one or more real estate mortgage investment conduits.
CLARKE AMERICAN: S&P Puts B+ Rating on Negative CreditWatch
-----------------------------------------------------------
Standard & Poor's placed its 'B+' corporate credit rating on check
printing company Clarke American Corp. on CreditWatch with
negative implications.
At the same time, Standard and Poor's affirmed the 'B+' rating on
the company's $480 million senior secured credit facility and the
'B-' rating on the $175 million senior unsecured notes, reflecting
CAC's plan to refinance these borrowings.
The CreditWatch listing reflects the announcement by M & F
Worldwide Corp. (not rated), CAC's parent, to acquire John H.
Harland Company, a check printing and software company, for
$1.7 billion, including debt assumption. MFW has announced that
it has committed financing in place to complete the acquisition
and refinance CAC's existing debt. Standard & Poor's will resolve
its CreditWatch listing following an assessment of the financing
structure and the future business and financial strategies.
Standard & Poor's has affirmed its 'B+' ratings on licorice
products manufacturer MAFCO Worldwide Corp., which is MFW's
subsidiary. Standard & Poor's has considered the consolidated
credit quality of MFW in its ratings for MAFCO, and had assumed
that MFW management would continue to seek acquisitions at the
parent level. However, S&P also assumes that there are adequate
restrictions in place limiting the potential for the incurrence of
additional debt at MAFCO under its bank agreement, at least until
MAFCO has deleveraged. As such, MAFCO has not announced any plans
to provide financing for MFW's acquisition of Harland. Should
MAFCO's intentions with regards to incurring additional debt
change, or if MAFCO's ratio of debt to EBITDA increases above 3x,
S&P would reassess its outlook and ratings.
At this time, Standard & Poor's does not expect the acquisition to
meaningfully impair MFW's credit quality. Ratings on CAC and
MAFCO reflect the consolidated credit quality of MFW, in addition
to each respective company's business and financial profiles.
COLLINS & AIKMAN: To File First Amended Joint Plan in Detroit
-------------------------------------------------------------
Collins & Aikman Corporation will file with the U.S. Bankruptcy
Court for the Eastern District of Michigan in Detroit an amended
joint plan of the Debtor and its affiliates and an accompanying
disclosure statement. The filing fulfills one of the company's
obligations under the Customer Agreement, which was approved on an
interim basis by the Bankruptcy Court on Dec. 14, 2006. The Plan
is supported by the agent for the company's secured prepetition
lenders and certain of the company's major customers. Collins &
Aikman will now work expeditiously toward satisfying various
conditions to obtain approval of the Disclosure Statement and
Plan, and will ultimately exit Chapter 11 through sales of its
assets.
"The Plan represents the Company's best opportunity to save
thousands of jobs and maximize recoveries for its creditors," said
John Boken, Chief Restructuring Officer. "We are pleased that the
agent for the company's secured prepetition lenders, as well as
several of the company's major customers, have agreed to support
the Plan as part of the Customer Agreement. More work remains to
be accomplished, but creating and filing the Plan represents a
major milestone in the Company's chapter 11 cases."
Under the Plan, Collins & Aikman will proceed with soliciting
qualified bids for the sale of the majority of its assets. On
Nov. 14, 2006, the company expects to sell its operations, in
whole or in parts, to maximize the value of the enterprise for its
creditors and preserve the largest number of jobs for its
employees. Net proceeds of the asset sales, after payment of the
obligations outstanding under the company's Postpetition Credit
Agreement and all allowed administrative and priority claims, will
be distributed to holders of secured debt claims under the
company's Prepetition Credit Agreement. Trade and unsecured
funded debt claims are expected to share in a portion of the net
proceeds from certain actions that will be prosecuted by a
Litigation Trust established under the Plan. All existing equity
interests in Collins & Aikman will be canceled with no
distribution.
Confirmation of the Plan is subject to a number of conditions,
which include consummating the sale of the company's Carpet &
Acoustics division. The Disclosure Statement and Plan have not
been approved by the Bankruptcy Court, and may be materially
modified before approval.
The company has selected a lead bidder in its proposed sale of its
North American automotive flooring and acoustic components
business. Details of the bid, including the identification of the
lead bidder, will be made available when the company files its
sale motion with the bankruptcy court for an expected January 2007
hearing.
Headquartered in Troy, Michigan, Collins & Aikman Corporation
-- http://www.collinsaikman.com/-- is a global leader in
cockpit modules and automotive floor and acoustic systems and is
a leading supplier of instrument panels, automotive fabric,
plastic-based trim, and convertible top systems. The Company
has a workforce of approximately 23,000 and a network of more
than 100 technical centers, sales offices and manufacturing
sites in 17 countries throughout the world. The Company and its
debtor-affiliates filed for chapter 11 protection on May 17,
2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri,
Esq., at Kirkland & Ellis LLP, represents C&A in its
restructuring. Lazard Freres & Co., LLC, provides the Debtor
with investment banking services. Michael S. Stammer, Esq., at
Akin Gump Strauss Hauer & Feld LLP, represents the Official
Committee of Unsecured Creditors Committee. When the Debtors
filed for protection from their creditors, they listed
$3,196,700,000 in total assets and US$2,856,600,000 in total
debts.
COLLINS & AIKMAN: Court Okays Severance Plan for Affected Workers
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan
approved a severance plan for workers affected by Collins & Aikman
Corporation and its debtor-affiliates' planned workforce
reduction.
The Debtors are pursuing a cooperative sale process, which they
expect will culminate with the confirmation of a plan of
reorganization. In line with this, the Debtors have determined
that a further reduction-in-force is necessary to maximize the
value of their estates and to complete the restructuring process.
As reported in the Troubled Company Reporter on Dec. 5, 2006, the
Debtors want to provide RIF-affected employees:
(a) a severance package equivalent to up to four weeks of
base salary and any accrued and unused vacation; and
(b) continued employee benefits for up to four weeks.
The base salary component of the Severance Benefits would be
subject to an aggregate limit of $775,000.
Specifically, the Debtors intend to reduce the number of salaried
employees by up to 125, representing approximately $9,300,000 in
annual base salaries.
Headquartered in Troy, Michigan, Collins & Aikman Corporation
-- http://www.collinsaikman.com/-- is a global leader in
cockpit modules and automotive floor and acoustic systems and is
a leading supplier of instrument panels, automotive fabric,
plastic-based trim, and convertible top systems. The Company
has a workforce of approximately 23,000 and a network of more
than 100 technical centers, sales offices and manufacturing
sites in 17 countries throughout the world. The Company and its
debtor-affiliates filed for chapter 11 protection on May 17,
2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri,
Esq., at Kirkland & Ellis LLP, represents C&A in its
restructuring. Lazard Freres & Co., LLC, provides the Debtor
with investment banking services. Michael S. Stammer, Esq., at
Akin Gump Strauss Hauer & Feld LLP, represents the Official
Committee of Unsecured Creditors Committee. When the Debtors
filed for protection from their creditors, they listed
$3,196,700,000 in total assets and US$2,856,600,000 in total
debts. (Collins & Aikman Bankruptcy News, Issue No. 47;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
CONTECH CONSTRUCTION: Moody's Revises Outlook to Negative
---------------------------------------------------------
Moody's Investors Service confirmed the company's B1 corporate
family rating and Ba3 credit facilities' ratings but changed
CONTECH's outlook to negative from stable. This rating action
concludes the review initiated on November 20, 2006.
CONTECH Construction Products, Inc. has announced plans to acquire
the U.S. stormwater management business of Australia based CDS
Technologies, Inc. for approximately $58 million. Moody's
understands the transaction may close by year end 2006. The
acquisition is expected to be financed by draw on the company's
existing $100 million revolver and issuance of
$17 million in additional mezzanine debt.
The change in outlook is primarily driven by long term projections
for low free cash flow generation and high debt leverage. In
addition, Moody's expects the company to continue to make debt
financed acquisition thereby maintaining its leverage above the
level that is more typical for B1 rated companies in the building
products portfolio. Lastly, the company's business mix and a
slowing economy suggests the probability of cash flow generation
lower than anticipated is more likely than the reverse.
The company's pro forma leverage of around 5.2 times is more
typical of a B2 rating. From a financial metrics perspective, the
company would need to de-lever its balance sheet to a level where
debt to EBITDA will be below 4 times. However, given the strength
of the company's products and market position, the company's B1
corporate family rating could be maintained if leverage improved
to below 4.5 as long as the one year forward projection is for
continued improvement (preferably to under 4.25 times).
Similarly, free cash flow generation currently is in line with
that which is typical of a B2 rated company. The company's free
cash flow is anticipated to be around 3% for FYE 2007 and improve
gradually to around 7% by 2009. Typically, B1 rated companies in
the building products sector are anticipated to have free cash
flow to debt of over 8% (on a projected 12 month basis) and
achieve that target within the next 18 months.
The company's B1 rating primarily reflects Moody's belief that
CONTECH has an exceptionally good market position. The company
manufactures and distributes specialty construction products to
the civil engineering infrastructure sector of the heavy
construction industry. The majority of the company's revenue is
generated from the highway, residential, and commercial
construction markets where the company is typically among the
strongest competitors based on its size and product offerings.
The ratings also consider the company's highly variable cost
structure, expected improvements in the company's product mix and
industry's product substitution trends leading to higher margins
and stronger EBITDA generation.
The ratings could be pressured if the company does not improve its
debt leverage to below 4.5 times on a sustainable basis and if
free cash flow generation does not improve above 5% on a
sustainable basis. Also, another debt financed acquisition will
be viewed as a rating negative. The outlook could stabilize if
the company would meet or surpass current projections. The
ratings could be bolstered if debt leverage would decline below
3.5 times and free cash flow to debt would increase to above 11%.
The following ratings have been confirmed:
Corporate Family Rating, confirmed at B1;
Probability of Default Rating, rated B1;
* $100 million Gtd. Sr. Sec. Revolving Credit Facility due
2012, Ba3 (LGD3, 33%);
* $450 million Gtd. Sr. Sec. Term Loan B due 2013, Ba3
(LGD3, 33%).
Headquartered in West Chester, Ohio, CONTECH manufactures and
markets corrugated steel and plastic pipe and fabricated products
for use in highway, residential and commercial construction.
Revenues for FYE 2006 were approximately $744 million.
CONVERIUM HOLDINGS: Moody's Concludes Review & Upgrades Ratings
---------------------------------------------------------------
Moody's Investors Service has raised the senior debt rating of
Converium Holdings (North America) Inc. to Baa3 from B2. In the
same action, Moody's has upgraded the insurance financial strength
rating of CHNA's subsidiary, Converium Reinsurance (North America)
Inc., to Baa3 from B2.
The ratings carry a stable outlook. These rating actions conclude
a review initiated on October 17, 2006, following an announcement
by the former parent company that it would sell CHNA and its
subsidiaries to National Indemnity Company, a subsidiary of
Berkshire Hathaway Inc. The sale closed on December 14, 2006.
According to Moody's, the rating on CHNA's senior notes largely
reflects implicit support from Berkshire Hathaway, given that
CHNA's run-off subsidiaries remain under receivership (through a
letter of understanding with the Connecticut Insurance Department)
and lack the ability to pay dividends to service debt. However,
the debt will not be guaranteed by Berkshire Hathaway or any of
its subsidiaries.
The upgrade of CRNA acknowledges implicit support from the new
parent as well as the progress the company has made in running off
its liabilities in the past two years. Moody's believes the new
parent is committed to maintaining the solvency of CRNA and would
likely provide explicit support (for the benefit of policyholders)
should the need arise. Berkshire Hathaway remains one of the most
active acquirers and largest managers of long-tail, run-off
(re)insurance liabilities.
The last rating action on CHNA and its subsidiaries occurred on
October 17, 2006, when Moody's placed the ratings on review for
possible upgrade, following the announcement by their former
parent company that it would sell its North American operations to
NICO.
These ratings were upgraded with a stable outlook:
Converium Holdings (North America) Inc. -- $200 million 7.125%
unsecured senior notes due October 2023 to Baa3 from B2;
Converium Reinsurance (North America) Inc. -- insurance financial
strength rating to Baa3 from B2.
Converium Holdings (North America) Inc. is an intermediate holding
company of National Indemnity Company, a subsidiary of Berkshire
Hathaway Inc. CHNA and its run-off subsidiaries, including
Converium Reinsurance (North America) Inc., were acquired by NICO
on December 14, 2006.
COPANO ENERGY: Expands Commodity Hedging Portfolio
--------------------------------------------------
Copano Energy, L.L.C. disclosed additions to its commodity risk
management portfolio through the purchase of product-specific
natural gas liquids and West Texas Intermediate crude oil puts.
During the week of December 11, Copano Energy purchased puts for
propane, iso-butane, normal butane and WTI crude oil from four
investment grade counterparties in accordance with its risk
management policy. The puts will be settled monthly over a five-
year period beginning in January 2007 and ending December 2011.
These options were implemented as cash flow hedges to mitigate the
potential impact of decreases in natural gas liquids and
condensate prices on its Texas Gulf Coast Processing and Mid-
Continent Operations segments and to supplement the Company's
existing hedging portfolio.
Copano Energy paid approximately $23.6 million for these newly-
acquired put options.
"These additions to our option portfolio reflect Copano's ongoing
program to reduce exposure to commodity price volatility," said
John Eckel, Chairman and Chief Executive Officer of Copano Energy.
Headquartered in Houston, Texas, Copano Energy, LLC (NASDAQ: CPNO)
-- http://www.copanoenergy.com/-- is a midstream natural gas
company with natural gas gathering, intrastate pipeline and
natural gas processing assets in the Texas Gulf Coast region and
in Central and Eastern Oklahoma.
* * *
As reported in the Troubled Company Reporter on Oct. 17, 2006,
Moody's Investors Service affirmed its B1 corporate family rating
on Copano Energy, LLC. At the same time, the rating agency held
its B2 probability-of-default rating on the Company's 8.125%
Senior Unsecured Global Notes due 2016, and attached an LGD5
rating on these notes, suggesting noteholders will experience a
72% loss in the event of a default.
COPANO ENERGY: Sells 375,000 Additional Common Units
----------------------------------------------------
Copano Energy, LLC, disclosed that underwriters of its recent
equity offering have exercised their over-allotment option to
purchase an additional 375,000 common units. The sale is part of
the Company's equity offering that was priced on Nov. 30, 2006, at
the offering price of $59.11 per common unit. The total gross
proceeds from the offering will be approximately $170 million
dollars, including the proceeds from the sale of the over-
allotment units.
UBS Investment Bank and Morgan Stanley & Co., Incorporated are
joint book- running managers for the offering. The co-managing
underwriters participating in the offering are RBC Capital Markets
Corporation, Lehman Brothers Inc., Citigroup Global Markets Inc.,
Wachovia Capital Markets, LLC, Banc of America Securities LLC,
Deutsche Bank Securities Inc., J.P. Morgan Securities Inc.,
KeyBanc Capital Markets, a Division of McDonald Investments Inc.,
and Sanders Morris Harris Inc.
A copy of the final prospectus supplement and related base
prospectus, meeting the requirements of Section 10 of the
Securities Act of 1933, as amended, can be obtained from:
UBS Securities LLC
Attention: Prospectus Department
299 Park Avenue
New York, NY 10171
Telephone: 212-821-3000
Morgan Stanley
Attention: Prospectus Department
1585 Broadway
New York, NY 10036
Headquartered in Houston, Texas, Copano Energy, LLC (NASDAQ: CPNO)
-- http://www.copanoenergy.com/-- is a midstream natural gas
company with natural gas gathering, intrastate pipeline and
natural gas processing assets in the Texas Gulf Coast region and
in Central and Eastern Oklahoma.
* * *
As reported in the Troubled Company Reporter on Oct. 17, 2006,
Moody's Investors Service affirmed its B1 corporate family rating
on Copano Energy, LLC. At the same time, the rating agency held
its B2 probability-of-default rating on the Company's 8.125%
Senior Unsecured Global Notes due 2016, and attached an LGD5
rating on these notes, suggesting noteholders will experience a
72% loss in the event of a default.
CREDIT SUISSE: Fitch Holds Junk Rating on $8.4 Mil. Class M Certs.
------------------------------------------------------------------
Fitch Ratings upgrades Credit Suisse First Boston Mortgage
Securities Corp.'s commercial mortgage pass-through certificates,
series 2000-C1, as:
-- $29.1 million class E to 'AAA' from 'AA';
-- $13.9 million class F to 'AAA' from 'A+';
-- $30.6 million class G to 'A' from 'BBB';
-- $12.5 million class H to 'BBB+' from 'BBB-';
-- $9.8 million class J to 'BBB-' from 'BB'; and,
-- $11.1 million class K to 'BB-' from 'B+'.
In addition, Fitch affirms these classes:
-- $57.5 million class A-1 at 'AAA';
-- $677.5 million class A-2 at 'AAA';
-- Interest-only class A-X at 'AAA';
-- $50.1 million class B at 'AAA';
-- $44.5 million class C at 'AAA'
-- $15.3 million class D at 'AAA'
-- $9.7 million class L at 'B'; and,
-- $8.4 million class M remains at 'C/DR4';
Fitch does not rate the $3.3 million class N.
The upgrades reflect the increased credit enhancement levels from
loan payoffs and scheduled amortization as well as the defeasance
of additional sixteen loans since Fitch's last rating action. A
total of thirty-seven loans have defeased since issuance. As of
the December 2006 distribution date, the pool's aggregate
certificate balance has decreased 12.5% to $973.3 million from
$1.11 billion at issuance. Of the original 211 loans, 199 remain
outstanding in the pool.
There are six loans in special servicing, with Fitch expecting
losses on two loans. Fitch expected losses will deplete class N
and partially deplete class M.
The largest specially serviced asset is a REO. It is secured by a
305,523 square foot retail property located in Billings, Montana.
Special servicer is actively marketing the property. Losses are
expected upon liquidation of the asset.
The second largest specially serviced loan is secured by a
250-unit multifamily property in Dallas, Texas. The loan was
transferred to the special servicer due to monetary default and is
currently 30+ days delinquent. The special servicer is working
with the borrower to bring the loan current.
Fitch's Distressed Recovery ratings, introduced in April 2006
across all sectors of structured finance, are designed to estimate
recoveries on a forward-looking basis while taking into account
the time value of money.
CREDIT SUISSE: Two Classes Get S&P's Default Rating
---------------------------------------------------
Standard & Poor's Ratings Services lowered its 'CCC' ratings on
class I-B-3 from Credit Suisse First Boston Mortgage Securities
Corp.'s series 2002-9 and class B from CSFB ABS Trust's series
2001-HE25 to 'D'.
Additionally, the ratings on class M-2 from series 2001-HE25 and
class II-B from series 2002-9 remain on CreditWatch with negative
implications. Additionally, the remaining classes from these two
series were affirmed.
The rating on class I-B-3 from series 2002-9 was lowered to 'D'
from 'CCC' due to a $279,776 loss realized by class I-B-4 during
the November 2006 remittance period. The rating on class II-B
from series 2002-9 remains on CreditWatch with negative
implications. The class I-B-4, originally rated 'BB', was
supported by subordination. Recent losses depleted available
subordination to zero and eroded the principal balance of this
class by $279,776. Cumulative losses for loan group one total
$2.72 million, or 0.48% of the original pool balance, while
serious delinquencies (90-day, foreclosure, and REO) total $6.2
million, or 12.94% of this loan group's current pool balance.
Currently, 8.48%, or $47.9 million of the pool balance for loan
group one, remains outstanding.
The rating on class B from series 2001-HE25 was lowered to 'D'
from 'CCC' due to a $196,118 loss realized by class B during the
November 2006 remittance period. The rating on class M-2 remains
on CreditWatch with negative implications. Support for the B
class, which was originally rated 'BBB-', consisted of excess
spread and overcollateralization. Realized losses continually
outpaced excess interest, which ultimately depleted O/C to zero,
resulting in a $196,118 principal loss to class B. Cumulative
losses total $16.4 million, or 3.46% of the original pool balance,
and severely delinquent loans total $9.20 million, or 26.00% of
the current pool balance, which has paid down to 7.22%.
Standard & Poor's will continue to closely monitor the performance
of the classes on CreditWatch. If losses decline to a point at
which they no longer outpace excess interest, and the level of O/C
has not been further eroded, S&P will affirm the ratings and
remove them from CreditWatch. Conversely, if losses continue to
outpace excess interest, S&P will take further negative rating
actions.
The collateral for series 2002-9 consists of 30-year, fixed- or
adjustable-rate, first- or second-lien mortgage loans secured by
one- to four-family residential properties. The collateral for
series 2001-HE25 consists of subprime closed-end, fixed- and
adjustable-rate, first-lien mortgage loans with original terms to
maturity of not more than 30 years.
Ratings Lowered
CSFB ABS Trust 2001-HE25
Rating
------
Series Class To From
------ ----- -- ----
2001-HE25 B D CCC
Credit Suisse First Boston
Mortgage Securities Corp.
Rating
------
Series Class To From
------ ----- -- ----
2002-9 I-B-3 D CCC
Ratings Remaining on Creditwatch Negative
CSFB ABS Trust 2001-HE25
Series Class Rating
------ ----- ------
2001-HE25 M-2 A/Watch Neg
Credit Suisse First Boston
Mortgage Securities Corp.
Series Class Rating
------ ----- ------
2002-9 II-B B/Watch Neg
Ratings Affirmed
CSFB ABS Trust 2001-HE25
Series Class Rating
------ ----- ------
2001-HE25 A-1, A-IO AAA
2001-HE25 M-1 AAA
Credit Suisse First Boston
Mortgage Securities Corp.
Series Class Rating
------ ----- ------
2002-9 I-A-1, I-A-2, I-A-3, I-P AAA
2002-9 I-X AAA
2002-9 I-B-1 AA
2002-9 I-B-2 A
2002-9 II-M-1 AAA
2002-9 II-M-2 A
DAIMLERCHRYSLER: Praises U.S. ITC's Ruling to Revoke Steel Duties
-----------------------------------------------------------------
The six largest automobile companies -- DaimlerChrysler AG, Ford
Motor Corp., General Motors Corp., Honda, Nissan, and Toyota Motor
North America -- with manufacturing facilities in the United
States has applauded a decision by the U.S. International Trade
Commission to revoke anti-dumping and countervailing duty orders
on "corrosion resistant steel" from Australia, Canada, France, and
Japan. The ITC left orders in place on imports from Germany and
Korea.
"We are pleased that the ITC revoked most of the duties," said
Stephen E. Biegun, Vice President, International Governmental
Affairs, Ford Motor Company.
"All of these duties are outdated and hurt American manufacturing
competitiveness and U.S. jobs while needlessly helping a steel
industry that is now profitable and healthy."
"[The] decision is a major step forward in restoring needed
competition to the U.S. steel market," Toyota Motor North America
group vice president Josephine Cooper said.
"The ITC's decision supports both a strong steel industry and a
strong auto industry, and we look forward to working with our
colleagues in the steel industry to continue to strengthen
manufacturing in the United States."
The duties on corrosion resistant steel have been in place since
1993 on imports from six countries. As a result of [the] vote,
duties on imports from Australia, Canada, France, and Japan are
revoked, while duties on imports from Germany and Korea will be
retained until the next review in 2011.
The six auto manufacturers -- DaimlerChrysler, Ford, General
Motors, Honda, Nissan and Toyota -- joined together for the first
time as a group in a trade case to urge revocation of duties on
corrosion-resistant steel because of their serious concern
regarding access to, and availability of, competitively-priced
steel. During the hearing, the companies demonstrated that the
U.S. steel industry is now profitable, has healthy long-term
prospects, and no longer needs government protection.
About DaimlerChrysler
Based in Stuttgart, Germany, DaimlerChrysler AG --
http://www.daimlerchrysler.com/-- develops, manufactures,
distributes, and sells various automotive products, primarily
passenger cars, light trucks, and commercial vehicles worldwide.
It primarily operates in four segments: Mercedes Car Group,
Chrysler Group, Commercial Vehicles, and Financial Services.
The Chrysler Group segment offers cars and minivans, pick-up
trucks, sport utility vehicles, and vans under the Chrysler, Jeep,
and Dodge brand names. It also sells parts and accessories under
the MOPAR brand.
The Chrysler Group is facing a difficult market environment in the
United States with excess inventory, non-competitive legacy costs
for employees and retirees, continuing high fuel prices and a
stronger shift in demand toward smaller vehicles. At the same
time, key competitors have further increased margin and volume
pressures -- particularly on light trucks -- by making significant
price concessions. In addition, increased interest rates caused
higher sales & marketing expenses.
In order to improve the earnings situation of the Chrysler Group
as quickly and comprehensively, measures to increase sales and cut
costs in the short term are being examined at all stages of the
value chain, in addition to structural changes being reviewed as
well.
DEAN POTTER: Case Summary & Three Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Dean Gordon Potter
100 Volz Court
Alamo, CA 94507
Tel: (707) 745-4540
Bankruptcy Case No.: 06-42425
Chapter 11 Petition Date: December 12, 2006
Court: Northern District of California (Oakland)
Debtor's Counsel: Gerald A. Holmes, Esq.
Law Offices of Simpson and Gigounas
100 Pine Street, Suite 750
San Francisco, CA 94111
Tel: (415) 391-4900
Estimated Assets: $1 Million to $100 Million
Estimated Debts: $1 Million to $100 Million
Debtor's Three Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Internal Revenue Service Taxes $5,603,768
Bankruptcy Division
1301 Clay Street
Oakland, CA 94612
Franchise Tax Board Taxes $417,931
P.O. Box 1622
Sacramento, CA 95812-1673
Tel: (916) 845-5928
Bank of America Trade Debt $4,500
P.O. Box 60069
City of Industry, CA 91716-0069
DELPHI CORP: Seeks Court's Approval on Plan Support Agreements
--------------------------------------------------------------
Throughout the Chapter 11 cases, Delphi Corporation and its
debtor-affiliates have endeavored to reach a consensual resolution
regarding their various restructuring initiatives and, with that
goal in mind, have sought input from their statutory committees,
their unions, General Motors Corporation, and other key
stakeholders, John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate,
Meagher & Flom LLP, in Chicago, Illinois, relates. Through
framework discussions, the Debtors were able to initiate
multilateral negotiations with their statutory committees, GM, and
potential plan investors that have significantly enhanced the
prospect for a consensual restructuring.
"While the framework discussions have not necessarily resolved all
parties' concerns, they have produced a solid foundation for the
Debtors' potential emergence from these cases and a platform for
continued cooperation to deal with yet unresolved matters,"
Mr. Butler says. The products of the framework discussions are
two agreements:
(1) Equity Purchase and Commitment Agreement by and between
Delphi Corp.; A-D Acquisition Holdings, LLC, an affiliate
of Appaloosa Management L.P.; Harbinger Del-Auto
Investment Co. Ltd., an affiliate of Harbinger Capital
Partners Master Fund I, Ltd.; Dolce Investments LLC, an
affiliate of Cerberus Capital Management, L.P.; Merrill
Lynch, Pierce, Fenner & Smith Incorporated; and UBS
Securities LLC; and
(2) Plan Framework Support Agreement by and between Delphi,
Appaloosa, Harbinger, Cerberus, Merrill, UBS, and GM.
The Debtors seek permission from the U.S. Bankruptcy Court for the
Southern District of New York to enter into the Equity Purchase
and Commitment Agreement pursuant to Sections 105(a), 363(b),
503(b), and 507(a) of the Bankruptcy Code; and the Plan Framework
Support Agreement pursuant to Sections 105(a), 363(b), and 1125(e)
of the Bankruptcy Code.
The Framework Agreements are an initial and critical step for the
Debtors, and form a platform for the resolution of the Debtors'
transformation issues and the formulation of a consensual
reorganization plan, Mr. Butler avers.
"[The] agreements represent significant milestones in Delphi's
reorganization and another major step forward towards emergence
from our Chapter 11 reorganization in the U.S.," Delphi Chairman
and CEO Robert S. Miller said in a press statement.
"Delphi has long emphasized its commitment to pursuing a
resolution of the principal issues in our restructuring. The
agreements announced . . . demonstrate real progress toward that
objective," Mr. Miller adds. "The Plan Investors' conditional
commitment to invest up to $3.4 billion in the reorganized
company, together with their support of Delphi's transformation
plan and our reorganization plan framework, should provide
additional confidence to our customers, suppliers, employees and
financial stakeholders."
The Debtors believe that the Framework Agreements create an
environment in which they, GM, and the labor unions will be able
to resolve their labor issues consensually, while adequately
addressing GM's requirements for its participation in a
transformation plan.
Mr. Butler discloses that the Debtors have developed a consensual
GM business plan model that should produce $2,400,000,000 in
EBITDA following successful implementation of Delphi's
transformation plan, with an opportunity for further growth. The
Debtors believe that with that business plan, the recoveries
available to their stakeholders would be significantly higher
than if they pursued the litigation of their claims against GM.
Equity Purchase and Commitment Agreement
The EPCA sets forth the terms and conditions upon which the Plan
Investors agree to purchase:
(i) $220,500,000 of common stock and $1,200,000,000 of
preferred shares in reorganized Delphi; and
(ii) any unsubscribed shares of common stock in connection
with a rights offering to existing common stock holders.
The Rights Offering contemplated by the EPCA provides that Delphi
will distribute at no charge to each holder of common stock, as
of a record date to be determined, certain rights to acquire new
common stock in reorganized Delphi. The Rights will permit the
Eligible Holders to purchase their pro rata share of 56,700,000
shares of new common stock at $35 per share.
In the event that no shareholders subscribe to the Rights
Offering, the Plan Investors, through the Back Stop Commitment,
will purchase all of the Unsubscribed Shares for $1,984,000,000.
Altogether, through the Back Stop Commitment and the purchase of
the Direct Subscription Shares and the Preferred Shares, the Plan
Investors could invest up to $3,400,000,000 in the reorganized
Debtors.
In connection with the Plan Investors' commitment to purchase the
Preferred Shares, the Debtors will agree to pay the Plan
Investors a preferred commitment fee equal to $21,000,000. In
addition, to compensate the Plan Investors for their undertakings
in connection with their purchase of the Direct Subscription
Shares and the Backstop Commitment, the Debtors will pay the Plan
Investors a standby commitment fee equal to $55,125,000.
The Debtors will also reimburse or pay the Plan Investors'
reasonably incurred out-of-pocket costs and expenses incurred on
or prior to the effective date of a plan of reorganization or
related to the closing of a plan of reorganization. The parties
agree that Appaloosa's Transaction Expenses on or before May 17,
2006, will not exceed $5,000,000 and will be paid if and when the
effective date of any plan of reorganization of the Debtors
occurs and only if the plan results in the holders of Delphi
common stock receiving a recovery. The Transaction Expenses of
the other Plan Investors, incurred on or prior to December 1,
2006, will not exceed $13,000,000.
The EPCA may be terminated through mutual written consent of
Delphi, Appaloosa, and Cerberus. In addition, either Appaloosa
or Cerberus, upon written notice to Delphi, can terminate the
EPCA for a variety of reasons, including:
-- if the Investors are not satisfied with their due
diligence or with the Debtors' business plan;
-- if the effective date of the Debtors' plan of
reorganization has not occurred by June 30, 2007;
-- if the Debtors' disclosure statement is not filed by May 1,
2007;
-- if there are modifications to the agreed forms of certain
transaction documents.
The Debtors will pay the Plan Investors an alternate transaction
fee equal to $100,000,000 if the EPCA is terminated:
-- as a result of the Debtors' entry into an Alternate
Transaction;
-- due to a willful breach by the Debtors and the Debtors'
entry into or consummation of an Alternate Transaction
within a 24-month period after the termination; and
-- due to a change of recommendation by the Debtors and the
Debtors' entry into or consummation of an Alternate
Transaction within a 24-month period after the termination.
An Alternate Transaction refers to any plan, proposal, offer or
transaction that is inconsistent with the EPCA, the Preferred
Stock Term Sheet attached as an exhibit to the EPCA, the PSA, the
Debtors' settlement with GM, or the Debtors' plan of
reorganization, other than a liquidation under Chapter 7 of the
Bankruptcy Code.
Under the EPCA, Appaloosa and Cerberus each have the right to
approve, in their individual sole discretion, the GM Settlement
and revised labor agreements with each of the International
Union, United Automobile, Aerospace and Agricultural Implement
Workers of America; the International Union of Electronic,
Electrical, Salaried, Machine and Furniture Workers-
Communications Workers of America; and United Steel, Paper And
Forestry, Rubber, Manufacturing, Energy, Allied Industrial And
Service Workers International Union.
The EPCA also contains conditions related to, among other things,
the approval of certain documents related to the Debtors' plan
and disclosure statement, consents, and representations and
warranties.
A full-text copy of the EPCA is available for free at:
http://researcharchives.com/t/s?177e
Plan Framework Support Agreement
The PSA outlines the potential treatment of the Debtors'
stakeholders in the Debtors' anticipated plan of reorganization
and provides a framework for several other aspects of the Chapter
11 reorganization.
Specifically, the PSA provides that:
* All senior secured debt would be refinanced and paid in
full and all allowed administrative and priority claims
would be paid in full.
* Trade and other unsecured claims and unsecured funded debt
claims would be satisfied in full with $810,000,000 of
common stock in the reorganized Delphi, at a deemed value
of $45 per share, and the balance in cash. The framework
requires that the amount of allowed trade and unsecured
claims not exceed $1,700,000,000.
* In exchange for GM's financial contribution to Delphi's
transformation plan, and in satisfaction of GM's claims
against the company, GM will receive 7,000,000 out of a
total of 135,300,000 shares of common stock in the
reorganized Delphi, $2,630,000,000 in cash, and an
unconditional release of any alleged estate claims against
GM.
* In addition, as with other customers, certain GM claims
would flow-through the Chapter 11 cases and be satisfied
by reorganized Delphi in the ordinary course of business.
The plan framework anticipates that GM's financial
contribution to Delphi's transformation plan would
include:
-- items to be agreed to between Delphi and GM like
triggering of the GM benefit guarantees;
-- assumption by GM of certain postretirement health and
life insurance obligations for certain Delphi hourly
employees;
-- provision of flowback opportunities at certain GM
facilities for certain Delphi employees;
-- GM's payment of certain retirement incentives and
buyout costs under current or certain future attrition
programs for Delphi employees;
-- GM's payment of mutually negotiated buy-downs;
-- GM's payment of certain labor costs for Delphi
employees; a revenue plan governing certain other
aspects of the commercial relationship between Delphi
and GM; and
-- GM's support of the wind-down of certain Delphi
facilities and the sales of certain Delphi business
lines and sites.
While the actual value of the potential GM contribution
cannot be determined until a consensual resolution with GM
is completed, Delphi is aware that GM has publicly
estimated its potential exposure related to Delphi's
Chapter 11 filing.
* All subordinated debt claims would be allowed and
satisfied with $450,000,000 of common stock in the
reorganized Delphi, at a deemed value of $45 per share and
the balance in cash.
* Holders of existing equity securities in Delphi would
receive $135,000,000 of common stock in the reorganized
Delphi, at a deemed value of $45 per share, and rights to
purchase approximately 57,000,000 shares of common stock
in the reorganized Delphi for $2,000,000,000 at a deemed
exercise price of $35 per share.
The PSA is expressly conditioned on reaching consensual
agreements with Delphi's U.S. labor unions and GM. Delphi and GM
must reach a documented settlement agreement on the resolution of
the GM issues by January 31, 2007, Mr. Butler notes.
In a regulatory filing with the Securities and Exchange
Commission, GM said it expects that the obligations and costs
that it would assume to resolve the Designated Issues together
with its recoveries contemplated by the Proposed Plan would be
consistent with the $6,000,000,000 to $7,500,000,000 range of net
liabilities associated with Delphi's Chapter 11 proceedings that
was previously disclosed.
The PSA would terminate automatically upon termination of the
EPCA. In addition, the PSA can be terminated by any party in its
sole discretion at any time after April 1, 2007, with or without
cause upon two business days' notice.
A full-text copy of the PSA is available for free at:
http://researcharchives.com/t/s?177d
Emergence Corporate Governance Structure
The EPCA and the PSA also include certain corporate governance
provisions for reorganized Delphi. Under the terms of the
proposed plan, reorganized Delphi would be governed by a 12-
member board of directors, 10 of whom would be independent
directors and two of whom would be a new executive chairman and a
new chief executive officer and president.
Most notably as part of the new corporate governance structure,
the current Delphi Board, along with the Plan Investors, have
mutually recognized that current Delphi President and Chief
Operating Officer Rodney O'Neal will be appointed CEO and
president of reorganized Delphi no later than the effective date
of the Plan.
Delphi's Board also has decided to make Mr. O'Neal's CEO
appointment effective January 1, 2007, to allow for the most
optimum transition between Mr. Miller and Mr. O'Neal before the
company emerges from bankruptcy. Concurrent with Mr. O'Neal's
appointment, Mr. Miller will become Delphi's first Executive
Chair and will continue to oversee the company's Chapter 11
reorganization through emergence.
A five-member selection committee, consisting of John D. Opie,
the Delphi Board's lead independent director; a representative of
each of Delphi's two statutory committees; and a representative
of each of Delphi's two lead Plan Investors -- Cerberus and
Appaloosa -- will select the company's post-emergence executive
chair as well as four independent directors.
The two lead Plan Investors must both concur in the selection of
the Executive Chair, but do not vote on the four common
independent directors and will each appoint three Board members
comprising the remaining six members of the new Board of
Directors. The new Board of Directors must satisfy all
exchange/NASDAQ independence requirements. Executive
compensation for the reorganized company must be on market terms,
must be reasonably acceptable to the Plan Investors, and the
overall executive compensation plan design must be described in
the company's disclosure statement and incorporated into the
Plan.
Pension Funding
The PSA also reaffirms Delphi's earlier commitment to the
preservation of its salaried and hourly defined benefit pension
plans and will include an arrangement to fund approximately
$3,500,000,000 of its pension obligations. As much as
$2,000,000,000 of the $3,500,000,000 may be satisfied through GM
taking an assignment of Delphi's net pension obligations under
applicable federal law.
In exchange, GM will receive a note in the amount of that
assignment on agreed market terms. The note will be paid in full
within 10 days after the effective date of a reorganization plan.
"With this funding, Delphi will be able to preserve its pension
plans and become fully funded to the extent required by ERISA,"
Mr. Miller said in the press statement. "While other major
Chapter 11 labor transformation cases have regrettably had to
terminate their pension plans as part of their restructuring,
Delphi has expended a great deal of effort and energy to save our
employees' pensions."
Hearing on Jan. 5
The Court will convene a hearing to consider approval of the plan
investment and the plan support agreements at 10:00 a.m. EST on
January 5, 2007. Objections, if any, to the agreements must be
filed with the Bankruptcy Court by 4:00 p.m. EST on January 2,
2007.
Deal With Delphi Feasible, GM Says
According to Fritz Henderson, GM's chief financial officer, it is
possible, albeit difficult, for Delphi and GM to determine the
extent of GM's liabilities to Delphi's pension fund and former-GM
employee benefits in 2007, the Wall Street Journal reports.
Mr. Henderson told Wall Street Journal that GM's talks with
Delphi are making progress but there are still many issues that
remain unresolved.
UAW's Statement
In a letter addressed to all GM and Delphi Local Union presidents
and chairpersons, dated December 18, 2006, UAW President Ron
Gettelfinger and UAW Vice President Cal Rapson provides updates
on the union's talks with Delphi:
"As you may be aware, Delphi announced today it will file
motions with the Bankruptcy Court seeking approval of new
investment and financing arrangements for the company.
These proposed arrangements properly recognize that the
company still requires a consensual resolution of
outstanding labor issues in order to complete its
reorganization plan.
Our union's position all along has been that matters
relating to the wages, working conditions, health care,
pensions and other terms of employment of union members at
Delphi should be settled at the negotiating table by consent
of the parties concerned, rather than by an order of the
Bankruptcy Court.
Today's announcement specifies that billions of new
investment in the company is contingent upon an agreement
with the UAW and other unions representing Delphi workers.
This reinforces a simple fact that we have made clear from
the beginning of this process: Our membership will be heard.
With your strong support, we will together continue to
advocate for the best interests of Delphi workers, families,
and communities.
Committees Object to Debtors' Request
The Official Committee of Unsecured Creditors and the Official
Committee of Equity Security Holders raises issues and concerns
with the Debtors' request.
Specifically, the Creditors Committee objects to:
(a) the payment of the Commitment Fees to the Proposed
Investors when they have nothing at risk;
(b) the payment of an alternate transaction fee to the
Proposed Investors in certain circumstances;
(c) certain terms of the Framework Agreements, including the
extraordinarily broad corporate governance powers to be
granted to the Plan Investors, in their capacity as
holders of a series of convertible preferred stock;
(d) the lack of the Committee's input and consent rights with
respect to any of the transaction documents contemplated
by the Framework Agreements; and
(e) the Debtors' indemnification obligations to the Plan
Investors.
The Equity Committee, on the other hand, objects to the economics
and substance of the Framework Agreements and their underlying
documents including the Rights Offering; the Commitment and
Alternative Transaction Fees; termination provisions of both
Agreements; the terms of the Preferred Stock; and governance
provisions.
Troy, Mich.-based Delphi Corporation -- http://www.delphi.com/--
is the single largest global supplier of vehicle electronics,
transportation components, integrated systems and modules, and
other electronic technology. The Company's technology and
products are present in more than 75 million vehicles on the road
worldwide. The Company filed for chapter 11 protection on Oct. 8,
2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler
Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell
A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins
LLP, represents the Official Committee of Unsecured Creditors.
As of Aug. 31, 2005, the Debtors' balance sheet showed
$17,098,734,530 in total assets and $22,166,280,476 in total
debts. (Delphi Bankruptcy News, Issue No. 51; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
DELPHI CORP: Court Permits Stafford Facility Closure
----------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
has authorized Delphi Medical Systems Texas Corporation to:
(a) enter into an amendment to a contract manufacturing
agreement with Applera Corporation; and
(b) close its facility at the city of Stafford, in Houston,
Texas.
Pursuant to the Contract, Delphi Medical Texas used the operations
at the Houston Facility to manufacture and sell certain medical,
analytical, and testing devices to Applera. In turn, Applera:
a) purchased the Products exclusively from Delphi Medical
Texas on a three-year basis;
b) assigned to Delphi its interest in the lease for the
Houston Facility; and
c) transitioned its work force at the Houston Facility to
Delphi Medical Texas.
John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher &
Flom LLP, in Chicago, Illinois, informed the Court that
manufacturing the products for Applera were unprofitable at the
agreed prices and the alternative uses for the Facility's excess
capacity did not develop as planned. As a result, Delphi Medical
Texas, whose sole function was to perform pursuant to the
Agreement, suffered annual losses aggregating $2,500,000.
According to Mr. Butler, losses might increase given that the
current term of the Agreement extends to June 6, 2008.
Accordingly, Delphi Medical Texas has determined that it is
necessary to seek an earlier termination of the Agreement and
wind down operations at the Facility.
To facilitate the closure of the Facility, Delphi Medical Texas
proposes to enter into an amendment to the Agreement to continue
manufacturing and selling a set quantity of products to Applera
for a finite period of time.
Among other things, the Amendment provides:
* price increases that will reduce losses by $1,300,000
through 2007;
* that Applera will purchase remaining inventory upon the
closure of the Houston Facility, thus saving Delphi Medical
Texas the necessity of liquidating $5,000,000 worth of
otherwise excess inventory; and
* that Applera will pay Delphi Medical Texas $547,000 as a
success fee for closing the Houston Facility and relocating
manufacturing operations. About $250,000 of that amount
will be allocated to defray the expense of employee
severances and $297,000 will be allocated as retroactive
price increases.
A full-text copy of the Applera Contract Amendment is available
for free at http://researcharchives.com/t/s?150d
Delphi Medical Texas expects that the wind-down period will be
completed and the Houston Facility will be closed in the first
quarter of 2007.
Troy, Mich.-based Delphi Corporation -- http://www.delphi.com/--
is the single largest global supplier of vehicle electronics,
transportation components, integrated systems and modules, and
other electronic technology. The Company's technology and
products are present in more than 75 million vehicles on the road
worldwide. The Company filed for chapter 11 protection on Oct. 8,
2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler
Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell
A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins
LLP, represents the Official Committee of Unsecured Creditors.
As of Aug. 31, 2005, the Debtors' balance sheet showed
$17,098,734,530 in total assets and $22,166,280,476 in total
debts. (Delphi Bankruptcy News, Issue No. 51; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
DELTA AIR: Court Approves New Gate Gourmet Catering Agreement
-------------------------------------------------------------
Delta Air Lines, Inc., and its debtor-affiliates obtained
authority from the U.S. Bankruptcy Court for the Southern District
of New York to:
(a) pursuant to Section 365(a) of the Bankruptcy Code and Rule
6006 of the Federal Rules of Bankruptcy Procedure:
* reject an Catering Agreement dated January 1, 2002,
including all amendments and addenda, among Delta Air
Lines, Inc., Gate Gourmet Switzerland GmbH --
successor-in-interest to Gate Gourmet International AG
-- and Gate Gourmet, Inc.; and
* assume a Sublease Agreement dated April 26, 2000,
between Delta and Gate Gourmet, Inc., as amended by
the Third Amendment to Sublease Agreement dated
December 4, 2006; and
(b) pursuant to Section 363(b)(1) and Rule 9019, to enter
into:
* a new Catering Agreement between Delta and Gate
Gourmet, Inc.;
* the amendment to a Services Agreement between Delta
and Gate Safe, Inc.; and
* a Settlement Agreement dated December 6, 2006 among
Delta, and these settlement parties and their
respective affiliates:
-- Gate Gourmet, Inc.,
-- Gate Gourmet Switzerland GmbH;
-- e-gatematrix, llc,
-- FiveOceans Inflight, Ltd., and
-- Gate Safe.
Pursuant to the Existing Catering Agreement, Gate Gourmet
provides catered meals and beverages and performs a number of
related services for certain of Delta's domestic and
international flights. Gate Gourmet also develops and recommends
meals and menus for Delta, stores Delta's catering equipment and
performs other services as may be agreed by Delta and Gate
Gourmet. Gate Gourmet is required to provide the Catering
Services at certain airports -- the Locations -- from which Delta
offers catered flights until the Existing Catering Agreement
expires on Dec. 31, 2008.
Delta relates that it has been evaluating the Catering Services
and considering various alternatives to the Gate Gourmet
entities. Throughout the process, Delta and the Gate Gourmet
entities remained in active discussions to design a catering
program that would meet Delta's needs now and after its emergence
from Chapter 11.
Subsequently, Delta and Gate Gourmet Entities have agreed that
Delta will reject the Existing Catering Agreement and that Delta
and Gate Gourmet will enter into a New Catering Agreement,
pursuant to which:
(a) Gate Gourmet will continue to provide the Catering
Services at the Locations and for the periods of service
identified in the New Catering Agreement;
(b) beginning on January 1, 2007, Gate Gourmet will provide
new pricing that is materially lower than the existing
pricing and is delivering estimated savings for Delta in
excess of $100,000,000 over the life of the New Catering
Agreement; and
(c) Gate Gourmet will stagger the periods of service for the
covered Locations over the term of the New Catering
Agreement, enhancing Delta's strategic sourcing
flexibility.
Under the Existing Catering Agreement, Delta would be required to
pay a $25,000,000 fee to Gate Gourmet if Delta were to terminate
the Agreement before 2020. The termination fee was structured to
decrease over the period from the effective date of the Agreement
through 2020, with the decreases heavily weighted toward the end
of the period.
However, Marshall S. Huebner, Esq., at Davis Polk & Wardwell, in
New York, explains that under the New Catering Agreement, the
decreases in the termination fee have been significantly
accelerated. The termination fee will now decrease by an equal
amount each year over the term of the New Catering Agreement, to
zero by the end of the term. The change provides the Debtors
with an additional degree of sourcing flexibility.
In connection with Delta's entry into the New Catering Agreement,
Delta will also assume the Sublease, as amended to allow Gate
Gourmet to continue to use certain kitchen spaces in Atlanta to
provide Catering Services.
Under the Settlement Agreement, the Settlement Group waives any
prepetition claims arising out of the Sublease, including any
right to cure or adequate assurance under Section 365(b) of the
Bankruptcy Code.
Gate Safe's Catering Security Services
Pursuant to a Services Agreement dated November 1, 2002, Gate
Safe provides certain catering security services in accordance
with Delta's specified procedures and in accordance with federal
law, including the Aviation and Transportation Security Act of
2001 and the regulations and Security Directives of the
Transportation Security Administration.
The Existing Catering Security Agreement had an original term of
three years, from November 1, 2002, to October 31, 2005, with
either party having the right to terminate some or all of the
covered catering locations on 90-days notice.
After October 31, 2005, however, Delta and Gate Safe continued to
perform under the Existing Catering Security Agreement on a
month-to-month basis.
In February 2006, Delta and Gate Safe amended, but Delta did not
assume, the Existing Catering Security Agreement to, among other
things, implement certain price discounts, keep the Existing
Catering Security Agreement in effect on a month-to-month basis
and provide that either party could terminate the Existing
Catering Security Agreement on 30-days notice.
As part of the evaluation process of its catering program, the
Debtors also considered whether to contract with alternative
security providers. However, after examining the various
alternatives and the Debtors strategic needs, the Debtors decided
to continue to employ Gate Safe.
After arm's-length discussions, Delta and Gate Safe have agreed
to enter into a New Catering Security Agreement on substantially
the same terms as the Existing Catering Security Agreement with
these changes:
(a) except in San Diego, Gate Safe will provide catering
security services at the same Locations and for the same
periods of service applicable to each Location provided in
the New Catering Agreement;
(b) pricing will be subject to escalation for inflation on the
same terms as that provided in the New Catering Agreement;
(c) Delta will have the option to terminate any Location at
any time if Gate Gourmet ceases to provide Catering
Services at that Location; and
(d) after December 31, 2009, Delta will have the option to
terminate all Locations on 90-days' notice.
The New Catering Security Agreement will supersede the Existing
Catering Security Agreement.
The Existing Catering Security Agreement will terminate with no
claims or liabilities owed by either party under the Existing
Catering Security Agreement.
The Settlement Agreement
As a result of the Debtors proposed rejection of the Existing
Catering Agreement, the Gate Gourmet Entities said they were
prepared to assert a rejection damages claim against Delta of
over $400,000,000. In addition, the Gate Gourmet entities and
the other members of the Settlement Group asserted claims for
what they alleged were defaults under the Existing Catering
Agreement and various other agreements with the Debtors.
Mr. Huebner relates, although Delta was prepared to contest the
size and validity of certain of Gate Gourmet entities' and the
Settlement Group's alleged claims, Delta was also obliged to take
into account the potential costs of litigation and the risk of an
adverse result, particularly given the magnitude of the Gate
Gourmet entities' and the Settlement Group's alleged claims and
the potential harm to the Debtors' estates and its creditors.
In the interests of avoiding the costs and risks associated with
the potential claims the Settlement Group and the Debtors have
against each other, and as part of a comprehensive settlement,
the Debtors and the Settlement Group have agreed to mutually
release each other from all those claims, except to the extent
expressly provided in the Settlement Agreement.
Pursuant to the Settlement Agreement, Gate Gourmet has agreed to
accept an $80,000,000 general unsecured nonpriority claim in full
satisfaction of any rejection damages claim that Gate Gourmet may
have arising from the rejection of the Existing Catering
Agreement.
In consideration of a cash payment of $8,000,000 for various
postpetition claims and liabilities and other terms in the
Settlement Agreement agreed to by Delta as part of their
comprehensive settlement with the Settlement Group, the
Settlement Agreement provides that the Settlement Group and Delta
waive all other claims arising under the Existing Catering
Agreement, the Existing Catering Security Agreement, the
Sublease, and other related agreements.
About Delta Air
Headquartered in Atlanta, Georgia, Delta Air Lines
-- 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. 53; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
DELTA AIR: Court Approves SSI as Committee's Search Consultant
--------------------------------------------------------------
The Official Committee of Unsecured Creditors of Delta Air Lines,
Inc., and its debtor-affiliates obtained authority from the U.S.
Bankruptcy Court for the Southern District of New York to retain
SSI (U.S.), Inc., doing business as Spencer Stuart, as board
search consultant, effective as of November 17, 2006, pursuant to
a letter of engagement dated November 17.
Jordan S. Weltman, representing Boeing Capital Corporation as the
Creditors Committee's chair, notes that since the Petition Date,
the Debtors with the active assistance of the Creditors
Committee, have worked diligently to restructure their operations
and facilitate its exit from Chapter 11 as expediently as
possible.
According to Mr. Weltman, Delta will continue to face challenges
after emerging from Chapter 11. The airline industry continues
to undergo significant macroeconomic changes, he adds. "[The]
Reorganized Delta will need the guidance of a highly qualified
and effective board of directors to navigate the challenges and
set a proper course for future success."
The Creditors Committee determined that Spencer Stuart is best
able to perform the board search services needed due to its broad
experience in both the aviation industry and Chapter 11 cases.
Spencer Stuart conducted over 400 board searches worldwide in
2005 and has placed approximately 1,700 directors over the past
five years. Spencer Stuart has almost 20 years of experience in
helping companies identify and recruit outside directors and has
the qualifications and experience necessary to perform its scope
of services in which it will be retained.
As Board Search Consultant, Spencer Stuart will assist the
Creditors Committee in identifying, interviewing and assessing
proposed qualified candidates for the Reorganized Delta's board
of directors.
Spencer Stuart will be paid an initial project fee of $200,000
upon Court approval of the Creditors Committee's retention
application.
Spencer Stuart will also be paid a retainer fee of $100,000 for
each director that Spencer Stuart helps recruit to the Board of
Reorganized Delta.
The Initial Fee will be credited against the Retainer Fees for
the first two director placements. No Retainer Fee will be
charged with respect to any of Delta's existing board member or
employee who serves on the Reorganized Delta's Board.
Spencer Stuart will be entitled to reimbursement of all its out-
of-pocket expenses for consultants and candidates' interview and
travel-related expenses.
Spencer Stuart has not received compensation from the Debtors or
any party-in-interest in connection with the Debtors' Chapter 11
cases.
Julie Daum, a consultant and practice leader at Spencer Stuart,
attests that Spencer Stuart is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
Headquartered in Atlanta, Georgia, Delta Air Lines
-- 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. 53; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
DELTA AIR: Wants to Amend and Assume SAP Software License Pact
--------------------------------------------------------------
Delta Air Lines, Inc., and its debtor-affiliates seek the U.S.
Bankruptcy Court for the Southern District of New York's authority
to assume the Software License Agreement with SAP America, Inc.,
as amended.
Delta Air and SAP America were parties to a Software End-User
License Agreement dated September 24, 1999, pursuant to which the
Debtors licensed from SAP a variety of software applications for
use throughout the their logistics, supply and accounting systems.
Among other things, the Debtors use SAP software for advanced
planning and optimization work relating to their supply network,
for business-to-business supply procurement and for spare parts
management.
The Debtors pay a single yearly maintenance fee for the
continuing use of the software applications.
Before December 11, 2006, the annual maintenance fee was
$3,740,000 per year, subject to a 2% maintenance increase in 2007
and a 4% increase in 2008 for extended maintenance.
On December 11, 2006, the Debtors and SAP agreed that the yearly
maintenance fee that the Debtors will pay for the use of SAP
software applications is reduced from $3,740,000 to $2,732,023.
However, the fee will remain subject to the same scheduled
increases of 2% in 2007 and 4% in 2008.
After 2009, SAP is entitled to adjust the maintenance fee to
conform to prevailing market rates.
As part of the comprehensive settlement, SAP waives any claim
against the Debtors for prepetition defaults under the Software
Agreement, a Professional Services Agreement dated September 30,
1999 between Delta and SAP, and various Statements of Work
issued, excluding claims for unauthorized use or disclosure of
SAP proprietary information.
The Debtors owe SAP approximately $1,925 in consulting fees for
prepetition services performed by SAP under the Waived
Agreements. SAP has filed Claim Nos. 485, 489 and 1763.
Timothy E. Graulich, Esq., at Davis Polk & Wardwell, in New York,
contends that if the Debtors' assumption of the Software
Agreement is authorized by the Court, each Claim will be deemed
withdrawn with prejudice.
Headquartered in Atlanta, Georgia, Delta Air Lines
-- 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. 53; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
DEVELOPERS DIVERSIFIED: Declares Class H and Class I Dividends
--------------------------------------------------------------
Developers Diversified has declared its fourth quarter 2006
Preferred Class H and Class I stock dividends.
-- Fourth Quarter Preferred Class H Stock Dividend: $0.460938
per depository share
Each Class H Depositary Share is equal to one twentieth of a share
of Developers Diversified's 7.375% Class H Cumulative Redeemable
Preferred Stock. This dividend covers the period beginning on
Oct. 15, 2006 and ending on Jan. 14, 2007. The declared Preferred
Class H Dividend is payable Jan. 16, 2007 to shareholders of
record at the close of business on Dec. 29, 2006.
-- Fourth Quarter Preferred Class I Stock Dividend: $0.46875
per depository share
Each Class I Depositary Share is equal to one twentieth of a share
of Developers Diversified's 7.5% Class I Cumulative Redeemable
Preferred Stock. This dividend covers the period beginning on
Oct. 15, 2006 and ending on Jan. 14, 2007. The declared Preferred
Class I Dividend is payable Jan. 16, 2007 to shareholders of
record at the close of business on Dec. 29, 2006.
Based in Beachwood, Ohio, Developers Diversified Realty
Corporation -- http://www.ddr.com/-- currently owns and manages
over 500 retail operating and development properties in 44 states,
plus Puerto Rico and Brazil, totaling 118 million square feet.
The Company is a self-administered and self-managed real estate
investment trust operating as a fully integrated real estate
company which acquires, develops and leases shopping centers.
* * *
As reported in the Troubled Company Reporter on Oct. 31, 2006,
Fitch Ratings affirmed Developers Diversified Realty Corporation's
BB+ preferred stock rating.
DURA AUTOMOTIVE: Wants Until January 31 to File Schedules
---------------------------------------------------------
DURA Automotive Systems, Inc. and its debtor-affiliates, pursuant
to Rule 1007(c) of the Federal Rules of Bankruptcy Procedure, and
Rule 1007-1 of the Local Rules of Bankruptcy Practice and
Procedure of the U.S. Bankruptcy Court for the District of
Delaware, ask for the further extension to Jan. 31, 2007, the
deadline to file their:
-- schedules of assets and liabilities,
-- schedules of current income and expenditures,
-- schedules of executory contracts and unexpired leases, and
-- statements of financial affairs.
Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, tells Judge Carey that, because of the
decentralized nature of their businesses, the Debtors' progress in
collecting, reviewing, and assembling information for the
Schedules and Statements have been slow.
In addition, Mr. Collins relates, the Debtors have engaged a new
financial advisor, AlixPartners, LLP. AlixPartners has assessed
the information that has been gathered by the Debtors and
determined that they will require additional time to complete the
Schedules and Statements.
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. 7; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
DURA AUTOMOTIVE: Wants to File Lear Settlement Pact Under Seal
--------------------------------------------------------------
DURA Automotive Systems, Inc. and its debtor-affiliates seek
authority from the U.S. Bankruptcy Court for the District of
Delaware to file, under seal, the Settlement Agreement and the
terms thereof, and the Motion of Lear Corporation.
Pursuant to various documents and purchase orders, Dura
Automotive Systems, Inc., supplied component parts that Lear
Corporation used to fulfill manufacturing agreements with General
Motors, Ford, and other original equipment manufacturers, relates
Albert Togut, Esq., at Togut, Segal & Segal LLP, in New York.
Several years before the Debtors filed for chapter 11 protection,
Lear brought an action in State Court against Dura to recover
damages for claims asserted against Lear by GM and Ford. Lear
sought (i) damages for alleged defects in goods that Dura sold to
Lear, which Lear in turn used in products that it provided to GM
and Ford, and (ii) injunctive relief to require Dura to continue
shipping to Lear despite Lear's recoupment from amounts due to
Dura. The State Court granted Lear's injunctive relief and
required Dura to ship goods without payment from Lear.
In the months prior to the Petition Date, the Debtors and Lear
reached a comprehensive settlement of the Lear Claims and the Lear
Action and the modification of the Lear Contracts.
Pursuant to Sections 105 and 365 of the Bankruptcy Code and Rule
9019 of the Federal Rules of Bankruptcy Procedure, the Debtors
seek the Court's authority to assume the Settlement Agreement and
the Purchase Orders.
As a condition to assumption, Lear has required that Dura keep the
terms of the Settlement Agreement confidential, particularly
because certain terms therein are commercially sensitive,
Mr. Togut tells the Court. This confidentiality requirement is
memorialized in the Settlement Agreement.
Mr. Togut explains that the automotive industry is highly
competitive, and many of the parties-in-interest in the Debtors'
Chapter 11 cases are direct competitors or customers of the
Debtors and Lear. If the information contained in the Settlement
Agreement is disclosed pursuant to a public filing, the Debtors'
competitors and customers would gain access to specific
confidential and commercial information related to the Debtors'
business relationship with Lear that could be detrimental to the
Debtors' reorganization efforts, Mr. Togut avers.
Notwithstanding their request, the Debtors have provided copies of
the Settlement Agreement and the Lear Motion to Lear, the Official
Committee of Unsecured Creditors, and the Office of the United
States Trustee.
In Dura's Form 10-Q filing with the Securities and Exchange
Commission, Keith R. Marchiando, Dura's vice president and chief
financial officer, said that subsequent to October 1, 2006, Dura
settled the warranty matter, along with a previously outstanding
warranty matter, to Lear for approximately $9,000,000.
"We had previously recorded reserves for our estimated exposure of
the known outstanding matter. However, we recorded an additional
charge of [$5,400,000] related to the final settlement of both
matters . . ." Mr. Marchiando said.
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. 7; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
EASTMAN HILL: Fitch Holds Junk Rating on $53.05 Million Notes
-------------------------------------------------------------
Fitch has affirmed all notes issued by Eastman Hill Funding I,
Ltd. These affirmations are the result of Fitch's review process
and are effective immediately:
-- $322,506,937 class A1-FL notes 'AA';
-- $6,298,964 class A1-FX notes 'AA';
-- $328,805,900 class A-2 notes 'AA';
-- $10,000,000 class A-3 notes 'BBB';
-- $28,053,787 class B-1 notes remain at 'CCC/DR4';
-- $25,000,000 combination notes remain at 'CC/DR6'.
Eastman Hill, a collateralized debt obligation that closed on July
2, 2001 and is managed by TCW Investment Management Company, is
composed primarily of corporate debt obligations and residential
mortgage backed securities. Included in this review, Fitch
discussed the current state of the portfolio with the asset
manager. Eastman Hill is currently out of its reinvestment
period. In addition, Fitch conducted cash flow modeling utilizing
various default timing and interest rate scenarios to measure the
breakeven default rates going forward relative to the minimum
cumulative default rates required for the rated liabilities
The affirmations reflect stable performance since last review. The
weighted average rating factor has decreased to 19 ('BB-/B+') as
of the most recent trustee report dated Oct. 31, 2006 from 20
('BB-/B+') as of Jan. 25, 2006. The overcollateralization (OC)
ratios have increased since last review, but the class B-1 OC
ratio continues to have negative cushion. Interest coverage
ratios have also improved but are still experiencing negative
cushion. As of the most recent trustee report available defaulted
assets represented approximately 2.5% of the portfolio. Assets
rated 'CCC' or lower represented approximately 8.4% of the
portfolio, excluding defaults.
The ratings of the class A1-FL, A1-FX and A-3 notes address the
likelihood that investors will receive full and timely payments of
interest, as per the governing documents, as well as the stated
balance of principal by the legal final maturity date. The rating
of the class A-2 notes addresses the likelihood that investors
will receive full and timely payments of interest on scheduled
interest payment dates. This rating does not address any
distribution of principal. The rating of the class B-1 notes
addresses the likelihood that investors will receive ultimate and
compensating interest payments, as per the governing documents, as
well as the stated balance of principal by the legal final
maturity date. The ratings of the combination notes and
subordinated preference shares address the likelihood that
investors will receive their stated balance of principal by the
legal final maturity date.
Fitch will continue to monitor and review this transaction for
future rating adjustments.
ENHERENT CORP: Sept. 30 Balance Sheet Upside Down by $1.18 Mil.
---------------------------------------------------------------
enherent Corp. filed its third quarter financial statements for
the three-month period ended Sept. 30, 2006.
The company reported a net income of $52,840 on $7,414,443 of
total revenues for the quarterly period ended Sept. 30, 2006,
compared to a net income of $80,595 on $7,627,010 of total
revenues for the same period in 2005.
At Sept. 30, 2006, the company's balance sheet showed $10,394,513
in total assets, $11,578,443 in total liabilities, and $1,183,930
in stockholders' deficit. At Dec. 31, 2005, the company's balance
sheet showed a stockholders' deficit of $911,686.
The company's September 30 balance sheet also showed strained
liquidity with $5,377,818 in total current assets available to pay
$8,096,569 in total current liabilities.
The company's working capital deficiency was $2.7 million as of
Sept. 30, 2006. The working capital deficiency arose primarily
because the outstanding balance, $3.6 million at Sept. 30, 2006
due under the revolving credit agreement with Ableco which expires
in March 2008, is required to be classified as a current liability
under generally accepted accounting principles and in accordance
with the provisions of Emerging Issues Task Force Issue 95-22.
A full-text copy of the company's financial statements for the
quarterly period ended Sept. 30, 2006, is available for free at
http://researcharchives.com/t/s?1785
About enherent Corp.
Based in New York City, enherent Corp. (ENHT.OB) --
http://www.enherent.com/-- provides information technology
services in the United States. Its services include IT
consultative resource and staffing, systems integration,
application development, and network and security. The company
also distributes computer hardware and software products. The
company primarily serves insurance, financial services, banking,
retail distribution, apparel, home healthcare, and pharmaceutical
industries.
EUROFRESH INC: Poor Performance Cues Moody's to Junk Ratings
------------------------------------------------------------
Moody's Investors Service downgraded the rating on Eurofresh
Inc.'s senior unsecured notes to Caa1 from B3, its senior
subordinated notes to Ca from Caa2, and its corporate family
rating to Caa1 from B3. The outlook on all ratings is negative.
The downgrade reflects Eurofresh's continuing poor operating
performance, Moody's concerns about the company's liquidity, and
the increased possibility that Eurofresh could have difficulty
meeting its debt service requirements as scheduled. Eurofresh's
operating performance has been significantly impacted during 2006
by increased energy and transportation costs, as well as by
significant labor shortages during 2006's third quarter at the
company's Arizona production facilities which caused significant
operating inefficiencies. Eurofresh's weak operating performance
follows a December 2005 recapitalization in which the company
increased its debt and leverage in order to pay a $122 million
dividend to its owners.
The Caa1 rating reflects the company's high leverage, weak equity
base, and very tight liquidity position, the geographic
concentration of its production, and its small size and limited
financial resources relative to larger, more diversified fresh
produce producers and distributors.
The negative outlook on Eurofresh's ratings reflect the
possibility that the company's liquidity and financial flexibility
could tighten further creating additional downward rating
pressure. This could occur if operating performance does not
improve sufficiently to build greater cushion in its financial
covenants, or if Eurofresh exhausts remaining availability under
its $40 million bank revolving credit facility.
Securities downgraded with a negative outlook are:
* $170 million senior unsecured notes due 2013 to Caa1
(LGD2/29%) from B3 (LGD4/53%)
* $44.17 million senior subordinated discount notes to Ca
(LGD4/69%) from Caa2 (LGD6/92%)
Corporate Family Rating to Caa1 from B3
Probability of default rating to Caa3 from B3
Based in Willcox, Arizona, Eurofresh is a leading producer of
greenhouse grown tomatoes. LTM Sept. 30, 2006, sales were
approximately $138 million.
FEDERAL-MOGUL: Judge Fitzgerald Denies Plan B Settlement Approval
-----------------------------------------------------------------
The Honorable Judith K. Fitzgerald of the U.S. Bankruptcy Court
for the District of Delaware clarified that she did not approve
the Plan B Settlement between Federal-Mogul Corporation, its
debtor affiliates, the Asbestos Claimants Committee and the Future
Claimants Representative, and that she has no idea that an order
approving the Settlement has been issued and docketed. Judge
Fitzgerald said it was a mistake.
James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones
& Weintraub LLP, in Wilmington, Delaware, advised Judge Fitzgerald
that the Clerk of Court has taken out the Order from the Court's
docket.
Judge Fitzgerald said the Clerk of Court "should not have
destroyed the old order that wasn't proper. She should have just
entered an order that vacates it as having been incorrectly
entered and then re-docketed the new one so that we all have some
recollection of what took place."
"But I don't know how I can undo this now because I wasn't made
aware of it," Judge Fitzgerald added.
The Court will consider approval of the Plan B Settlement at the
hearing to consider confirmation of an amended Plan of
Reorganization to be filed by the Debtors. James F. Conlan, Esq.,
at Sidley Austin, LLP, in Chicago, Illinois, the Debtors' lead
bankruptcy counsel, has advised the Court that a revised Plan will
be delivered.
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. 118; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
FEDERAL-MOGUL: Trustee Appoints Trizec to Asbestos Claimants Panel
------------------------------------------------------------------
Kelly Beaudin Stapleton, United States Trustee for Region 3,
appoints Trizec Properties, Inc., to serve on the Official
Committee of Asbestos Property Damage Claimants in Federal-Mogul
Corporation, its debtor affiliates' Chapter 11 cases.
According to Andrew R. Vara, Assistant United States Trustee, two
members voluntarily resigned from the Asbestos PD Committee:
(a) The Hill School, effective October 30, 2006; and
(b) Richard Blythe, effective December 6, 2006.
Moxie Real Estate is also out of the Asbestos PD Committee because
it is no longer eligible to serve on the committee. Moxie's
asbestos property damage claim was expunged, and it is no longer a
creditor by virtue of a Court order dated June 13, 2006, which
sustained the Debtors' objection to asbestos property damage
claims that failed to comply with the Court's Bar Date Order.
The Asbestos PD Committee is now composed of:
(1) Anderson Memorial Hospital
c/o Speights & Runyan
Attn: Daniel A. Speights
P. O. Box 685
200 Jackson Avenue, East
Hampton, South Carolina 29924
Tel: 803-943-4444
Fax: 803-943-4599
(2) Jacksonville College
c/o Dies & Hile, LLP
Attn: Martin W. Dies
1009 West Green Avenue
Orange, Texas 77630
Tel: 409-883-4394
Fax: 409-883-4814
(3) Trizec Properties, Inc.
c/o Philip J. Goodman
280 N. Old Woodward, Ste 407
Birmingham, Michigan 48009
Tel: 248-647-9300
Fax: 248-647-8481
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. 122; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
FEMWELL GROUP: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Femwell Group Health, Inc.
3225 Aviation Avenue, Suite 700
Miami, FL 33133
Bankruptcy Case No.: 06-16720
Type of Business: The Debtor is a physician-owned, physician
practice management company, providing business
services to over 67 medical practices in the
South Florida area. The Debtor provides an
array of administrative services for each of its
client centers in the areas of accounting,
billing, collections, human resources, managed
care contracting, and risk management.
See http://www.femwell.com/
Chapter 11 Petition Date: December 19, 2006
Court: Southern District of Florida (Miami)
Judge: A. Jay Cristol
Debtor's Counsel: Peter E. Shapiro, Esq.
Shutts & Bowen LLP
200 East Broward Boulevard, Suite 2100
Fort Lauderdale, FL 33301
Tel: (954) 524-5505
Fax: (954) 524-5506
Total Assets: $548,011
Total Debts: $2,677,150
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Antonio Monzon, M.D. Promissory Note $6,807
8950 North Kendall Drive
Suite 302
Miami, FL 33176
Carlos DeCespedes, M.D. Promissory Note $6,807
3661 South Miami Avenue
Suite 505
Miami, FL 33133
Emmanuella Wolloch, M.D. Promissory Note $6,807
400 Arthur Godfrey Road
Suite 305
Miami Beach, FL 33140
Francisco Jimenez, M.D. Promissory Note $6,807
Isaac Halfon, M.D. Promissory Note $6,807
Javier Gutierrez, M.D. Promissory Note $6,807
Jean Samimy, M.D. Promissory Note $6,807
Jorge Mendia, M.D. Promissory Note $6,807
Jose Iparraguirre, M.D. Promissory Note $6,807
Manuel Morad, M.D. Promissory Note $6,807
Mark Firestone, M.D. Promissory Note $6,807
Melvin Castillo, M.D. Promissory Note $6,807
Mitchell Grabois, M.D. Promissory Note $6,807
Omar Pasalodos, M.D. Promissory Note $6,807
Pedro Alvarez, M.D. Promissory Note $6,807
Pedro Brasac, M.D. Promissory Note $6,807
Rebecca Martinez, M.D. Promissory Note $6,807
Rolando DeLeon, M.D. Promissory Note $6,807
Samuel Oberstein, M.D. Promissory Note $6,807
Spencer Kellogg, M.D. Promissory Note $6,807
FERRO CORPORATION: Files 2006 Third Quarter Financial Report
------------------------------------------------------------
Ferro Corporation has filed its Quarterly Report on Form 10-Q with
the U.S. Securities and Exchange Commission for the three-month
period ended September 30, 2006. With this filing the Company is
now current in its financial reports to the SEC.
Net income from continuing operations was $5.4 million, compared
with $7.2 million in the third quarter of 2005. Sales for the
third quarter ended Sept. 30, 2006, were $500.6 million, an
increase of 7.4% from the third quarter of 2005.
"The third quarter results show good sales growth along with solid
growth in total segment income," said President and CEO James
Kirsch. "Total company results were not up to our original
expectations, however, we expect to deliver a solid fourth quarter
that will provide further evidence of the transformation we are
accomplishing within Ferro."
Included in the third quarter net income from continuing
operations were net pre-tax charges of $1.3 million, primarily
related to accelerated depreciation resulting from the company's
restructuring program in Europe.
Third Quarter Results
Sales for the third quarter showed growth in the Performance
Coatings, Electronic Materials, Polymer Additives, and Color and
Glass Performance Materials segments, continuing the growth trends
seen through the first and second quarters of 2006. Sales were
down in the Specialty Plastics and Other segments compared with
the third quarter of 2005.
Most of the revenue increase for the quarter was due to increases
in average selling prices, including changes in product mix and
price increases. Sales benefited less than 2 percent from
favorable changes in currency exchange rates.
Gross margins for the third quarter were 19.7% of sales. Included
in the cost of sales during the third quarter were charges of
$1.6 million for accelerated depreciation related to previously
announced restructuring programs in Europe. Higher precious metal
prices, which are generally passed through to customers without
mark-up, also had a negative impact on gross margin percentage for
the quarter.
Selling, general and administrative expenses for the third quarter
were $74.1 million, or 14.8% of sales. SG&A expense was down by
$1.2 million compared with the prior-year period and was lower as
a percent of sales than the 16.1% recorded in the third quarter of
2005.
Total segment income for the third quarter was $33.9 million, an
increase of 9.7% from the third quarter of 2005.
As of the end of September, total debt, including off-balance-
sheet arrangements, was $684.3 million, an increase of
$129.6 million from the end of 2005. This increase primarily was
the result of increased deposit requirements for precious metal
consignment arrangements and for working capital to support
increased sales. Deposits for precious metal consignments were
$93 million at the end of the third quarter. The Company expects
to reduce the amount of material under consignment requiring cash
deposits by year-end and anticipates that a majority of the
deposits will be returned by the end of the first quarter of 2007.
Interest expense for the quarter increased by $4.7 million from
the third quarter of 2005, reflecting increases in the Company's
debt and higher interest rates. Miscellaneous income/expense was
lower by $4.6 million in the 2006 third quarter, compared to 2005.
The change was driven by a reduction of $5.5 million in mark-to-
market charges for natural gas supply contracts compared to the
prior-year period.
Fourth Quarter Guidance
Sales for the fourth quarter are expected to be approximately
$500 million to $510 million, reflecting continued growth across
multiple business segments. Sales growth in the fourth quarter,
compared to the fourth quarter of 2005, is expected to be led by
the Company's Electronic Materials, Performance Coatings and Color
and Glass Performance Materials segments.
As previously indicated, the Company expects to recognize charges
related to its restructuring programs during the fourth quarter.
The current estimate of the pre-tax charges is $23 million. These
charges will reduce after-tax earnings by approximately $0.35 per
share. Including these charges, the net loss for the fourth
quarter is expected to be in the range of $0.18 to $0.22 per
share.
About Ferro Corp
Headquartered in Cleveland, Ohio, Ferro Corporation (NYSE:FOE) --
http://www.ferro.com/-- supplies technology-based performance
materials for manufacturers. Ferro materials enhance the
performance of products in a variety of end markets, including
electronics, telecommunications, pharmaceuticals, building and
renovation, appliances, automotive, household furnishings, and
industrial products. The Company has approximately 6,800
employees globally.
* * *
Standard & Poor's Ratings Services' 'B+' long-term corporate
credit and 'B' senior unsecured debt ratings on Ferro Corp.
remains on CreditWatch with negative implications, where they were
placed Nov. 18, 2005.
FIRSTLINE CORPORATION: Court Approves Panel's Disclosure Statement
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Georgia
approved the Official Committee of Unsecured Creditors' Amended
Disclosure Statement explaining its Amended Liquidating Chapter 11
Plan for Firstline Corporation.
The Court determined that the Disclosure Statement contains
adequate information -- the right amount of the right kind -- for
creditors to make informed decisions when the Debtors asks them to
vote to accept the Plan.
Under the Amended Plan, Administrative Expense Claims, Priority
Tax Claims and Priority Claims will be paid in full and in cash.
Secured Claims are divided into two subclasses; Wells Fargo Bank,
National Association's secured claims and other allowed secured
claims.
The Committee relates that Wells Fargo's secured claim has already
been paid in full but Wells Fargo still asserts a contingent,
unliquidated secured claim against the Debtor as a potential
indemnification claim.
The Committee says that in full satisfaction of any remaining
secured claim, Wells Fargo will receive cash equal to the amount
of the remaining secured claim.
With respect to Consolidated Electrical Distributors, Inc.'s
secured claim, the Chapter 11 Trustee appointed in the Debtor's
case, holds the Consolidated Lien Escrowed Funds amounting to
$58,266.10 in his trust account pending determination of the lien.
If the lien is determined to be valid, the Chapter 11 Trustee will
disburse the escrowed funds in full satisfaction of the claim.
Otherwise, Consolidated Electrical's claim will be treated as an
unsecured claim.
Holders of Unsecured Claims will receive their pro rata share of
any cash distributions from the Debtor to holders of unsecured
claims. The Committee estimates that unsecured claims amount to
between $10.3 million to $12.3 million.
Holders of Convenience Claims will receive cash equal to 25% of
their claims.
Holders of equity interest in the Debtor will not receive anything
under the plan and those interests will be cancelled.
Full text copy of the Committee's Amended Disclosure Statement is
available for a fee at:
http://www.researcharchives.com/bin/download?id=061221022249
Full text copy of the Committee's Amended Liquidating Plan is
available for a fee at:
http://www.researcharchives.com/bin/download?id=061221023054
Headquartered in Valdosta, Georgia, FirstLine Corporation --
http://www.firstlinecorp.com/-- supplies home-building and
construction materials. The company filed for chapter 11
protection on Mar. 6, 2006 (Bankr. M.D. Ga. Case No. 06-70145).
Ward Stone, Jr., Esq., at Stone & Baxter, LLP, represents the
Debtor. Todd C. Meyers, Esq., at Kilpatrick Stockton LLP
represent the Official Committee of Unsecured Creditors. The
Court appointed David W. Cranshaw as the Debtor's Chapter 11
Trustee. Morris, Manning & Martin, LLP, represents the Chapter 11
Trustee. As of Jan. 31, 2006, the Debtor reported assets totaling
$37,061,890 and debts totaling $26,481,670.
FIRSTLINE CORPORATION: Confirmation Hearing Set for January 16
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Georgia set
9:30 a.m., on Jan. 16, 2007, to consider confirmation of the
Official Committee of Unsecured Creditors' Amended Liquidating
Chapter 11 Plan for Firstline Corporation.
Objections, if any, must be filed by Jan. 8, 2007. Ballots are
due on Jan. 8, 2007.
Headquartered in Valdosta, Georgia, FirstLine Corporation --
http://www.firstlinecorp.com/-- supplies home-building and
construction materials. The company filed for chapter 11
protection on Mar. 6, 2006 (Bankr. M.D. Ga. Case No. 06-70145).
Ward Stone, Jr., Esq., at Stone & Baxter, LLP, represents the
Debtor. Todd C. Meyers, Esq., at Kilpatrick Stockton LLP
represent the Official Committee of Unsecured Creditors. The
Court appointed David W. Cranshaw as the Debtor's Chapter 11
Trustee. Morris, Manning & Martin, LLP, represents the Chapter 11
Trustee. As of Jan. 31, 2006, the Debtor reported assets totaling
$37,061,890 and debts totaling $26,481,670.
FORD MOTOR: Changan Ford Mazda Names Jeffrey Shen as President
--------------------------------------------------------------
Changan Ford Mazda Automobile Co. Ltd.'s board of directors has
disclosed that Jeffrey Shen is appointed president of the company,
effective Jan. 1, 2007. Phil Spender, the current president of
Changan Ford Mazda Automobile will undertake a new assignment as
chief operating officer of Ford Motor (China), Ltd.
Changan Ford Mazda Automobile is a joint venture of Changan
Automotive Group of China, Ford Motor Company, and Mazda Motor
Corporation.
"Mr. Spender joined Changan Ford Mazda Automobile in May 2005.
Under his leadership, the company has been undergoing
unprecedented business expansion. In the first 11 months of 2006,
the company achieved over 140% year-on-year sales growth to become
the fastest growing automaker in China.
Mr. Spender led the successful launch of Ford Focus, which is one
of the top selling products in China's C-segment car market. He
also played a key role in the production of Mazda3 and Volvo S40
at CFMA.
"In representing the board, I would like to extend our sincere
appreciation to Mr. Spender and wish him all the best for his new
position at Ford Motor China," Changan Ford Mazda Automobile
chairman Yin Jiaxu said.
"In the mean time, we are very pleased to have Mr. Shen take over
the president position. His experiences in the automotive
industry expand across manufacturing, product development,
service, sales & marketing, and overall management. Mr. Shen has
outstanding results with his leadership on these positions. We
believe he is the right person to lead the fast growing Changan
Ford Mazda Automobile," Yin Jiaxu said.
"Jeffrey has been leading the Ford Lio Ho since December 2001. He
has made great contribution to the continuous development of Ford
Lio Ho. We believe, with his rich experience at Ford Lio Ho,
Jeffrey will lead Changan Ford Mazda Automobile team to achieve
its aggressive business objectives," Changan Ford Mazda vice
chairman Mei Wei Cheng said.
Kiyoshi Ozaki, Director and Senior Managing Executive Officer of
Mazda Motor Corporation, one of the parent companies of Changan
Ford Mazda Automobile, expressed his welcome to Jeffrey Shen as
well. "Jeffrey used to be the managing director of Mazda Taiwan.
His experience of working with different partners, including Mazda
Motor Corporation, will enable him to play a good management and
coordination role on his new assignment." Mr. Ozaki said.
Jeffrey Shen was born in Taiwan in 1951. He received a bachelor's
degree in Mechanical Engineering from the National Cheng Kong
University, and an EMBA certificate of the Executive Program from
the University of Michigan in 1996.
Jeffrey Shen has been the President of Ford Lio Ho located in
Chung Li, Taiwan, from Dec. 1, 2001. Before his current position,
he was the Marketing & Sales Vice President of Ford Lio Ho. He
joined the company as an Engine Engineering Supervisor in 1976 and
held a variety of manufacturing and product development management
positions before being promoted to Product Development Vice
President in May 1990. In June 1997, he moved from the technical
affairs to the field of customer services as the Vice President of
Ford Customer Service Division.
About Ford Motor Co.
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 Dec. 12, 2006,
Standard & Poor's Ratings Services affirmed its 'B' bank loan and
'2' recovery ratings on Ford Motor Co. after the company increased
the size of its proposed senior secured credit facilities to
between $17.5 billion and $18.5 billion, up from $15 billion.
As reported in the Troubled Company Reporter on Dec. 7, 2006,
Fitch Ratings downgraded Ford Motor Company's senior unsecured
ratings to 'B-/RR5' from 'B/RR4' due to the increase in size of
both the secured facilities and the senior unsecured convertible
notes being offered.
As reported in the Troubled Company Reporter on Dec. 6, 2006,
Moody's Investors Service assigned a Caa1, LGD4, 62% rating to
Ford Motor Company's $3 billion of senior convertible notes due
2036.
FORD MOTOR: Inks MOU's with Cooper-Standard and Flex-N-Gate
-----------------------------------------------------------
Ford Motor Company disclosed that it entered into a Memorandum of
Understanding with Cooper-Standard Automotive and Flex-N-Gate.
Cooper-Standard MOU
The MOU with Cooper-Standard Automotive is for Cooper-Standard's
purchase of the Automotive Components Holdings' fuel rail
manufacturing operations at its El Jarudo, Mexico, plant.
The El Jarudo Plant is a North American maquiladora plant and
producer of automotive fuel rails. The plant employs about 500
people. It is part of Automotive Components Holdings, a Ford-
managed temporary company formed in October 2005.
"The acquisition of this facility will be a key step in expanding
our ability to provide a broad array of fluid subsystems and
modules in North America," Cooper-Standard Automotive chief
executive officer Jim McElya said. "The ACH facility has
excellent quality levels and will be a strong addition to our
manufacturing footprint."
"This transaction provides the ability to expand our product
offering with fuel rails. The layout of the facility gives us the
opportunity to optimize our manufacturing in North America, and
further enhance our competitive position," Cooper-Standard
Automotive's Fluid Systems president Larry Beard said.
"This MOU represents more progress as our North American Way
Forward plan moves into high gear," Mark Fields, president of The
Americas and Ford executive vice president, said. "This is
another positive sign of progress toward our commitment to sell
selected operations by the end of 2008."
"I am delighted to be announcing our second MOU this month," Al
Ver, chief executive officer and chief operating officer,
Automotive Components Holdings and Ford vice president, said.
"Cooper-Standard has a strong focus on the business and the
people."
Flex-N-Gate MOU
Ford Motor MOU with Flex-N-Gate outlines the plans, which have
been established for Flex-N-Gate's purchase of Automotive
Components Holdings' fascia and fuel tank operations at its Milan,
Michigan, plant.
The Milan Plant produces automotive front and rear fascias and
fuel tanks. The plant currently employs about 700 people,
including salaried employees leased from Visteon and UAW hourly
employees leased from Ford. It is part of Automotive Components
Holdings, a Ford-managed temporary company formed in October 2005.
Flex-N-Gate is a growing, international and privately held company
with numerous manufacturing operations in several countries.
Flex-N-Gate has a solid reputation in the plastics and metal
forming industries and has content on virtually all-major
automotive nameplates.
"This MOU on another Automotive Components Holdings business
represents continued momentum for our Way Forward Acceleration,"
Mark Fields, president of The Americas and Ford executive vice
president, said.
"These sales enhance our ability to reduce material costs and
obtain high-quality, competitively priced components in North
America."
"ACH has had a flurry of activity as we end the year and I am
pleased to announce our third MOU in one month," Automotive
Components Holdings chief executive officer and chief operating
officer and Ford vice president Al Ver said.
"This MOU with Flex-N-Gate underscores our progress with the ACH
strategy."
"This MOU is a statement of our intention to be a key part of
Ford's initiatives. We enjoy a long and valued relationship with
Ford. This agreement will build on our relentless efforts to
expand our customer base and product/service offerings," Flex-N-
Gate chief executive officer Shahid Khan said.
"There are many reasons why this deal makes sense. Milan is a
plant with great technical and production capabilities; it will
support our continued alignment with Ford. Milan also offers us
an exciting opportunity to acquire fuel tank competencies and
continue our growth throughout the industry."
The deal is contingent upon a new and competitive agreement with
the UAW. Other issues to be addressed before conclusion of a
Final Agreement include the alignment of property taxes with the
current property value.
About Automotive Components Holdings
Automotive Components Holdings produces automotive and
architectural glass, and automotive interior, climate, chassis,
and powertrain components at 10 plants in the U.S. and three in
Mexico.
About Cooper-Standard Automotive
Headquartered in Novi, Mich., Cooper-Standard Automotive Inc. is a
global automotive supplier specializing in manufacturing and
marketing of systems and components for the automotive industry.
Products include body-sealing systems, fluid handling systems, and
NVH control systems. Cooper-Standard Automotive employs more than
16,000 people across 61 facilities in 14 countries. Cooper-
Standard Automotive is a privately held portfolio company of The
Cypress Group and Goldman Sachs Capital Partners Funds.
About Ford Motor Co.
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 Dec. 12, 2006,
Standard & Poor's Ratings Services affirmed its 'B' bank loan and
'2' recovery ratings on Ford Motor Co. after the company increased
the size of its proposed senior secured credit facilities to
between $17.5 billion and $18.5 billion, up from $15 billion.
As reported in the Troubled Company Reporter on Dec. 7, 2006,
Fitch Ratings downgraded Ford Motor Company's senior unsecured
ratings to 'B-/RR5' from 'B/RR4' due to the increase in size of
both the secured facilities and the senior unsecured convertible
notes being offered.
As reported in the Troubled Company Reporter on Dec. 6, 2006,
Moody's Investors Service assigned a Caa1, LGD4, 62% rating to
Ford Motor Company's $3 billion of senior convertible notes due
2036.
FORD MOTOR: Applauds U.S. ITC's Ruling to Revoke Steel Duties
-------------------------------------------------------------
The six largest automobile companies -- DaimlerChrysler AG, Ford
Motor Corp., General Motors Corp., Honda, Nissan, and Toyota
Toyota Motor North America -- with manufacturing facilities in the
United States has applauded a decision by the U.S. International
Trade Commission to revoke anti-dumping and countervailing duty
orders on "corrosion resistant steel" from Australia, Canada,
France, and Japan. The ITC left orders in place on imports from
Germany and Korea.
"We are pleased that the ITC revoked most of the duties," said
Stephen E. Biegun, Vice President, International Governmental
Affairs, Ford Motor Company.
"All of these duties are outdated and hurt American manufacturing
competitiveness and U.S. jobs while needlessly helping a steel
industry that is now profitable and healthy."
"[The] decision is a major step forward in restoring needed
competition to the U.S. steel market," Toyota Motor North America
group vice president Josephine Cooper said.
"The ITC's decision supports both a strong steel industry and a
strong auto industry, and we look forward to working with our
colleagues in the steel industry to continue to strengthen
manufacturing in the United States."
The duties on corrosion resistant steel have been in place since
1993 on imports from six countries. As a result of [the] vote,
duties on imports from Australia, Canada, France, and Japan are
revoked, while duties on imports from Germany and Korea will be
retained until the next review in 2011.
The six auto manufacturers -- DaimlerChrysler, Ford, General
Motors, Honda, Nissan and Toyota -- joined together for the first
time as a group in a trade case to urge revocation of duties on
corrosion-resistant steel because of their serious concern
regarding access to, and availability of, competitively-priced
steel. During the hearing, the companies demonstrated that the
U.S. steel industry is now profitable, has healthy long-term
prospects, and no longer needs government protection.
About Ford Motor Co.
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 Dec. 12, 2006,
Standard & Poor's Ratings Services affirmed its 'B' bank loan and
'2' recovery ratings on Ford Motor Co. after the company increased
the size of its proposed senior secured credit facilities to
between $17.5 billion and $18.5 billion, up from $15 billion.
As reported in the Troubled Company Reporter on Dec. 7, 2006,
Fitch Ratings downgraded Ford Motor Company's senior unsecured
ratings to 'B-/RR5' from 'B/RR4' due to the increase in size of
both the secured facilities and the senior unsecured convertible
notes being offered.
As reported in the Troubled Company Reporter on Dec. 6, 2006,
Moody's Investors Service assigned a Caa1, LGD4, 62% rating to
Ford Motor Company's $3 billion of senior convertible notes due
2036.
GENERAL MOTORS: Europe Unit Eyes Astra Export to North America
--------------------------------------------------------------
General Motors Corp.'s European division will export its Opel
Astra model to North America to be sold under the company's Saturn
brand, Christoph Rauwald writes for The Wall Street Journal.
"The Astra is a great fit for Saturn, with its European style and
driving dynamics," Saturn general manager Jill Lajdziak said. "It
also signals our efforts to get new vehicles to market quickly and
reinvent the entire Saturn product lineup with unprecedented
speed."
According to GM Europe President Carl-Peter Forster, the company
aims to export at least 20,000 Astra models annually to North
America starting in the third quarter of 2007.
"The Astra enables Saturn to occupy a unique position in the
marketplace and to strategically broaden its appeal with consumers
who usually have import brands on their shopping lists," said
Lajdziak. "Saturn's partnership with Opel is a natural way to
expand our lineup with relevant products that will attract new
buyers into our showrooms."
GM will produce both the three- and five-door version of the Astra
hatchback for sale in North America in its plant in Antwerp,
Belgium.
WSJ discloses that the company is also eyeing to export its next-
generation mid-size Opel Vectra for the North American market. GM
expects to launch its Vectra model in 2009.
The Astra is part of the larger collaboration between Saturn and
Opel. By sharing resources from throughout GM's global network of
design and engineering centers, the two brands can develop strong,
broad product lineups that will attract buyers to the brands both
in North America and Europe. Early examples of this collaboration
include the Saturn Sky and upcoming Opel GT, as well as the Opel
Antara and 2008 Saturn Vue.
About Saturn
Saturn, a division of General Motors Corp., markets vehicles in
the U.S. and Canada through a network of about 500 retailers, with
a focus on providing innovative products with solid value and
excellent customer service. In 2006, the brand has undertaken a
major revitalization of its portfolio with four new vehicles: the
Sky roadster, the Aura midsize sedan, the Vue Green Line hybrid
and the larger Outlook crossover. Next year, Saturn continues its
aggressive growth plans with an all-new Vue compact crossover
(Spring 2007) and the new European Astra small car (Fall 2007).
About General Motors
General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- is the
world's largest automaker and has been the global industry sales
leader since 1931. Founded in 1908, GM employs about 327,000
people around the world. It has manufacturing operations in
33 countries and its vehicles are sold in 200 countries. GM sells
cars and trucks under these brands: Buick, Cadillac, Chevrolet,
GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and
Vauxhall.
* * *
As reported in the Troubled Company Reporter on Dec. 15, 2006,
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit rating and other ratings on General Motors Corp. and
removed them from CreditWatch with negative implications, where
they were placed March 29, 2006. S&P said the outlook is
negative.
As reported in the Troubled Company Reporter on Nov. 14, 2006,
Moody's Investors Service assigned a Ba3, LGD1, 9% rating to the
proposed US$1.5 billion secured term loan of General Motors Corp.
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 General Motors and Saturn Corp.
GENERAL MOTORS: Applauds Trade Commissions Ruling to Revoke Duties
------------------------------------------------------------------
The six largest automobile companies -- DaimlerChrysler AG, Ford
Motor Corp., General Motors Corp., Honda, Nissan, and Toyota Motor
North America -- with manufacturing facilities in the United
States has applauded a decision by the U.S. International Trade
Commission to revoke anti-dumping and countervailing duty orders
on "corrosion resistant steel" from Australia, Canada, France, and
Japan. The ITC left orders in place on imports from Germany and
Korea.
"We are pleased that the ITC revoked most of the duties," said
Stephen E. Biegun, Vice President, International Governmental
Affairs, Ford Motor Company.
"All of these duties are outdated and hurt American manufacturing
competitiveness and U.S. jobs while needlessly helping a steel
industry that is now profitable and healthy."
"[The] decision is a major step forward in restoring needed
competition to the U.S. steel market," Toyota Motor North America
group vice president Josephine Cooper said.
"The ITC's decision supports both a strong steel industry and a
strong auto industry, and we look forward to working with our
colleagues in the steel industry to continue to strengthen
manufacturing in the United States."
The duties on corrosion resistant steel have been in place since
1993 on imports from six countries. As a result of [the] vote,
duties on imports from Australia, Canada, France, and Japan are
revoked, while duties on imports from Germany and Korea will be
retained until the next review in 2011.
The six auto manufacturers -- DaimlerChrysler, Ford, General
Motors, Honda, Nissan and Toyota -- joined together for the first
time as a group in a trade case to urge revocation of duties on
corrosion-resistant steel because of their serious concern
regarding access to, and availability of, competitively-priced
steel. During the hearing, the companies demonstrated that the
U.S. steel industry is now profitable, has healthy long-term
prospects, and no longer needs government protection.
General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- is the
world's largest automaker and has been the global industry sales
leader since 1931. Founded in 1908, GM employs about 327,000
people around the world. It has manufacturing operations in
33 countries and its vehicles are sold in 200 countries. GM sells
cars and trucks under these brands: Buick, Cadillac, Chevrolet,
GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and
Vauxhall.
* * *
As reported in the Troubled Company Reporter on Dec. 15, 2006,
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit rating and other ratings on General Motors Corp. and
removed them from CreditWatch with negative implications, where
they were placed March 29, 2006. S&P said the outlook is
negative.
As reported in the Troubled Company Reporter on Nov. 14, 2006,
Moody's Investors Service assigned a Ba3, LGD1, 9% rating to the
proposed US$1.5 billion secured term loan of General Motors Corp.
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 General Motors and Saturn Corp.
GIRASOLAR INC: Sept. 30 Balance Sheet Upside-Down by $1.4 Million
-----------------------------------------------------------------
GiraSolar Inc., fka Legend Investment Corp., reported a $205,663
net loss for the three months ended Sept. 30, 2006, as compared to
$106,730 during the three months ended Sept. 30, 2005.
Revenues for the three months ended Sept. 30, 2006 increased by
$15,264,326, or 100% from $0 for the three months ended
Sept. 30, 2005.
The company says the change in net loss and revenue was a result
of the company's acquisition of GiraSolar, B.V. The company owns
a majority of GiraSolar, B.V., which is based in the Netherlands.
GiraSolar, B.V. operates through three subsidiaries: Dutch Solar
B.V., GiraMundo, and a 51% owned joint venture called GiraSolar
Turkey.
At Sept. 30, 2006, the company's balance sheet showed $17,634,092
in total assets, $18,963,366 in total liabilities and minority
interest of $74,031, resulting in a $1,403,305 stockholders'
deficit. The company had a $2,798,843 working capital deficiency
at Sept. 30, 2006, including cash, and cash equivalents.
Full-text copies of the company's financial statements are
available for free at http://researcharchives.com/t/s?1786
Going Concern Doubt
E. Randall Gruber, CPA, PC, in St. Louis, Missouri, raised
substantial doubt about Legend Investment Corp.'s ability to
continue as a going concern after auditing the Company's
financial statements for the year ended Dec. 31, 2005. The
auditor pointed to the Company's significant net losses since
its inception, lack of current source of material revenue, and
working capital deficit.
About GiraSolar
Based in the Netherlands, GiraSolar Inc., fka Legend Investment
Corp, through its subsidiary, Girosolar, B.V., makes solar
energy equipment, sells solar energy applications and equipment,
and offers consultancy services in the field of solar energy
applications and equipment.
GLIMCHER REALTY: Increases Credit Facility to $470 Million
----------------------------------------------------------
Glimcher Realty Trust amended its unsecured credit facility to
increase the borrowing availability from $300 million to
$470 million.
The company disclosed that certain financial covenants were also
amended, which provides improved pricing and enhanced borrowing
flexibility under the amended credit facility.
The amended credit facility has a three-year term and will expire
on Dec. 13, 2009, with a one-year extension option available.
The amended credit facility will be available to fund
redevelopment, acquisition and development opportunities as well
as for general corporate purposes.
The initial interest rate on the amended credit facility is LIBOR
plus 1.05%, but can range from LIBOR plus 0.95% to LIBOR plus
1.40%, depending upon the company's ratio of debt to total asset
value.
The banks participating in the amended credit facility included
KeyBanc Capital Markets as the sole lead arranger and KeyBank
National Association as administrative agent, Wachovia Bank,
National Association and Eurohypo AG as co-syndication agents and
Bank of America, N.A. and Charter One Bank, N.A. as co-
documentation agents.
Also participating are Aareal Bank AG, U.S. Bank National
Association, Huntington National Bank, PNC Bank, National
Association, National City Bank, Lehman Brothers Commercial Bank,
and Midfirst Bank.
Glimcher Realty Trust (NYSE: GRT) is a real estate investment
trust, which owns, manages, acquires and develops regional and
super-regional malls. The Company is a component of both the
Russell 2000(R) Index, representing small cap stocks, and the
Russell 3000(R) Index, representing the broader market.
* * *
As reported in the Troubled Company Reporter on July 12, 2006,
Standard & Poor's Ratings Services affirmed its 'BB' corporate
credit and 'B' preferred stock ratings on Glimcher Realty Trust.
The affirmations affect $210 million in outstanding rated
preferred stock. S&P said the outlook is stable.
GMAC COMMERCIAL: Fitch Upgrades Rating on $8.1 Mil. Class L Certs.
------------------------------------------------------------------
Fitch Ratings upgrades eight classes of GMAC Commercial Mortgage
Securities, Inc.'s commercial mortgage pass-through certificates,
series 2003-C2, as:
-- $30.7 million class D to 'AAA' from 'AA+';
-- $16.1 million class E to 'AA+' from 'AA';
-- $21 million class F to 'AA-' from 'A+';
-- $11.3 million class G to 'A+' from 'A';
-- $16.1 million class H to 'A-' from 'BBB+';
-- $21 million class J to 'BBB' from 'BBB-';
-- $8.1 million class K to 'BBB-' from 'BB+'; and,
-- $8.1 million class L to 'BB+ 'from ' BB-'.
In addition, Fitch affirms these classes:
-- $524.6 million class A-1 at 'AAA';
-- $471.6 million class A-2 at 'AAA';
-- Interest-only class X-1 at 'AAA';
-- Interest-only class X-2 at 'AAA';
-- $40.3 million class B at 'AAA';
-- $16.1 million class C at 'AAA';
-- $9.7 million class M at 'B+';
-- $4.8 million class N at 'B'; and,
-- $4.8 million class O at 'B-'.
Fitch does not rate the $21 million class P certificates.
The rating upgrades are due to increased subordination levels as a
result of defeasance and paydown since issuance. Twelve loans
have defeased, including two of the top ten loans in the pool. As
of the November 2006 distribution date, the pool has paid down 5%
to $1.23 billion from $1.29 billion at issuance.
Fitch reviewed the credit assessments of the DDR Portfolio and the
Boulevard Mall; the John Hancock Tower, the largest loan in the
pool, has fully defeased.
The DDR Portfolio is secured by 10 retail properties totaling
2.9 million square feet located across eight states.
Third-quarter 2006 servicer-provided debt service coverage ratio
based on net operating income was 2.37x compared to 2.86x at
issuance. Occupancy increased to 96.6% from 92.6% at issuance.
The Boulevard Mall is a 1.2 million sf regional mall in Las Vegas,
NV, of which 587,170 sf serve as collateral for the loan. The
Boulevard Mall whole loan consists of two pari passu A notes and a
$21.5 million B note, with the $46.5 million A-2 piece included in
this trust. Third-quarter 2006 servicer-provided DSCR based on
NOI for the A notes was 2.40x compared to 2.86x at issuance.
Occupancy increased slightly to 95.5% from 92.6% at issuance.
Currently there are four Fitch Loans of Concern, including the
third largest loan in the pool. The asset is a 420-unit
multifamily apartment complex located in Novi, Michigan. Servicer-
provided second-quarter 2006 DSCR based on NOI was 1.0x and
occupancy was at 60%, a decline from the issuance DSCR of 1.46x
and occupancy of 88%. The servicer inspected the asset in 2006
and found it in good condition; moreover, the borrower is
continuously upgrading the property to be more competitive in the
market.
Two loans are 30 days delinquent. The largest loan is
collateralized by a multifamily property in Fenton, Michigan. The
second is collateralized by a multifamily property in Hartford,
Connecticut.
There are no specially serviced loans.
GMAC COMMERCIAL: S&P Holds Low-B Ratings on 6 Certificate Classes
-----------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on four
pooled classes of mortgage pass-through certificates from GMAC
Commercial Mortgage Securities Inc.'s series 2003-C3.
Concurrently, the ratings on 20 classes of certificates were
affirmed.
The raised and affirmed ratings on the pooled certificates reflect
credit enhancement levels that provide adequate support through
various stress scenarios. The affirmed ratings on the raked
certificates reflect the operating performance of the AFR/Bank of
America portfolio loan.
As of the remittance report dated Dec. 11, 2006, the trust
collateral consisted of 82 mortgage loans with an outstanding
balance of $1.37 billion, compared with a balance of $1.33 billion
and 81 loans at issuance. The master servicer, Capmark Finance
Inc., reported year-end 2005 financial information for 100% of the
pool. Based on this information and excluding $99.2 million of
loans for which the collateral was defeased, Standard & Poor's
calculated a weighted average debt service coverage (DSC) of
1.58x, compared with 1.55x at issuance. All of the loans in the
pool are current, and no loans are with the special servicer, LNR
Partners Inc. To date, the trust has not experienced any losses.
The top 10 exposures have an aggregate outstanding balance of
$658.0 million (48%) and a weighted average DSC of 1.68x, up from
1.50x at issuance. The increase is inflated, however, as five of
the top 10 exposures have partial interest-only periods, and the
DSC at issuance included the amortization of these loans. Three
of the exposures experienced significant declines in DSC, one of
which is on the master servicer's watchlist and is discussed.
Additionally, the largest exposure is also on the watchlist
because the inspections for some of the properties were reported
to be "fair." Standard & Poor's reviewed the property inspection
reports provided by Capmark, and with the exception of some of the
AFR/Bank of America portfolio properties, all were reported to be
in "good" or "excellent" condition.
Three of the top 10 exposures exhibited credit characteristics
consistent with those of investment-grade obligations at issuance,
and all have continued to do so.
The largest exposure in the pool, the AFR/Bank of America
portfolio, has an in-trust pooled balance of $86.7 million (6%)
and a total loan balance of $381.7 million. This loan consists of
a $294.9 million A note that is participated into six pari passu
pieces. The properties are also encumbered by an $86.8 million B
note that is included in the trust. The trust's portion of the A
and B notes represents 13% of the aggregate outstanding pool
balance. To date, the collateral for $29.9 million of the total
loan balance has been defeased, of which $13.6 million relates to
the trust's portion of the outstanding loan balance. The remaining
real estate collateral includes 133
office complexes totaling 6.6 million sq. ft. in various locations
throughout the U.S. The raked certificates in the transaction
derive 100% of their cash flows from the B note. While the
AFR/Bank of America portfolio's operating performance has remained
stable, it has not met the original underwriting
expectations. However, it is expected that additional collateral
will be released and defeased in 2007. Standard & Poor's will
continue to monitor the loan's performance. The property reported
a DSC of 1.75x and occupancy of 90% as of June 30, 2006.
The AFR/Bank of America portfolio loan was placed on the watchlist
because the inspection reports for some of the properties were
said to be "fair" due to deferred maintenance items. These
include, among others, structural and roof damage from hurricanes,
mold and cracks in the buildings and sidewalks, and potholes in
the parking areas. The master servicer did not provide updated
information regarding possible mitigations.
The second-largest exposure, Water Tower Place, is collateralized
by 821,740 sq. ft. of a 3.1 million-sq.-ft. retail/office complex
in Chicago. The loan consists of a $178.7 million A note, which
is participated into six pari passu pieces, $71.4 million of which
is in the trust. The trust's portion of the A notes represents 5%
of the aggregate outstanding pool balance. Standard & Poor's
underwritten net cash flows have decreased slightly since issuance
due to higher operating expenses and capital reserves. The
property reported a DSC of 1.86x and occupancy of 95% as of June
30, 2006.
The Mall at Millenia, the third-largest exposure, is a 1.1
million-sq.-ft. super-regional retail mall in Orlando, Fla., of
which 518,150 sq. ft. is the trust's collateral. The loan
consists of a $195 million A note that is participated into four
pari passu pieces, of which $67.5 million (5%) is the trust
balance. The property is also encumbered by a $15 million B note
that is held outside of the trust. Standard & Poor's underwritten
net cash flows have increased 10% since issuance. The property
reported a 2.38x DSC as of December 2005 and 95% occupancy as of
July 2006.
The master servicer reported 16 loans totaling $267.2 million
(20%) on the watchlist. The AFR/Bank of America portfolio,
together with one other top 10 exposure, represent approximately
44% ($117.2 million) of the loans on the watchlist. The 10th-
largest exposure, the Levy portfolio, is secured by three office
buildings totaling 538,750 sq. ft. in Houston, Texas. The
$37.2 million (3%) loan is on the watchlist due to a decrease in
DSC from 1.27x at issuance to 0.34x as of Sept. 30, 2006. The
decrease is attributable to lower occupancy and higher operating
expenses. Combined occupancy had improved to 88% as of September
2006, from 74% as of December 2005.
The remaining loans on the watchlist have low occupancies, low
DSCs, or upcoming lease expirations.
Standard & Poor's stressed various assets in the mortgage pool as
part of its analysis, including the loans on the watchlist and
those otherwise considered credit-impaired. The resultant credit
enhancement levels adequately support the raised and affirmed
ratings.
Ratings Raised: Pooled Certificates
GMAC Commercial Mortgage Securities Inc.
Series 2003-C3 mortgage pass-through certificates
Rating
------
Class To From Credit enhancement(%)
----- -- ---- ---------------------
B AAA AA 14.94
C AA+ AA- 13.64
D AA A 11.30
E A A- 9.61
Ratings Affirmed: Pooled and Raked Certificates
GMAC Commercial Mortgage Securities Inc.
Series 2003-C3 mortgage pass-through certificates
Class Rating Credit enhancement(%)
----- ------ ---------------------
A-1 AAA 18.19
A-2 AAA 18.19
A-3 AAA 18.19
A-4 AAA 18.19
A-1A AAA 18.19
F BBB+ 7.80
G BBB 6.76
H BBB- 5.46
J BB+ 4.42
K BB 3.77
L BB- 3.25
M B+ 2.47
N B 2.08
O B- 1.69
S-AFR1 A- N/A
S-AFR2 BBB+ N/A
S-AFR3 BBB N/A
S-AFR4 BBB- N/A
X-1 AAA N/A
X-2 AAA N/A
N/A - Not applicable.
GOODRICH TRADING: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Goodrich Trading Company, Inc.
13939 Southwest Tualatin Sherwood Road
Sherwood, OR 97140
Bankruptcy Case No.: 06-34011
Type of Business: The Debtor manufactures custom made crates for
industrial and government needs. A majority of
its products are shipped into the Pacific Rim
along with Guam, Hawaii and Alaska.
See http://www.goodrichtrading.com/
Chapter 11 Petition Date: December 15, 2006
Court: District of Oregon (Portland)
Judge: Elizabeth L. Perris
Debtor's Counsel: Albert N. Kennedy, Esq.
Tonkon Torp LLP
888 Southwest 5th Avenue, Suite 1600
Portland, OR 97204
Tel: (503) 802-2013
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Weyerhaeuser Trade Debt $1,240,593
1601 Northeast 192nd Avenue
Portland, OR 97230
Alliance Packaging Trade Debt $319,072
1000 Southwest 43rd Street
Renton, WA 98055
Victory Packaging Trade Debt $299,907
9010 West Little York
Houston, TX 77040
International Paper Trade Debt $217,932
4049 Willow Lake Road
Memphis, TN 38118
American Moving Trade Debt $159,766
P.O. Box 59269
Dallas, TX 75229
Eastgroup Properties Trade Debt $130,553
Georgia Pacific Trade Debt $116,275
Michelsen Packaging Trade Debt $111,060
Morgan Packaging Trade Debt $98,713
Trent, Inc. - Paclease Trade Debt $98,555
WIT Wholesale Ind. Tape Trade Debt $76,412
Realty Assoc. Fund VI Trade Debt $69,190
CDS Moving Equipment Trade Debt $58,951
Atlantic Paper Trade Debt $56,096
Matson Navigation Co. Trade Debt $51,360
Great Lakes Standard Trade Debt $50,815
Lynden Transport Trade Debt $47,555
Allpak Container Trade Debt $44,469
Trojan Litho Trade Debt $41,502
OMNI Supply Trade Debt $40,336
GRADY DUPREE: Case Summary & 12 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Grady S. Dupree
aka G. Sanders Dupree
aka G.S. Dupree
aka Sanders Dupree
P.O. Box 1073
Highlands, NC 28741
Bankruptcy Case No.: 06-20100
Chapter 11 Petition Date: December 15, 2006
Court: Western District of North Carolina (Bryson City)
Judge: George R. Hodges
Debtor's Counsel: David R. Hillier, Esq.
Gum, Hillier & McCroskey, P.A.
47 North Market Street
P.O. Box 3235
Asheville, NC 28802
Tel: (828) 258-3368
Fax: (828) 252-6721
Total Assets: $4,613,280
Total Debts: $1,897,367
Debtor's 12 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Macon Bank Lots 1, 2, & 10 $324,726
50 West Main Street Highlands Point
Franklin, NC 28734
Chase Consumer Debt $20,619
P.O. Box 15298
Wilmington, DE 19850-5298
Macon County Tax $7,372
5 West Main Street
Franklin, NC 28734
Discover Financial Services Consumer Debt $7,361
Chase Consumer Debt $5,813
Fusion Systems Consumer Debt $1,445
Wilson Gas Consumer Debt $935
Emory Clinic $882
Stone Electric Consumer Debt $372
Verizon Wireless Consumer Debt $273
Terminex Consumer Debt $152
Fred H. Jones, Esq. Legal Services for Unknown
Kenton & Linda David
GS MORTGAGE: S&P Holds Rating on Class F Certificates at BB+
------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on the class
D and E commercial mortgage pass-through certificates issued by GS
Mortgage Securities Corp. II's series 1998-C1.
Concurrently, ratings were affirmed on the remaining six classes
from this transaction.
The upgrades reflect the defeasance of the largest loan in the
pool, the AmeriCold Portfolio loan, earlier this month. Defeased
collateral, by balance, has increased 12% since Standard & Poor's
last review in March 2006. The affirmed ratings reflect credit
enhancement levels that provide adequate support through various
stress scenarios.
As of Nov. 20, 2006, the collateral pool consisted of 234 loans
and three real estate owned assets with an aggregate balance of
$1.3 billion, compared with 322 loans with a balance of
$1.86 billion at issuance. The master servicer, Capmark Finance
Inc., provided primarily full-year 2005 financial information for
96% of the pool, excluding defeased loans, which includes the
AmeriCold portfolio.
Based on this information, Standard & Poor's calculated a weighted
average debt service coverage of 1.53x for the pool, down from
1.75x at issuance. All of the loans in the pool are current
except for the aforementioned REO assets, which are with the
special servicer, also Capmark. Two appraisal reduction amounts
related to the REO assets totaling $5.8 million are in effect. To
date, the trust has experienced losses on 30 loans, totaling $55.6
million.
The top 10 loans secured by real estate have an aggregate
outstanding balance of $421.5 million and a weighted average DSC
of 1.94x, up from 1.67x at issuance. The increase in the DSC
resulted primarily from increases in net cash flow of 20% or more
since issuance for four of the top 10 loans. The seventh-largest
loan is on the master servicer's watchlist and is
discussed further below.
Standard & Poor's reviewed property inspections provided by
Capmark for all of the assets underlying the top 10 loans, and all
were characterized as "good" except for one that was characterized
as "excellent" and two that were characterized as "fair."
There are three assets with the special servicer, all of which are
REO.
These are the details concerning these assets:
-- The largest REO asset, Commerce Center, is a 130,000-sq.ft.
office complex built in 1959 in Memphis, Tennessee. The
total exposure is $6.0 million, including all related
advancing. The loan was transferred to Capmark due to
imminent default after the sole tenant vacated the
property. The property became REO through a foreclosure
sale in September 2006. An ARA of $4.3 million is in
effect based on the appraisal dated March 2006.
Additionally, the special servicer is assessing
environmental issues that are associated with the
activities of a former gasoline station and dry cleaner at
the site.
-- Westmoor Apartments is a 58-unit apartment building in
Findlay, Ohio. The loan was transferred to Capmark in
December 2005 due to payment default and became REO in
August 2006. During an inspection in mid-September, it was
noted that the roof on one of the buildings was in poor
condition and needed to be replaced at a total cost of
approximately $28,000. Capmark reports that the roof
repair is 80% complete and anticipates the work to be
finished by the end of next week. An appraisal dated
December 2005 values the property at $2.3 million.
-- Sierra Trails Apartments is a 116-unit apartment complex
built in 1970 in Fort Worth, Texas. The loan was
transferred to the special servicer in August 2005 due to
payment default and became REO in December 2005. The
property is in poor condition. The total exposure is
$2.6 million, including all related advancing. An ARA of
$1.5 million is in effect based on the new appraisal of
$1.4 million dated September 2006. After the property was
listed for sale at $2.0 million, the highest offer was
$1.6 million. A contract is out for signature, which
includes an inspection period.
Capmark reported a watchlist of 71 loans with an aggregate
outstanding balance of $215.5 million. The largest loan on the
watchlist is also the seventh-largest loan in the pool. Home
Mortgage Plaza, renamed The Hato Rey Center, is secured by a
211,000 -sq.-ft. office complex in San Juan, Puerto Rico. The
loan was placed on the watchlist due to low occupancy and low DSC.
Year-end 2005 occupancy was 50%, and DSC was 1.09x.
According to the Oct. 31, 2006, rent roll, occupancy has improved
to 75%.
Standard & Poor's stressed various loans in the transaction,
paying closer attention to the assets with the special servicer
and those loans on the watchlist. The resultant credit
enhancement levels support the raised and affirmed ratings.
Ratings Raised
GS Mortgage Securities Corp. II
Commercial Mortgage Pass-Through
Certificates Series 1998-C1
Rating
------
Class To From Credit enhancement
----- -- ---- ------------------
D AA+ AA 15.20%
E A A- 12.73%
Ratings Affirmed
GS Mortgage Securities Corp. II
Commercial Mortgage Pass-Through
Certificates Series 1998-C1
Class Rating Credit enhancement
----- ------ ------------------
A-2 AAA 38.86%
A3 AAA 38.86%
B AAA 31.09%
C AAA 23.32%
F BB+ 6.37%
X AAA N/A
N/A-Not applicable.
HARRAH'S ENTERTAINMENT: S&P Cuts Ratings & Retains Negative Watch
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Harrah's
Entertainment Inc. and its subsidiary Harrah's Operating Co. Inc.,
including its corporate credit rating to 'BB' from 'BB+.
In addition, ratings remain on CreditWatch with negative
implications, where they were initially placed on Oct. 2, 2006,
following Harrah's acknowledgement that it had received the
initial proposal from Apollo Management and Texas Pacific Group to
acquire all of Harrah's outstanding common stock.
The downgrade and continued CreditWatch listing follow Harrah's
announcement yesterday that it has agreed to be acquired by Apollo
and TPG for $90 per share in cash, or about $17.1 billion.
Including the assumption of Harrah's $10.7 billion in debt
outstanding, the transaction values Harrah's at about $27.8
billion. The transaction is expected to close in about 12 months,
subject to shareholder and regulatory approvals.
The downgrade stems from S&P's conclusion that as a result of the
proposed transaction and expected significantly higher debt
burden, credit measures will no longer be aligned with the former
ratings. As S&P has the opportunity to review the proposed
capital structure, and the financial and operating strategies of
the new owners, ratings could be further lowered, potentially even
into the 'B' category. Several factors will drive the final
ratings determination including the level of equity ultimately
provided, management's ongoing development strategy, the potential
for asset sales, and the ultimate financing structure. Ratings on
the public notes could be lowered further than the corporate
credit rating if a substantial level of priority debt is placed
ahead of the notes in the final capital structure. Given the level
of equity or asset sales that would be required to achieve this
threshold, it is likely that Wednesday's rating action is just an
interim step.
HEALTHNOW NEW YORK: Good Performance Cues S&P to Lift Ratings
-------------------------------------------------------------
Standard & Poor's Ratings Services raised its counterparty credit
and financial strength ratings on HealthNow New York Inc. to 'BBB-
' from 'BB+'. The outlook is stable.
"The upgrade is based on the company's improved operating
performance and capitalization, positioning it to compete in
challenging New York State regional markets," noted Standard &
Poor's credit analyst Amy L. Ho.
For 2006, HealthNow is expected to report its second highest level
of earnings in the past five years, with projected pretax income
of about $113.0 million, compared with $114.8 million in 2005. In
addition, the company's statutory surplus is expected to reach
about $455 million-$460 million by year-end 2006, which would
translate into a projected capital adequacy ratio of about 200%, a
level considered strong for the rating.
Offsetting these positive trends, the ratings continue to be
constrained by overall enrollment losses (projected at negative 9%
for full-year 2006, negative 2% for 2007); its geographic
concentration in markets with increasing competition, weak
demographics, and weak economic conditions; and the very political
New York State regulatory environment.
HealthNow provides health insurance and related services to about
681,000 members (as of Sept. 30, 2006), predominantly in the
western region of New York where it holds the BlueCross and
BlueShield licenses and northeastern regions of New York where it
holds the BlueShield license. The company also markets nonbranded
products (non-Blue) in central New York, and acts as a
Medicare Part B claims processor for upstate New York, as
designated by CMS. HealthNow is projected to report about $2.2
billion in annual revenues in 2006, based on $1.8 billion of
revenues through Oct. 31, 2006. HealthNow maintains a good
competitive position based on its leading market share of 47% of
the insured market in Western New York and 25% market share in
Northeastern New York. The company's competitive strengths
include the strong brand equity of its Blues brand and
comprehensive product portfolio.
The stable outlook is based on the expectation that HealthNow will
maintain its improved financial strength, operating performance,
and leading market position while not experiencing additional
enrollment losses. Total enrollment is expected to be negative
7%-9% for full-year 2006 and negative 2% for 2007 due to lost
membership from unprofitable business. Pretax earnings are
expected to be about $113 million for full-year 2006 and
$80 million-$85 million for 2007 with a pretax ROR between 3%-5%.
HealthNow's earnings adequacy ratio will remain stable at about
220%-240% for 2006 and 2007. Capitalization should improved
further over time with CAR expected to be 197% in 2006 and over
200% in 2007, and statutory surplus of about $458 million at year-
end 2006 and $511 million at year-end 2007.
HUDSON COUNTY: Failure to Cover Operations Cue S&P to Cut Rating
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on Hudson
County Improvement Authority, N.J.'s solid waste system revenue
debt three notches to 'B' from 'BB' due to the system's failure to
cover operations from its operating revenues.
Despite the expectation that the system would meet ongoing
operating expenses from current operating revenues, in fiscal
2005, income from operations was a negative $3.9 million -- the
first time this has occurred over the past three fiscal periods.
This shortfall results in a growing dependence on alternative
revenues, primarily money received due to the sale of the Koppers
site and the use of stranded debt relief aid from the state to not
only provide for debt service on the bonds but also to subsidize
tipping fees at the market rate to support ongoing operations.
This reliance on nonsystem revenues to provide for ongoing debt
service is consistent with system's 'B' rating.
An obligation rated 'B' is more vulnerable to nonpayment than
obligations rated 'BB', but the obligor currently has the capacity
to meet its financial commitment on the obligation. Adverse
business, financial, or economic conditions will likely impair the
obligor's capacity or willingness to meet its financial commitment
on the obligation.
"We believe authority officials will continue to rely on stranded
debt relief aid from the state and continue to use money from the
sale of the Koppers site to subsidize operating revenues," said
Standard & Poor's credit analyst Rich Marino. "We also expect the
financial balance to remain tenuous."
Additional rating factors include legal provisions that do not
require the system to meet debt service from operating revenues
annually -- provisions allow the authority to use nonrecurring
revenues and funds on hand to meet the rate covenant; below-
average competitiveness of the system; and continuing weakened
debt service coverage from net system operating revenues to the
point where in fiscal 2005 the system's very weak financial
performance failed to provide sufficient operating revenues to
fully support operations or provide for any debt service from net
system operating revenues.
Net revenues of the solid waste system secure the bonds.
The rating action affects roughly $27 million of debt outstanding.
INTERSTATE BAKERIES: Creditors' Panel Wants to Reconstitute Board
-----------------------------------------------------------------
The Official Committee of Unsecured Creditors asks the U.S.
Bankruptcy Court for the Western District of Missouri to direct
Interstate Bakeries Corporation and its debtor-affiliates to
reconstitute IBC's present board of directors with a seven-member
board, agreed to in principle by the Creditors and the Equity
Committees, and the Debtors' prepetition secured lenders -- the
Constituents.
The Committee further asks the Court to enter a temporary
restraining order to enjoin Brencourt Advisors LLC's lawsuit in
Delaware Chancery Court, for a period of approximately two or
three weeks, to allow the parties sufficient time to finalize the
terms of the board change to implement the terms of the Board
Settlement.
Following the filing of Brencourt's complaint, the Creditors'
Committee and its advisors had numerous discussions with all
parties-in-interest in an attempt to broker an agreement that
would be mutually agreeable to the Debtors, Brencourt, and the
Constituents.
Working within an expedited timeframe to reach agreement before
significant estate resources were devoted to litigating board
composition issues, the Constituents and Brencourt were able to,
at least preliminarily, agree on these seven individuals to
reconstitute the Debtors' board of directors:
(1) Robert Calhoun,
(2) Michael Anderson,
(3) William Mistretta,
(4) Robert Weinstein,
(5) Terry Peets,
(6) David Pauker, and
(7) a new CEO
Mr. Peets is a candidate suggested by the prepetition lenders and
acceptable to the Constituents and, subject to an interview
process, Brencourt.
Mr. David Pauker is a candidate suggested by the Equity Committee
and acceptable to the Constituents and Brencourt.
Scott Cargill, Esq., at Lowenstein Sandler PC, in Roseland, New
Jersey, asserts that the Board Settlement is for the Debtors'
best interests because it:
(a) allows for the continued membership of two of the
current directors, thus promoting continuity and reducing
interruptions that a replacement of the full board
potentially may entail;
(b) adds new members with fresh perspectives and ideas for the
Debtors' business, and strategies for concluding their
reorganization;
(c) provides the CEO with a board seat;
(d) is a consensus position among those who may have economic
stake in the Chapter 11 cases and provides a platform for
these diverse groups to continue to work together in a
productive manner.
Due to the accelerated time frame, the parties have been unable
to receive final commitments from the suggested names, however,
in the event that one of them is unwilling to serve, the
Creditors Committee believes that the Constituents and Brencourt
will likely find alternate and mutually agreeable individuals to
serve as directors, Mr. Cargill says. He adds that not all of
the terms of the settlement have been fully negotiated and
completed as of the time of the filing of the request. The
Creditors' Committee, however, anticipates that the terms and
conditions of the Board Settlement will be finalized over the
next several weeks.
Accordingly, a temporary restraining order for a two or three-
week duration would permit the parties to finalize the details of
the Board Settlement; agree upon the mechanics for the transition
of directors; and resolve any outstanding issues, Mr. Cargill
maintains.
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh baked
bread and sweet goods, under various national brand names,
including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R),
Merita(R) and Drake's(R). The Company employs approximately
32,000 in 54 bakeries, more than 1,000 distribution centers and
1,200 thrift stores throughout the U.S. The Company and seven of
its debtor-affiliates filed for chapter 11 protection on
September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric
Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate,
Meagher & Flom LLP, represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they listed $1,626,425,000 in total assets and
$1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior
subordinated convertible notes due Aug. 15, 2014, on Aug. 12,
2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue
No. 54; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
JOSE ORTEGA: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: Jose Lorenzo Ortega
197 West Highway 98
Calexico, CA 92231
Bankruptcy Case No.: 06-03848
Chapter 11 Petition Date: December 6, 2006
Court: Southern District of California (San Diego)
Judge: Louise DeCarl Adler
Debtor's Counsel: Steven A. Wickman, Esq.
Wickman & Wickman
5151 Murphy Canyon Road, Suite 100
San Diego, CA 92123
Tel: (858) 292-9999
Fax: (858) 277-3456
Estimated Assets: $1 Million to $100 Million
Estimated Debts: $1 Million to $100 Million
The Debtor did not file a list of its 20 largest unsecured
creditors.
JP MORGAN: Fitch Holds Junk Rating on $2.4 Million Class H Certs.
-----------------------------------------------------------------
Fitch Ratings upgrades J.P. Morgan Commercial Mortgage Finance
Corp.'s mortgage pass-through certificates, series 1998-C6, as:
-- $15.9 million class E to 'AAA' from 'AA'; and,
-- $39.8 million class F to 'BBB-' from 'BB+'.
In addition, Fitch affirms the following classes:
-- $137.6 million class A-3 at 'AAA';
-- Interest-only class X at 'AAA';
-- $47.8 million class B at 'AAA';
-- $39.8 million class C at 'AAA';
-- $47.8 million class D at 'AAA'; and,
-- $19.9 million class G at 'B-'.
The $2.4 million class H remains at 'C/DR5'.
Classes A1 and A2 have paid in full.
The upgrade and affirmations are due to increased subordination
levels as a result of loan payoffs and amortization. As of the
November 2006 distribution date, the pool's certificate balance
has been reduced 56% to $351 million from $796.4 million at
issuance. Currently there are 51 loans and at issuance there were
91.
Six assets have been identified as Fitch Loans of Concern,
including the one specially serviced asset, a 26,500 square foot
retail shopping center in Calumet City, Illinois. The asset
transferred to special servicing in October 2006 due to imminent
default caused by a 50% decrease in occupancy. The asset is
30 days delinquent and the special servicer is evaluating workout
options.
Of the original four investment grade credit assessed loans in the
pool, two have paid in full and two maintain their investment
grade credit assessments.
The Crystal Gateway Marriott is a 697-room full-service hotel in
Arlington, Virginia. Third-quarter 2006 servicer-provided debt
service coverage ratio based on net operating income was
2.86x compared to year-end 2005 at 2.45x. Occupancy remained
stable at 82%.
Four and Five Skyline Drive are two office buildings in Falls
Church, Virginia, with a total of 509,808 sf. Servicer-provided
DSCR based on NOI for third-quarter 2006 was 2.94x compared to YE
2005 of 2.77x. Occupancy increased 1% to 99%.
JPMCC 2005-LDP5: Fitch Holds Low-B Ratings on Six Cert. Classes
---------------------------------------------------------------
Fitch Ratings affirms JPMCC 2005-LDP5 commercial mortgage pass-
through certificates as:
-- $237.1 million class A-1 certificates at 'AAA';
-- $200 million class A-2FL certificates at 'AAA';
-- $297.5 million class A-2 certificates at 'AAA';
-- $171.5 million class A-3 certificates at 'AAA';
-- $1,395.9 million class A-4 certificates at 'AAA';
-- $169.5 million class A-SB certificates at 'AAA';
-- $451.5 million class A-1A certificates at 'AAA';
-- Interest only classes X-1 and X-2 at 'AAA';
-- $419.7 million class A-M certificates at 'AAA';
-- $299 million class A-J certificates at 'AAA';
-- $26.2 million class B certificates at 'AA+';
-- $73.4 million class C certificates at 'AA';
-- $42 million class D certificates at 'AA-';
-- $21 million class E certificates at 'A+';
-- $52.5 million class F certificates at 'A';
-- $36.7 million class G certificates at 'A-';
-- $52.5 million class H certificates at 'BBB+';
-- $42 million class J certificates at 'BBB';
-- $63 million class K certificates at 'BBB-';
-- $26.2 million class L certificates at 'BB+';
-- $15.7 million class M certificates at 'BB';
-- $15.7 million class N certificates at 'BB-';
-- $5.2 million class O certificates at 'B+';
-- $5.2 million class P certificates at 'B';
-- $10.5 million class Q certificates at 'B-'.
Fitch does not rate the NR or HG classes.
The rating affirmations reflect stable transaction performance and
minimal paydown since issuance. As of the December 2006
distribution date, the pool's aggregate certificate balance
decreased 0.35% to $4.31 billion from $4.33 billion at issuance.
Currently there is one loan (0.3%) in special servicing. The
specially serviced loan is secured by three multifamily complexes
in Birmingham, Alabam. The loan was transferred to the special
servicer due to monetary default and is currently 90+ days
delinquent. The special servicer is working with the borrower to
bring the loan current.
Fitch reviewed credit assessments on three loans: Brookdale Office
Portfolio, Houston Galleria and Jordan Creek. All loans maintain
their investment grade credit assessments due to their stable
performance since issuance.
Brookdale Office Portfolio is secured by 21 office buildings
totaling 306,566 square feet located in various states. The loan
consists of an A note and a B note, with only the A note in the
trust. As of September 2006, the weighted average portfolio
occupancy increased significantly to 93% from 84.1% at issuance.
Houston Galleria is secured by a 1,328,776-sf retail property
located in Houston, TExas. The loan consists of A-1 and A-2
notes, a B note and a C note, with only the A-1 note in the trust.
As of September 2006, occupancy remained stable since issuance at
93%.
Jordan Creek is secured by a 939,085-sf retail property in West
Des Moines, Iowa. The loan consists of an A note and a B note,
with only the A note in the trust. As of September 2006, the
occupancy of the collateral increased to 90.8% from 85.9% at
issuance.
KNOBLAUCH BUILDERS: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Knoblauch Builders, Inc.
1000 Bristol Pike
Bensalem, PA 19020
Bankruptcy Case No.: 06-15934
Type of Business: The Debtor is a home builder and contractor.
See http://www.knoblauchbuilders.com/
Chapter 11 Petition Date: December 15, 2006
Court: Eastern District of Pennsylvania (Philadelphia)
Judge: Eric L. Frank
Debtor's Counsel: Albert A. Ciardi, III, Esq.
Ciardi & Ciardi, P.C.
One Commerce Square
2005 Market Street, Suite 2020
Philadelphia, PA 19103
Tel: (215) 557-3550
Fax: (215) 557-3551
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
TKB Management Services, Inc. $2,888,857
9 Appaloosa Court
Holland, PA 18966
IUPAT District Council 21 $208,942
2980 Southampton-Byberry Road
Philadelphia, PA 19154
Internal Revenue Service $182,762
Special Procedures
P.O. Box 12051
Philadelphia, PA 19155
Laborers' Union $137,122
c/o Delinquent Committee
District Counsel
1361 Ridge Avenue
Philadelphia, PA 19123
Wachovia $137,122
P.O. Box 7558
Philadelphia, PA
CPI $101,142
Peter Bradely Construction, Inc. $97,725
Building Specialties $60,286
Tru-Fit Frame & Door Corp. $57,248
American Express - New Jersey $56,536
Bucks County Bank $32,443
Chase $28,214
American Express - Florida $25,783
Chase Bank One $25,768
PA Department of Revenue $22,608
City of Philadelphia (PRTax) $18,048
MBNA America $17,952
PA Unemployment Compensation $17,801
George F. Kempf Supply Co. $17,667
Capital One $15,713
KYPHON INC: S&P Rates $675 Million Senior Secured Facility at B+
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to Sunnyvale, California-based medical device
manufacturer Kyphon Inc. The rating outlook is positive.
At the same time, Standard & Poor's assigned its loan and recovery
ratings to Kyphon's $675 million senior secured credit facility,
consisting of a $300 million revolver maturing in 2011 and a $375
million term loan maturing in 2014. The credit facility is rated
'B+' (at the same level as the corporate credit rating) with a
recovery rating of '2', indicating the expectation for substantial
(80%-100%) recovery of principal in the event of a payment
default.
Proceeds mainly will be used to fund the company's $725 million
acquisition of medical device manufacturer, St. Francis Medical
Technologies Inc.
"The ratings on Kyphon reflect the company's heavy reliance on one
product line (its KyphX(R) balloon kyphoplasty products) and
concentration in spine-related technologies, as well as litigation
risk, its indirect exposure to Medicare reimbursement, and its
significant debt leverage," said Standard & Poor's credit analyst
Jesse Juliano. "These concerns are partially offset by
the success of the KyphX(R) products, the company's worldwide
direct sales force of nearly 420 representatives, and its growth
potential and substantial cash flow."
Following the St. Francis acquisition, Kyphon is expected to have
about $425 million of debt. The company's financial risk profile
is consistent with the current rating, given a pro forma lease-
adjusted debt-to-EBITDA ratio of around 4x and EBITDA interest
coverage of just less than 4x. These ratios do not include the
revenue-based contingent payment of up to $200 million, which is
due in 2008 and is part of Kyphon's $725 million purchase price
for St. Francis. While the company can meet this obligation
through stock or cash, S&P has have conservatively estimated in
our analysis that it will use 100% cash. However, S&P believes
that current growth in sales could dramatically improve Kyphon's
financial risk profile in a very short period of time.
MARCLAR N GROUP: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Marclar N Group
9163 West Union Hills Drive, Suite 106-16
Peoria, AZ 85302
Bankruptcy Case No.: 06-04218
Chapter 11 Petition Date: December 14, 2006
Court: District of Arizona (Phoenix)
Judge: Redfield T. Baum Sr.
Debtor's Counsel: David Allegrucci, Esq.
Allegrucci Law Office PLLC
18001 North 79th Avenue, Suite B-46
Glendale, AZ 85308
Tel: (623) 412-2330
Fax: (623) 878-9807
Total Assets: $7,240
Total Debts: $1,000,137
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Marsha & Clarence Dickerson $400,000
10519 West Daley Lane
Peoria, AZ 85383
Border Products Corp. - Arizona $147,842
[address not provided]
Marvel $131,233
P.O. Box 5836
Phoenix, AZ 85010
Hanson Aggregates $114,272
Department 0912
P.O. Box 120001
Dallas, TX 75063
American Express $37,925
P.O. Box 297879
Fort Lauderdale, FL
Associate Fence of Glendale $19,000
A & H Iron Works $13,000
Shorty's Concrete $9,636
Rock & Rolling $8,988
Tremors Underground $7,960
Leaf Financial $7,000
RSC Equipment $6,958
White Cap Construction aka Southwest Reabar $6,630
Smith's Precast/Shorty's Concrete $6,276
Pioneer Sand Company $6,212
Superior Grout $4,767
Chase $4,709
Visa $4,709
Border Products Corp. - Arizona $4,551
Arid Solutions Nursery $4,509
MERIDIAN AUTOMOTIVE: Expects to Emerge from Ch. 11 on December 29
-----------------------------------------------------------------
Meridian Automotive Systems Inc. and its debtor-affiliates
anticipate that their Fourth Amended Joint Plan of Reorganization
will become effective as of Dec. 29, 2006, Edward J. Kosmowski,
Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington,
Delaware, relates.
The Plan will be become effective only when these conditions have
been waived or satisfied:
* The Confirmation Order has been entered;
* Each exhibit, document or agreement to be executed in
connection with the Plan has been in substantially the form
filed with the Court;
* The Debtors have fulfilled or waived certain transactions
contemplated in the Plan, including the incorporation of
Reorganized Meridian as a Delaware corporation and wholly
owned subsidiary of Meridian Automotive Systems, Inc., and
the securing of the Exit Financing; and
* The Court has entered a final order granting the Debtors'
requests to assume or reject, as the case may be, various
unexpired contracts and leases, or those Motions have been
waived by the Debtors.
As of the Effective Date, the Distributions and rights provided
in the Plan and the treatment of claims and interests under the
Plan will be in exchange for and in complete satisfaction,
discharge and release of all claims, and satisfaction or
termination of all Prepetition Meridian Interests, including any
interest accrued on claims from and after the Petition Date, Mr.
Kosmowski notes.
In addition, all entities will be precluded from asserting
against the Debtors, the Reorganized Debtors, or their successors
or property, any other or further claims, demands, debts, rights,
causes of action, liabilities or equity interests based upon any
act, omission, cause, transaction, state of facts, or other
activity of any kind or nature that occurred prior to the
Effective Date.
Furthermore, all persons who have held, hold, or may hold claims
against or interests in the Debtors will be permanently enjoined
from:
-- commencing or continuing any action against the Reorganized
Debtors and their estates
-- enforcing, attaching, collecting or recovering in any
manner any judgment, award, decree or order;
-- creating, perfecting or enforcing any lien or encumbrance
on the Reorganized Debtors and their estates; and
-- asserting a set-off or right of subrogation of any kind
against any debt, liability or obligation due to the
Debtors.
Any and all professional persons employed by the Debtors or the
Official Committee of Unsecured Creditors will have until
Feb. 12, 2007, to file and serve their applications for final
allowance of fees and expenses, Mr. Kosmowski states.
Headquartered in Dearborn, Mich., Meridian Automotive Systems
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers. Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers. The Company and its debtor-affiliates filed for
chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos.
05-11168 through 05-11176). James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts. Eric E. Sagerman, Esq.,
at Winston & Strawn LLP represents the Official Committee of
Unsecured Creditors. The Committee also hired Ian Connor
Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A.,
to prosecute an adversary proceeding against Meridian's First Lien
Lenders and Second Lien Lenders to invalidate their liens. When
the Debtors filed for protection from their creditors, they listed
$530 million in total assets and approximately $815 million in
total liabilities. Judge Walrath has confirmed the Revised Fourth
Amended Reorganization Plan of Meridian. (Meridian Bankruptcy
News, Issue No. 47; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
MORGAN STANLEY: Fitch Holds Junk Rating on $5.3MM Class M Certs.
----------------------------------------------------------------
Fitch Ratings upgrades these classes of Morgan Stanley Capital I
Inc.'s commercial pass-through certificates, series 1998-WF2:
-- $21.2 million class F to 'AA' from 'AA-'; and,
-- $23.9 million class G to 'A-' from 'BBB+'.
In addition, Fitch affirms the following classes:
-- $323.9 million class A-2 at 'AAA';
-- Interest only class X at 'AAA';
-- $53.1 million class B at 'AAA';
-- $47.8 million class C at 'AAA';
-- $53.1 million class D at 'AAA';
-- $21.2 million class E at 'AAA';
-- $10.6 million class H at 'BBB';
-- $8 million class J at 'BBB-';
-- $8 million class K at 'BB'; and,
-- $15.9 million class L at 'B-'.
The $5.3 million class M remains at 'CCC'.
Fitch does not rate the $2.5 million class N.
The class A-1 certificates have paid in full.
The rating upgrades reflect the increased credit enhancement due
to scheduled amortization and loan payoffs, as well as the
additional defeasance of one loan since Fitch's last rating
action. As of the December 2006 distribution date, the pool's
aggregate balance has been reduced 44% to $594.6 million from
$1.06 billion at issuance. Since issuance, six loans have
defeased.
There are currently no delinquent or specially serviced loans.
NATIONAL ENERGY: Issues 10,868,562 Common Shares to Charter
-----------------------------------------------------------
National Energy Services Company, on Dec. 18, 2006, issued
10,868,562 shares of common stock to Charter Management, LLC. The
common shares were issued upon conversion of all of the
outstanding Series A Preferred Stock issued to Charter.
The Series A preferred shares convert at a ratio of 58:1 into
shares of common stock. As of July 31, 2006, no preferred shares
have been converted.
The company disclosed in its 10-QSB filing on Sept. 14, 2006, that
it has signed a master agreement with Charter for the purpose of
obtaining financing from Charter for its projects.
Headquartered in Egg Harbor Township, New Jersey, National Energy
Services Company, Inc. -- http://www.nescorporation.com/-- the
Company is engaged in the business of marketing a comprehensive
energy management program for long- term care and hospitality
facilities. The program features an upgrade to lighting fixtures,
improved heating, venting and air conditioning (HVAC) equipment,
ozone laundry support systems (OLSS). The facilities generally
recover the cost of these renovations through the monthly energy
savings, resulting in no out-of-pocket costs to the facility.
* * *
As reported in the Troubled Company Reporter on March 22, 2006,
Bagell Josephs & Company LLC expressed substantial doubt about
National Energy Services Company, Inc.'s ability to continue as a
going concern after it audited the Company's financial statements
for the fiscal years ended Oct. 31, 2005 and 2004. The auditing
firm pointed to the company's substantial net losses for the years
ended Oct. 31, 2005 and 2004 that has resulted in substantial
accumulated deficits.
NAUTILUS RMBS: Fitch Holds Rating on $17 Mil. Class C Notes at BB
-----------------------------------------------------------------
Fitch affirms all classes of notes issued by Nautilus RMBS CDO II
Ltd.
These affirmations are the result of Fitch's review process and
are effective immediately:
-- $211,200,242 class A-1S notes at 'AAA';
-- $28,128,778 class A-1J notes at 'AAA';
-- $27,191,152 class A-2 notes at 'AA';
-- $33,754,534 class A-3 notes at 'A';
-- $21,565,397 class B notes at 'BBB'; and,
-- $17,814,893 class C notes at 'BB'.
Nautilus RMBS II Ltd. is a cash collateralized debt obligation
managed by RCG Helm, LLC which closed December 20, 2005. The
portfolio is comprised of RMBS.
Deleveraging of the transaction has led to increased credit
enhancement levels for all classes of notes. All
overcollateralization and interest coverage tests are passing the
covenants. The Weighted Average Spread and Fitch Weighted Average
Rating Factor have decreased since the original rating. And the
Weighted Average Coupon has increased from since the original
rating.
The ratings of class A-1S, A-1J, and A-2 notes address the
likelihood that investors will receive full and timely payments of
interest as per the governing documents, as well as the aggregate
outstanding amount of principal by the stated maturity date. The
ratings of the class A-3, class B, and class C notes address the
likelihood that investors will receive ultimate interest payments
as per the governing documents, as well as the aggregate
outstanding amount of principal by the stated maturity date.
Fitch will continue to monitor and review this transaction for
future rating adjustments.
NORAMPAC INC: Moody's to Lift Ratings on Acquisition Completion
---------------------------------------------------------------
Moody's Investors Service confirmed Cascades Inc.'s Ba2 corporate
family rating and its Ba3 senior unsecured rating.
Moody's also assigned Baa3 ratings to Cascades' new
CDN$650 million senior secured revolver and CDN$100 million senior
secured term loan.
Finally, Moody's announced that it will upgrade Norampac's senior
unsecured rating to Ba3 from B1 upon completion of the acquisition
by Cascades of the 50% of Norampac it does not already own, and on
the basis that the Norampac notes will become a direct obligation
of Cascades when the liquidation of Norampac into Cascades is
complete.
The ratings reflect the overall probability of default of
Cascades, to which Moody's affirms the PDR of Ba2. The senior
unsecured ratings of Ba3 reflect a loss given default of LGD5
(72%) and the senior secured ratings of Baa3 reflect a loss given
default of LGD2 (18%). The existing revolver and term loan
ratings of Cascades and Norampac will be withdrawn when the
acquisition of Norampac is complete. This completes the review of
Cascades begun on Dec. 5, 2006, when the acquisition of Norampac
was announced. The rating outlook is stable.
Cascades' Ba2 corporate family rating reflects the diversity
derived from its boxboard, packaging and tissue businesses and,
with its full consolidation of Norampac, its significant position
in the Canadian containerboard segment. The ratings also consider
that Cascades and Norampac will have paid down approximately
CDN$190 million of debt this year, prior to Cascades increasing
debt to fund a portion of the Norampac acquisition.
At the same time, the ratings consider the CDN$310 million of
incremental debt taken on to fund the acquisition and Cascades'
debt protection measures, which are slightly weak for the rating.
However, Moody's notes that Cascades is issuing CDN$250 million of
new equity and that, notwithstanding the incremental debt taken on
to fund the acquisition, its debt protection measures improve
somewhat given the full consolidation of Norampac's more lowly
levered operations, coupled with access to 100% of Norampac's cash
flow. The Ba2 rating also reflects Cascades' exposure to the
stronger Canadian dollar, to cyclical pricing, particularly in the
containerboard and boxboard segments, and to volatile raw material
costs, especially recycled fibers, as well as energy and
chemicals. The ratings also reflect the company's penchant for
conducting relatively small, but debt financed acquisitions. The
rating outlook is stable.
Ratings confirmed:
Cascades Inc.
Corporate Family Rating: Ba2
PDR: Ba2
$675 million Sr. Unsecured Notes due 2013, Ba3
Ratings to be upgraded upon completion of the acquisition of
Norampac:
Norampac Inc.
$250 million 6.75% Sr. Unsecured Notes due 2013, to Ba3 from B1
Ratings to be withdrawn upon completion of the acquisition of
Norampac:
Cascades Inc.
CDN$450 mm Revolving Facility due 2010, Ba1
CDN$100 mm Term Loan Facility due 2012, Ba1
Norampac Inc.
Corporate Family Rating, Ba3, RUR, Direction Uncertain
PDR: Ba3, RUR, Direction Uncertain
CDN$325 mm Revolving Facility due 2011, Ba2, RUR, Direction
Uncertain
The most recent rating action for Cascades was to place its
ratings under review for possible downgrade on Dec. 5, 2006. The
most recent rating action for Norampac was to place its ratings
under review, with direction uncertain, also on Dec. 5, 2006
Headquartered in Montreal, Quebec, Norampac is a containerboard
producer and had sales in 2005 of CDN$1.3 billion.
Headquartered in Kingsey Falls, Quebec, Cascades Inc. is a
packaging and paper company producing boxboard, containerboard,
specialty packaging products and tissue, and had sales in 2005 of
CDN$3.5 billion.
NORTHWEST AIRLINES: Amends Airline Services Pact with Pinnacle
--------------------------------------------------------------
Northwest Airlines Inc. and Pinnacle Airlines Corp. have reached
an agreement for an amended and restated Airline Services
Agreement between the two parties, subject to confirmation by the
bankruptcy court overseeing Northwest's chapter 11 bankruptcy
proceedings. The agreement provides, among other things, that
Pinnacle will continue to be a long-term partner of Northwest
through at least 2017.
In addition to reaching terms on an Amended ASA, Northwest and
Pinnacle have also reached an agreement on certain corporate
governance issues and agreed that Pinnacle will receive an allowed
unsecured claim of $377.5 million in Northwest's bankruptcy
proceedings in settlement of all claims that Pinnacle may have
against Northwest. Once approved, the Amended ASA and related
agreements will become effective Jan. 1, 2007.
"All of us at Pinnacle are pleased and proud to continue our
relationship with Northwest Airlines," said Philip H. Trenary,
President and CEO of Pinnacle Airlines Corp. "By working together
and flying one of the most reliable, cost-efficient fleets of
regional jets in the world, our People have positioned Pinnacle as
one of Northwest's most valuable contributors. This is a win for
all parties."
Operations Restrictions for Other Airlines Removed
The Amended ASA removes all restrictions preventing Pinnacle from
using its wholly owned subsidiary, Pinnacle Airlines, Inc., to
provide regional airline services to other major airlines, with
the exception of operating flights into or out of Northwest's hub
cities of Minneapolis/St. Paul, Detroit, and Memphis. Pinnacle
may also operate aircraft with seating capacities of 76 seats, or
such other size that does not cause Northwest to violate its
collective bargaining agreement with its pilots union. Further,
the existing provision that requires Pinnacle to allocate its
overhead between multiple operations, thus reducing the amount
Northwest pays to Pinnacle for overhead, will not be applicable
until Pinnacle has added at least 24 aircraft with another
partner.
Fleet Size
The Amended ASA will provide that Pinnacle will retain its
existing fleet of 124 CRJ-200 aircraft. Pinnacle's fleet size
will further be adjusted under these conditions:
-- 17 CRJ-200/440 aircraft will be delivered to Pinnacle during
2007. Northwest will commit to either a three- or ten-year
term for these aircraft with Pinnacle prior to March 31,
2007. However, if Pinnacle has not entered into an amended
collective bargaining agreement with the Airline Pilots
Association, the union representing its pilots, prior to
March 31, 2007, Northwest will have an ongoing option to
remove these 17 aircraft from Pinnacle at any time at a rate
of three aircraft per month. Pinnacle's contract with ALPA
is currently amendable.
-- To the extent that Pinnacle operates regional jets on behalf
of another major airline, Northwest will have limited rights
to remove some aircraft from Pinnacle's fleet. Northwest
may remove one aircraft for every two aircraft that Pinnacle
operates for another partner above an initial base of 20
regional jets. Northwest may remove no more than 20
aircraft subject to this option and no more than five
aircraft in any 12-month period. Notably, Northwest may
only exercise this option if the removed aircraft are not
operated by or on behalf of Northwest after their removal.
-- Northwest may exchange CRJ-200 aircraft in Pinnacle's fleet
for aircraft configured with 70 or more seats on a one-for-
one basis and on similar economic terms and conditions.
-- If Northwest enters into any merger or acquisition agreement
with another major air carrier prior to completing its
bankruptcy proceedings, then Northwest may remove from
Pinnacle's fleet the 17 aircraft to be added during 2007
plus an additional 24 aircraft. Once Northwest has
completed its bankruptcy proceedings, it will no longer have
this option.
Amended ASA Term
The term of the Amended ASA as it relates to Pinnacle's existing
fleet of 124 aircraft will extend through Dec. 31, 2017, subject
to renewal at Northwest's option for successive five-year terms.
Northwest's Rights Upon a Pinnacle Change of Control
The existing ASA provided that Northwest may terminate that
agreement upon a change of control of Pinnacle. Under the Amended
ASA, upon a change of control occurring after Jan. 1, 2008,
Northwest will no longer have the option to terminate the
agreement, but instead will have the option to remove up to 62
aircraft from Pinnacle over a three-year period, and the option to
extend the Amended ASA for another five years without the
obligation to reset rates. In addition, certain operating
performance measurement formulas would be revised in Northwest's
favor.
Preferred Share Purchase Agreement
Pinnacle and Northwest will enter into a Share Purchase Agreement
requiring Pinnacle to redeem its Class A Preferred Share held by
Northwest for a price of $20 million on Jan. 2, 2008, subject to
bankruptcy court approval. If Northwest enters into any merger or
acquisition agreement with another major air carrier as part of
its reorganization proceedings and elects to remove any aircraft
from Pinnacle, then the redemption price of the Class A Preferred
Share will be reduced to a nominal amount. The Class A preferred
share entitles Northwest to appoint two members of Pinnacle's
Board of Directors and also gives Northwest consent rights for
changes to its articles of incorporation and bylaws.
In addition, the Class A Preferred Share provides consent rights
to merger or acquisition transactions involving another airline
with annual revenues greater than $500 million. Additionally, the
existing ASA includes a termination provision if Northwest does
not consent to any replacement of Pinnacle's chief executive
officer. After the Class A Preferred Share is redeemed on Jan. 2,
2008, Northwest will no longer retain these corporate governance
rights.
Claim Resolution Agreement
In a separate agreement, Northwest and Pinnacle have agreed
that Pinnacle will receive an allowed unsecured claim of
$377.5 million, subject to bankruptcy court approval, against
Northwest in its bankruptcy proceedings in settlement of all
amounts that Northwest may owe to Pinnacle for pre-petition claims
and the economic adjustments provided for in the Amended ASA. The
allowed unsecured claim will be reduced by:
-- $13.6 million, if Northwest commits the 17 aircraft added
to Pinnacle for a period of three years and
-- $42.5 million, if the 17 aircraft are committed for a
period of ten years.
Pinnacle will retain the right to assert an additional claim
should Northwest enter into a merger or acquisition agreement with
another major airline as part of its plan of reorganization and
elect to remove up to 24 aircraft above the 17 aircraft delivered
in 2007; however, such claim would be reduced by the $20 million
decrease in Pinnacle's purchase price paid to Northwest for the
Series A Preferred share.
Aircraft Security Deposits
The Amended ASA and related aircraft subleases will provide that
Northwest will retain the $24.6 million it is currently holding as
a security deposit for the existing fleet of 124 aircraft and the
17 aircraft to be added during 2007. Pinnacle will pay a security
deposit equal to one month's rent for any aircraft that is
subleased from Northwest and operated under the Amended ASA.
Pinnacle's current obligation to pay a second month's deposit on
its existing fleet under certain circumstances will be removed
from the aircraft subleases.
Restructured Economics
Both the existing ASA and the Amended ASA provide a monthly margin
payment calculated to achieve a target operating margin, based on
reimbursement payments and payments based on pre-set rates. The
Amended ASA will provide for Pinnacle to charge Northwest current
market rates for regional airline services.
Specifically, three major items of compensation will change for
Pinnacle.
First, Northwest will provide jet fuel to Pinnacle at no charge to
Pinnacle, and fuel will be removed as a revenue and expense item
from Pinnacle's statement of operations. As fuel will no longer
be an expense item, Pinnacle will no longer receive its target
margin on fuel expense.
Second, the amount that Pinnacle pays to sublease aircraft from
Northwest will be reduced under the Amended ASA and related
aircraft subleases. Pinnacle will continue to receive its target
margin on the reduced aircraft rent.
Third, Pinnacle's target margin rate will be reduced from 10% to
8%. The reset of the target margin to industry average in 2008
has also been eliminated. These new rates will remain in effect
until 2013, when the rates will be reset.
Had they been in effect, the changes in the Amended ASA would have
reduced Pinnacle's operating income for the nine months ended
Sept. 30, 2006 by approximately $30 million.
Assuming Pinnacle reaches agreement with ALPA prior to March 31,
2007 and is able to retain the 17 aircraft to be delivered in
2007, Pinnacle expects that its operating income associated with
the Amended ASA will be approximately $50 million for the year
ended Dec. 31, 2007. This estimate does not include any earnings
from other sources, including potential earnings associated with
the value Pinnacle might receive from the sale of its allowed
unsecured claim against Northwest.
Under generally accepted accounting principles, Pinnacle will
defer and amortize over the remaining eleven-year term of the
Amended ASA the realized value of its allowed unsecured claim
against Northwest that is associated with foregone future earnings
under the existing ASA. In addition, Pinnacle will likely
amortize the $20 million cost of the redemption of its Class A
Preferred Share over the remaining eleven-year term of the Amended
ASA after Pinnacle redeems it in 2008. The net impact of these
items will not be fully determined until Pinnacle assesses the
fair value of its allowed unsecured claim, but the company
believes that the impact will be a material non-cash increase in
its ongoing net earnings.
Contingent on Final Bankruptcy Court Approval
The Amended ASA, the Share Purchase Agreement and the Claim
Resolution Agreement are subject to the approval by the bankruptcy
court overseeing Northwest's bankruptcy proceedings. Northwest
will file an appropriate motion with the bankruptcy court seeking
approval of these agreements and certain amendments to aircraft
subleases in effect between the parties. Any creditor or party-
in-interest, including the Official Committee of Unsecured
Creditors of Northwest Airlines Corp, et al., may file an
objection to this motion and, regardless of whether any such
objections are filed, the bankruptcy court may not approve the
motion, in which case the Amended ASA, the Share Purchase
Agreement, the Claims Resolution Agreement and the amendments to
the aircraft sublease agreements would not become effective.
Furthermore, even if the motion is approved by the bankruptcy
court, the Amended ASA could later be rejected by Northwest in its
bankruptcy proceedings.
In addition, the existing ASA could be rejected by Northwest or
its successor under applicable provisions of the Bankruptcy Code
prior to any approval of the motion. If either rejection were to
occur, Pinnacle would file a claim against Northwest or its
successor arising out of such rejection of either the existing ASA
or the Amended ASA. However, such rejection would nevertheless
have a materially adverse impact on Pinnacle's financial condition
and results of operations.
About Pinnacle Airlines
Headquartered in Memphis, Tennessee, Pinnacle Airlines, Corp.
(NASDAQ: PNCL) fka Express Airlines I operates through its wholly
owned subsidiary, Pinnacle Airlines, Inc., as a regional airline
that provides airline capacity to Northwest Airlines, Inc.
Pinnacle operates as a Northwest Airlink carrier at Northwest's
domestic hub airports in Detroit, Minneapolis/St. Paul and Memphis
and the focus city of Indianapolis. Pinnacle currently operates
an all-jet fleet of 124 Canadair Regional Jets and offers
scheduled passenger service with 709 daily departures to 110
cities in 36 states and three Canadian provinces. Pinnacle
Airlines employs approximately 3,450 People.
About Northwest Airlines
Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/
-- is the world's fourth largest airline with hubs at Detroit,
Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and
approximately 1,400 daily departures. Northwest is a member of
SkyTeam, an airline alliance that offers customers one of the
world's most extensive global networks. Northwest and its travel
partners serve more than 900 cities in excess of 160 countries on
six continents. The Company and 12 affiliates filed for chapter
11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No.
05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq.,
at Cadwalader, Wickersham & Taft LLP in New York, and Mark C.
Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in
Washington represent the Debtors in their restructuring efforts.
The Official Committee of Unsecured Creditors has retained Akin
Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the
Debtors' chapter 11 cases. When the Debtors filed for protection
from their creditors, they listed $14.4 billion in total assets
and $17.9 billion in total debts. The Debtors' exclusive period
to file a chapter 11 plan expires on Jan. 16, 2007.
PACIFIC LUMBER: Revenue Concerns Prompt S&P's Negative Outlook
--------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Pacific
Lumber Co. to negative from developing.
At the same time, the rating agency affirmed the company's 'CCC'
corporate credit rating.
"The outlook revision was prompted by our concern that low lumber
prices will continue to cause weaker-than-expected earnings for
Pacific Lumber," said Standard & Poor's credit analyst Pamela
Rice.
In November 2006, Pacific Lumber's parent, Maxxam Inc., made a
loan to the company to cure a minimum EBITDA covenant default
under its credit agreement at Sept. 30, 2006.
"Prospects for lower timber harvests and weak prices may
negatively affect the company's ability to meet financial
covenants in future quarters," Ms. Rice said.
"We could lower the ratings if Pacific Lumber is unable to amend
its financial covenants under its credit agreement."
Pacific Lumber and its wholly owned subsidiary and primary log
supplier, Scotia Pacific, continue to struggle with poor financial
results.
"We could also lower the ratings if Scotia Pacific fails to meet
its financial obligations or if it files for bankruptcy protection
and we then expect that the courts will force Pacific Lumber into
the filing. We are unlikely to take any positive rating action on
Pacific Lumber in the near term unless Scotia Pacific is able to
increase its harvest significantly or otherwise refinance its debt
to allow it to meet its interest and payments," Ms. Rice added.
PATRIOT MEDIA: Moody's Holds Corporate Family Rating at B1
----------------------------------------------------------
Moody's affirmed Patriot Media & Communications CNJ, LLC B1
corporate family rating, stable outlook and B1 probability of
default rating as well as the Ba3 first lien rating and B3 second
lien rating.
Patriot's corporate family rating is constrained by its financial
risk, including low fixed charge coverage, increasing competition
and lack of scale. The ratings benefit, however, from the
company's attractive assets, management's track record in
reduction of leverage and high collateral value given today's
private market valuations.
Patriot faces high financial risk with leverage of 5.7x
debt-to-EBITDA and interest coverage at 2x EBITDA-to-interest
expense for the LTM period ending Sept. 30, 2006. The company's
fixed coverage leverage is relatively low at about 1x EBITDA. The
company's leverage has declined by more than one turn since the
last year, as Patriot's EBITDA has grown due to both revenue and
margin expansion. While Moody's believes that the leverage is
likely to continue to decline with EBITDA growth, the rate of
decline will be lower given anticipated growth in competition.
Affirm:
-- B1 Corporate Family Rating;
-- B1 Probability of Default Rating;
-- Stable Outlook;
-- Ba3, LGD3, 40% Senior Secured First Lien Term Loan;
-- Ba3, LGD3, 40% Senior Secured Revolving Credit Facility;
and,
-- B3, LGD6, 91% Senior Secured 2nd Lien Term Loan.
Patriot Media & Communications CNJ, LLC is a multiple system cable
operator serving approximately 80,000 subscribers located in
central New Jersey. Its LTM revenue through Sept. 30, 2006, was
approximately $98 million. The company maintains its headquarters
in Greenwich, Connecticut.
PEABODY ENERGY: Prices $675 Million Junior Subordinated Debentures
------------------------------------------------------------------
Peabody Energy has priced $675 million principal amount of
convertible junior subordinated debentures due 2066. The
debentures will pay interest semiannually at a rate of 4.75% per
year and the initial conversion price is $61.95.
The company has granted the underwriters an option to purchase up
to an additional $75 million of debentures to cover over-
allotments.
The debentures are convertible under certain circumstances,
including when the price of the shares reaches $86.73. Upon
conversion, holders will receive cash in the amount of, or
preferred stock with a liquidation preference equal to, the
principal amount, and only any value in excess of the principal
amount will be delivered in the company's common stock.
The company disclosed that it will use commercially reasonable
efforts to raise net proceeds by issuing securities to pay holders
the principal amount of the debentures, together with accrued and
unpaid interest, on Dec. 15, 2041, the scheduled maturity date.
Net proceeds of the offering, are expected to be used primarily to
repay debt under the company's revolving credit facility and term
loan facility, which partly financed the recent acquisition of
Excel Coal Limited, and for other corporate purposes.
Lehman Brothers Inc., Morgan Stanley & Co. Incorporated and
Citigroup Global Markets Inc. are the joint book running managers
for the offering.
Copies of the prospectus supplement relating to the offering may
also be obtained from:
Lehman Brothers
c/o ADP Financial Services
Integrated Distribution Services
1155 Long Island Avenue,
Edgewood, NY 11717
Tel. No: (888) 603-5847
Fax: (631) 254-7268
Morgan Stanley
Attention: Prospectus Department
180 Varick Street, 2/F
New York, NY 10014
Tel. No: (866) 718-1649
Citigroup Global Markets Inc.
Brooklyn Army Terminal
140 58th Street, 8th Floor
Brooklyn, NY 11220
Tel. No: (718) 765-6732
Fax: (718) 765-6734.
Headquartered in St. Louis, Missouri, Peabody Energy Corp.
(NYSE: BTU) -- http://www.peabodyenergy.com/-- is a private-
sector coal company, with 2005 sales of 240 million tons of coal
and $4.6 billion in revenues. Its coal products fuel 10% of all
U.S. and 3% of worldwide electricity.
* * *
As reported in the Troubled Company Reporter on Dec. 18, 2006,
Moody's Investors Service assigned Peabody Energy Corporation's
proposed $500 million convertible junior subordinated debentures a
rating of Ba2. The rating agency also revised Peabody's outlook
to stable from negative.
As reported in the Troubled Company Reporter on Dec. 15, 2006,
Fitch rated the $500 million convertible junior subordinated
debentures due 2066 at 'BB-'. The ratings of the $650 million
senior notes due 2013, the $250 million senior notes due 2016, the
$650 million senior notes due 2016, the $250 million notes due
2026, the $1.8 billion revolving credit facility, and the $950
million term loan facility are affirmed at 'BB+'.
The Rating Outlook is Stable.
PINNACLE AIRLINES: Amends Airline Services Pact with Northwest
--------------------------------------------------------------
Pinnacle Airlines Corp. and Northwest Airlines Inc. have reached
an agreement for an amended and restated Airline Services
Agreement between the two parties, subject to confirmation by the
bankruptcy court overseeing Northwest's chapter 11 bankruptcy
proceedings. The agreement provides, among other things, that
Pinnacle will continue to be a long-term partner of Northwest
through at least 2017.
In addition to reaching terms on an Amended ASA, Northwest and
Pinnacle have also reached an agreement on certain corporate
governance issues and agreed that Pinnacle will receive an allowed
unsecured claim of $377.5 million in Northwest's bankruptcy
proceedings in settlement of all claims that Pinnacle may have
against Northwest. Once approved, the Amended ASA and related
agreements will become effective Jan. 1, 2007.
"All of us at Pinnacle are pleased and proud to continue our
relationship with Northwest Airlines," said Philip H. Trenary,
President and CEO of Pinnacle Airlines Corp. "By working together
and flying one of the most reliable, cost-efficient fleets of
regional jets in the world, our People have positioned Pinnacle as
one of Northwest's most valuable contributors. This is a win for
all parties."
Operations Restrictions for Other Airlines Removed
The Amended ASA removes all restrictions preventing Pinnacle from
using its wholly owned subsidiary, Pinnacle Airlines, Inc., to
provide regional airline services to other major airlines, with
the exception of operating flights into or out of Northwest's hub
cities of Minneapolis/St. Paul, Detroit, and Memphis. Pinnacle
may also operate aircraft with seating capacities of 76 seats, or
such other size that does not cause Northwest to violate its
collective bargaining agreement with its pilots union. Further,
the existing provision that requires Pinnacle to allocate its
overhead between multiple operations, thus reducing the amount
Northwest pays to Pinnacle for overhead, will not be applicable
until Pinnacle has added at least 24 aircraft with another
partner.
Fleet Size
The Amended ASA will provide that Pinnacle will retain its
existing fleet of 124 CRJ-200 aircraft. Pinnacle's fleet size
will further be adjusted under these conditions:
-- 17 CRJ-200/440 aircraft will be delivered to Pinnacle during
2007. Northwest will commit to either a three- or ten-year
term for these aircraft with Pinnacle prior to March 31,
2007. However, if Pinnacle has not entered into an amended
collective bargaining agreement with the Airline Pilots
Association, the union representing its pilots, prior to
March 31, 2007, Northwest will have an ongoing option to
remove these 17 aircraft from Pinnacle at any time at a rate
of three aircraft per month. Pinnacle's contract with ALPA
is currently amendable.
-- To the extent that Pinnacle operates regional jets on behalf
of another major airline, Northwest will have limited rights
to remove some aircraft from Pinnacle's fleet. Northwest
may remove one aircraft for every two aircraft that Pinnacle
operates for another partner above an initial base of 20
regional jets. Northwest may remove no more than 20
aircraft subject to this option and no more than five
aircraft in any 12-month period. Notably, Northwest may
only exercise this option if the removed aircraft are not
operated by or on behalf of Northwest after their removal.
-- Northwest may exchange CRJ-200 aircraft in Pinnacle's fleet
for aircraft configured with 70 or more seats on a one-for-
one basis and on similar economic terms and conditions.
-- If Northwest enters into any merger or acquisition agreement
with another major air carrier prior to completing its
bankruptcy proceedings, then Northwest may remove from
Pinnacle's fleet the 17 aircraft to be added during 2007
plus an additional 24 aircraft. Once Northwest has
completed its bankruptcy proceedings, it will no longer have
this option.
Amended ASA Term
The term of the Amended ASA as it relates to Pinnacle's existing
fleet of 124 aircraft will extend through Dec. 31, 2017, subject
to renewal at Northwest's option for successive five-year terms.
Northwest's Rights Upon a Pinnacle Change of Control
The existing ASA provided that Northwest may terminate that
agreement upon a change of control of Pinnacle. Under the Amended
ASA, upon a change of control occurring after Jan. 1, 2008,
Northwest will no longer have the option to terminate the
agreement, but instead will have the option to remove up to 62
aircraft from Pinnacle over a three-year period, and the option to
extend the Amended ASA for another five years without the
obligation to reset rates. In addition, certain operating
performance measurement formulas would be revised in Northwest's
favor.
Preferred Share Purchase Agreement
Pinnacle and Northwest will enter into a Share Purchase Agreement
requiring Pinnacle to redeem its Class A Preferred Share held by
Northwest for a price of $20 million on Jan. 2, 2008, subject to
bankruptcy court approval. If Northwest enters into any merger or
acquisition agreement with another major air carrier as part of
its reorganization proceedings and elects to remove any aircraft
from Pinnacle, then the redemption price of the Class A Preferred
Share will be reduced to a nominal amount. The Class A preferred
share entitles Northwest to appoint two members of Pinnacle's
Board of Directors and also gives Northwest consent rights for
changes to its articles of incorporation and bylaws.
In addition, the Class A Preferred Share provides consent rights
to merger or acquisition transactions involving another airline
with annual revenues greater than $500 million. Additionally, the
existing ASA includes a termination provision if Northwest does
not consent to any replacement of Pinnacle's chief executive
officer. After the Class A Preferred Share is redeemed on Jan. 2,
2008, Northwest will no longer retain these corporate governance
rights.
Claim Resolution Agreement
In a separate agreement, Northwest and Pinnacle have agreed
that Pinnacle will receive an allowed unsecured claim of
$377.5 million, subject to bankruptcy court approval, against
Northwest in its bankruptcy proceedings in settlement of all
amounts that Northwest may owe to Pinnacle for pre-petition claims
and the economic adjustments provided for in the Amended ASA. The
allowed unsecured claim will be reduced by:
-- $13.6 million, if Northwest commits the 17 aircraft added
to Pinnacle for a period of three years and
-- $42.5 million, if the 17 aircraft are committed for a
period of ten years.
Pinnacle will retain the right to assert an additional claim
should Northwest enter into a merger or acquisition agreement with
another major airline as part of its plan of reorganization and
elect to remove up to 24 aircraft above the 17 aircraft delivered
in 2007; however, such claim would be reduced by the $20 million
decrease in Pinnacle's purchase price paid to Northwest for the
Series A Preferred share.
Aircraft Security Deposits
The Amended ASA and related aircraft subleases will provide that
Northwest will retain the $24.6 million it is currently holding as
a security deposit for the existing fleet of 124 aircraft and the
17 aircraft to be added during 2007. Pinnacle will pay a security
deposit equal to one month's rent for any aircraft that is
subleased from Northwest and operated under the Amended ASA.
Pinnacle's current obligation to pay a second month's deposit on
its existing fleet under certain circumstances will be removed
from the aircraft subleases.
Restructured Economics
Both the existing ASA and the Amended ASA provide a monthly margin
payment calculated to achieve a target operating margin, based on
reimbursement payments and payments based on pre-set rates. The
Amended ASA will provide for Pinnacle to charge Northwest current
market rates for regional airline services.
Specifically, three major items of compensation will change for
Pinnacle.
First, Northwest will provide jet fuel to Pinnacle at no charge to
Pinnacle, and fuel will be removed as a revenue and expense item
from Pinnacle's statement of operations. As fuel will no longer
be an expense item, Pinnacle will no longer receive its target
margin on fuel expense.
Second, the amount that Pinnacle pays to sublease aircraft from
Northwest will be reduced under the Amended ASA and related
aircraft subleases. Pinnacle will continue to receive its target
margin on the reduced aircraft rent.
Third, Pinnacle's target margin rate will be reduced from 10% to
8%. The reset of the target margin to industry average in 2008
has also been eliminated. These new rates will remain in effect
until 2013, when the rates will be reset.
Had they been in effect, the changes in the Amended ASA would have
reduced Pinnacle's operating income for the nine months ended
Sept. 30, 2006 by approximately $30 million.
Assuming Pinnacle reaches agreement with ALPA prior to March 31,
2007 and is able to retain the 17 aircraft to be delivered in
2007, Pinnacle expects that its operating income associated with
the Amended ASA will be approximately $50 million for the year
ended Dec. 31, 2007. This estimate does not include any earnings
from other sources, including potential earnings associated with
the value Pinnacle might receive from the sale of its allowed
unsecured claim against Northwest.
Under generally accepted accounting principles, Pinnacle will
defer and amortize over the remaining eleven-year term of the
Amended ASA the realized value of its allowed unsecured claim
against Northwest that is associated with foregone future earnings
under the existing ASA. In addition, Pinnacle will likely
amortize the $20 million cost of the redemption of its Class A
Preferred Share over the remaining eleven-year term of the Amended
ASA after Pinnacle redeems it in 2008. The net impact of these
items will not be fully determined until Pinnacle assesses the
fair value of its allowed unsecured claim, but the company
believes that the impact will be a material non-cash increase in
its ongoing net earnings.
Contingent on Final Bankruptcy Court Approval
The Amended ASA, the Share Purchase Agreement and the Claim
Resolution Agreement are subject to the approval by the bankruptcy
court overseeing Northwest's bankruptcy proceedings. Northwest
will file an appropriate motion with the bankruptcy court seeking
approval of these agreements and certain amendments to aircraft
subleases in effect between the parties. Any creditor or party-
in-interest, including the Official Committee of Unsecured
Creditors of Northwest Airlines Corp, et al., may file an
objection to this motion and, regardless of whether any such
objections are filed, the bankruptcy court may not approve the
motion, in which case the Amended ASA, the Share Purchase
Agreement, the Claims Resolution Agreement and the amendments to
the aircraft sublease agreements would not become effective.
Furthermore, even if the motion is approved by the bankruptcy
court, the Amended ASA could later be rejected by Northwest in its
bankruptcy proceedings.
In addition, the existing ASA could be rejected by Northwest or
its successor under applicable provisions of the Bankruptcy Code
prior to any approval of the motion. If either rejection were to
occur, Pinnacle would file a claim against Northwest or its
successor arising out of such rejection of either the existing ASA
or the Amended ASA. However, such rejection would nevertheless
have a materially adverse impact on Pinnacle's financial condition
and results of operations.
About Pinnacle Airlines
Headquartered in Memphis, Tennessee, Pinnacle Airlines, Corp.
(NASDAQ: PNCL) fka Express Airlines I operates through its wholly
owned subsidiary, Pinnacle Airlines, Inc., as a regional airline
that provides airline capacity to Northwest Airlines, Inc.
Pinnacle operates as a Northwest Airlink carrier at Northwest's
domestic hub airports in Detroit, Minneapolis/St. Paul and Memphis
and the focus city of Indianapolis. Pinnacle currently operates
an all-jet fleet of 124 Canadair Regional Jets and offers
scheduled passenger service with 709 daily departures to 110
cities in 36 states and three Canadian provinces. Pinnacle
Airlines employs approximately 3,450 People.
About Northwest Airlines
Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/
-- is the world's fourth largest airline with hubs at Detroit,
Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and
approximately 1,400 daily departures. Northwest is a member of
SkyTeam, an airline alliance that offers customers one of the
world's most extensive global networks. Northwest and its travel
partners serve more than 900 cities in excess of 160 countries on
six continents. The Company and 12 affiliates filed for chapter
11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No.
05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq.,
at Cadwalader, Wickersham & Taft LLP in New York, and Mark C.
Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in
Washington represent the Debtors in their restructuring efforts.
The Official Committee of Unsecured Creditors has retained Akin
Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the
Debtors' chapter 11 cases. When the Debtors filed for protection
from their creditors, they listed $14.4 billion in total assets
and $17.9 billion in total debts. The Debtors' exclusive period
to file a chapter 11 plan expires on Jan. 16, 2007.
* * *
Going Concern Doubt
As reported in the Troubled Company Reporter on March 9, 2006,
Ernst & Young LLP expressed substantial doubt about Pinnacle
Airlines' ability to continue as a going concern after reviewing
the Company's financial statements for the years ended Dec. 31,
2005, and 2004. Ernst & Young pointed to uncertainty regarding
the future of Pinnacle's contract with its primary customer,
Northwest Airlines, due to its filing of chapter 11 protection in
September 2005.
PRECISE MECHANICALS: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: Precise Mechanicals, Inc.
fdba Precise Plumbing, Inc.
fdba Precise Plumbing, Heating and Cooling, Inc.
1580 Clara Avenue
Columbus, OH 43211
Bankruptcy Case No.: 06-57408
Type of Business: The Debtor offers plumbing services.
Chapter 11 Petition Date: December 18, 2006
Court: Southern District of Ohio (Columbus)
Judge: C. Kathryn Preston
Debtor's Counsel: Richard K. Stovall, Esq.
Allen Kuehnle Stovall & Neuman LLP
21 West Broad Street, Suite 400
Columbus, OH 43215
Tel: (614) 221-8500
Fax: (614) 221-5988
Estimated Assets: $100,000 to $1 Million
Estimated Debts: $1 Million to $100 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Ferguson Enterprises, Inc. Trade Debt $193,520
4363 Lyman Drive
Hilliard, OH 43026-1266
Ferguson Enterprises, Inc. Trade Debt $158,160
4200 Ford Street Extension
Fort Myers, FL 33916
American Express Credit Card $104,000
P.O. Box 650448
Dallas, TX 75265-0448
Carr Supply Trade Debt $74,655
1415 Old Leonard Avenue
Columbus, OH 43219
Columbus Electrical Trade Debt $54,197
Distributors
2101 South High Street
Columbus, OH 43207
Robertson Heating Supply Co. Trade Debt $50,000
Eastway Supplies Trade Debt $30,604
Worly Supply Trade Debt $15,647
Wells Fargo SBA Loan $14,927
Nextel Cell Phones $13,192
Lowes Business Credit Trade Debt $12,800
Verizon Wireless Cell Phones $10,518
Speedway Gas Cards $9,669
Trane Trade Debt $3,337
Johnson Electric Supply Co. Trade Debt $3,190
Plumbers & Factory Trade Debt $2,724
Supplies Inc.
Mattison & Company Accounting Services $2,605
McKeever Electric and Supply Trade Debt $2,008
Capital Lighting Trade Debt $1,479
American Electric Power Utilities $1,158
RADIO ONE: Moody's Holds Corporate Family Rating at Ba3
-------------------------------------------------------
Moody's Investors Service affirmed Radio One, Inc.'s Ba3 corporate
family rating and changed the outlook to stable from positive
after a period of prolonged weakness at the company's Los Angeles
radio station.
Radio One's Ba3 corporate family rating reflects significant debt
to EBITDA leverage and continued softness at several of its
stations.
The rating also incorporates the inherent cyclicality of the
advertising market, Moody's belief that radio is a mature business
with limited growth prospects and the increasing fragmentation of
advertising dollars over a growing number of media.
The rating is supported by the company's diverse revenue mix and
geographic diversification, significant EBITDA margins that lead
most of its peers and substantial broadcast revenue attributable
to local advertising.
Moody's has taken these ratings actions:
* Radio One, Inc.
-- Corporate Family Rating Affirmed Ba3;
-- Probability of Default Rating Affirmed Ba3;
-- Secured Revolver Affirmed Ba1, LGD2, 25%;
-- Secured Term Loan Affirmed Ba1, LGD2, 25%;
-- 6 3/8% Senior Subordinated Notes Affirmed B1, LGD5, 81%;
and,
-- 8 7/8% Senior Subordinated Notes Affirmed B1, LGD5, 81%.
The outlook has been revised to stable.
Radio One, Inc., headquartered in Lanham, Maryland is a radio
broadcaster that owns and/or operates 70 radio stations located in
22 urban markets in the U.S.
SUNCOM WIRELESS: To Appeal NYSE's Decision to Suspend Stock
-----------------------------------------------------------
SunCom Wireless Holdings, Inc., disclosed that it intends to
appeal the New York Stock Exchange's decision to suspend its
common stock prior to the opening of trading on Dec. 19, 2006.
The NYSE informed SunCom that it no longer meets the exchange's
minimum market capitalization requirements. The company said that
its stock will, for the time being, be traded over-the-counter
commencing on December 19.
Michael E. Kalogris, chairman and chief executive officer, said,
"While we are disappointed in the NYSE's decision, we intend to
exercise our right to appeal. Importantly, we do not believe the
announcement will have any impact on the company's ability to
pursue its business strategy or diminish the deep level of
commitment our employees have to providing outstanding service to
our more than 1 million wireless subscribers in the Southeastern
portion of the United States, Puerto Rico or the U.S. Virgin
Islands."
Based in Berwyn, Pennsylvania, SunCom Wireless Holdings Inc.
(NYSE: TPC) -- http://www.suncom.com/-- offers digital wireless
communications services to more than one million subscribers in
the southeastern United States, Puerto Rico and the U.S. Virgin
Islands. SunCom is committed to delivering Truth in Wireless by
treating customers with respect, offering simple, straightforward
plans and by providing access to the largest GSM network and the
latest technology choices.
SunCom Wireless' balance sheet showed a stockholders' deficit of
$378,099,000 at Sept. 30, 2006, compared with a deficit of
$338,223,000 at June 30, 2006.
WEIGHT WATCHERS: Commences Tender Offer for 8.3 Mil. Common Shares
------------------------------------------------------------------
Weight Watchers International, Inc., commenced a "modified Dutch
auction" self-tender offer for up to 8.3 million shares of its
common stock at a price per share not less than $47 and not
greater than $54, and which is expected to expire at 12:00
midnight, New York City time, on Jan. 18, 2007.
The company's directors and executive officers and Artal Holdings
Sp. z o.o., its majority shareholder, have advised that they do
not intend to tender any shares in the tender offer.
The Company anticipates paying for the shares purchased through
the tender offer and from Artal and related fees and expenses with
up to approximately $1.2 billion in new borrowings it is
negotiating. A portion of the borrowings is also expected to be
used to refinance the debt of its subsidiary, WeightWatchers.com.
A commitment from Credit Suisse to provide additional capacity
under its senior credit facility to finance the purchases and the
refinancing was obtained by the company.
Credit Suisse Securities (USA) LLC will serve as dealer manager,
Georgeson Inc. will serve as information agent and Computershare
Trust Company, N.A. will serve as the depositary for the tender
offer.
Artal Purchase Agreement
Prior to commencing the tender offer, the company also entered
into an agreement to purchase shares from Artal, which owns
approximately 55.2% of the company's outstanding shares of common
stock. Under the terms of the agreement, Artal agreed to sell to
the company a number of shares of common stock so that Artal's
percentage ownership interest in the company's outstanding shares
of common stock after the tender offer and the purchase from Artal
will be substantially equal to its current level. The purchase
will be at the same price per share as paid in the tender offer
and is scheduled to occur 11 business days following the
expiration date of the tender offer.
Headquartered in Woodbury, N.Y., Weight Watchers International,
Inc. (NYSE: WTW) -- http://www.weightwatchersinternational.com--
provides weight management services, operating in 30 countries
through a network of company owned and franchised operations.
WEIGHT WATCHERS: S&P Places Ratings on Negative CreditWatch
-----------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings for
commercial weight-loss service provider Weight Watchers
International Inc., including the 'BB' corporate credit rating,
on CreditWatch with negative implications, indicating that the
ratings could be lowered or affirmed after the completion of
Standard & Poor's review.
New York-based WWI had about $817.0 million of total consolidated
debt outstanding as of Sept. 30, 2006.
At the same time, the ratings on online weight-loss service
provider WeightWatchers.com, including the 'B+' corporate credit
rating, were affirmed.
Standard & Poor's expects the ratings on WW.com would be withdrawn
upon the completion of the planned refinancing of its existing
senior secured debt.
The CreditWatch listing reflects WWI's increasingly aggressive
financial policy comes after the company's report that it plans to
launch a "modified Dutch auction" self-tender offer for up to
8.3 million shares of its common stock at a price range between
$47.00 and $54.00 per share. Artal Luxembourg S.A., WWI's
majority shareholder, plans to retain its pro rata share of common
stock outstanding after the completion of the Dutch auction
repurchase.
WWI also reported its intention to repay the outstanding balance
of WW.com's senior secured credit facilities, which consist of a
$170 million first-lien term loan and a $45 million second-lien
term loan. WWI intends to fund the share purchases and the
planned refinancing of its WW.com facilities through an additional
$1.2 billion in new senior secured bank debt, and has
obtained a commitment from Credit Suisse to provide the additional
borrowing capacity under its credit facility that is required to
complete the proposed transactions.
Although WWI does not provide a guarantee for the WW.com credit
facilities, Standard & Poor's factors some implicit support for
WW.com in its
ratings, given the strategic importance and affiliation of WW.com
as an additional marketing venue for Weight Watchers.
"We expect credit protection measures to weaken as a result of
Weight Watchers' more aggressive financial policy," said
Standard & Poor's credit analyst Mark Salierno.
"Specifically, we expect lease-adjusted consolidated total debt to
EBITDA to be in the 4.5x area, compared with adjusted debt
leverage of about 2.0x for the 12 months ended Sept. 30, 2006. We
will meet with management and review the company's financial
policy, pro forma capital structure, planned refinancing of
WeightWatchers.com bank debt, and outlook for fiscal 2007 before
resolving the CreditWatch listing."
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Abraxas Petro ABP (20) 118 (3)
Acorda Therapeut. ACOR (8) 40 5
AFC Enterprises AFCE (40) 157 4
Alaska Comm Sys ALSK (25) 566 26
Alliance Imaging AIQ (18) 674 30
AMR Corp. AMR (514) 30,128 (1,202)
Armstrong World AWI (1,197) 4,721 1,132
Atherogenics Inc. AGIX (136) 197 146
Bare Essentials BARE (620) 139 42
Blount International BLT (107) 441 121
CableVision System CVC (5,400) 9,776 (400)
Centennial Comm CYCL (1,062) 1,434 33
Charter Comm-a CHTR (5,632) 15,198 (999)
Choice Hotels CHH (78) 286 (48)
Cincinnati Bell CBB (679) 1,889 55
Clorox Co. CLX (55) 3,539 (20)
Compass Minerals CMP (74) 671 145
Corel Corp. CRE (22) 113 11
Crown Media HL CRWN (449) 917 190
Delphi Corp DPHIQ (7,756) 17,514 2,250
Deluxe Corp DLX (68) 1,296 (188)
Denny's Corporation DENN (231) 454 (73)
Domino's Pizza DPZ (592) 360 (20)
Echostar Comm DISH (365) 9,351 1,696
Emeritus Corp. ESC (115) 713 (34)
Empire Resorts I NYNY (25) 61 (2)
Encysive Pharm ENCY (88) 69 33
Gencorp Inc. GY (98) 1,017 (3)
Graftech International GTI (157) 875 253
Guidance Software GUID (2) 22 (1)
Hansen Medical I HNSN (32) 38 33
HealthSouth Corp. HLS (1,339) 3,310 (314)
I2 Technologies ITWO (46) 208 1
ICOS Corp ICOS (18) 285 111
IMAX Corp IMAX (33) 243 84
Immersion Corp IMMR (22) 47 31
Immunomedics Inc IMMU (21) 50 21
Incyte Corp INCY (66) 465 295
Indevus Pharma IDEV (124) 92 55
Inergy Holdings NRGP (19) 1,647 (12)
Investools Inc. IEDU (64) 120 (79)
IPG Photonics IPGP (31) 115 24
J Crew Group Inc. JCG (55) 414 128
Kaiser Aluminum KALU (3,105) 1,598 123
Koppers Holdings KOP (86) 637 148
Ligand Pharm LGND (239) 232 (162)
Lodgenet Entertainment LNET (62) 269 18
McMoran Exploration MMR (38) 438 (46)
New River Pharma NRPH (65) 170 135
Northwest Airlines NWACQ (7,718) 13,498 659
NPS Pharm Inc. NPSP (182) 237 150
Omnova Solutions OMN (2) 366 72
ON Semiconductor ONNN (1) 1,417 316
Portal Software PRSF (20) 112 (14)
Qwest Communication Q (2,576) 21,114 (1,569)
Riviera Holdings RIV (29) 222 10
Rural Cellular RCCC (540) 1,410 164
Rural/Metro Corp. RURL (89) 305 51
Savvis Inc. SVVS (142) 442 16
Sealy Corp. ZZ (188) 933 89
Sepracor Inc. SEPR (33) 1,352 424
St. John Knits Inc. SJKI (52) 213 80
Sun-Times Media SVN (322) 905 (383)
Town Sports Inte. CLUB (25) 417 (55)
Vertrue Inc. VTRU (9) 441 (75)
Weight Watchers WTW (103) 935 (72)
Worldspace Inc. WRSP (1,574) 604 140
WR Grace & Co. GRA (480) 3,641 902
*********
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,
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*********
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.
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