/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/070109.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, January 9, 2007, Vol. 11, No. 7 Headlines ADELPHIA COMMS: Plan Expected to Become Effective on January 17 ADELPHIA COMMS: Bondholders Object to 5th Amended Plan Changes ADVANCED MARKETING: Organizational Meeting Scheduled on Friday AES CORP: Increases Revolving Credit Facility to $750 Million AIR AMERICA: CACI International Can Pursue Defamation Suit ARAMARK CORP: Buyout Prompts Moody's Low-B Ratings on Debentures ASARCO LLC: Has Until May 11 to Remove Civil Actions ASARCO LLC: 3 Subsidiaries Want Until Jan. 26 to File Schedules BALDOR ELECTRIC: S&P Places Corporate Credit Rating at BB- BLUEGREEN CORP: S&P Revises Outlook to Stable From Positive CAROLINA COUNTRY: Case Summary & 20 Largest Unsecured Creditors CC FUNDING: S&P Holds Rating on 2003-2 Class B-5 Debenture at B CENTENNIAL COMMS: Posts $33.4 Mil. Net Loss in Qtr. Ended Nov. 30 CHARMING CASTLE: Court Okays Burr & Forman as Committee Counsel CHASE MORTGAGE: Fitch Holds Low-B Ratings on Various Certificates CMS ENERGY: Unit Gets $25MM Claim Award from American Arbitration CMS ENERGY: Inks MOU to Settle Securities Class Action Suits COLLINS & AIKMAN: Wants Second Stipulation on Lear Pact Approved COMPLETE RETREATS: Court OKs $98MM Asset Sale to Ultimate Resort COMPLETE RETREATS: Court Approves $3.14 Mil. Real Property Sale DAIMLERCHRYSLER: Chrysler Arm to Double International Sales DAIMLERCHRYSLER: Chrysler's '06 Sales Outside North America Up 15% DANA CORP: Completes Asset Sale to Hendrickson USA for $31 Million DANA CORP: Unions Will Appeal Judge Lifland's Officers' Pay Order DANA CORP: DCC Finalizes Forbearance Agreement with Noteholders DELPHI CORP: Highland Capital Offers $4.7 Bil. Equity Commitment DELPHI CORP: GM Says Highland Rival Offer Could Delay Delphi Deal DELPHI CORP: Equity Purchase and Commitment Agreement Draws Fire DELPHI CORP: Ct. OKs $4.495B Replacement Credit Pact From JPMorgan DIRECTV GROUP: S&P Holds Corporate Credit Rating at BB DLJ COMMERCIAL: Fitch Holds Junk Rating on Class B-8 Certificates DOGGIEDAY HOLDINGS: Case Summary & 22 Largest Unsecured Creditors DURA AUTOMOTIVE: Creditors Committee Taps Kramer Levin as Counsel DURA AUTOMOTIVE: Panel Taps Chanin Capital as Financial Advisors DURA AUTOMOTIVE: Auction Sets Bond Price at 24.125% of Face Value EFREN REYNOSO: Case Summary & Six Largest Unsecured Creditors ENESCO GROUP: Bank Lenders Limit Credit Facility Advances FAIRCHILD SEMICONDUCTOR: To Appeal $8.4-Mil. ZTE Lawsuit Judgment FAIRCHILD SEMICONDUCTOR: Launching Tender Offer for System General FORD MOTOR: Partners with Microsoft on In-Car Digital Systems FORD MOTOR: Strong Brazilian Ops Spurs Group to Invest $1 Billion FOREST OIL: Acquiring Houston Exploration in $1.5 Billion Deal FORT JAMES: Moody's Completes Withdrawal of Ratings FRANK GRILLO: Voluntary Chapter 11 Case Summary GAP INC: Goldman Sachs Hiring Sparks Rumors on Strategic Options GAP INC: December Sales Down 4%; Comparable Store Sales Down 8% GENERAL MOTORS: Says Highland Rival Offer Could Delay Delphi Deal GENERAL MOTORS: Awards Lithium-Ion Battery Development Contracts GMAC MORTGAGE: Fitch Holds Low-B Ratings on 3 Certificate Classes GOODYEAR TIRE: Fitch Removes Ratings from Watch Negative GREENMAN TECH: Sept. 30 Balance Sheet Upside-Down by $11.4 Million INFRASOURCE SERVICES: Changes Status, Amends CEO's Management Pact INSTITUTE FOR CANCER PREVENTION: Court Confirms Trustee's Plan ISTAR FINANCIAL: Consent Solicitation for Notes Ends Today J.C.'S GRADING: Case Summary & 19 Largest Unsecured Creditors JAMES URBAN: Voluntary Chapter 11 Case Summary JOHN B. SANFILIPPO: Posts $4.8 Mil. Net Loss in 1st Fiscal Quarter JOHN ESSMAN: Case Summary & 17 Largest Unsecured Creditors JOHNSFIELD II: Case Summary & Two Largest Unsecured Creditors JP MORGAN: Moody's Affirms Low-B Ratings on Six Cert. Classes KEARNY INDUSTRIAL: Case Summary & 5 Largest Unsecured Creditors KEYSTONE TRUCK: Case Summary & 40 Largest Unsecured Creditors KIMBERLY BODNAR: Case Summary & 18 Largest Unsecured Creditors KINDER MORGAN: S&P Lowers Corporate Credit Rating to BB- K-TEL INTERNATIONAL: Grant Thornton Raises Going Concern Doubt LAIDLAW INT'L: Earns $40.1 million in Fiscal Quarter Ended Nov. 30 LENOX GROUP: Marc Pfefferle is Interim Chief Executive Officer LENOX GROUP: Poor Performance Cues Moody's Ratings Downgrade LENOX GROUP: Weak Performance Cues S&P's Negative CreditWatch MANARIS CORP: Unit Inks Technology License Agreement with iMetrik MANUFACTURERS & TRADERS: Fitch Holds BB Rating on Class B-4 Certs. MARION TOWN: Mayor Says Town Can't Pay $350K Sewage Treatment Fee MCCLINTOCK DIARY: Case Summary & 13 Largest Unsecured Creditors MEDICALCV INC: Posts $3.1 Mil. Net Loss in Quarter Ended Oct. 31 MESABA AVIATION: Shareholder Opposes Northwest's Purchase Proposal MICHELEX CORP: Wins More Time to Complete Ag-Pro Purchase MIDLAND OIL: Case Summary & 30 Largest Unsecured Creditors MILLS CORP: Secures March 31 Senior Term Loan Maturity Extension MIRANT CORP: Has Until February 15 to File Chapter 11 Plan MORGAN STANLEY: Moody's Hold Low-B Ratings on Six Cert. Classes MORGAN STANLEY: Moody's Holds Junk Rating on Class N Certificates MORGAN STANLEY: Fitch Holds Rating on Class H Certificates at BB+ MORTGAGE ASSET: Fitch Holds Low-B Ratings on Various Certificates MORTGAGE ASSET: Fitch Holds Rating on Class B-I-4 Certs. at BB MT. PLEASANT: Case Summary & Eight Largest Unsecured Creditors NEWCOMM WIRELESS: Court Sets Feb. 28 Auction for All Assets NEWPARK RESOURCES: Secures New $100 Mil. Revolving Line of Credit NORTHWEST AIRLINES: MAIR Shareholder Balks at Mesaba Purchase Bid OMEGA HEALTHCARE: Earns $14.6 Million in Quarter Ended Sept. 30 ON ASSIGNMENT: Buys Oxford Global for $200 Million ORION DIVERSIFIED: Posts $9,758 Net Loss in Quarter Ended Oct. 31 RADIO ONE: $30 Million Entercom Sale Cues S&P's CreditWatch RAYMOND PEDDEN: Case Summary & 15 Largest Unsecured Creditors RESIDENTIAL ASSET: Fitch Lifts Rating on Class B-2 Certs. to BB- ROO GROUP: Posts $3.7 Million Net Loss in Quarter Ended Sept. 30 SAMSONITE CORP: Earns $8.9 Million in Quarter Ended October 31 SANKOFA SHULE: Moody's Affirms Caa3 Rating with Negative Outlook SCOTTISH RE: Shareholder To Vote Against MassMutual/Cerberus Deal SMITTY INVESTMENT: Case Summary & 20 Largest Unsecured Creditors SONTRA MEDICAL: To Sell 6 Million Common Shares for $600,000 SOUNDVIEW HOME: Moody's Rates Class M-10 Certificates at Ba1 SOUTHERN DATA: Case Summary & 20 Largest Unsecured Creditors STRUCTURED ASSET: Fitch Places Class B5 Certs. on Watch Negative TECHNICAL OLYMPIC: Shareholder Class Action Filed in S.D. Fla. TERASEN INC: S&P Pares Corporate Credit Rating to BB- from BBB TOWER AUTOMOTIVE: Court Okays Increased Equity Investors Payments TOWER AUTOMOTIVE: Wants to Employ Pay Foley & Lardner as an OCP TYRINGHAM HOLDINGS: Disclosure Statement Hearing Set for Jan. 24 UNITED HOUSING: Case Summary & 41 Largest Unsecured Creditors US MORTGAGE: Case Summary & 17 Largest Unsecured Creditors VICTORIA INGENIERO: Voluntary Chapter 11 Case Summary WALTER BEARD: Case Summary & 20 Largest Unsecured Creditors WASTEQUIP INC: Moody's Places Corporate Family Rating at B2 WEIGHT WATCHERS: S&P Holds Corporate Credit Rating at BB WILLIAM LEACH: Case Summary & 41 Largest Unsecured Creditors WINNING EDGE: Posts $668,468 Net Loss in Quarter Ended October 31 * David Sweet's 3-Attorney Team Joins Buchanan Ingersoll & Rooney * Large Companies with Insolvent Balance Sheets ********* ADELPHIA COMMS: Plan Expected to Become Effective on January 17 --------------------------------------------------------------- The Honorable Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York has entered an order confirming the first modified fifth amended joint Chapter 11 plan of reorganization of Adelphia Communications Corporation and Certain Affiliated Debtors. Under the Federal Rules of Bankruptcy Procedure, the order is subject to a stay pending appeal, which will expire on Jan. 16, 2007. If no additional stay is issued, the ACOM Debtors expect the Plan to become effective on Jan. 17, 2007. The Plan was jointly proposed by the ACOM Debtors, the Official Committee of Unsecured Creditors, and bank lender agents Wachovia Bank, N.A., the Bank of Montreal, and the Bank of America, N.A. The ACOM Debtors intend to set the close of business on Jan. 10, 2007, as the record date for distributions for holders of claims in the Bank Claims Classes, Trade Claims Classes, and Other Unsecured Claims Classes. The ACOM Debtors also intends to set the record date for holders of claims in Notes Claims Classes and holders of Equity Interests as the close of business on Jan. 17, 2007. The record dates are subject to change if the Plan is not effective on or about Jan. 17, 2007. Judge Gerber had said, in a 267-page bench decision, that he is confirming the Plan. The Plan will distribute the approximately $15,000,000,000 in value remaining after the ACOM Debtors sold substantially all of their assets to Time Warner and Comcast, and after the distribution of the first $2,600,000,000 in value under the confirmed Joint Venture Plan of Reorganization for the Century-TCI and the Parnassos Debtors. The Debtors' counsel -- Marc Abrams, Esq., at Willkie Farr & Gallagher LLP, in New York -- and the Creditors Committee's counsel -- David Friedman, Esq., at Kasowitz, Benson, Torres & Friedman LLP, in New York -- advised the Court that creditors have overwhelmingly voted to accept the Fifth Amended Plan. Judge Gerber accedes that the Fifth Amended Plan has secured the assent of: (a) over $10,000,000,000 in claims, representing approximately 84% of the claims in the ACOM Debtors' Chapter 11 cases; (b) in both number and amount, of "30 of the 30 classes" who voted on the Plan. After having reviewed all of the requirements of Section 1129, the reasonableness of the settlement of the interdebtor disputes, Judge Gerber has determined that the Plan fully conforms to the requirements of the Bankruptcy Code. No Cramdown Situation Judge Gerber notes that satisfaction of some of the Section 1129(a) requirements is disputed in connection with the Plan. Section 1129(a), Judge Gerber explains, has two requirements for ensuring that the Plan has the requisite support: (a) Section 1129(a)(10) provides that if any class of claims is impaired under the Plan, at least one class of claims has accepted it, without including any acceptance by an insider; and (b) Section 1129(a)(8) requires that all of the classes of impaired claims and interests have accepted the Plan. However, Section 1129(b) states that if the only deficiency in the plan is the inability to satisfy Section 1129(a)(8), the plan can be confirmed if the additional requirements of Section 1129(b) are satisfied. Those requirements include, most significantly, that the plan "does not discriminate unfairly," and that it be "fair and equitable", Judge Gerber states. This scenario is colloquially referred to as "cramdown." In accordance with the decision in Heins v. Ruti-Sweetwater, Inc. (In re Ruti-Sweetwater, Inc.), 836 F.2d 1263 (10th Cir. 1988), Judge Gerber rules that the 30 of 30 accepting classes satisfy Section 1129(a)(8). Thus, a cramdown situation does not exist, and the additional requirements of Section 1129(b) are inapplicable, Judge Gerber declares. Propriety of Settlement Judge Gerber notes that Section 1123(b)(3), which describes what a plan may contain, expressly includes settlements. The Settlement of Intercreditor Issues that the Plan contains is one of its most important, and controversial features, Judge Gerber says. All parties agree that while a plan may contain a settlement, that settlement must pass muster for fairness, under standards articulated by the Supreme Court, the Second Circuit and lower courts. The Plan has been vigorously opposed by a group of bondholders of Senior Notes of Adelphia Communications Corp. who "vociferously" oppose the Settlement, Judge Gerber notes. The ACC Bondholders have argued that the Plan is unconfirmable notwithstanding the overwhelming support for it. The Plan Proponents have contended that months of exposure to the Motion in Aid litigation in connection to the Intercreditor Issues, and the events that preceded it, dramatically increased Judge Gerber's ability to understand the issues and to form informed views as to the MIA's outcome possibilities and settlement fairness. In response, the ACC Bondholders asserted that Judge Gerber must examine the controversy as if he was a "visiting judge" who had come in to the case as an outsider, and had read only the record. The ACC Bondholders are: -- Aurelius Capital Management, LP, -- Catalyst Investment Management Co., LLC, -- Drawbridge Global Macro Advisors LLC, -- Drawbridge Special Opportunities Advisors LLC, -- Elliott Associates, LP, -- Farallon Capital Management LLC, -- Noonday Asset Management LP, and -- Perry Capital LLC; Judge Gerber disagrees with the ACC Bondholders' argument because it runs flatly inconsistent with the long-time practice in judicial consideration of settlements and if ever accepted, would represent a sea of change in the manner in which settlements are evaluated -- requiring the individual with more knowledge than anyone of the propriety of the settlement to abandon the benefits of his or her expertise with respect to the matter to be decided. According to Judge Gerber, the approval of settlements is a matter within the discretion of the bankruptcy court. The exercise of discretion, at least in the context of settlements, typically involves consideration of the applicable law with respect to the underlying issues to be litigated, the facts that are put forward or alleged with respect to the underlying controversy, and the consideration of judicially prescribed factors to be taken into account in exercising one's discretion for considering approval of the settlement. In the bankruptcy context, Judge Gerber adds, it also includes judicial experience, knowledge of the past proceedings in the case and the alternatives for its future, and consideration of what is best for the future of the parties and the estate. Judge Gerber states that there is nothing in the law that requires a court approving a settlement to approach the case with blinders, and to disregard its knowledge of the case, and the litigants' "strategies, positions and proofs." A. Assent to Settlement Judge Gerber rejects the ACC Bondholders' contentions that: (a) only the now-dormant ACC Senior Notes Committee was empowered to propose the Settlement; (b) only an "independent fiduciary" could propose the Settlement; or (c) nobody could propose the Settlement. Judge Gerber further rejects the ACC Bondholders' argument that the ACOM Debtors, with the assent of the affected classes, did not have the power to propose the Settlement. Judge Gerber contends that the ACOM Debtors have always had the rights of debtors and debtors-in-possession, which include the right to propose settlements in a reorganization plan, under Section 1123(b)(3), or under Rule 9019 of the Federal Rules of Bankruptcy Procedure. Judge Gerber also notes that Tudor Investment Corporation and Highfields Capital originally were designated by the ACC Senior Noteholders Committee to be its representatives in the MIA negotiations, and were the earliest members of the ACC Senior Noteholders Committee to negotiate a settlement of MIA issues. They had participated in the settlement discussions with the knowledge of most of the other members of the ACC Senior Noteholders Committee. However, Tudor and Highfields executed a Plan Agreement with, among others, the ACOM Debtors. Tudor and Highfields each were acting in its individual capacity, and not in a fiduciary capacity as an authorized representative of any other ACC senior bondholders -- including the ACC Senior Noteholders Committee. "[W]ith the ACC Senior Noteholders Committee having split and become disabled, and with at least some members now believing that the Settlement would be a good thing, it is ludicrous to believe that dissenters on that committee could prevent ACC Senior Noteholders from considering the Settlement proposal," Judge Gerber says. Judge Gerber relates that counsel for Tudor and Highfields determined at closing arguments during the Confirmation Hearing that the ACC Bondholders, the objectors to the Settlement, are not an official committee and "do not have ... standing to hold the majority of the ACC noteholders hostage to their own desires..." With regards to the ACC Bondholders' argument that only an independent ACOM fiduciary could propose the Settlement if the now-paralyzed ACC Senior Noteholders Committee didn't support it, Judge Gerber asserts that it misses the mark in several respects: (a) he has previously ruled that it was unnecessary to appoint trustees or nonstatutory fiduciaries to deal with the conflicts resulting from the MIA; and (b) the ACC Senior Noteholders Committee, before it split, had taken exactly the opposite position. B. Settlement Analysis In reviewing a compromise, a bankruptcy court need not be aware of or decide the particulars of each individual claim resolved by the settlement agreement, or "assess the minutia of each and every claim," Judge Gerber explains. Rather, the court "need only canvass the issues and see whether the settlement falls 'below the lowest point in the range of reasonableness.'" The expense and delay occasioned by a continued litigation of the MIA would prejudice many parties-in-interest, most particularly, the creditors of ACOM. As the MIA continued, administrative expenses would continue to accrue or have to be paid in cash. Interest on secured bank debt would have to continue to be paid. After looking initially solely at the Settlement's economic terms, Judge Gerber finds that the Settlement is plainly reasonable, well within the range of reasonableness, fair and equitable, and in the best interests of the ACOM estate. Classification of Certain Claims The ACC Bondholders have objected to classification of ACC Trade Claims and Allowed Other Unsecured Claims in two separate classes, arguing that creditors comprising either class are general unsecured creditors of equal rank and priority. The ACC Bondholder Group further argued that the placement of the those claims in two separate classes is arbitrary, and suggested that the only reasonable conclusion for segregating these substantially similar claims into two classes is the Plan Proponents' desire to gerrymander an accepting impaired class of ACC claims. In response, the Plan Proponents ask the Court to reject allegations of gerrymandering, arguing that Claims and Equity Interests were not classified separately "solely to create an impaired assenting class". Rather, they argue, the Plan's classification structure was created with a view towards recognizing and respecting legal rights and obligations, and maximizing and protecting value for all creditors of each of the Debtors. Judge Gerber points out that although Section 1122(a), by its terms, doesn't require that all similarly situated claims be classified together, rulings in In re One Times Square Assocs. Ltd. P'ship, 159 B.R. 695, 703 (Bankr. S.D.N.Y. 1993), has made clear that separate classification of substantially similar unsecured claims is permissible only when there is a reasonable basis for doing so or when the decision to separately classify "does not offend one's sensibility of due process and fair play." When considering assertions of gerrymandering, courts in the Second Circuit in Boston Post Rd. Ltd. P'ship v. FDIC (In re Boston Post Rd. Ltd. P'ship), 21 F.3d 477, 483 (2d Cir. 1994), have inquired whether a plan proponent has classified substantially similar claims in separate classes for the sole purpose of obtaining at least one impaired assenting class, Judge Gerber states. Judge Gerber notes that the classification structure in the Plan is based on the requirement that the ACOM Debtors recognize: (a) the similar legal character of the claims and equity interests grouped together; and (b) the different legal character of those Claims and Equity Interests that are classified separately. Accordingly, Judge Gerber finds that the Plan complies with Section 1122 of the Bankruptcy Code and relevant Second Circuit case law. Plan Proposed in Good Faith Judge Gerber finds that the Plan plainly satisfies Section 1129(a)(3), which requires the Plan to have been proposed in good faith and not by any means forbidden by law. "I have seen, first hand, how [the ACOM Debtors and the Creditors Committee] have balanced . . . their responsibilities as fiduciaries to maximize value and bring these cases to a successful end, with the demands that have been placed upon them by feuding individual creditor groups with parochial desires to maximize the return on their individual investments in these cases," Judge Gerber relates. "Likewise, the bank agents acted vigorously, but always properly, in addressing the concerns in their domain." Equal Treatment under the Plan The ACC Noteholders have argued that the solicitation process has been irreparably tainted by offers of special consideration to some, but not all members of the Senior Notes class. Thus, they say, the Plan violates Section 1123(a)(4). Judge Gerber contends that neither the Bankruptcy Code nor its legislative history precisely defines the standards of "equal treatment." However, courts in See In re AOV Industries Inc., 792 F.2d 1140, 1154 (D.D.C. 1986), have held that the statute does not require identical treatment for all class members in all respects under a plan, and that the requirements of Section 1123(a)(4) apply only to a plan's treatment on account of particular claims or interests in a specific class -- not the treatment that members of the class may separately receive under a plan on account of the class members' other rights or contributions. Judge Gerber notes that the exculpation and release provisions of the Plan are separate and independent provisions negotiated and agreed to as part of the Settlement -- available to any and all who also support the Settlement. All holders of ACC Senior Notes, including members of the ACC Bondholders, were entitled to avail themselves of the protection afforded by the release and exculpation provisions. Thus, Judge Gerber finds that the exculpation and release provisions under the Plan have no bearing on the Plan's treatment of claims. Equal treatment of claims is all that is required by Section 1123(a)(4), Judge Gerber explains. "I hold that the treatment of each ACC Senior Note claim under the Plan is the same whether the holder of [that] claim voted to accept or to reject the Plan, and that the requirements of section 1123(a)(4) are satisfied." Best Interests of Creditors As opposed to the ACC Bondholders' contentions, Judge Gerber finds that the Plan easily meets the requirements of the Best Interests test. "No dissenting creditor is receiving less than it would receive in the event of a liquidation of the Debtor against whom that creditor has a claim," Judge Gerber states. Possible Payment More Than In Full The bulk of the consideration that was paid for the Time Warner/Comcast acquisition was in cash, but a major portion of it was in TWC stock -- whose value is in some respects subjective, and which is subject to fluctuations in value. Most unsecured creditors will be paid at least in part in TWC stock. Judge Gerber disagrees with the ACC Bondholders' contentions that some creditors might be getting paid more than par plus accrued, due to the increased value of TWC stock since the Sale Transaction, will be contrary to law, and makes the Plan unconfirmable. Among others, Judge Gerber points out that the "fair and equitable" requirement of Section 1129(b) of the Code prohibits payment of more than par plus accrued in any instance where Section 1129(b) applies, that is any situation where cramdown is proposed. However, there is no cramdown situation in the ACOM Debtors' cases. Judge Gerber adds that at the $6,500,000,000 valuation for TWC stock that he has found, dissenting creditors do much better under the Plan than they would under a liquidation proceeding. Classes Where No Creditor Voted Judge Gerber disagrees with the ACC Bondholders' argument that the Plan Proponents had to proceed by cramdown because there were classes for six ACOM Debtors wherein no creditor voted and they cannot be said to have accepted the Plan. Judge Gerber notes that the Plan adopts a presumption that if no holders of Claims or Equity Interests eligible to vote in a particular Class vote to accept or reject the Plan, the Plan will be deemed accepted by the holders of those Claims or Equity Interests in that Class. The presumption was explicit and well advertised, appearing in both the Plan and the Second Disclosure Statement Supplement. Judge Gerber upholds the Plan presumption with respect to the non-voting creditors in those classes. Judge Gerber points out that case law at the Circuit Court of Appeals level -- "the only law at that high a level" -- supports the presumption. He refers to the Ruti-Sweetwater case, in where the Tenth Circuit affirmed a bankruptcy court's decision that "a non-voting, non-objecting creditor who is the only member of a class . . . is deemed to have accepted the Plan for purposes of [Section] 1129(b)." Forfeited Rigas Sub Debt The Plan cancels $567,000,000 in Subordinated Note Claims purportedly purchased by James Rigas and Michael Rigas that they later forfeited to the U.S. Government under the ACOM Debtors' court-approved settlement with the U.S. Department of Justice. The Sub Debt class under the Plan covers bona fide third-party holders of Sub Debt, but expressly excludes the Rigas Sub Debt. In connection with the confirmation of the Plan, Judge Gerber has been asked to decide on the issue. In a separate opinion, Judge Gerber has determined that the Rigas Sub Debt was never validly issued, and was not the subject of an allowed claim and to subordination provisions that would make it subject to turnover to more senior debt. Thus, Judge Gerber concludes, the Rigas Sub Debt was properly cancelled under the Plan, and was not subject to turnover to holders of ACC Senior Notes. Equity Committee's Objection to CVV Judge Gerber finds that the Official Committee of Equity Security Holders' various objections to confirmation, principally with respect to the Contingent Value Vehicle, are without merit and will be overruled. Judge Gerber disagrees, among others, with the Equity Committee's arguments that: (a) the Court "lacks jurisdiction" to remove the Equity Committee as a plaintiff in the Bank Litigation, to transfer the Equity Committee claims to the CVV, or to substitute the CVV Trustees as plaintiffs, because the reference has been withdrawn; (b) the ACOM Debtors can't transfer the Equity Committee claims to the CVV; and (c) the Plan's proposed distribution of proceeds from the CVV violates the Absolute Priority Rule. The Equity Committee also objects to the Plan provision providing that the Equity Committee will terminate on the Plan's effective date, except for the narrow purpose of final applications for fees. Judge Gerber, however, rules that the provision is entirely appropriate. Judge Gerber says, "[t]he Equity Committee served responsibly and well. But now its job is done." Calyon Issues Under the Bank Lenders' loan agreements, the secured bank lenders are entitled to the repayment of their principal, interest, and attorneys fees. They also have a contractual right under their loan agreements to indemnification for losses they may suffer in connection with their loans, unless they are judicially determined to have acted in a way that would disqualify them from that entitlement. The Plan offers the bank lenders that are a party to the Bank Lenders Action an additional $80,000,000 -- which totals $90,000,000 if coupled with the Joint Venture Plan for the Parnassos and the Century-TCI Debtors -- to pay their post- effective date indemnification claims. The amount is in addition to upwards of $170,000,000 that has been paid to the banks for their expenses through the effective date. The amount is satisfactory to all except for one of the approximately 400 bank lenders. Calyon New York Branch has voted against the Plan and raised objections to confirmation, notwithstanding the acceptance of the Plan by each of the classes in which it is a member. Calyon asserts that the amount it would get is insufficient to fund its desired expenditures in its litigation defense, and that it must be provided the funds, which would range from $4,000,000 to $39,000,000, that it wishes to spend on the defense of the Bank Lenders Action. Judge Gerber says that consistent with past practice in the Court and elsewhere, he estimating Calyon's future expenses for the purposes of establishing a fair reserve, and not for the purposes of ultimate allowance. With respect to estimation and the means to do it, Judge Gerber states that he takes guidance from the decision in Ralph Lauren Womenswear, 197 B.R. 771 (Bankr. S.D.N.Y. 1996). Neither the Bankruptcy Code nor the Federal Rules of Bankruptcy Procedure prescribes any method for estimating a claim. "Here we are talking about a prediction as to the future, where the fact that some future fees will have to be paid is certain (or nearly so), but the amount is highly uncertain," Judge Gerber explains. "There is also uncertainty as to whether the future fees, to the extent incurred, will be reasonable." Judge Gerber states that Section 506(b) limits oversecured lenders' claims for fees and costs to an amount sufficient to pay "reasonable" expenses. The Plan Proponents propose to estimate Calyon's post-effective date indemnification claims against the ACOM Debtors in an amount not to exceed approximately $632,000, which represents Calyon's pro rata share of the $12,000,000 LIF that was consensually established under the Plan for Calyon and the other non- administrative agent banks. However, Calyon objects to its $632,000 pro rata share of that $12,000,000 fund. After analyzing the record to determine a reasonable amount to reserve to award Calyon for its LIF, Judge Gerber estimates Calyon's claim for post-effective date indemnification claims to $700,000, bringing its LIF to a total of approximately $1,330,000. A full-text copy of Judge Gerber's 267-page Decision is available for free at http://ResearchArchives.com/t/s?1823 A full-text copy of the proposed Confirmation Order is available for free at http://ResearchArchives.com/t/s?1822 A full-text copy of Judge Gerber's Decision on Rigas Sub Debt is available for free at http://ResearchArchives.com/t/s?1824 Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is a cable television company. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, 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 Debtors in their restructuring efforts. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates chapter 11 cases. (Adelphia Bankruptcy News, Issue No. 160; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ADELPHIA COMMS: Bondholders Object to 5th Amended Plan Changes -------------------------------------------------------------- The ACC Bondholders Group objects to the proposed modifications to Adelphia Communications Corp. and its debtor-affiliates' Fifth Amended Plan of Reorganization. The ACC Bondholders ask the U.S. Bankruptcy Court for the Southern District of New York, based on the material nature of the modifications, to either: (a) deny the proposed modifications and confirmation of the Plan; or (b) direct the Plan Proponents to re-solicit the votes of all ACOM creditors based on the modified form of Plan. The ACC Bondholders are: -- Aurelius Capital Management, LP, -- Catalyst Investment Management Co., LLC, -- Drawbridge Global Macro Advisors LLC, -- Drawbridge Special Opportunities Advisors LLC, -- Elliott Associates, LP, -- Farallon Capital Management LLC, -- Noonday Asset Management LP, and -- Perry Capital LLC; During the course of the confirmation hearing for the Fifth Amended Plan of Reorganization, the Plan Proponents announced, "in various formats and guises", several material modifications to the Plan that adversely impact the ACOM creditors, relates Sylvia A. Mayer, Esq., at Weil, Gotshal & Manges LLP, in New York, on behalf of a group of Adelphia Communications Corp. bondholders. Ms. Mayer asserts that the ACOM creditors who voted to accept the Plan should be notified of the proposed Plan modifications, informed of the higher valuation and intent to determine contractual subordination rights, and afforded an opportunity to reconsider their acceptance. Ms. Mayer argues that the modifications: (a) further reduce funds originally promised to be made available for the ACOM creditors, rather than set aside for various litigation indemnification funds, from $175,000,000 to $77,000,000 million; (b) continue to force the ACOM creditors to pay, out of the residual value otherwise available to them, the professional fees of other creditors whose interests are adverse to those of the ACOM creditors, and with no notice or opportunity to reconsider their vote, increase this requirement by $4,175,000; (c) recognize the material undervaluation of the TWC Stock and attempt a purely cosmetic fix to bring the highest point under the collar in line with the Plan Proponents' own expert's valuation -- a valuation known by the Debtors, yet not disclosed, before the vote was complete; and (d) potentially strip all holders of ACOM Senior Notes of the benefit of contractual subordination provisions, without notice and an opportunity to be heard, in the context of the Plan. Ms. Mayer asserts that other than announcements in open court and certain Court filings, no notice has been given to the ACOM creditors, especially to accepting ACC creditors, of the proposed modifications to the Plan, which adversely impact their recoveries. Ms. Mayer contends that while the ACC Bondholder Group actively participated in the Confirmation Hearing as an objecting party and made clear that each of its members voted to reject the Plan, other ACC creditors -- particularly the ACC Accepting Creditors -- have not been similarly involved. Ms. Mayer points out that pursuant to Sections 1125 and 1127(a) of the Bankruptcy Code and Rule 3019 of the Federal Rules of Bankruptcy Procedure, those ACC creditors who voted to accept the Plan -- 10 to 20 days prior to any public announcement of the materially adverse Plan modifications -- must be re-solicited. Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is a cable television company. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, 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 Debtors in their restructuring efforts. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates chapter 11 cases. (Adelphia Bankruptcy News, Issue No. 160; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ADVANCED MARKETING: Organizational Meeting Scheduled on Friday -------------------------------------------------------------- The U.S. Trustee for Region 3 will hold an organizational meeting to appoint an official committee of unsecured creditors in Advanced Marketing Services, Inc. and its debtor-affiliates' chapter 11 cases at 10:00 a.m., on Friday, Jan. 12, 2006, at the Double Tree Hotel, 700 King Street, Salon L in Wilmington, Delaware. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. The meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. However, a representative of the Debtors will attend and provide background information regarding the cases. Creditors interested in serving on a Committee should complete and return to the U.S. Trustee a statement indicating their willingness to serve on an official committee. Official creditors' committees, constituted under Section 1102 of the Bankruptcy Code, ordinarily consist of the seven largest creditors who are willing to serve on a committee. In some Chapter 11 cases, the U.S. Trustee is persuaded to appoint multiple creditors' committees. Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes that the reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Based in San Diego, California, Advanced Marketing Services, Inc. -- http://www.advmkt.com/-- provides customized merchandising, wholesaling, distribution and publishing services, currently primarily to the book industry. The company has operations in the U.S., Mexico, the United Kingdom and Australia and employs approximately 1,200 people Worldwide. The company and its two affiliates, Publishers Group Incorporated and Publishers Group West Incorporated filed for chapter 11 protection on Dec. 29, 2006 (Bankr. D. Del. Case Nos. 06-11480 through 06-11482). Chun I. Jang, Esq., Mark D. Collins, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on Apr. 28, 2007. AES CORP: Increases Revolving Credit Facility to $750 Million ------------------------------------------------------------- AES Corporation disclosed in a regulatory filing with the U.S. Securities and Exchange Commission that on Dec. 6 and Dec. 26, 2006, it entered into amendments for its senior secured credit facility. The amendments are part of a single plan and increase the size of the revolving credit facility from $650 million to $750 million. The amendment was entered into by: * AES Corp., as borrower; * AES Hawaii Management Company, Inc., AES New York Funding, L.L.C., AES Oklahoma Holdings, L.L.C., and AES Warrior Run Funding, L.L.C., as Subsidiary Guarantors; * Citicorp Usa, Inc., as Agent and as a Revolving Fronting Bank; * Citibank N.A., as Collateral Agent; * Bank of America, N.A., Deutsche Bank Trust Company Americas, Lehman Commercial Paper, Inc., UBS AG, Stamford Branch, Union Bank California, N.A., CALYON - New York Branch, and Societe Generale - New York Branch, as Revolving Fronting Banks; and * Barclays Bank PLC, as a Committing Bank. A full-text copy of Amendment No. 9 to the Third Amended and Restated Credit and Reimbursement Agreement, dated as of Dec. 29, 2006, is available for free at: http://ResearchArchives.com/t/s?182c A full-text copy of Amendment No. 8 to the Third Amended and Restated Credit and Reimbursement Agreement, dated as of Dec. 6, 2006, is available for free at: http://ResearchArchives.com/t/s?182d AES Corp. (NYSE:AES) -- http://www.aes.com/-- is a global power company. The Company operates in South America, Europe, Africa, Asia and the Caribbean countries. Generating 44,000 megawatts of electricity through 124 power facilities, the company delivers electricity through 15 distribution companies. AES's Latin America business group is comprised of generation plants and electric utilities in Argentina, Brazil, Chile, Colombia, Dominican Republic, El Salvador, Panama and Venezuela. Fuels include biomass, diesel, coal, gas and hydro. The group also pursues business development activities in the region. AES has been in the region since May 1993, when it acquired the CTSN power plant in Argentina. * * * The company's senior secured term loan due 2011 and senior secured revolving credit facility due 2010 carry Moody's Ba1 rating. AIR AMERICA: CACI International Can Pursue Defamation Suit ---------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has allowed CACI International Inc. to pursue its defamation suit against Air America Radio, aka Piquant LLC, and Randi Rhodes, a host at Air America, the Associated Press reports. CACI is seeking $1 million in compensatory damages and $10 million in punitive damages. According to AP, the suit arose from statements Ms. Rhodes made on her show allegedly accusing CACI employees of raping and murdering Iraqi civilians at the Abu Ghraib prison. Claims against CACI are covered by Air America's insurance policy, AP reports. CACI says any damages would be paid out of that policy and not from the company's assets. Arlington, Va.-based CACI is an information technology-consulting firm. The company generates most of its revenue from government contracts. A CACI subsidiary company provided civilian interrogators for the U.S. military in Iraq. About Air America Air America Radio, aka Piquant LLC -- http://www.airamerica.com/ -- is a full-service radio network and program syndication service in the United States. The network features discussion and information programs reflecting a liberal, left wing, or progressive point of view. Air America filed a voluntary Chapter 11 petition on Oct. 13, 2006 (Bankr. S.D. N.Y. Case No: 06-12423) Tracy L. Klestadt, Esq., at Klestadt & Winters, LLP, represents the Debtor. No Official Committee of Unsecured Creditors has been appointed in this case. When the Debtor filed for bankruptcy, it disclosed total assets of approximately $4.3 million and total debts of over $20 million. ARAMARK CORP: Buyout Prompts Moody's Low-B Ratings on Debentures ---------------------------------------------------------------- Moody's Investors Service assigned provisional ratings to the proposed financing of the leveraged buyout of Aramark Corporation. Moody's concurrently downgraded to B3 from B2 the rating on the existing 5% senior notes due 2012 of Aramark Services, Inc., a wholly-owned subsidiary of Aramark Corporation. This concludes a review for possible downgrade initiated on May 1, 2006. The rating outlook is stable. Ratings Assigned: * Aramark -- $600 million secured revolving credit facility due 2013, Ba3, LGD3, 32%; -- $3.660 billion secured term loan due 2014, Ba3, LGD3, 32%; -- $250 million secured synthetic letter of credit facility due 2013, Ba3, LGD3, 32%; -- $1.7 billion senior unsecured notes due 2015, B3, LGD5, 80%; -- $570 million senior subordinated notes due 2016, B3, LGD6, 93%; -- Corporate family rating at B1; and, -- Probability of Default rating, B1. These ratings are subject to Moody's review of final documentation. Ratings Downgraded: * Aramark -- Corporate Family Rating, to B1 from Ba3; -- Probability of Default rating, to B1 from Ba3; -- Senior unsecured shelf registration, to B3, LGD6, 96% from B2, LGD6, 96%; and, -- Senior subordinated shelf registration, to B3, LGD6, 97% from B2, LGD6, 97%. Ratings Downgraded: * Aramark Services: -- $250 million senior unsecured notes due 2012, to B3, LGD6, 96% from B2, LGD6, 96%; -- Senior unsecured shelf registration, to B3, LGD6, 96% from B2, LGD6, 96%; and, -- Senior subordinated shelf registration, to B3, LGD6, 97% from B2, LGD6, 97%. Ratings affirmed: * Aramark Services -- $300 million senior unsecured notes due 2007, Baa3; -- $31 million senior unsecured notes due 2007, Baa3; and, -- $300 million senior unsecured notes due 2008, Baa3. The review of the ratings was initiated on May 1, 2006, after the dislcosure that the company had received a proposal to be acquired in a leveraged buyout led by its chairman and private equity investors GS Capital Partners, J.P. Morgan Capital Partners, CCMP Capital Partners, Thomas H. Lee Partners and Warburg Pincus LLC. On Aug. 8, 2006, the board of directors of ARAMARK approved a definitive merger agreement. The merger is valued at approximately $8.6 billion, including the assumption or repayment of approximately $2.1 billion of existing debt, and is expected to close in the first quarter of 2007. The merger is expected to be financed with a $3.66 billion secured term loan, $1.7 billion of senior unsecured notes, $570 million of senior subordinated notes and an equity contribution of $2.1 billion. The company has received commitments to increase the size of its receivable securitization facility from $225 million to $250 million and expects to have $225 million outstanding at closing. Moody's will withdraw the ratings on the senior notes due 2007- 2008 upon the closing of the buyout since these notes are expected to be redeemed by the company. The existing corporate family rating of ARAMARK will also be withdrawn upon the closing of the buyout. The senior notes due 2012 will remain outstanding after the consummation of the buyout. The downgrade of the senior notes due 2012 reflects the structural subordination of these notes to high levels of secured and guaranteed debt in the post-acquisition capital structure. The provisional ratings of ARAMARK will be converted into definitive ratings upon the closing of the buyout. The B1 Corporate Family Rating is supported by the large size of the company, significant geographic, customer and service line diversification and good growth fundamentals. Financial strength will weaken significantly post-merger because of the approximately $4.5 billion in incremental debt needed to fund the buyout. The ratings are constrained by cash flow, leverage and interest coverage metrics that are weak for the B1 rating category. The stable outlook reflects Moody's expectation of 2%-4% organic revenue growth and modest EBIT margin improvement over the next 12-24 months. Cash flow, leverage and interest coverage metrics are expected to remain weak for the rating category during this period. Aramark Corporation, headquartered in Philadelphia, Pennsylvania, is one of the largest U.S. providers of food and support services to a variety of end markets across the country, including businesses, the educational and healthcare sectors, sports and entertainment venues and correctional institutions. The company also operates the second largest uniform and career apparel rental services and sales business in the U.S., catering to a diversified client portfolio through an extensive national service network. For the twelve month period ending Sept. 30, 2006, revenues were approximately $11.6 billion. ASARCO LLC: Has Until May 11 to Remove Civil Actions ---------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi further extends until May 11, 2007, the period within which ASARCO LLC and its debtor-affiliates may remove civil actions. As reported in the Troubled Company Reporter on Dec. 18, 2006, the Debtors were parties to a myriad of lawsuits in various state and federal courts. The issues involved in many of those lawsuits are complex and many require individual analysis of each case. Nathaniel Peter Holzer, Esq., at Jordan, Hyden, Womble, Culbreth, & Holzer, P.C., asserted that the Debtors need additional time to review the lawsuits at issue to determine whether removal of the various cases is in the best interest of the bankruptcy estates. 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. 35; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ASARCO LLC: 3 Subsidiaries Want Until Jan. 26 to File Schedules --------------------------------------------------------------- Debtors AR Sacaton LLC, ASARCO Exploration Company Inc., and Southern Peru Holdings LLC ask the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to extend the time for them to file their schedules of assets and liabilities, statement of financial affairs and lists of leases until Jan. 26, 2007. The Subsidiary Debtors explain that due to the administrative load on ASARCO LLC's employees, they need more time to compile and verify the accuracy of the data needed for the preparation and filing of their Schedules. The Subsidiary Debtors also ask the Court to schedule the meeting of creditors shortly after the date they are ordered to file their Schedules. 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. 35; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). BALDOR ELECTRIC: S&P Places Corporate Credit Rating at BB- ---------------------------------------------------------- Standard & Poor's Rating Services assigned its 'BB-' corporate credit rating to Fort Smith, Arkansas-based Baldor Electric Co. At the same time, Standard & Poor's assigned its 'BB' bank loan ratings and recovery ratings of '1' to the company's proposed $1 billion seven-year, senior secured term loan and $200 million five-year revolving credit facility, indicating the expectation of full recovery of principal in the event of a payment default. Also, the company's proposed $550 million 10-year senior unsecured notes were rated 'B' and the proposed $150 million three-year mandatory redeemable preferred stock was rated 'B-'. The rating on the preferred stock applies to the company's obligation to service the preferred stock until conversion, as well as its obligation to issue common shares under the conversion terms. The rating does not pertain to the safety of principal. The preferred stock value depends on the market value of the company's common shares, and is not addressed by the credit rating. Proceeds from the financing will be used to acquire the Power Systems business from Rockwell Automation and to refinance existing debt. Total balance sheet debt following the transaction will be approximately $1.55 billion. "The ratings reflect Baldor's aggressive financial profile following the proposed acquisition of Rockwell Automation's Power Systems business and the highly competitive and cyclical industry in which the company operates. This is somewhat offset by the company's leading share in the domestic industrial electric motors market and good operating margins," said Standard & Poor's credit analyst Dan Picciotto. After the acquisition, Baldor Electric will design and manufacture motors, power transmission systems, drives, and generators. The company will have leading domestic share in the industrial electric motor market offered under the Baldor and Reliance brands. BLUEGREEN CORP: S&P Revises Outlook to Stable From Positive ----------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Bluegreen Corp. to stable from positive. The outlook revision reflects Standard & Poor's expectation that ratings are unlikely to be raised over the intermediate term given increased leverage at Bluegreen to fund aggressive growth in the timeshare and residential home sites businesses. At the same time, Standard & Poor's affirmed its 'B' corporate credit rating on the Boca Raton, Florida-based timeshare developer. Total lease adjusted debt, including $470 million in off-balance-sheet securitized obligations, was about $775 million as of September 2006. This compares to total lease adjusted debt of about $630 million at December 2005. Standard & Poor's believes that including off-balance-sheet securitized obligations more accurately reflects the capital necessary to sustain current cash flow levels. The ratings on Boca Raton, Florida-based Bluegreen reflect the capital-intensive nature of the timeshare industry, reliance on the capital market's appetite for debt backed by the company's timeshare receivables, and a highly leveraged capital structure. Higher leverage is due primarily to an increase in debt to finance notes receivable and inventory investments, but also partly a result of flat EBITDA during 2006 due to higher expenditures related to new offsite sales locations and new marketing alliances. In addition, Bluegreen has experienced lower sales year to date in 2006 in its Communities business due to earlier-than-expected sellouts of developments in 2005. While the timeshare marketing investments would reasonably be expected to produce increased sales levels, and the inventory shortfalls in the Communities business may be temporary, Standard & Poor's expects that Bluegreen will continue to have sizable financing needs over the intermediate term to fund its growth objectives. Bluegreen expects to develop new timeshare inventory during the next several years, with investments in Las Vegas, Williamsburg, Virginia, and Wisconsin Dells, Wisconsin. Bluegreen has also made significant investments in 2006 in inventory for its Communities business, spending about $80 million year to date. CAROLINA COUNTRY: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Carolina Country Barbecue, Incorporated P.O. Box 2727 Gastonia, NC 28053 Bankruptcy Case No.: 07-30017 Chapter 11 Petition Date: January 4, 2007 Court: Western District of North Carolina (Charlotte) Judge: J. Craig Whitley Debtor's Counsel: Geoffrey A. Planer, Esq. P.O. Box 1596 Gastonia, NC 28053 Tel: (704) 864-0235 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ First National Bank of Bank loan $2,756,000 Shelby Value of Collateral: 529 S. New Hope Rd. $1,378,000 Gastonia, NC 28054 Internal Revenue Service Trade debt $1,131,196 P.O. Box 21126 Philadelphia, PA 19114 Wesley, Mark and D. Norman Trade debt $956,138 Morris c/o Fred W. DeVore, III 831 E. Morehead St. Suite 245 Charlotte, NC 28202 NC Dept. of Revenue Trade debt $184,000 Bankruptcy Unit P.O. Box 1168 Raleigh, NC 27602 Tyson Meat Company Trade debt $28,000 2545 E. Ozark Ave. Gastonia, NC 28054 City of Gastonia Trade debt $27,820 Tax Collector P.O. Box 9000 Gastonia, NC 28053 First Gaston Bank Bank loan $25,000 c/o Mark Heavner, Attorney P.O. Box 488 Gastonia, NC 28053 BB&T Insurance Services Inc. Trade debt $24,688 c/o Gerald H. Groon, Jr. Attorney P.O. Box 26268 Raleigh, NC 27611 Mecklenburg Co. Tax Trade debt $16,338 Collector P.O. Box 32247 Charlotte, NC 28232 Douglas P. Arthurs Trade debt $10,550 Arthurs & Foltz, Attorney at Law P.O. Box 2206 Gastonia, NC 28053 Prime Rate Premium Trade debt $8,500 Finance Corp., Inc. P.O. Box 100507 Florence, SC 29501 Starr Electric Trade debt $3,827 1808 Norland Road P.O. Box 18726 Charlotte, NC 28218 NCO Financial Systems Trade debt $2,692 For BellSouth Advertising 3850 N. Causeway Blvd. Suite 300 Metairie, LA 70002 Bradford and Bradford, PA Trade debt $2,280 Attorney at Law P.O. Box 977 York, SC 29745 McCannon Rogers Driscoll & Trade debt $2,214 Assoc. P.O. Box 339 Gastonia, NC 28053 Chicago Title Co. Trade debt $2,200 P.O. Box 1076 Gastonia, NC 28053 Receivables Control Corp. Trade debt $1,160 For Ecolab Inc. P.O. Box 9658 Minneapolis, MN 55440 York Chester Investment Co. Trade debt $0 209 W. 2nd Avenue Gastonia, NC 28052 UMC Investments Trade debt $0 c/o Paul I. Klein, Esq. P.O. Box 221648 Charlotte, NC 28222 City County Tax Collector Trade debt $0 P.O. Box 31577 Charlotte, NC 28231 CC FUNDING: S&P Holds Rating on 2003-2 Class B-5 Debenture at B --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on five classes from CC Funding Corp.'s series 2003-1 and 2003-2. At the same time, ratings were affirmed on 11 other classes from these series. The upgrades reflect positive collateral performance that had significantly increased current and projected credit support levels for the respective classes as of the December 2006 remittance period. Significant principal prepayments and the shifting interest structure of the transactions have allowed the level of available credit support to build. The projected credit support multiples for the upgraded classes range from 1.94x to 2.17x the original percentages at the new rating levels. Total delinquencies to date have been low for the 2003 vintage: 3.54% for series 2003-1 and 5.22% for series 2003-2. Cumulative losses to date are 0% for series 2003-1 and 0.03% for series 2003-2, and the pools have paid down to 13.59% and 16.42% of their original sizes, respectively. The affirmations reflect actual and projected credit support levels that are sufficient to maintain the current ratings. The overall performance of both pools remains positive. These transactions utilize a senior subordinate structure; each class is supported only by the rated and unrated classes subordinate to it. The underlying collateral for these transactions consists primarily of prime, 30-year, negatively amortizing, adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties. Ratings Raised CC Funding Corp. Rating ------ Series Class To From ------ ----- -- ---- 2003-1 B-1 AA+ AA 2003-1 B-2 AA- A 2003-1 B-3 A- BBB 2003-2 B-1 AA+ AA 2003-2 B-2 A+ A Ratings Affirmed CC Funding Corp. Series Class Rating ------ ----- ------ 2003-1 A-1, A-2, A-NA AAA 2003-1 B-4 BB 2003-1 B-5 B 2003-2 A-1, A-2, A-NA AAA 2003-2 B-3 BBB 2003-2 B-4 BB 2003-2 B-5 B CENTENNIAL COMMS: Posts $33.4 Mil. Net Loss in Qtr. Ended Nov. 30 ----------------------------------------------------------------- Centennial Communications Corp. reported a $33.4 million net loss for the second fiscal quarter ended Nov. 30, 2006, compared with $8.2 million of net income for the same period in 2005. Centennial Communications Corp. reported income from continuing operations of $1 million for the second fiscal quarter of 2007 as compared to income from continuing operations of $9.9 million in the second fiscal quarter of 2006. The second fiscal quarter of 2007 included $2.9 million of stock-based compensation expense. Consolidated adjusted operating income from continuing operations for the second fiscal quarter was $88.2 million, as compared with $87.7 million for the prior-year quarter. "We have a strong history of growing retail cash flow in each of our businesses, and continue to take important steps to reassert our market leadership in both the U.S. and Puerto Rico," Centennial chief executive officer Michael J. Small said. "We operate great networks, have recently enhanced our direct distribution channels and continue to showcase the continuity and power of our brand. Our successful unlimited offering in Puerto Rico builds on our heritage of bringing simplicity and value to our customers." Centennial reported fiscal second-quarter consolidated revenue from continuing operations of $229.2 million, which included $121.5 million from U.S. wireless and $107.7 million from Puerto Rico operations. Consolidated revenue from continuing operations grew 6 percent versus the fiscal second quarter of 2006. The company ended the quarter with 1,058,700 total wireless subscribers, which compares with 992,200 for the year-ago quarter and 1,041,500 for the previous quarter ended Aug. 31, 2006. The company reported 387,500 total access lines and equivalents at the end of the second fiscal quarter, which compares with 324,100 for the year-ago quarter. U.S. wireless operations revenue was $121.5 million, a 10% increase from last year's second quarter. Retail revenue increased 17% from the year-ago period primarily driven by a 9% increase in total retail subscribers, and supported by strong feature, data and access revenue. Roaming revenue decreased 21% from the year-ago quarter as a result of a 20% decline in total roaming traffic. Puerto Rico wireless operations were $78.9 million, unchanged from the prior-year second quarter. Puerto Rico broadband operations were $31.8 million, an 11% year- over-year increase. About Centennial Communications Headquartered in Wall, New Jersey, Centennial Communications Corp. (NASDAQ: CYCL) -- http://www.centennialwireless.com/-- provides regional wireless and integrated communications services in the United States and the Puerto Rico with approximately 1.1 million wireless subscribers and 387,500 access lines and equivalents. The U.S. business owns and operates wireless networks in the Midwest and Southeast covering parts of six states. Centennial's Puerto Rico business owns and operates wireless networks in Puerto Rico and the U.S. Virgin Islands and provides facilities-based integrated voice, data and Internet solutions. Welsh, Carson, Anderson & Stowe and an affiliate of the Blackstone Group are controlling shareholders of Centennial. * * * As reported in the Troubled Company Reporter on July 3, 2006, Fitch assigned Centennial Communications Corp.'s issuer default rating at 'B-' and senior unsecured notes rating at 'CCC/RR6'. The rating outlook is stable. CHARMING CASTLE: Court Okays Burr & Forman as Committee Counsel --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Alabama approved the application of the Official Committee of Unsecured Creditors in Charming Castle LLC's chapter 7 case to retain Burr & Forman LLP as its counsel, nunc pro tunc to Oct. 23, 2006. As counsel, Burr & Forman will: a) assist the Committee in analyzing the reorganization or liquidation efforts of the Debtor; b) give legal advice with respect to its duties and powers in the Debtor's chapter 11 case; c) assist in its investigation of the acts, conduct, assets, liabilities and continuance of the business, and any other matter relevant to the case or to the formulation of a plan of reorganization or liquidation; d) participate in the formulation of the plan; e) assist in requesting the appointment of a trustee or examiner, if necessary; and f) perform other legal services as required in the interest of the creditors. The firm's professionals bill: Professional Position Hourly Rate ------------ -------- ----------- Robert B. Rubin, Esq. Partner $400 Derek F. Meek, Esq. Partner $285 Jennifer B. Kimble, Esq. Associate $190 Julie Crawford, Esq. Paralegal $150 To the best of the Committee's knowledge, Burr & Forman is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Hackleburg, Alabama, Charming Castle LLC, dba Indies House -- http://www.indieshouse.net/-- manufactures mobile homes. The Company filed for chapter 11 protection on Oct. 5, 2006 (Bankr. N.D. Ala. Case No. 06-71420). Robert L. Shields, III, Esq., at the Shields Law Firm represents the Debtor. On Dec. 11, 2006, the Court converted the Debtor's case into chapter 7. Robert A. Morgan serves as trustee and is represented by William Dennis Schilling in Birmingham, Alabama. When the Debtor filed for protection from its creditors, it listed estimated assets of less than $50,000 but estimated debts between $10 million and $50 million. The Debtor's exclusive period to file a chapter 11 plan expires on Feb. 2, 2007. CHASE MORTGAGE: Fitch Holds Low-B Ratings on Various Certificates ----------------------------------------------------------------- Fitch Ratings affirmed these Chase Mortgage Finance Trust transactions: Series 2002-S4: -- Class A at 'AAA'. Series 2002-S8: -- Class A at 'AAA'; -- Class M at 'AAA'; -- Class B-1 at 'AAA'; -- Class B-2 at 'AA'; -- Class B-3 at 'A'; and, -- Class B-4 at 'BBB'. Series 2003-S1: -- Class A at 'AAA'; -- Class M at 'AAA'; -- Class B-1 at 'AA+'; and, -- Class B-4 at 'BB'. Series 2003-S5: -- Class A at 'AAA'; -- Class B-1 at 'A+'; -- Class B-2 at 'BBB'; -- Class B-3 at 'BB'; and, -- Class B-4 at 'B'. Series 2003-S6: -- Class A at 'AAA'; -- Class B-1 at 'A'; -- Class B-2 at 'BBB'; and, -- Class B-4 at 'B'. Series 2003-S7: -- Class A at 'AAA'. Series 2003-S8: -- Class A at 'AAA'; -- Class B-1 at 'A'; and, -- Class B-4 at 'B'. Series 2003-S12: -- Class A at 'AAA'; -- Class M at 'AA-'; -- Class B-1 at 'A'; and, -- Class B-4 at 'B'. Series 2003-S13: -- Class A at 'AAA'. Series 2004-S1: -- Class A at 'AAA'. Series 2004-S3: -- Class A at 'AAA'; -- Class M at 'AA'; -- Class B-1 at 'A'; -- Class B-2 at 'BBB'; -- Class B-3 at 'BB'; and, -- Class B-4 at 'B'. Series 2004-S4 -- Class A at 'AAA'; -- Class M at 'AA'; -- Class B-1 at 'A'; -- Class B-2 at 'BBB'; -- Class B-3 at 'BB'; and, -- Class B-4 at 'B'. The affirmations, affecting approximately $2.1 billion of the outstanding certificates, reflect a stable relationship between credit enhancement and expected loss. In addition, all of the above transactions have experienced growth in CE and have suffered minimal to no losses to date. The collateral for the above transaction consists of 15-year and 30-year fixed-rate mortgage loans extended to prime borrowers and secured by first liens on one to four-family residential properties. The loans were originated or acquired by Chase Manhattan Mortgage Corporation and are serviced by Chase Home Finance, LLC, which is rated 'RPS1' by Fitch. As of the December 2006 distribution date, the pool factors range from 5% to 70%. In addition, the transactions are seasoned from 32 months to 58 months. CMS ENERGY: Unit Gets $25MM Claim Award from American Arbitration ----------------------------------------------------------------- CMS Energy Corporation's indirect wholly owned subsidiary, Dearborn Industrial Generation LLC, received a $25 million award from the American Arbitration Association regarding disputes with Duke/Flour Daniel and others pertaining to the construction of the Dearborn Industrial Generation Project, a 710 megawatt natural gas-fueled cogeneration facility located in Dearborn, Michigan. In October 2001, DFD, the primary construction contractor for the DIG Project, presented the Dearborn Industrial Generation, LLC, developer of the DIG Project, with a change order to their construction contract and filed an action in Michigan state court against DIG, claiming contractual damages in the amount of $110 million, plus interest and costs. DFD also filed a construction lien for the $110 million. DIG contested both of the claims made by DFD. The company disclosed that, in addition to drawing down on three letters of credit totaling approximately $30 million that it obtained from DFD, DIG filed an arbitration claim against DFD asserting in excess of an additional $75 million. The judge in the Michigan state court case entered an order staying DFD's prosecution of its claims in the court case and permitting the arbitration to proceed and the claims of both parties to be considered. The arbitration hearing concluded on Sept. 28, 2006. The AAA arbitration panel awarded DIG approximately $25 million, including interest, on its various claims against DFD presented in the arbitration. The panel also awarded DFD approximately $5 million on its claims and credited DFD approximately $30 million, plus $2 million in interest, for the three letters of credit DIG drew against DFD. The result is a net amount due DFD, inclusive of interest, in the amount of approximately $12 million, which is payable upon entry of judgment in Wayne County Circuit Court and within the applicable time periods contained in the Michigan Court Rules. The company has previously accrued a liability of approximately $30 million on the matter and has recorded fourth quarter pre-tax earnings of approximately $18 million because of the arbitration result. CMS Energy Corporation -- http://www.cmsenergy.com/-- is a Michigan-based company that has as its primary business operations an electric and natural gas utility, natural gas pipeline systems, and independent power generation. Through its regulated utility subsidiary, Consumers Energy Co., the company provides natural gas and electricity to almost 60% of nearly 10 million customers in Michigan's lower-peninsula counties. * * * As reported in the Troubled Company Reporter on Oct. 16, 2006, Moody's Investors Service lowered its Corporate Family Rating for CMS Energy Corp. to Ba2 from Ba1, in connection with its new Probability-of-Default and Loss-Given-Default rating methodology. CMS ENERGY: Inks MOU to Settle Securities Class Action Suits ------------------------------------------------------------ CMS Energy Corporation's special committee of independent directors and its full board of directors approved a memorandum of agreement regarding the settlement of shareholder class action lawsuits linked to round-trip energy trading that took place at CMS Marketing, Services and Trading Company, its former Texas- based subsidiary. The lawsuits alleged that the company violated U.S. securities laws and regulations by making allegedly false and misleading statements about its business and financial condition, particularly with respect to revenues and expenses recorded in connection with round-trip trading by CMS Marketing between 2000 and 2002. The special committee of independent directors and the company's full board of directors, both judged that it was in the best interests of shareholders to eliminate the business uncertainty. The company expects the MOU to lead to a detailed stipulation of settlement that will be presented to the assigned federal judge and the affected class in the first quarter of 2007. The District Court appointed Andover Brokerage LLC and Herbert Steiger as lead plaintiffs and the law firms of Entwistle & Cappucci LLP and Milberg Weiss Bershad Hynes & Lerach LLP as plaintiffs' co-lead counsel, and the law firms of Mantese, Miller, and Shea, PLLC, and Elwood S. Simon & Associates as plaintiffs' liaison counsel for the Class action suits. Terms of the MOU Under the terms of the MOU, the litigation will be settled for a total of $200 million, including the cost of administering the settlement and any attorney fees the court awards. The company will make a payment of $123.5 million plus an amount equivalent to interest on the outstanding unpaid settlement balance beginning on the date of preliminary approval of the Court and running until the balance of the settlement funds is paid into a settlement account. Of the amount, the company's insurers will pay $76.5 million. The company disclosed that it has established a $123.5 million reserve and taken a resulting pre-tax charge to 2006 earnings in the fourth quarter. The company says that, in entering the MOU, it makes no admission of liability under the Actions. The company further disclosed that the settlement amount can be paid and its liquidity needs for continuing operations can be met from cash from operations and available cash. A full text-copy of the MOU may be viewed at no charge at http://ResearchArchives.com/t/s?1821 CMS Energy Corporation -- http://www.cmsenergy.com/-- is a Michigan-based company that has as its primary business operations an electric and natural gas utility, natural gas pipeline systems, and independent power generation. Through its regulated utility subsidiary, Consumers Energy Co., the company provides natural gas and electricity to almost 60% of nearly 10 million customers in Michigan's lower-peninsula counties. * * * As reported in the Troubled Company Reporter on Oct. 16, 2006, Moody's Investors Service lowered its Corporate Family Rating for CMS Energy Corp. to Ba2 from Ba1, in connection with its new Probability-of-Default and Loss-Given-Default rating methodology. COLLINS & AIKMAN: Wants Second Stipulation on Lear Pact Approved ---------------------------------------------------------------- Collins & Aikman Corp. and its debtor-affiliates ask the Honorable Steven W. Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan to approve a second stipulation between the Debtors and Lear Corporation and its affiliates and subsidiaries resolving the remaining disputed prepetition debt, which will mark the end of the dispute. Before filing for bankruptcy, the Debtors and Lear provided each other with certain automotive component parts. It was agreed on the first stipulation that the prepetition Lear receivable owed to the Debtors was $4,441,028. The Debtors also believed that they were owed an additional $866,622 from Lear on account of prepetition shipments to Lear. It was also agreed in the First Stipulation that Lear was owed $331,899. At the time of the First Stipulation, Lear asserted that it continued to be owed on account of prepetition shipments to the Debtors an additional $88,209 from the Debtors. Both parties have reconciled and agreed that the additional receivable is due to Lear. On Nov. 3, 2006, Lear filed a motion seeking a declaration that the automatic stay did not prohibit it from recouping the prepetition amounts owed to Lear against prepetition amounts that Lear owed the Debtors. Under certain agreements, the Debtors transferred certain accounts to Carcorp Inc., who in turn assigned substantially all accounts receivable to General Electric Capital Corporation. GECC alleged that under the terms of the Agreements, around $1,776,305 of the Lear Receivable was assigned to GECC. It was agreed in the First Stipulation that $1,323,907 was owed in respect to the assigned accounts. On Dec. 22, 2005, GECC filed a complaint for declaratory judgment and related relief against the Debtors and Lear seeking payment of the portion of the Lear Receivable assigned to GECC. In accordance with the First Stipulation, Lear paid the Debtors $2,697,683 and paid GECC $1,323,907. On Oct. 13, 2006, the Court approved a stipulation regarding a Receivables Transfer Agreement between the Debtors and GECC. The Debtors and Lear now agree that $513,168 of the disputed prepetition debt is actually owed by various other customers of the Debtors or is otherwise not payable by Lear; and $273,272 is based on invoices that were paid by Lear, and therefore, were not properly categorized as part of the Lear Receivable. The remaining Disputed Prepetition Debt is $79,512. Pursuant to the Second Stipulation, the Debtors and Lear have agreed that: * Lear will pay $39,756 to the Debtors within five business days from the entry of Court order, and the payment will absolve Lear of any and all liability for any debt on account of the Lear Receivable or the Disputed Prepetition Debt; and * Lear may recoup the Reserve and apply it in full settlement of the Additional Receivable. 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. 48; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) COMPLETE RETREATS: Court OKs $98MM Asset Sale to Ultimate Resort ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Connecticut has approved an Asset Purchase Agreement and a Management Contract by and between the Debtors and Ultimate Resort, LLC. The Hon. Alan H.W. Shiff authorized the transfer, conveyance, and assignment of the Acquired Assets to Ultimate, free and clear of all liens, claims, encumbrances, and other interests on the closing of the Sale. Judge Shiff does not exempt the transfer of real estate in Florida from stamp and similar taxes under Section 1146(a) as per the request of the Florida Department of Revenue. The Court explains that it has not found any authority for a Section 1146(a) exemption in a case where a plan had not been filed as of the time of the Sale. Contracts & Liabilities Assumed by Ultimate The Court also authorized the Debtors to assume and assign the Assumed Contracts and the Assumed Liabilities to Ultimate. Each of the Assumed Contracts will, upon assignment to Ultimate, be deemed to be valid and binding on Ultimate and in full force and effect and enforceable in accordance with their terms, Judge Shiff says. The Debtors and the non-Debtor party to an Assumed Contract will endeavor in good faith to resolve any disputed cure amount objections, Judge Shiff rules. If a resolution cannot be reached, the Court directs the Debtors to promptly schedule a hearing to address the unresolved Cure Objections. Pursuant to agreements between the Debtors and the applicable non-Debtor parties, the cure amounts for the Debtors' contracts with 16 counterparties are: Counterparty Cure Amount ------------ ----------- Akira, LLC $49,503 Angela Meyer 13,709 BDL Associates 20,587 Ben and Holly Gill 30,141 Chris Laukenmann 19,193 Curtis D. Stoldt 15,080 David Stephens 39,205 Dennis Gurevich 21,798 Doug and Cynthia Harmon 39,508 F-4 Crystal Springs, LLC 20,564 Kiawah Island Golf Resort 78,451 Moshe Kedan 23,208 Paul J. Morrissey 13,709 Susan Bergeron 31,161 Thrall Enterprises, Inc. 13,866 Trump International Management Corp. 246,994 Except for the right to enforce the Debtors' obligation to pay the Cure Amounts, each non-Debtor party to an Assumed Contract is forever barred, precluded, estopped, and permanently enjoined from asserting against the Debtors or Ultimate any default existing as of the date of the Sale Hearing. The Court permits the Debtors to reject certain executory contracts and unexpired leases since those contracts or leases are not going to be either assumed by the Debtors or assumed and assigned to Ultimate in connection with the Sale. A nine-page list of the Rejected Contracts is available for free at http://ResearchArchives.com/t/s?1826 A full-text copy of the Ultimate Asset Sale Order is available for free at http://ResearchArchives.com/t/s?1827 Debtors File Management Agreement In connection with the proposed sale of substantially all of their assets to Ultimate Resort, LLC, the Debtors delivered to the Court their management agreement with Ultimate. Pursuant to the Management Agreement, Ultimate will fund operating disbursements with respect to the Debtors' destination club business from Dec. 29, 2006, until the Closing Date of the Ultimate Asset Purchase Agreement. Specifically, Ultimate will be responsible for funding any disbursements set forth in the Budget that are up to, but in no event in excess of: -- 10% more than the amount of total disbursements for any line item forecasted in the Budget for the applicable time period if that forecasted line item disbursement is equal to or more than $50,000 in the forecasted week; or -- 20% more than the amount of total disbursements forecasted in the Budget for the applicable time period if that forecasted line item disbursement is less than $50,000 in the forecasted week. Under the Management Agreement, the Debtors and Ultimate will continue, consistent with the practices developed in connection with the execution of the APA, to cooperate with regard to the day-to-day operations and management of the Business. Moreover, the Debtors will continue to own the Acquired Assets and be responsible for all liabilities they incur, including without limitation the Assumed Liabilities. The Management Agreement will commence as of the Funding Date and will remain in effect until the Management Termination Date, unless terminated earlier in accordance with its provisions. The Management Termination Date will occur on the earliest of: (a) the APA Closing Date; (b) the date on which the APA terminates by its terms; (c) the date on which the Ableco DIP Facility or any successor terminates or is accelerated in accordance with its terms; (d) the date on which the Debtors' bankruptcy case is converted to a proceeding pursuant to Chapter 7 of the Bankruptcy Code; (e) at the option of the non-breaching party, upon a breach of the Management Agreement's terms, if that breach is not cured within 10 days after notice of the breach is given; or (f) a later date as the parties may mutually agree in writing. During the term of the Management Agreement, Ultimate is entitled to the benefits of all the Debtors' licenses, contracts, leases and agreements, and the Debtors will cooperate in making those licenses, contracts, leases and agreements available to Ultimate. The Management Agreement permits Ultimate, in its sole discretion, to contract with third parties and former employees at its own expense for assistance. In addition, Ultimate will have the right to collect amounts under the Consent Documents on or after the Funding Date. A full-text copy of the Ultimate Resort Management Agreement is available for free at http://ResearchArchives.com/t/s?1828 Payment to Patriot On the closing of the Sale, Judge Shiff permits the Debtors to pay in full all outstanding secured DIP financing obligations owed to The Patriot Group LLC. As reported in the Troubled Company Reporter on Nov. 27, 2006, in connection with the closing of the Debtors' DIP Financing with Ableco Finance LLC on Nov. 15, 2006, the Debtors paid all of the amounts due and owing to The Patriot Group LLC except for $3,500,000. Patriot agreed that the Debtors could delay repaying the remaining DIP amount in exchange for an $875,000 financing fee. If the Debtors pay the DIP Obligation by Nov. 30, 2006, Patriot agreed that the Debtors would only be obligated to pay a $175,000 financing fee. Ultimate Resort permits the Debtors to utilize $3,675,000 of the $10,000,000 Deposit to pay the outstanding secured DIP financing obligations owed to Patriot, Mr. Daman states. In exchange, the Debtors agree to substitute Ultimate Resort for Patriot with all of the protections and security interests that Patriot currently has, as a DIP lender, with respect to the amount of the Remaining Patriot DIP Obligation that will be repaid from the Deposit. To the extent Ultimate Resort will be entitled to a return to all or a portion of its Deposit under the terms and conditions of the APA, Ultimate Resort would be granted a second priority lien and superpriority administrative expense claim for $3,675,000. At the Closing, the entire amount of the Deposit will be deemed applied to the final $98,000,000 Purchase Price. About Complete Retreats Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor-affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. Michael J. Reilly, Esq., at Bingham McCutchen LP, in Hartford, Conn., serves as counsel to the Official Committee of Unsecured Creditors. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed $308,000,000 in total debts. The Debtors' exclusive period to file a plan expires on Feb.18, 2007. They have until April 19, 2007, to solicit acceptance to that plan. (Complete Retreats Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). COMPLETE RETREATS: Court Approves $3.14 Mil. Real Property Sale --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Connecticut authorized Complete Retreats LLC and its debtor-affiliates to sell the Princeville Property to Gary P. Siracuse for $1,290,000, and the Bluffton Property to Thomas Gibbons for $550,000, free and clear of all liens, claims, and encumbrances. Property Address Proposed Buyer Purchase Price ---------------- -------------- -------------- 7447 Royal Street East Ladd Tanner $1,300,000 Unit 351 Park City, Utah 4165 Kamalani Lane Gary P. Siracuse 1,290,000 Princeville, Hawaii 14 West Cottage Circle Thomas Gibbons 550,000 Bluffton, South Carolina The Park City Property includes two 1,475-square foot houses. Each of the houses has two bedrooms and two bathrooms. The Princeville Property includes a nearly 2,500-square foot house with three bedrooms, three and a half bathrooms, and a nearly 500-square foot garage. The Princeville Property is located on the Princeville Mallon Golf Course. The Bluffton Property, which includes a 2,131-square foot house with four bedrooms and four bathrooms, is located in a community resort development known as the Belfair Plantation. Amenities at the Bluffton Property and the Belfair Plantation include views of a golf course and the Colleton River, a health and fitness center, an indoor lap pool, an outdoor pool, tennis courts, a basketball court, a volleyball court, and an athletic field. The Hon. Alan H.W. Shiff directs the Debtors to pay $25,800 to CIT Capital USA, Inc., and $64,500 to Century 21 All Islands, in full satisfaction of the brokers' fees in connection with the sale of the Princeville Property. Judge Shiff also directs the Debtors to pay $5,500 to CIT Capital and $33,000 to Corabett Thomas Realty for the brokers' fees in connection with the sale of the Bluffton Property. Pursuant to the Ableco DIP Facility, the Court directs the Debtors to pay Ableco Finance, LLC, 100% of the Net Cash Proceeds from the sale of the Princeville Property and the Bluffton Property. About Complete Retreats Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor-affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. Michael J. Reilly, Esq., at Bingham McCutchen LP, in Hartford, Conn., serves as counsel to the Official Committee of Unsecured Creditors. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed $308,000,000 in total debts. The Debtors' exclusive period to file a plan expires on Feb.18, 2007. They have until April 19, 2007, to solicit acceptance to that plan. (Complete Retreats Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DAIMLERCHRYSLER: Chrysler Arm to Double International Sales ----------------------------------------------------------- Chrysler Group, DaimlerChrysler A.G.'s U.S. unit, aims to double its international sales in the next five years, following a decline in its U.S. results for 2006, Bloomberg News reports. Chrysler CEO Tom LaSorda said the unit wants to be less dependent on its U.S. sales, which fell seven percent in 2006. U.S. sales account for around 80% of Chrysler Group's sales. Mr. LaSorda said the company would focus on increasing sales outside North America adding vehicle features like right-hand drive and diesel engines. The company sold 200,000 vehicles outside North America in 2006. Chrysler's plans also include: -- adding a Taiwan-built cargo van in Mexico; and -- manufacturing Sebring sedans in China for domestic sale. In a TCR report on Jan. 5, Chrysler has signed a deal with Chery Automobile Co. under which the Chinese automaker will produce small cars known in the industry as "B-cars" to be distributed worldwide bearing the Chrysler brand. DaimlerChrysler has decided to partner with Chery Auto because higher costs such as labor and healthcare make it difficult for the company to build small cars profitably in the U.S., Bloomberg News reports. "Their plan is realistic," John Novak, an analyst at Morningstar Inc. in Chicago, told Bloomberg. "I think they are a little late to the game, but they can catch up." About DaimlerChrysler Based in Stuttgart, Germany, DaimlerChrysler AG (NYSE: DCX) -- 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. DAIMLERCHRYSLER: Chrysler's '06 Sales Outside North America Up 15% ------------------------------------------------------------------ Chrysler Group's sales continued to gain momentum outside North America and increased 15% over 2005. It was the highest amount of growth in the last 10 years, and the total sale of almost 207,000 vehicles made it the number-two sales year during that same time period. "It is clear that the road to long-term health for our company must include an aggressive strategy for international expansion," Chrysler Group president and chief executive officer Tom LaSorda said. By the end of 2007, Chrysler Group will have doubled the number of vehicles available outside North America when compared with 2003, tripled the number of right-hand-drive offerings and quadrupled the number of models with a diesel option. Supported by the strategy to offer more vehicles that meet the needs of global customers, each of Chrysler Group's three brands outperformed 2005 sales totals. Chrysler brand sales increased 6% with a total of 90,807 units, while the Jeep(R) brand was up 2% to 85,591 units. The expansion of the Dodge brand in markets outside North America helped raise its year-over-year sales 185% and close the year with 30,527 units. For the month of December, International sales were up 25% (20,845 units) compared with the same month in 2005 (16,667 units), and the year finished upholding the trend of monthly year-over-year sales gains, now at 19 consecutive months. Additionally, for the month of December, all major regions posted sales gains. Western European sales, which account for more than half of Chrysler Group's global sales, increased 20% for the year, and all markets in that region made gains over 2005. Sales in Italy, the top-selling market with 21,260 units sold in 2006, increased 12%; while the U.K. sales growth of 40% was the most significant of all International markets, and secured it as the number-two selling market outside North America. Jeep Grand Cherokee was the highest volume vehicle outside North America in 2006 with 39,208 units sold; and much like in the U.S., Chrysler Group minivans contributed to a significant portion of the year's sales (35,716 units), making it the second-best seller. New models were also an important factor in the sales success. After being on the market only seven full months, Dodge Caliber sold 17,722 units and accounted for roughly 9% of all Chrysler Group sales outside North America. "Many of Chrysler Group's new vehicles are beginning to make their way to International markets," Chrysler Group Executive Director for International Sales and Marketing Thomas Hausch said. "This arrival of the product offensive, along with the investment that the Company and our dealers made to continuously improve facilities, vehicle quality and increase customer satisfaction are drivers of this year's sales accomplishments. And we will keep working on these areas to support our continued profitable growth moving into 2007." Chrysler Group sells and services vehicles in more than 125 countries around the world, and Chrysler Group sales outside North America currently account for approximately 8% of the company's total global sales. Vehicles available range across all three Chrysler Group brands, with limited availability on some trucks and SUV models. The Company's operations outside North America have been experiencing year-over-year sales increases since 2004, and will continue to increase the number of product offerings, powertrain options, and RHD availability through 2007. About DaimlerChrysler Based in Stuttgart, Germany, DaimlerChrysler AG (NYSE: DCX) -- 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. DANA CORP: Completes Asset Sale to Hendrickson USA for $31 Million ------------------------------------------------------------------ Dana Corporation and its subsidiary, Dana Canada Corporation, have completed the sale of their trailer axle manufacturing assets to Hendrickson USA, L.L.C., a subsidiary of The Boler Company, and its affiliates. The U.S. and Canadian assets, which include trailer axle production equipment, inventory, and related assets at facilities in Lugoff, S.C., USA, and Barrie, Ontario, Canada, were sold for a combined $31 million, subject to inventory adjustments at closing. Additionally, a Chinese affiliate of Hendrickson has established a $2 million escrow for the purchase of certain trailer axle production equipment, inventory and related assets from Dana's Chinese subsidiary Dana (Wuxi) Technology Co. Ltd. Dana expects that the sale of the Wuxi assets will close in the first quarter of 2007. "The sale of the trailer axle assets enables Dana's Commercial Vehicle group to concentrate its resources on its core products and competencies - drive and steer axles, driveshafts, brakes and tire inflation systems for commercial vehicles," Dana Heavy Vehicle Products President Nick Stanage said. In conjunction with these transactions, Bendix Spicer Commercial Vehicle Foundation Brake LLC, a joint venture in which Dana has an interest, has entered into an agreement to supply certain of Hendrickson's requirements for Bendix(R) brake products and systems through 2013. Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Sept. 30, 2005, the Debtors listed $7,900,000,000 in total assets and $6,800,000,000 in total debts. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non- Union Retirees. The Debtors' exclusive period to file a plan expires on Sept. 3, 2007. They have until Nov. 2, 2007, to solicit acceptances to that plan. DANA CORP: Unions Will Appeal Judge Lifland's Officers' Pay Order ----------------------------------------------------------------- The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union notify the U.S. Bankruptcy Court for the Southern District of New York that they will take an appeal to the U.S. District Court for the Southern District of New York from Judge Burton Lifland's order approving the employment agreements of Michael Burns and other Senior Executives and the long-term incentive plan. Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Sept. 30, 2005, the Debtors listed $7,900,000,000 in total assets and $6,800,000,000 in total debts. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. The Debtors' exclusive period to file a plan expires on Sept. 3, 2007. They have until Nov. 2, 2007, to solicit acceptances to that plan. (Dana Corporation Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). DANA CORP: DCC Finalizes Forbearance Agreement with Noteholders --------------------------------------------------------------- Dana Corporation and non-debtor Dana Credit Corporation finalized and executed on Dec. 18, 2006, a Settlement Agreement, which resolves certain intercompany claims. On the same date, DCC and the holders of approximately 95% of the outstanding principal amount of the DCC Notes finalized and executed a Forbearance Agreement. Taken together, the Settlement and Forbearance Agreements provide, among other things, that: (a) the Forbearing Noteholders will forbear from exercising their rights or remedies under any of the DCC Note documents or applicable law for a period of 24 months during which DCC will endeavor to sell its remaining portfolio assets in an orderly manner and will use the proceeds to pay down the DCC Notes; (b) the Forbearing Noteholders release the Debtors from all claims they may have against the Debtors; (c) DCC will have an allowed general unsecured claim for $325,000,000 against Dana Corp. in exchange for DCC's release of all other claims it may have against the Debtors that arose before the effective date of the Settlement Agreement; (d) until the effective date of a plan of reorganization, DCC will provide the Ad Hoc Committee of DCC Noteholders, the Official Committee of Unsecured Creditors, the Official Committee of Equity Security Holders and the Official Committee of Non-Union Retirees with notice and opportunity to object before any sale or transfer of the Intercompany Claim to a third party; (e) the applicable Debtors will make timely cash payments to the applicable DCC entities of all rental or other amounts that become due after the effective date of the Settlement Agreement under any lease of real or personal property between them, net of any amounts owed by the DCC entities to the Debtors; (f) DCC consents to the release to Dana Corp. of the currently escrowed proceeds from the sale of certain real estate properties and waives any right to receive any portion of the proceeds from the escrow accounts; and (g) the time for the Debtors to assume or reject unexpired leases of non-residential real property between the Debtors, as lessees, and DCC, as lessor, is extended until the date of entry of an order confirming a plan. A full-text copy of the DCC Settlement and Forbearance Agreements is available for free at http://bankrupt.com/misc/dana_dccsettlement&forbearance.pdf In a regulatory filing with the Securities and Exchange Commission, Michael L. DeBacker, vice president, general counsel and secretary of Dana Corp., related that DCC intended to pay approximately $155,000,000 to the Forbearing Noteholders on Dec. 28, 2006. The amount includes a principal payment of approximately $125,000,000, thereby reducing DCC's current outstanding debt from $392,000,000 to $267,000,000. Holders of DCC Notes who have not signed the Forbearance Agreement may obtain information about becoming Forbearing Noteholders by contacting counsel for the Ad Hoc Committee: Matthew Cantor, Esq. Kirkland & Ellis, LLP 153 East 53rd Street New York, New York 10022 Tel. No.: 212-446-4846 About Dana Corp. Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Sept. 30, 2005, the Debtors listed $7,900,000,000 in total assets and $6,800,000,000 in total debts. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. The Debtors' exclusive period to file a plan expires on Sept. 3, 2007. They have until Nov. 2, 2007, to solicit acceptances to that plan. (Dana Corporation Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). DELPHI CORP: Highland Capital Offers $4.7 Bil. Equity Commitment ---------------------------------------------------------------- Highland Capital Management L.P. and certain of its affiliates and related entities have sent a letter to the Board of Directors of Delphi Corporation that outlines Highland Capital's opposition to the proposal by a group of investors led by Cerberus Capital Management L.P. and Appaloosa Management L.P. made on Dec. 18, 2006, and offers a superior alternative proposal and up to a $4,700,000,000 equity commitment. Highland Capital believes that, unlike the Appaloosa/Cerberus deal, its proposal is fair to all groups that currently make up Delphi's capital structure, allows participation by all equity holders through a rights offering and will promote good and independent corporate governance for the company. Under the Appaloosa/Cerberus deal, Appaloosa, Cerberus, and other select parties would purchase $1,200,000,000 in convertible preferred securities and $200,000,000 in common stock that would not be available to other equity holders, in addition to any unsubscribed shares from a $2,000,000,000 rights offering. Highland Capital believes this inside deal would give Appaloosa and Cerberus disproportionate equity ownership at the expense of current stockholders and would immediately deliver a value transfer of approximately $1,000,000,000 to the Appaloosa/ Cerberus group. Certain debt holders would also receive cash and equity worth more than 100 cents on the dollar, also at the expense of the common stockholders. In addition, Appaloosa and Cerberus would have effective control of the board through their right to name six of the 12 directors of Delphi, including the board's chairman. Highland Capital does not believe a compressed timeframe is conducive to the process required for a board of directors to consider a proposal of this complexity and magnitude. Highland Capital urges the Delphi Board of Directors to reject the Appaloosa/Cerberus proposal consistent with its fiduciary duties. Under the Highland Capital Proposal: * All existing stockholders will be able to participate in a $4,700,000,000 rights offering. There will be no convertible preferred shares. * All existing stockholders with more than 0.5% of the common shares will have the right to purchase any unsubscribed shares in the rights offering. Highland Capital will commit to purchase any shares that remain unsubscribed. * All debt holders and general unsecured claimants will be able to receive par value plus accrued interest. Bondholders will also have the option of continuing to hold their bonds. * The terms as proposed for the negotiated deal between General Motors Corporation and Delphi, including cash distribution, share allocation and funding of pension obligations, will not change. * A six-member panel will nominate the company's 12-member board. A majority of the panel will be composed of certain participants in the rights offering and a representative from the Official Committee of Equity Security Holders. The panel will also include one representative from management and one representative from GM. * Steve Miller and Rodney O'Neal will hold the same management positions as in the Appaloosa/Cerberus deal. Mr. Miller and Mr. O'Neal will also sit on the board. * The exit and DIP financing under the Appaloosa/Cerberus deal will not change. * Delphi will maintain the same amount of leverage and debt as in the Appaloosa/Cerberus deal such that there will be no change in the company's credit profile. Highland Capital believes its commitment should be considered by the Delphi Board and its financial advisors in an orderly and contemplative fashion consistent with the Board's fiduciary duty to exercise due care. A full-text copy of Highland Capital's letter sent to the Board of Directors of Delphi: December 21, 2006 Via Facsimile and Federal Express Board of Directors Delphi Corporation 5725 Delphi Drive Troy, Michigan 48098 Proposal and Commitment Letter for up to $4.7 Billion Common Equity Commitment Gentlemen: Highland Capital Management, L.P., is an SEC-registered investment adviser specializing in credit, alternative investing and equity investments. Highland Capital currently manages approximately $35,000,000,000 in leveraged loans, high yield bonds, structured products, distressed assets, equity investments and other assets for banks, insurance companies, pension plans, foundations, and endowments. Currently, certain of Highland Capital's affiliates and related entities collectively are the second largest beneficial stockholder in Delphi Corporation with aggregate holdings of approximately 8.8% of the currently issued and outstanding common stock, par value $0.01 per share of Delphi. Highland Capital has reviewed the proposal recently made by Appaloosa Management, L.P., Cerberus Capital Management, L.P., Harbinger Capital Partners Master Fund I, Ltd., Merrill Lynch & Co., and UBS Securities, LLC, and supported by Delphi. Highland Capital believes that the Appaloosa/Cerberus Proposal is deficient and not in the best interests of Delphi and its various creditors, stockholders and other parties-in-interest, including, most importantly, its common stockholders for a number of reasons, including that the existing common stockholders would be significantly diluted and are not entitled to participate in the entire transaction. Highland Capital, on behalf of itself, certain of its affiliates and related entities as may be designated(1), submits this proposal and commitment for a purchase of common equity to Delphi and certain of its United States subsidiaries and affiliates that are Chapter 11 Debtors in Possession in the United States Bankruptcy Court for the Southern District of New York. We believe this Commitment is superior to the Appaloosa/Cerberus Proposal. We believe this Commitment also provides an alternative that is in the best interests of the Company and its various creditors, stockholders and other parties in interest, including, most importantly, its common stockholders. Pursuant to this Commitment, the Plan Investor will purchase up to $4,700,000,000 of new common stock, par value $0.01 per share, of the reorganized Company to support the Company's transformation plan announced on March 31, 2006, and a plan of reorganization supported by the Plan Investor to be filed by the Company and confirmed in the Company's Chapter 11 Case No. 05-44481. Subject to the agreement of the Company to file and seek confirmation of the Plan, the Plan Investor commits to enter into agreements on substantially the same terms and subject to the same applicable conditions as those set forth in the Equity Purchase and Commitment Agreement and the Plan Framework Support Agreement that were filed with the Bankruptcy Court on December 18, 2006, except as otherwise specified herein. Subject to the Company's agreement to move forward with respect to this Commitment, the Plan Investor covenants and agrees to proceed along a similar path to plan confirmation as described in, and proposed by, the filings made with the Bankruptcy Court on December 18, 2006, relating to the Appaloosa/Cerberus Proposal. Superior Offer This Commitment is clearly superior to the Appaloosa/Cerberus Proposal and is in the best interests of the company and its creditors, stockholders and other parties in interest. This Commitment also maximizes the value of the Company and provides significant benefits to the Company and its various stakeholders by maintaining fairness to all the existing stakeholders in the Company, when compared to the Appaloosa/Cerberus Proposal. Some of the benefits of this Commitment include: * The ability of the Board of Directors to submit a proposal to the Court that is consistent with its fiduciary duties to all of its stakeholders and one that should ensure the support of the Equity Committee in the Chapter 11 cases; * The ability of the Company to obtain $4,700,000,000 of capital without offering a "sweetheart" $1,200,000,000 preferred stock deal to the Appaloosa/Cerberus Group that significantly dilutes the existing stockholders and results in this new insider group taking control of the Company through its acquisition of almost 30% of the Company's equity and its acquisition of veto rights; * The ability to proceed with a rights offering that does not guarantee an allocation of equity (6,300,000 shares) to a control group; * The ability to endorse the management of the Company as announced on December 18, 2006, while at the same time ensuring that this management will report to an independent board that is not subject to the Appaloosa/Cerberus Group; * A transaction that accepts the negotiated deal between the Company and General Motors Corporation and that should be equally supported by this stakeholder and the other statutory committees; * A transaction that offers existing stockholders the ability to capture the economic value of the enterprise, rather than allowing the taking of this value by the Appaloosa/Cerberus Group; and * A transaction that we believe will be embraced by the market because it supports and is reflective of the current value of the Company. Commitment Subject to the preparation and execution of definitive documents reflecting this Commitment as detailed herein, the following would be the principal terms under which Highland Capital will commit to the equity investment in the Company and to support the Plan: A. Equity Purchase and Rights Offering The Company will conduct a Rights Offering by offering and selling shares of its Common Stock to its existing stockholders on the terms and subject to the conditions set forth in an Equity Purchase and Commitment Agreement to be entered into by the Company and the Plan Investor similar in form and substance to the one agreed to with the Appaloosa/Cerberus Group, except as provided herein. The Plan Investor will purchase any shares of Common Stock that are unsubscribed in the Rights Offering up to $4,700,000,000 and receive a fee in the amount of 2.5% of the Rights Offering. Subject to compliance with all applicable laws, all existing holders of Common Stock holding a minimum of 0.5% of the currently issued and outstanding shares of Common Stock of the Company will be given the option to participate in the Backstop and earn their pro-rata share of the Backstop Fee. As more particularly to be set forth in the New Equity Agreement, the Rights Offering will provide (i) that the existing Stockholders will receive the right to acquire new common stock of the Company either as part of confirmation of a Plan or subject to the effectiveness of a registration statement to be filed with the Securities and Exchange Commission, (ii) that the Rights Offering be subject to prior approval of the Bankruptcy Court and satisfaction of certain other terms and conditions similar in scope to those set forth in the Equity Agreement, and (iii) that the Rights will entitle the eligible Stockholders to purchase their pro rata share of the Common Stock at a discount to the anticipated business enterprise value of the reorganized Company and would be transferable by the original eligible Stockholders. The Rights Offering may be reduced to $4,200,000,000 by the Plan Investor, subject to and on the terms specified herein. No preferred stock in the reorganized Company will be offered or purchased pursuant to this Commitment by Highland. B. Plan of Reorganization Framework The Plan Investor will enter into a Plan Framework Support Agreement similar to the Plan Framework Support Agreement entered into with the Appaloosa/Cerberus Group, except as provided herein. The New Plan Agreement will outline the Company's proposed framework for the Plan and the treatment of claims and interests under the Plan will be as follows: * All senior secured debt will be refinanced and paid in full and all allowed administrative and priority claims will be paid in full; * Trade and other unsecured claims and unsecured funded debt claims will be reinstated pursuant to terms satisfactory to the Plan Investor or be satisfied in full with cash. The framework requires that the amount of allowed trade and unsecured claims not exceed $1,700,000,000; * As is the case in the Appaloosa/Cerberus Proposal, in exchange for GM's financial contribution to the Company's transformation plan, and in satisfaction of GM's claims against the Company, GM will receive 7,000,000 shares of Common Stock in the reorganized Company, $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 the reorganized Company in the ordinary course of business. Any other terms relating to GM as outlined in the Company's announcement dated December 18, 2006, will also be accepted by Highland; and * All subordinated debt claims will be satisfied in full with cash. In the event the Plan Investor determines to reduce the Rights Offering to $4,200,000,000, the claims of the Preferred Holders would be satisfied with $450,000,000 of common stock in the reorganized Company, at a deemed value of $45 per share and the balance in cash. As a result of the Plan and the Rights Offering, holders of existing equity securities in the Company will effectively receive 3,000,000 out of a total of 135,300,000 shares of Common Stock in the reorganized Company, at a deemed value of $45 per share, and rights to purchase approximately 125,300,000 shares of Common Stock in the reorganized Company for $4,700,000,000 at a deemed exercise price of $37.23 per share. In the event the Plan Investor determines to reduce the Rights Offering to $4,200,000,000, holders of existing equity will receive rights to purchase approximately 115,300,000 shares of common stock in the reorganized Company for $4,200,000,000 at a deemed exercise price of $36.56 per share. C. Refinance of DIP Facility Pursuant to the New Plan Agreement, the Plan Investor will support the Company with its announced efforts to refinance successfully in full its existing $2,000,000,000 DIP facility and $2,500,000,000 prepetition revolver and term loan facilities with JPMorgan Chase Bank, N.A., and other lenders as announced by the Company on December 18, 2006. D. Improved Corporate Governance Structure Because no preferred stock in the reorganized Company possessing veto rights will be issued and there will be no transfer of control pursuant to this Commitment, the common equity holders will be protected from a corporate governance perspective post-confirmation of the Plan. The executive management team as announced on December 18, 2006, will be left in place post-confirmation. Highland Capital will also accept the terms of the Appaloosa/Cerberus Proposal that the Company be governed by a 12 member Board of Directors, 10 of whom would be independent directors and two of whom would be the new executive chairman and a new chief executive officer and president. However, with respect to the appointment of post- confirmation directors, a board selection panel of six members will be created to choose the members of the reorganized Company Board. The Panel will consist of the Plan Investor and a maximum of two other significant stockholders of the reorganized Company, one representative from GM, one management representative, and one representative from the Equity Committee. This Panel will provide representation by all significant stakeholders, without granting control of this process to the Appaloosa/Cerberus Group. Similar to the Appaloosa/Cerberus Proposal, the new Board of Directors will satisfy all New York Stock Exchange/NASDAQ independence requirements. Executive compensation for the reorganized Company will be on market terms and reasonably acceptable to the Plan Investor, and the overall executive compensation plan design will be described in the Company's disclosure statement and incorporated into the Plan. E. Pension Funding The Plan Investor will support the Company's earlier commitment to preserve its salaried and hourly defined benefit U.S. pension plans and will include an arrangement to fund approximately $3,500,000,000 of its pension obligations similar to that proposed by the Appaloosa/Cerberus Group. Other Please note that the undersigned has devoted substantial time and resources to preparing this Commitment in a very short time frame given the timetable endorsed by the Company in connection with the Appaloosa/Cerberus Proposal. The undersigned is prepared to proceed expeditiously to complete final documentation reflecting this Commitment and take appropriate action to move forward toward the full formulation and implementation of the transactions contemplated by this Commitment, including supporting the Debtors' efforts to obtain entry of any approval order required by the Bankruptcy Court. This Commitment is subject to, and expressly conditioned on in a manner consistent with the Appaloosa/Cerberus Proposal, among other items, (1) the execution and delivery by all signatories thereto of definitive documentation reflective of the matters set forth herein; (2) the completion of limited confirmatory due diligence; and (3) the entry by the Bankruptcy Court of an order, in form and substance, reasonably satisfactory to Highland Capital approving the transactions set forth herein. We are willing to proceed with the due diligence review immediately and will execute an appropriate confidentiality agreement as required or requested, by the Board. Due to the financial strength of our organization and our position in the financial community, please be advised that we can provide, or cause to be provided, funds to satisfy the financial requirements of this Commitment and are in a position to consummate this transaction expeditiously. Please note, moreover, that the material terms and conditions of this Commitment are as set forth herein, but this Commitment does not and cannot encompass all matters to be addressed in the definitive documentation. Those matters that are not addressed or definitively set forth herein are subject to further negotiations and future agreement of the parties. At a minimum, we believe this Commitment sets forth a transaction that should be considered by the Board of Directors and its financial advisors, and requires the members of the Board to do so in an orderly and contemplative fashion consistent with their fiduciary duties to exercise due care. We believe the timetable that has been proposed by the Appaloosa/Cerberus Group as reflected in the Bankruptcy Court filings is not conducive to the process required by the Board to adequately assess these types of proposals. Therefore, we would respectfully request that the Board fully consider and discuss both proposals with its advisors before proceeding with a transaction that is not in the best interests of all stakeholders of the Company. To the extent the Board determines to proceed in accordance with the existing timetable, we are also willing to take the requisite action necessary to proceed. We are available at any time to meet with the Board or representatives of the Board regarding this Commitment and look forward to the opportunity to address any questions or concerns you might have. Very truly yours, Highland Capital Management, L.P. By: [signature] Name: Patrick H. Daugherty Title: Secretary cc: Mr. Robert "Steve" Miller, Chairman Mr. Rodney O'Neal, President and CEO (1) This proposal and commitment is not being made by or on behalf of, among other entities, Highland Credit Strategies Fund. About Highland Capital Based in Dallas, Texas with offices in New York and London, Highland Capital Management L.P. is an SEC-registered investment adviser specializing in credit, alternative investing and equity investments. Highland Capital currently manages approximately $35,000,000,000 in leveraged loans, high yield bonds, structured products, distressed assets, equity investments and other assets for banks, insurance companies, pension plans, foundations, and endowments. About Delphi Corp. 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 Corporation Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELPHI CORP: GM Says Highland Rival Offer Could Delay Delphi Deal ----------------------------------------------------------------- Delphi Corp. and General Motors Corp.'s reorganization deal with Appaloosa Management LP and Cerberus Capital Management could be delayed by a rival offer from Highland Capital Management LP, Reuters quotes Rick Wagoner, GM's CEO, as saying. Under Appaloosa and Cerberus' $3.4 billion offer, GM will receive 7 million shares of Reorganized Delphi's common stock, $2.63 billion in cash, and a release of claims by Delphi against GM. Highland's proposed funding fund, on the other hand, amounts to approximately $4.7 billion. Delphi became a fully independent company on May 28, 1999, after it was spun-off from GM. About General Motors Corp. 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. About Delphi Corp. Troy, Mich.-based Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. DELPHI CORP: Equity Purchase and Commitment Agreement Draws Fire ---------------------------------------------------------------- Three parties-in-interest objected to the U.S. Bankruptcy Court for the Southern District of New York's approval of Delphi Corp. and its debtor-affiliates' Equity Purchase and Commitment Agreement: 1. Committee of Delphi Trade Claim Holders, 2. International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers, Communications Workers of America, and 3. Official Committee of Equity Security Holders. Delphi Trade Committee The Committee of Delphi Trade Claim Holders asserts that Court approval of the Equity Purchase and Commitment Agreement is premature. "The obligations of the [Plan] Investors are not binding until several material conditions are met, including confirmation and effectiveness of a chapter 11 plan," Thomas M. Kennedy, Esq., at Kennedy, Jennik & Murray, P.C., in New York, notes. "Delphi offers no meaningful justification for ramming this through during Christmas and New Years." The Delphi Trade Committee believes that the Debtors are agreeing to pay excessively large Commitment Fees without a true commitment being provided by the Proposed Investors. The Debtors are obligating themselves to pay a break up fee upon mere entry into an alternative transaction, Mr. Kennedy points out. Mr. Kennedy contends that: * the difference in the dictated $35 per share purchase price of the common stock from the "treatment" value of $45 per share either overstates creditor recoveries or provides the Plan Investors an additional $63,000,000 "pricing" fee and the opportunity for a further $567,000,000; * the difference in the $35 per share conversion price of the preferred stock from the $45 per share treatment value either overstates creditor recoveries or provides Plan Investors an additional pricing fee of $342,900,000; * if the $45 per share price is used by Delphi to treat its creditors, then the EPCA yields fees, on the common equity, of between $118,125,000 and $685,125,000; and * if the $35 per share price is what Delphi is paying, then Delphi is satisfying in full the trade claims with inflated equity rendering the Chapter 11 Plan illusory and not confirmable. In addition, the limited termination rights of the EPCA appear to provide full commitment fees to certain Plan Investors with absolutely no commitment, even one arguably to negotiate agreement in good faith, Mr. Kennedy argues. The EPCA also dictates critical plan provisions making it an improper sub rosa plan, and provides protection under Section 1125(e) of the Bankruptcy Code without approval of a disclosure statement, Mr. Kennedy contends. The terms of the proposed Chapter 11 Plan for the Trade Claims provide treatment that violates the Bankruptcy Code and discriminates against trade creditors, Mr. Kennedy further asserts. The EPCA also values Delphi with two markedly different valuations and the $1,700,000,000 limitation on allowed trade and unsecured claims potentially further reduces creditor recoveries. 2. IUE-CWA The International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers, Communications Workers of America complains that despite repeated invitations to do so, the Plan Investors did not meet with their representatives to discuss their plans and intentions regarding the operations of Delphi. Consequently, the IUE-CWA objects to the Debtors' request in order to protect its membership and their claims, as well as to ensure that a post-bankruptcy Delphi is adequately capitalized and fairly structured. Among other, the IUE-CWA contests: -- the payment of more than $100,000,000 in commitment fees to the Plan Investors when they have nothing at risk; -- the payment of $13,000,000 of expenses of the Plan Investors before they have committed to full participation in the Framework Agreements; -- the payment of an alternative transaction fee to the Plan Investors in certain circumstances; -- certain unacceptable 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 to be issued by Reorganized Delphi; and -- the Debtors' indemnification obligations to the Plan Investors. 3. Equity Committee The Official Committee of Equity Security Holders asks the Court to deny the Debtors motion. According to the Equity Committee, its input on the Framework Agreements was limited to periodic review of already negotiated drafts of the Agreements and an opportunity to provide the Debtors with written comments on the drafts. Some comments were incorporated, albeit in unilateral form, while others were unilaterally rejected or ignored by the Debtors, Plan Investors, and General Motors Corporation, Debra M. Torres, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP, in New York, relates. As a result, the Framework Agreements leave open several of the most critical elements of a restructuring, including specific commitments by GM to contribute towards the Debtors' labor and manufacturing transformation costs, and provide the Debtors with ongoing business. Ms. Torres notes that GM will be free to terminate the Plan Framework Support Agreement for any reason or no reason at all. If GM terminates the PSA, the Plan Investors may immediately terminate the EPCA, Ms. Torres says. The Plan Investors may themselves terminate the PSA for any reason or no reason at all on or after April 1, 2007, or if they determine in their sole discretion that one or more conditions have arisen. Ms. Torres points out that many of the conditions triggering the Plan Investors' unilateral termination rights do not involve any breach of the Framework Agreements by the Debtors. The Equity Committee also objects to the Plan Investors' entitlement to nonrefundable commitment fees totaling $76,000,000 if the EPCA is terminated for any reason. The Debtors' request, Ms. Torres argues, fails to address the possibility that the Debtors could pay a $100,000,000 Alternative Transaction Fee to the Plan Investors even if (a) the Plan Investors terminate the Investment Agreement as a result of action by GM, rather than the Debtors; (b) at the time of the termination no Alternate Transaction has been considered by or even proposed to the Debtors; and (c) it takes the Debtors as much as two years to identify and enter into an Alternate Transaction. "Payment of the Alternative Transaction Fee under such circumstances would be an unjustifiable waste of the Debtors' estates," Mr. Torres contends. The Equity Committee asserts that the Debtors offer to current equity holders of rights to purchase newly issued common shares of the reorganized Debtors would significantly diminish the potential value of the rights to equity holders, and instead improperly benefit the Plan Investors. Additionally, the Rights Offering is conditioned on approval by the Securities and Exchange Commission of a Rights Offering Registration Statement and the Registration Statement becoming effective. "Given that the Rights are to be issued to equity holders who hold a claim against or interest in the Debtors, and that the New Equity Shares will be purchased pursuant to the exercise of the Rights, the Debtors' decision to embark upon the burdensome, expensive registration process instead of the far simpler Section 1145 process is puzzling, to say the least," Ms. Torres says. 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 Corporation Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELPHI CORP: Ct. OKs $4.495B Replacement Credit Pact From JPMorgan ------------------------------------------------------------------ The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York authorizes Delphi Corp. and its debtor-affiliates to enter into the Replacement Credit Agreement. The Debtors may borrow money and obtain letters of credit totaling $4,495,820,240 from JPMorgan Chase Bank, N.A., and a syndicate of financial institutions. Judge Drain permits the Debtors to: (i) use the proceeds of borrowings under the Replacement Credit Agreement to irrevocably repay in full all obligations due and payable to JPMorgan Chase Bank, N.A., the Existing DIP Agent and the Existing DIP Lenders under the Existing DIP Facility; (ii) cancel or "cash collateralize" all outstanding letters of credit issued pursuant to the Existing DIP Credit Agreement in accordance with its provisions; and (iii) pay or secure all of their hedging obligations permitted under the Existing DIP Credit Agreement and indebtedness. The Court allows the Debtors to increase the amount of the pre- default carve-out from $5,000,000 to $10,000,000 if the Court approves the Appaloosa ECPA. The Howard County Objection has been consensually resolved by the parties prior to the hearing and is hereby deemed withdrawn. No other objections to the Debtors' request were filed. A full-text copy of the 40-page Replacement DIP Order is available for free at http://ResearchArchives.com/t/s?1834 Howard County Objection Howard County, Indiana, filed a proof of claim for certain unpaid taxes for at least $7,081,152. The Debtors designated the claim as Claim No. 2557. Howard County opposed the Refinancing Motion to the extent that it sought to, inter alia, extinguish reclassify, limit, subvert, and subordinate Howard County's claim and any past, present, future lien in favor of Howard County under applicable law including, but not limited to, Indiana law and the Bankruptcy Code. Debtors Revised Proposed Order John Wm. Butler, Jr., at Skadden, Arps, Slate, Meagher & Flom, LLP, in Chicago, Illinois, informed the Court that Howard County's objection has been resolved when Howard County understood that the refinancing does not adversely affect, in any material respect, the current priority of its tax liens that secure outstanding tax claims against the Debtors relative to other liens. Specifically, those tax liens will have the same priority relative to the first priority DIP liens as they currently have relative to the existing DIP liens, and will have the same priority relative to the Second Priority DIP Liens as they currently have relative to the liens held by the Prepetition Secured Lenders, Mr. Butler noted. Moreover, since filing the Refinancing Motion, the Debtors have engaged in constructive discussions with the counsel of certain parties-in-interest and have made various changes to the Proposed Order based on those discussions. To address concerns based on the Debtors' undertaking to pay the Transaction Expenses of the Plan Investors, the Debtors and the Replacement DIP Lenders have agreed to increase the amount of the pre-default carve-out from $5,000,000 to $10,000,000. The Proposed Order was also amended to clarify that: -- it preserves the relative priority between the new Tranche C term loan and the Setoff Claims; and -- both the DIP Lenders and the Prepetition Secured Lenders will receive the fees, expenses, and indemnities to which they are entitled under their respective loan documents. The Debtors also amended the Replacement Credit Agreement that was filed on Dec. 26, 2006. The two significant changes to the Replacement Credit Agreement related to: (i) the carve-out, and (ii) provisions governing whether the Debtors can undergo a change of corporate control without being in default under the terms of the credit agreement. To resolve issues raised by certain parties-in-interest, the section of the Replacement Credit Agreement, which provided that the occurrence of a change in control solely as a result of any change in ownership of the stock of Delphi would trigger a default was deleted. A full-text copy of the Replacement Credit Agreement dated January 9, 2006, is available for free at: http://ResearchArchives.com/t/s?1835 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 Corporation Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DIRECTV GROUP: S&P Holds Corporate Credit Rating at BB ------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on satellite direct-to-home TV provider The Directv Group Inc., including the 'BB' corporate credit rating. The outlook is stable. The affirmation comes after the recent report that Liberty Media LLC would be acquiring News Corp.'s 38.4% interest in El Segundo, California-based Directv, in a transaction valued at approximately $11 billion. "Liberty's CEO has publicly stated that Directv's balance sheet, currently modestly leveraged and having $2.3 billion in cash and short-term investments, could handle more debt," said Standard & Poor's credit analyst Naveen Sarma. "However, our affirmation of the ratings on Directv is based on our belief that, though Liberty will be Directv's largest shareholder and will have board representation, it will only have influence over, not direct control of, Directv's financial policy." Conversely, although the rating agency recognizes that Directv is a significant investment for Liberty, Standard & Poor's views it as only part of Liberty's investment portfolio. Accordingly, Standard & Poor's does not impute credit support to Directv from its higher rated, prospective major shareholder. Despite modest leverage, the 'BB' corporate credit rating on Directv is constrained by business risk. The rating reflects the intensely competitive U.S. pay-TV industry and some concern about the company's longer-term competitive position arising from its inability to provide the high-speed data, voice, and advanced two- way video services available from cable TV companies and likely to be offered by telephone companies over the next few years. Tempering factors include healthy subscriber growth, scale advantages from the company's position as the second-largest multichannel TV provider, modest leverage, significant cash and growing, sizable discretionary cash flow. DLJ COMMERCIAL: Fitch Holds Junk Rating on Class B-8 Certificates ----------------------------------------------------------------- Fitch upgrades DLJ Commercial Mortgage Corp's, series 1999-CG1 commercial mortgage pass-through certificates: -- $15.5 million class B-2 to 'AAA' from 'AA'. In addition, Fitch affirms these classes: -- $6.8 million class A-1A at 'AAA'; -- $686.2 million class A-1B at 'AAA'; -- Interest-only class S at 'AAA'; -- $58.9 million class A-2 at 'AAA'; -- $65.1 million class A-3 at 'AAA'; -- $18.6 million class A-4 at 'AAA'; -- $46.5 million class B-1 at 'AAA'; -- $37.2 million class B-3 at 'A-'; -- $21.7 million class B-4 at 'BBB-'; -- $9.3 million class B-5 at 'BB+'; -- $12.4 million class B-6 at 'B+; and, -- $12.4 million class B-7 at 'B-'. Fitch affirms the $12.4 million class B-8 at 'C', however the distressed recovery rating has been lowered to 'DR5' from 'DR4' due an increase in Fitch expected losses on the specially serviced loans. The $4.3 million class C is not rated by Fitch. The upgrade of class B-2 is a result of increased credit enhancement due to additional paydown and defeasance since Fitch's last rating action in July 2006. Eighty-one loans have been fully defeased, including the Winston Hotel portfolio, the largest loan in the deal. As of the December 2006 distribution date, the pool's aggregate principal balance has been reduced 18.8% to $1 billion from $1.24 billion at issuance. To date, the transaction has realized $20.8 million in losses. There are currently two assets in special servicing with losses expected to deplete class C and severely impact class B-8. The largest specially serviced asset is a retail property located in Roanoke Rapids, North Carolina and is currently real estate owned. The trust took title to the property in November 2006 and is preparing to market the property. The property is currently 37% occupied. The second specially serviced asset is a retail property located in Joliet, Illinois and is currently in foreclosure. The loan transferred to the special servicer due to declining cash flow, major deferred maintenance issues, and environmental concerns. The property is currently 33% occupied. DOGGIEDAY HOLDINGS: Case Summary & 22 Largest Unsecured Creditors ----------------------------------------------------------------- Lead Debtor: DoggieDay Holdings, Inc. 400 Tremont Street Boston, MA 02116 Bankruptcy Case No.: 07-10036 Debtor-affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- DoggieDay Affiliate Network, Inc. 07-10038 DoggieDay Group, Inc. 07-10040 Pathocon, Inc. 07-10039 Type of Business: The Debtors provide pet care services and supplies. See http://www.doggieday.com/ Chapter 11 Petition Date: January 3, 2007 Court: District of Massachusetts (Boston) Judge: William C. Hillman Debtor's Counsel: Ashley D. Forest, Esq. 400 Tremont Street Boston, MA 02116 Tel: (617) 504-2364 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million Consolidated List of Debtors' 22 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Massachusetts Dept. of Revenue Judgment $550,000 c/o Andrew Zalkis P.O. Box 9565 100 Cambridge Street Boston, MA 02114 Taxes $45,000 Internal Revenue Service Taxes $350,000 c/o Patrick Dillon 1250 Hancock Street Quincy, MA 02169 Bank of America Bank Loan $110,000 100 Federal Street Boston, MA 02110 Marci Haberkorn Trade $110,000 25 Church Street Dedham, MA 02026-4315 Union Construction Trade Debt $85,000 140 Reservation Road Hyde Park, MA 02136 Gadsby & Hanna Trade $72,000 American Express Trade $45,000 Jeffrey Stoler Convertible Note $30,000 Berkeley Florist Trade $30,000 Francorp Trade $24,000 University Inn LLC Trade Debt $20,000 Andrew Levitt Judgment $15,000 Nstar Electric Trade Debt $13,000 RW Sullivan & Associates Trade Debt $13,000 Grocery Associates Trade $12,000 Plourde Bogue and Moylin Trade Debt $11,000 Cubellis Associates Trade $10,000 Albany Street Florist Trade $9,000 Cupp & Cupp Floral Supply Trade $7,000 International Marketing Trade $6,037 Services DJ & Amy Morse Trade Debt $4,500 Gary W. Cruikshank Trade $3,000 DURA AUTOMOTIVE: Creditors Committee Taps Kramer Levin as Counsel ----------------------------------------------------------------- The Official Committee of Unsecured Creditors in DURA Automotive Systems Inc. and its debtor affiliates' Chapter 11 cases, seek authority from the U.S. Bankruptcy Court for the District of Delaware to retain Kramer Levin Naftalis & Frankel LLP as its counsel, effective as of Nov. 7, 2006. Nicholas W. Walsh, chairperson of the Committee, explains that the Creditors Committee selected Kramer Levin primarily because the firm's Corporate Restructuring and Bankruptcy Department has extensive experience in the fields of bankruptcy and creditors' rights and, in particular, has represented official creditors committees in some of the largest and most complex Chapter 11 reorganization cases of recent years, including Dana Corporation, Genuity Inc., Bethlehem Steel Corporation, and Adelphia Business Solutions Inc., among others. In addition to acting as primary spokesman for the Committee, Kramer Framer Levin's services will also, without limitation, assist, advise, and represent the Committee with respect to: a. The administration of these cases and the exercise of oversight with respect to the Debtors' affairs including all issues in connection with the Debtors, the Committee or the Chapter 11 cases; b. The preparation on behalf of the Committee of necessary applications, motions, memoranda, orders, reports and other legal papers; c. Appearances in Court and at statutory meetings of creditors to represent the interests of the Committee; d. The negotiation, formulation, drafting and confirmation of a plan or plans of reorganization and matters related thereto; e. The investigation, if any, as the Committee may desire concerning, among other things, the assets, liabilities, financial condition, sale of any of the Debtors' businesses, and operating issues concerning the Debtors that may be relevant to the Chapter 11 Cases; f. Communications with the Committee's constituents and others at the direction of the Committee in furtherance of its responsibilities, including, but not limited to, communications required under Section 1102 of the Bankruptcy Code; and g. The performance of all of the Committee's duties and powers under the Bankruptcy Code and the Bankruptcy Rules and the performance of other services as are in the interests of those represented by the Committee. Kramer Levin will bill: Professional Hourly Rate ------------ ----------- Partners $500 to $795 Counsel $505 to $855 Associates $295 to $545 Legal Assistants $190 to $220 Kramer Levin will also seek reimbursement of out-of-pocket expenses. Thomas Moers Mayer, Esq., a member at Kramer Levin, assures the Court that: (i) the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code; (ii) neither Kramer Levin nor its professionals have any connection with the Debtors, the creditors or any other party-in-interest; and (iii) Kramer Levin does not hold or represent any interest adverse to the Committee in the matters for which it is to be retained. 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. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DURA AUTOMOTIVE: Panel Taps Chanin Capital as Financial Advisors ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in DURA Automotive Systems Inc. and its debtor affiliates' Chapter 11 cases seek authority from the U.S. Bankruptcy Court for the District of Delaware to retain Chanin Capital Partners as its financial advisors, nunc pro tunc to Nov. 10, 2006. Nicholas W. Walsh, chairperson of the Committee, relates that Chanin Capital has diverse experience and extensive knowledge in the field of bankruptcy. The firm has advised debtors and creditors committees in numerous restructuring transactions, including some of the largest and most complicated cases like in ATX Communications, Inc.; Birch Telecom, Inc.; Cable & Wireless USA, Inc.; Converse, Inc.; and Neoplan USA. Mr. Walsh tells the Court that the Committee needs Chanin Capital's assistance in collecting and analyzing financial and other information in relation to the Debtors' Chapter 11 cases. Chanin Capital will: (a) analyze and evaluate the liquidity position, assets and liabilities, and financial condition of the Debtors; (b) review and analyze the Debtors' financial and operating statement; (c) review and analyze the Company's business and financial projections; (d) evaluate the Company's debt capacity in light of its projected cash flows; (e) assist in the determination of an appropriate capital structure for the Company; (f) determine a theoretical range of values for the Company on a going concern basis; (g) assist the Committee in identifying and evaluating candidates for the potential acquisition of certain assets of the Company; (h) analyze proposed sales of assets of the Debtors, the terms and options and related issues, including available strategic alternatives; (i) review, analyze and monitor the Debtor-In-Possession financing and other financing alternatives; (j) advise the Committee on tactics and strategies for negotiating with the Company and other purported stakeholders; (k) determine a theoretical range of values for any securities to be issued or distributed in connection with the Chapter 11 case, including without limitation any securities to be distributed under a plan; (l) advise and assist the Committee in the review and analysis of the Debtors' business plan; (m) advise and assist the Committee in the review of all plans; (n) assist with a review of the Debtors' short-term cash management procedures and monitoring of cash flow; (o) assist with a review of the Debtors' employee benefit programs; (p) assist and advise the Committee with respect to the Debtors' management of their supply chain, including critical and foreign vendors; (q) assist with a review of the Debtors' performance of cost/benefit evaluations with respect to the affirmation or rejection of various executory contracts involving vendors and customers; (r) assist in the evaluation of the Debtors' operations and identification of areas of potential cost savings, including overhead and operating expense reductions and efficiency improvements; (s) assist in the review and preparation of information and analysis necessary for the confirmation of a plan; (t) assist in the review of potential claims levels and the Debtors' reconciliation process; (u) assist with various tax matters; (v) provide testimony in any proceeding before the Court; and (w) provide the Committee with other appropriate general restructuring advice. Chanin Capital will be paid $150,000 per month and will be reimbursed for expenses incurred in connection with the engagement. A $1,500,000 transaction fee will also be paid to the firm on the effective date of a plan of reorganization. Brent Williams, managing director at Chanin Capital, discloses that the firm represents certain Committee members or parties-in- interest in the Debtors' Chapter 11 cases. Chanin Capital, however, has not identified any material relationships with any party that would otherwise affect its judgment or ability to perform services for the Committee. Chanin Capital assures the Court that it has not and will not provide any professional services to the Debtors, any of the creditors, other parties-in-interest with regard to any matter related to the Debtors' Chapter 11 cases. Mr. Williams assures the Court that Chanin Capital is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code. 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: Auction Sets Bond Price at 24.125% of Face Value ----------------------------------------------------------------- In an auction held on Nov. 28, 2006, Dura Automotive Systems Inc.'s $400,000,000 of 8.625% notes have been given a redemption price of 24.125 cents on the dollar by credit-default swap dealers, Bloomberg News reports. The redemption rate will be used by up to 327 banks and investors to cash-settle credit-default swaps based on the notes. Another auction set a value of 3.5% of face value for Dura's $523,000,000 of 9% subordinated notes, according to Bloomberg's Shannon D. Harrington Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company's ability to repay debt. Twelve dealers participated in the auctions, which were run by Creditex Group Inc. and Markit Group Ltd. According to the International Swaps and Derivatives Association, the bidders were Bank of America, Barclays, Bear Stearns, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, and UBS. 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). EFREN REYNOSO: Case Summary & Six Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Efren Reynoso fdba East Coco Wheels dba Paradise Custom Wheels 2717 Lincoln Lane Antioch, CA 94509-4903 Bankruptcy Case No.: 06-42533 Type of Business: The Debtor operates an auto shop that specializes in exotic wheels, window tinting and auto & motorcycle detailing. Chapter 11 Petition Date: December 28, 2006 Court: Northern District of California (Oakland) Judge: Randall J. Newsome Debtor's Counsel: Ruth Elin Auerbach, Esq. Law Offices of Ruth Elin Auerbach 711 Van Ness Avenue #440 San Francisco, CA 94102 Tel: (415) 673-0560 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million Debtor's Six Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Pavel Flider and Anna Flider $2,986,851 c/o George L. Cohn, Esq. 2850 Artesia Boulevard, Suite 201 Redondo Beach, CA 90278 Home Depot $316 P.O. Box 6028 The Lakes, NV 88901 Antioch Community Credit Union $220 301 G. Street Secured value: Antioch, CA 94509 $44,155 Target National Bank $89 P.O. Box 59317 Minneapolis, MN 55459 76 Proclean Gasolines $88 P.O. Box 688929 Des Moines, IA 50368 Chevron Credit Bank $33 P.O. Box 2001 Concord, CA 94529 ENESCO GROUP: Bank Lenders Limit Credit Facility Advances --------------------------------------------------------- Enesco Group Inc. reported that the lenders under its senior credit facility with Bank of America N.A. and LaSalle Bank N.A. have elected to allow future advances under the credit facility only on a limited discretionary basis. The company continues to seek refinancing for the senior credit facility and to pursue other restructuring alternatives. The company said there could be no certainty as to whether it will be successful in achieving its goals. Enesco Group, Inc. --- http://www.enesco.com/-- is a world leader in the giftware, and home and garden decor industries. Serving more than 44,000 customers worldwide, Enesco distributes products to a wide variety of specialty card and gift retailers, home decor boutiques, as well as mass-market chains and direct mail retailers. Internationally, Enesco serves markets operating in the United Kingdom, Canada, Europe, Mexico, Australia and Asia. With subsidiaries located in Europe and Canada, and a business unit in Hong Kong, Enesco's international distribution network is a leader in the industry. Enesco's product lines include some of the world's most recognizable brands, including Border Fine Arts, Bratz, Circle of Love, Foundations, Halcyon Days, Jim Shore Designs, Lilliput Lane, Pooh & Friends, Walt Disney Classics Collection, and Walt Disney Company, among others. Credit Default As reported in the Troubled Company Reporter on Aug. 15, 2006, Enesco is continuing to aggressively pursue long-term debt financing. Enesco previously had agreed to obtain a commitment for long-term financing by Aug. 7, 2006. Because Enesco has not obtained a commitment, the company is in default of its current credit facility agreement. Enesco is working with the lenders for possible additional loans or terms and conditions, but has been advised that the lenders are not committing to waive the default. FAIRCHILD SEMICONDUCTOR: To Appeal $8.4-Mil. ZTE Lawsuit Judgment ----------------------------------------------------------------- Fairchild Semiconductor says it will appeal a judgment by the Intermediate People's Court of Shenzhen, Guangdong Province, People's Republic of China, in favor of Zhongxing Telecom Ltd. The company will appeal to the Higher People's Court of Guangdong Province. The judgment ordered Fairchild to pay RMB65,733,478 or approximately $8.4 million at current exchange rates to ZTE. Fairchild Semiconductor maintains that the product liability claims are invalid. The lawsuit relates to alleged defects in products shipped in late 2002 and early 2003. The company did not sell the allegedly defective products to ZTE directly. Among other defenses, Fairchild has argued that limitations on damages in its contract with its distributor at the time of shipment should limit any damages recovery by ZTE. Fairchild expects to record a charge of approximately $8.2 million in the fourth quarter 2006 related to this legal proceeding. About Fairchild Fairchild Semiconductor -- http://www.fairchildsemi.com/-- supplies power products to electronic applications in the computing, communications, consumer, industrial and automotive segments. Fairchild's 9,000 employees design, manufacture and market power, analog & mixed signal, interface, logic, and optoelectronics products. * * * As reported in the Troubled Company Reporter on Nov. 6, 2006, Moody's Investors Service confirmed Fairchild Semiconductor Corp.'s Ba3 corporate family rating in connection with the rating agency's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology. FAIRCHILD SEMICONDUCTOR: Launching Tender Offer for System General ------------------------------------------------------------------ Fairchild Semiconductor expects to launch a tender offer to acquire 100% of the outstanding shares of Taipei-based System General Corporation for NTD93 per share in cash through a wholly owned Fairchild subsidiary. "We are excited to announce this deal with System General - a leading supplier of analog power management semiconductors for AC/DC offline power conversion in computers, LCD monitors, printers, chargers, and consumer products," Fairchild president and chief executive officer Mark Thompson said. "We believe System General has one of the top Asia-based power analog management teams and their growing portfolio of pulse width modulated controllers, desktop PC power supply supervisor and combo ICs, and power factor correction controllers, coupled with their customer relationships and strong local field applications support has made them a significant competitor in the Taiwan and China AC/DC power conversion market. "When combined with Fairchild's global infrastructure, process and package capabilities, worldwide customer access, and manufacturing scale, we will possess a leading position in the AC/DC offline power conversion market with the opportunity to accelerate our growth and margin improvement," Mr. Thompson said. System General's net revenue through the first eleven months of 2006 was NTD1,138 million, or approximately $35 million. In the proposed transaction, approximately 250 System General employees will join Fairchild, including the current management team. System General will continue normal operations under its name after the closing of the tender offer and prior to the share swap described below and will operate as an independent business within Fairchild during that time. After the completion of the transaction, System General will be a wholly owned Fairchild subsidiary, and Fairchild and System General's management will work together to combine the power conversion businesses of each company and form a single business unit targeting worldwide AC/DC offline power conversion applications. Fairchild expects the acquisition to be neutral to Fairchild's earnings per share in 2007 and to be accretive to earnings per share in 2008 and beyond. "Acquiring System General is a natural extension of Fairchild's business strategy to invest aggressively to expand our sales and margins by pursuing fast-growing power analog markets," Mr. Thompson said. "Over two thirds of the worldwide power management IC market is in Asia, with six of the top 10 worldwide power supply OEMs located in Taiwan. The AC/DC offline power conversion market, which consists of isolated PWM controllers, PFC controllers, and AC/DC offline regulators measured over $1.5 billion in 2005, and this combination of Fairchild and System General places us as a leader in this fast growing segment. "The combination is especially synergistic--System General is strong in PWM controllers in Taiwan and China, while Fairchild is a leading provider of AC/DC offline regulators with strong sales in Korea and China. System General's management has a proven track record of servicing key OEMs in Taiwan and China, with an experienced, technical field sales force and industry leading innovative products. "Fairchild expects to continue building upon the R&D design center System General has created in Taiwan to strengthen System General's technical and innovation capabilities. We expect the acquisition of System General to further accelerate the growth of Fairchild's overall AC/DC power conversion business, and we expect the margin profile of this business to continue to expand over time." The transaction is structured as a tender offer for all outstanding shares of System General followed by a share swap and merger. The tender offer may be extended or withdrawn to the extent permitted under applicable law. The closing of the tender offer is subject to customary closing conditions, including tender of a majority of the outstanding System General shares. Shareholders owning 30.88% of the outstanding shares of System General common stock have entered into agreements under which they have agreed to tender their shares to Fairchild. Assuming the tender offer is completed, it is expected that System General and a subsidiary of Fairchild will conduct a share swap which will provide any remaining shareholders of System General with preferred shares of such subsidiary that have redemption rights effectively equivalent to NTD93 per original System General share. After redemption of the preferred stock, the Fairchild subsidiary would be merged into System General, with System General as the surviving corporation in the merger. Completion of the share swap and merger will be subject to approval by System General's shareholders after the tender offer closes and is expected to take place by the end of Fairchild's second quarter, 2007. The purchase price, depending upon final shares tendered and the exchange rate at the time of the closings of the tender offer and share swap, is anticipated to be approximately $200 million in the aggregate. Deutsche Bank is acting as an exclusive financial advisor to Fairchild in this transaction. About Fairchild Fairchild Semiconductor -- http://www.fairchildsemi.com/-- supplies power products to electronic applications in the computing, communications, consumer, industrial and automotive segments. Fairchild's 9,000 employees design, manufacture and market power, analog & mixed signal, interface, logic, and optoelectronics products. * * * As reported in the Troubled Company Reporter on Nov. 6, 2006, Moody's Investors Service confirmed Fairchild Semiconductor Corp.'s Ba3 corporate family rating in connection with the rating agency's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology. FORD MOTOR: Partners with Microsoft on In-Car Digital Systems ------------------------------------------------------------- Ford Motor Company has launched a new factory-installed, in-car communications and entertainment system that is designed to change the way consumers use digital media portable music players and mobile phones in their vehicles. The Ford-exclusive technology based on Microsoft Auto software, called Sync, provides consumers the convenience and flexibility to bring into their vehicle nearly any mobile phone or digital media player and operate it using voice commands or the vehicle's steering wheel or radio controls. Sync offers consumers two ways to bring electronic devices into their Ford, Lincoln, and Mercury vehicles and operate them seamlessly through voice commands or steering wheel controls: * Bluetooth, for wireless connection of phones and phones that play music. * A USB 2.0 port for command and control and charging of digital media players -- including the Apple iPod and Microsoft Zune -- as well as PlaysForSure music devices and most USB media storage devices. Supported formats include MP3, AAC, WMA, WAV, and PCM. Sync will debut this calendar year on the 2008 Ford Focus, Fusion, Five Hundred, Edge, Freestyle, Explorer, and Sport Trac; Mercury Milan, Montego, and Mountaineer; and Lincoln MKX and MKZ. The technology will be on all Ford, Lincoln, and Mercury vehicles in the near future. "Ford and Microsoft share a vision for a future where drivers are safely connected to the people, information and entertainment they care about while they are on the road," Microsoft Corporation Chairman Bill Gates said. 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: Strong Brazilian Ops Spurs Group to Invest $1 Billion ----------------------------------------------------------------- Ford Motor Co. will invest around $1 billion into its Brazilian operations until 2011, BBC News reports. The investment will cover: -- product development plans, -- Sao Paulo site expansion, and -- acquisition of off-road vehicle firm Troller. The company, which commenced takeover talks with Troller in November, did not disclose the final acquisition price, BBC relays. Dominic Di Marco, Ford's top honcho in Canada and South America, said the company is confident in Brazil, BBC says. The company increased its market share in Brazil despite a sluggish sales performance in the U.S. 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. FOREST OIL: Acquiring Houston Exploration in $1.5 Billion Deal -------------------------------------------------------------- Forest Oil Corp. has entered into a definitive agreement to acquire 100% of the outstanding stock of The Houston Exploration Company in a stock and cash transaction totaling approximately $1.5 billion plus the assumption of net debt estimated to be $100 million at Dec. 31, 2006. Forest Oil worked with JANA Partners LLC, the holder of 14.7% of the outstanding shares of Houston Exploration, with the result that JANA has agreed to vote in favor of the transaction. JANA has also agreed not to propose any extraordinary transactions with Forest or to seek to influence the management or control of Forest for a year following the close of the transaction. "We are undertaking this significant acquisition to further strengthen our onshore North American asset base and to add drilling inventory for our proven acquire and exploit strategy," Forest president and chief executive officer H. Craig Clark stated. "This strategy has provided us with superior risk weighted returns over the last several years. This acquisition will add in excess of 3,200 drill sites to our existing inventory. Furthermore, these assets are located in tight gas sand basins in which we have extensive experience and have recently benefited from new technological applications like horizontal drilling and fracture stimulation. "We believe that our stated organic growth goals can be achieved in the foreseeable future within our existing free-cash flow model. In order to reduce our leverage and to further narrow our geographic focus, we will seek to sell our Alaskan entity in 2007." The transaction positions Forest as one of the top independent onshore North American exploration and production companies. The acquisition will also create a highly concentrated and complementary set of oil and natural gas assets focused in all regions of Texas. On a pro forma basis at Dec. 31, 2005, the Company would have estimated proved reserves of approximately 2 trillion cubic feet of natural gas equivalents of which approximately 69% would be classified as proved developed and approximately 70% would be natural gas. "Over the past year, we have made significant progress in improving Houston Exploration's operations and creating a more focused asset portfolio," Houston Exploration chairman, president, and chief executive officer William G. Hargett said. "Our agreement with Forest builds on this solid foundation and represents a successful conclusion to the strategic review that our Board and management team began last year to enhance shareholder value and develop an even stronger future for our company. "The transaction with Forest not only provides immediate value to Houston Exploration's shareholders, but also affords them the opportunity to participate in the upside potential created by our combination. I am confident that together with Forest, we will have the financial and operational strength needed to continue capturing the opportunities in our industry," Mr. Hargett concluded. "Given the current environment, we believe this is a good deal and we have confidence that Forest Oil is the right company to maximize the value of these assets" JANA Managing Partner Barry Rosenstein stated. "Forest Oil has a strong track record of keeping F&D costs and operating expenses low, and its disciplined management team has maintained some of the most favorable cost controls in the industry during the inflationary period of the last several years. In addition, we believe there are significant synergies, particularly given Forest Oil's demonstrated expertise in analogous acquisitions and the direct overlapping acreage positions in the combined portfolio." Transaction Details Under the terms of the agreement, Houston Exploration shareholders will receive total consideration equal to 0.84 shares of Forest common stock and $26.25 in cash for each share of Houston Exploration common stock outstanding of Forest common stock and cash of $740 million. This represents $52.47 per share of consideration to be received by the Houston Exploration shareholders based on the closing price of Forest shares on Jan. 5, 2007. The exact amount of the total cash and stock consideration to be received by each Houston Exploration shareholder will be determined by elections and an equalization formula. It is anticipated that the transaction will be tax free to Houston Exploration and the stock portion of consideration will be received tax free by its shareholders. The cash component of the acquisition is expected to be financed with a new $1.4 billion revolving credit facility, which has been underwritten by JPMorgan Chase Bank, N.A. The boards of directors of Forest Oil and Houston Exploration have unanimously approved the transaction. The transaction is subject to regulatory approvals and other customary conditions, as well as both Forest Oil and Houston Exploration shareholder approval. Forest Oil management and its board of directors will continue in their current positions with Forest, and it is anticipated that Forest will create a new business unit to be located in Houston. Credit Suisse Securities LLC acted as the financial advisor and Vinson & Elkins LLP acted as the legal advisor to Forest in transaction. Forest Oil Corporation (NYSE:FST) -- http://www.forestoil.com/-- is engaged in the acquisition, exploration, development, and production of natural gas and crude oil in North America and selected international locations. Forest's principal reserves and producing properties are located in the United States in the Gulf of Mexico, Alaska, Louisiana, Oklahoma, Texas, Utah, and Wyoming, and in Canada. Forest's common stock trades on the New York StockExchange under the symbol FST. * * * On Sept. 9, 2006, Moody's Investor Service downgraded Forest Oil Corp.'s Ba3 rating on 8% Senior Unsecured Global Notes due 2008 to B1. FORT JAMES: Moody's Completes Withdrawal of Ratings --------------------------------------------------- Moody's Investors Service completed the withdrawal of ratings for debt instruments issued or guaranteed by Georgia-Pacific Corporation's subsidiary companies, Fort James Corporation and Fort James Operating Company by withdrawing the ratings on four remaining debt instruments. GP does not provide segmented or legal entity financial disclosure to facilitate risk assessment of instruments issued or guaranteed by subsidiary companies, and accordingly, maintenance of the ratings is not practicable. This step completes the rating actions contemplated in Moody's Dec. 11, 2006, press release. Withdrawals: * Fort James Operating Company -- Senior Secured Pass-Through, Withdrawn, previously rated B1 * Effingham County Industrial Dev. Auth. -- Senior Unsecured Revenue Bonds, Withdrawn, previously rated B1 * Green Bay Redev. Auth. -- Senior Unsecured Revenue Bonds, Withdrawn, previously rated B1 * Butler (City of) Al. -- Senior Unsecured Revenue Bonds, Withdrawn, previously rated B1 Georgia-Pacific Corporation, headquartered in Atlanta, Georgia, is a privately owned global leader in tissue and other consumer products, and has significant operations in building products and paper-based packaging. FRANK GRILLO: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Frank Michael Grillo 4141 Crane Boulevard Jackson, MS 39216 Bankruptcy Case No.: 06-02940 Chapter 11 Petition Date: December 21, 2006 Court: Southern District of Mississippi (Jackson) Judge: Edward Ellington Debtor's Counsel: Eileen N. Shaffer, Esq. P.O. Box 1177 Jackson, MS 39215-1177 Tel: (601) 969-3006 Fax: (601) 949-4002 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. GAP INC: Goldman Sachs Hiring Sparks Rumors on Strategic Options ---------------------------------------------------------------- The Gap Inc. hired Goldman Sachs Group Inc. last month, CNBC's David Faber reported. According to reports, analysts speculated that Goldman Sachs's involvement with the clothing company could mean that Gap is either up for sale, will spin off its brands, or will undergo a leveraged buyout. The announcement also renewed speculation that Gap chief executive officer Paul Pressler and other senior executives' tenure are at an end, Reuters said. The company's shares surged yesterday to 11% before closing up at over 7% at $20.26 per share. Gap Inc. (NYSE: GPS) -- http://www.gapinc.com/-- is an international specialty retailer offering clothing, accessories and personal care products for men, women, children and babies under the Gap, Banana Republic, Old Navy, Forth & Towne and Piperlime brand names. Gap Inc. operates more than 3,100 stores in the United States, the United Kingdom, Canada, France, Ireland and Japan. In addition, Gap Inc. is expanding its international presence with franchise agreements for Gap and Banana Republic in Southeast Asia and the Middle East. * * * As reported in the Troubled Company Reporter on Nov. 21, 2006, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured ratings on San Francisco-based The Gap Inc. to 'BB+' from 'BBB-'. The outlook is stable. GAP INC: December Sales Down 4%; Comparable Store Sales Down 8% --------------------------------------------------------------- Gap Inc. discloses on Jan. 4, 2007, net sales of $2.34 billion for the five-week period ended Dec. 30, 2006, which represents a 4% percent decrease compared with net sales of $2.44 billion for the same period ended Dec. 31, 2005. The company's comparable store sales for December 2006 decreased 8% compared with a 9% decrease in December 2005. Comparable store sales by division for December 2006 were: * Gap North America: negative 9% versus negative 10% last year * Banana Republic North America: positive 2% versus negative 5% last year * Old Navy North America: negative 10% versus negative 10% last year * International: negative 8% versus negative 3% last year. "Although Banana Republic continued to make good progress in its turnaround, we continued to experience negative traffic trends at Gap and Old Navy," said Sabrina Simmons, senior vice president, corporate finance, Gap Inc. "Given the weak traffic trends, we needed to take significant action on promotions and markdowns at these two brands which drove Gap Inc.'s overall merchandise margins significantly below last year. We expect continued margin pressure into January as we work to clear remaining holiday product at Gap and Old Navy." Based on its holiday sales performance, the company said that it is revising its fiscal 2006 guidance. The company now expects full-year earnings per share to be $0.83 to $0.87 versus previous guidance of $1.01 to $1.06. Full-year operating margins are now expected to be about 7% and free cash flow is now expected to be about $650 million for the year. The company reiterated that it expects the percent increase in inventory per square foot at the end of the fourth quarter of fiscal 2006 to be in the low-single-digits versus prior year. "We are clearly disappointed with Gap and Old Navy's holiday sales and overall performance for the year," said Paul Pressler, president and CEO, Gap Inc. "Given that we did not gain the traction we had expected, the management team, with the active involvement of our board of directors, is currently reviewing Gap and Old Navy's brand strategies. We are committed to making the necessary changes to improve performance." Year-to-date net sales of $14.75 billion for the 48 weeks ended Dec. 30, 2006, decreased 2% compared with net sales of $15.07 billion for the same period ended Dec. 31, 2005. The company's year-to-date comparable store sales decreased 7% compared with a 5% decrease in the prior year. As of Dec. 30, 2006, Gap Inc. operated 3,184 store locations compared with 3,126 store locations last year. About Gap Inc. Gap Inc. (NYSE: GPS) -- http://www.gapinc.com/-- is an international specialty retailer offering clothing, accessories and personal care products for men, women, children and babies under the Gap, Banana Republic, Old Navy, Forth & Towne and Piperlime brand names. Gap Inc. operates more than 3,100 stores in the United States, the United Kingdom, Canada, France, Ireland and Japan. In addition, Gap Inc. is expanding its international presence with franchise agreements for Gap and Banana Republic in Southeast Asia and the Middle East. * * * As reported in the Troubled Company Reporter on Nov. 21, 2006, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured ratings on San Francisco-based The Gap Inc. to 'BB+' from 'BBB-'. The outlook is stable. GENERAL MOTORS: Says Highland Rival Offer Could Delay Delphi Deal ----------------------------------------------------------------- Delphi Corp. and General Motors Corp.'s reorganization deal with Appaloosa Management LP and Cerberus Capital Management could be delayed by a rival offer from Highland Capital Management LP, Reuters quotes Rick Wagoner, GM's CEO, as saying. Under Appaloosa and Cerberus' $3.4 billion offer, GM will receive 7 million shares of Reorganized Delphi's common stock, $2.63 billion in cash, and a release of claims by Delphi against GM. Highland's proposed funding fund, on the other hand, amounts to approximately $4.7 billion. Delphi became a fully independent company on May 28, 1999, after it was spun-off from GM. About Delphi Corp. 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. About General Motors Corp. 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: Awards Lithium-Ion Battery Development Contracts ---------------------------------------------------------------- General Motors Corp. has awarded advanced battery development contracts to two suppliers to design and test lithium-ion batteries for use in the Saturn Vue Green Line plug-in hybrid SUV. One contract has been awarded to Johnson Controls - Saft Advanced Power Solutions LLC, a joint venture between Tier 1 automotive supplier Johnson Controls and Saft. Another agreement was signed with Cobasys, in partnership with A123Systems. Cobasys, based in Orion, Mich., is a joint venture between Chevron Technology Ventures LLC, a subsidiary of Chevron Corp., and Energy Conversion Devices Inc. A123Systems, based in Watertown, Mass., is a manufacturer of high power lithium-ion batteries. The two test batteries, one from Cobasys - A123Systems and the other from Johnson Controls - Saft, will be evaluated in prototype Saturn Vue Green Line plug-in hybrids beginning later this year. While both are lithium-ion batteries, the chemistry differs significantly. The suppliers also use unique methods in the design and assembling of the battery packs. GM announced in November at the 2006 Greater Los Angeles Auto Show its intention to produce a Saturn Vue Green Line plug-in hybrid that has the potential to achieve double the fuel efficiency of any current SUV. In addition to plug-in technology and a lithium-ion battery pack when ready, the Vue Green Line will use a modified version of GM's 2-mode hybrid system, powerful electric motors and highly efficient electronics to achieve significant increases in fuel economy. GM is co-developing the 2-mode hybrid system with DaimlerChrysler and BMW Group for use in front-, rear- and four-wheel drive applications in an array of car and truck models. The 2-mode system debuts later this year in the Chevrolet Tahoe/GMC Yukon Hybrid SUVs. About Johnson Controls Inc. Johnson Controls Inc., headquartered in Milwaukee, Wis., had sales of $32 billion in fiscal year 2006 and employs approximately 136,000 people. Johnson Controls' power solutions business provides more than 110 million starter batteries globally each year. About Saft Advanced Power Solutions Saft Advanced Power Solutions LLC, headquartered in Paris, employs 4,000 people and had annual sales of more than $700 million in 2005. Saft is a world leader in high performance batteries and has a decade of experience in lithium-ion development and manufacturing. Saft provided lithium-ion batteries for the Chevrolet Sequel fuel cell concept vehicle. About Johnson - Saft Joint Venture Saft and Johnson Controls formed the battery joint venture last year. Now, more than 150 people work for the joint venture, based also in Milwaukee. About Cobasys Cobasys has facilities in both Michigan and Ohio with approximately 400 employees to the design, manufacture and integrate advanced energy storage systems for both transportation and stationary power markets. It's headquarters features one of the world's largest Energy Storage System development and test facilities required for the validation of battery systems. Cobasys is presently supplying nickel-metal hydride systems for the Saturn Vue Green Line hybrid SUV and will be supplying NiMH systems for the 2007 Saturn Aura Green Line hybrid sedan. About A123Systems A123Systems, which employs 250 people, was started in 2001 to commercialize technology developed at the Massachusetts Institute of Technology. A123Systems has quickly grown to be one of the world's largest suppliers of high power lithium-ion batteries. By the end of 2007, A123Systems will have the annual capacity to make 20 million lithium-ion batteries for use in power tools. It also sells batteries for stationary backup power, jet engine auxiliary power units, and hybrid trucks and buses. About General Motors Corp. 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. GMAC MORTGAGE: Fitch Holds Low-B Ratings on 3 Certificate Classes ----------------------------------------------------------------- Fitch Ratings has taken action on these GMAC Mortgage Corporation Home Equity Issues: GMAC Mortgage, Series 2005-J1: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'BBB'; -- Class B-1 affirmed at 'BB'; and, -- Class B-2 affirmed at 'B'. GMAC Mortgage, Series 2005-AR5: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'BBB'; and, -- Class B-1 affirmed at 'BB'. The affirmations reflect satisfactory credit enhancement relationships to future loss expectations and affect approximately $1.0 billion of outstanding certificates as detailed above. There have been no cumulative losses experienced to date and the CE for each class has increased nominally since closing. The underlying collateral consists of both fixed-rate and hybrid adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties. As of the December 2006 distribution date, series 2005-AR5 is 16 months seasoned and series 2005-J1 is 13 months seasoned. The pool factors are 86% and 94%, respectively. The loans were sold by GMACM to Residential Asset Mortgage Products, the depositor. The depositor, a special purpose corporation, deposited the loans in the trust, which then issued the certificates. GMAC Mortgage Corporation, the servicer for the aforementioned transactions, is rated a 'RPS1' by Fitch. Fitch will continue to monitor these deals. GOODYEAR TIRE: Fitch Removes Ratings from Watch Negative -------------------------------------------------------- Fitch Ratings affirmed ratings for The Goodyear Tire & Rubber Company and removed the ratings from Rating Watch Negative. The ratings were placed on Rating Watch Negative on Oct. 18, 2006, when the company reported a $975 million drawdown of its bank revolver. These are Goodyear's debt and recovery ratings: -- Issuer Default Rating 'B'; -- $1.5 billion first lien credit facility 'BB/RR1'; -- $1.2 billion second lien term loan 'BB/RR1'; -- $300 million third lien term loan 'B/RR4'; -- $650 million third lien senior secured notes 'B/RR4'; and, -- Senior unsecured debt 'CCC+/RR6'. Goodyear Dunlop Tires Europe B.V. -- EUR505 million European secured credit facilities 'BB/RR1'. The Rating Outlook is Negative. The removal of Goodyear's ratings from Rating Watch Negative comes after the ratification of a new union contract by the United Steelworkers on Dec. 29, 2006. The new contract runs for three years and covers approximately 12,600 employees at 12 tire and engineered products plants in the United States who had been on strike since Oct. 5, 2006. A separate contract covering workers in Canada has also been approved. The Negative Rating Outlook reflects concerns about weak operating results and higher levels of debt associated with costs of the strike and the new contract. Prior to October when Fitch placed the ratings on Negative Watch, the Rating Outlook had been Stable. During the strike, Goodyear borrowed $975 million under its bank revolver and issued $1 billion of senior unsecured notes to support its liquidity and to replace $515 million of debt scheduled to mature by March 2007. On a pro forma basis, proceeds from the new debt increased Goodyear's cash balances from $1.3 billion at Sept. 30, 2006, to approximately $2.7 billion. This amount is adjusted to exclude cash designated for the $515 million of near-term debt maturities and does not reflect the impact of strike-related costs that Goodyear previously estimated at up to $35 million per week. Goodyear's cash balances would be available to fund a $1 billion Voluntary Employees' Beneficiary Association trust to be implemented under the new master contract. The VEBA trust will be funded with $700 million in cash and $300 million in cash or common stock at the company's option. Goodyear will transfer to the trust all USW retiree medical obligations, thereby reducing its projected benefit obligation for post-retirement benefits by more than half. It expects the VEBA trust arrangement to improve cash flows related to these benefits by $145 million annually. Goodyear's operating results and cash flow have been pressured by high raw material costs and by declining tire volumes in North America. The company is addressing these trends through better pricing and by transitioning toward a more favorable product mix. Volume declines in original equipment tires reflect lower vehicle production, while lower volumes for consumer replacement tire volumes include the impact of weaker demand as well as Goodyear's decision to exit certain segments of the low-margin private label tire business. The planned closure of the Tyler Texas plant after 2007, along with three other announced closures, should allow Goodyear to reach its targeted capacity reduction for private label tires and support its focus on higher-margin premium tires. The Rating Outlook could eventually be changed to Stable once Goodyear returns to normal operations and begins to realize expected cost reductions. Any upward revisions in the ratings and/or Outlook over the longer term would also depend on the company's ability to generate sufficient cash flow to reduce debt and leverage and its ability to maintain its competitive position. Cash flow should benefit from Goodyear's expected cost savings that were announced concurrently with the new labor union agreement. However, ongoing cash requirements for capital expenditures and pension contributions are substantial, and Goodyear's capacity to reduce debt may be limited until market conditions improve and Goodyear makes further progress in realizing projected cost savings. The company estimates that contributions to funded pension plans will total $550 million to $575 million in 2006, $550 million to $600 million in 2007 and $200 million to $250 million in 2008. These cash requirements will be partly offset by a reduction in OPEB cash outflows estimated by Goodyear at $145 million annually. Goodyear's ongoing cost reduction efforts will be facilitated by its new agreement with the USW. The company has scheduled a conference call on Jan. 9 in which it will address specifics of the new contract. Under Goodyear's cost reduction plan initiated in 2005, the company targeted cost savings in excess of $1 billion by 2008. By comparison, the company estimates the new labor contract will support savings, relative to costs in 2006, of $610 million through 2009. The contract provides for a lower wage structure for new hires and more flexibility in making productivity improvements. These benefits should support stronger operating results, but Goodyear still faces a highly competitive environment in which its North American cost structure may leave it at a disadvantage relative to its peers despite expected cost reductions. The new contract provides more job security for union workers and provides for the closure of the Tyler, Texas plant at the end of 2007. Goodyear will be required to make capital investments in USW plants of at least $550 million during the life of the labor contract. GREENMAN TECH: Sept. 30 Balance Sheet Upside-Down by $11.4 Million ------------------------------------------------------------------ GreenMan Technologies Inc. filed its financial statements for the year ended Sept. 30, 2006, with the Securities and Exchange Commission on Dec. 15, 2006. At Sept. 30, 2006, GreenMan Technologies Inc.'s balance sheet showed $9.5 million in total assets and $20.9 million in total liabilities, resulting in an $11.4 million stockholders' deficit. The company's balance sheet at Sept. 30, 2006, also showed $3.5 million in total current assets available to pay $7.5 million in total current liabilities. GreenMan Technologies Inc. reported a $3.7 million net loss on $17.6 million of net sales for the year ended Sept. 30, 2006, compared with a $15.2 million net loss on $18.3 million of net sales for the same period in 2005. Net sales from continuing operations for the fiscal year ended Sept. 30, 2006, decreased $703,000 or 4% to $17.6 million as compared to last year's net sales from continuing operations of $18.3 million, mainly resulting from the completion of the Iowa scrap tire cleanup project during fiscal 2005 which accounted for approximately $1.2 million of revenue and 1.25 million passenger tire equivalents during fiscal 2005. The decrease in net loss is mainly attributable to the $1.1 million operating income in fiscal 2006 compared with a $25,775 operating loss in fiscal 2005, the $6 million loss on disposal of discontinued operations in fiscal 2005, absent in fiscal 2006, and the $5.1 million decrease in loss from discontinued operations, partly offset by the $896,192 increase in other expense. 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?1820 About GreenMan Based in Lynnfield, Massachusetts, GreenMan Technologies, Inc. (OTCBB: GMTI) -- http://www.greenman.biz/-- operates facilities in Iowa and Minnesota which collect, process and market over 12 million scrap tires in whole, shredded or granular form. Products are used as an efficient alternative fuel by pulp and paper producers and electric utilities, as a substitute for crushed stone in civil engineering applications, such as road beds, landfill and septic field construction, or as crumb rubber which is used for playground and athletic surfaces, running tracks and landscaping/groundcover applications. INFRASOURCE SERVICES: Changes Status, Amends CEO's Management Pact ------------------------------------------------------------------ InfraSource Services Inc. has changed its status from a controlled company to a widely held public company. The company also amended and restated its management agreement with David R. Helwig, its chief executive officer and chairman of the board of directors. As reported in the Troubled Company Reporter on Oct. 17, 2006, Mr. Helwig succeeded Ian Schapiro, who had served as interim chairman since June 2005. Under the terms of the Management Agreement, Mr. Helwig will continue to be employed on an "at will" basis, and will receive annual compensation consisting of base salary, an incentive compensation bonus, and a long term incentive plan award in the form of shares of restricted stock or options to acquire shares of common stock. The annual target incentive compensation bonus and long-term incentive plan awards may be adjusted at the discretion of the company's board of directors. A full text-copy of the Amended and Restated Management Agreement may be viewed at no charge at http://ResearchArchives.com/t/s?1825 Headquartered Media, Pennsylvania, InfraSource Services, Inc. (NYSE: IFS) -- http://www.infrasourceinc.com/-- is a specialty contractor servicing electric, natural gas and telecommunications infrastructure in the United States. InfraSource designs, builds, and maintains transmission and distribution networks for utilities, power producers, and industrial customers. * * * Standard & Poor's assigned BB- long-term foreign and local issuer credit ratings to the company. INSTITUTE FOR CANCER PREVENTION: Court Confirms Trustee's Plan -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York conditionally confirmed the chapter 11 plan of liquidation filed by Hobart G. Truesdell of Walker Truesdell & Associates, Inc, for Institute for Cancer Prevention. The Order confirming the Plan was subject to receiving final approval from the United States Department of Health and Human Services, National Cancer Institute on a global settlement that involved the Institutes' former officers, board of trustees, auditors and financial consultant. NCI delivered its approval on Jan. 4, 2007. The Plan was accepted by all voting creditors and provides for a full distribution to all administrative and priority claims and a modest distribution to general unsecured claims. "We are very pleased with the court's decision," said counsel for the chapter 11 trustee, Joseph Malfitano of Young Conaway Stargatt & Taylor, LLP. "This was a difficult case and the results obtained are the direct result of the hard work and dedication of Mr. Truesdell." Mr. Truesdell expressed appreciation to the Court, Young Conaway, and other parties involved in the case for their patience and support in reaching this milestone. Mr. Truesdell hopes to make a distribution to creditors in the first quarter of 2007. About Young Conaway Young Conaway Stargatt & Taylor, LLP, one of Delaware's largest law firms, counsels and represents national, international and local clients, handling sophisticated advisory and litigation matters involving bankruptcy, corporate law and intellectual property. Now in its fifth decade, Young Conaway also guides regional businesses and individuals through a myriad of employment, real estate, tax, estate planning, environmental and banking issues from the firm's offices in downtown Wilmington. About Walker Truesdell Walker Truesdell & Associates provides comprehensive senior management, advisory and administrative services to bankrupt companies and to companies experiencing financial difficulties. In a bankruptcy case, Walker Truesdell is retained typically as Trustee, Restructuring Officer, Liquidation Agent or Plan Administrator. About the Institute for Cancer Prevention Based in New York, the Institute for Cancer Prevention is a non- profit private research organization devoted to cancer prevention and control. The Foundation filed for chapter 11 protection on Sept. 21, 2004 (Bankr. S.D.N.Y. Case No. 04-16148). Alan B. Miller, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtor. When the Debtor filed for protection from its creditors, it listed estimated assets and debts between $1 million and $10 million. After their chapter 11 filing, the Foundation captured headlines as it was forced to shut the doors of its Manhattan office and upstate research labs after federal investigators alleged that it had misspent $5.7 million in federal grants. Soon after, Hobart "Hobie" Truesdell, at Walker Truesdell & Associates, was appointed as the chapter 11 trustee in the troubled case and was charged with cleaning up the mess and trying to provide a recovery to creditors in a case where a recovery looked unlikely. Young Conaway Stargatt & Taylor, LLP, represents the chapter 11 trustee. ISTAR FINANCIAL: Consent Solicitation for Notes Ends Today ---------------------------------------------------------- The consent expiration date with respect to a consent solicitation for iStar Financial Inc.'s consent solicitation for its 7.000% Senior Notes due 2008, 4.875% Senior Notes due 2009, 6.000% Senior Notes due 2010, 5.125% Senior Notes due 2011, 6.500% Senior Notes due 2013 and 5.700% Senior Notes due 2014 will end today, Jan. 9, 2007, at 5:00 p.m. New York City time, unless terminated or further extended. As of 5:00 p.m. New York City time on Jan. 4, 2007, iStar had received consents from a significant majority in aggregate principal amount of each of its 7.000% Senior Notes due 2008; 4.875% Senior Notes due 2009; 6.000% Senior Notes due 2010; 5.125% Senior Notes due 2011; and 6.500% Senior Notes due 2013. The Company also disclosed that the consent payment per $1,000 principal amount of 5.700% Notes due 2014 will be $7.50 and that the 2014 Notes will continue to include the covenant entitled "Offer to Repurchase Upon Change of Control." All other terms of the original Consent Solicitation, dated Dec. 20, 2006, remain in effect and unmodified. Holders of notes that have validly provided consents do not need to take any further actions in light of the extension, or the changes to the solicitation terms of the 2014 Notes. The Consent Solicitation Statement dated Dec. 20, 2006, contains all relevant terms and conditions. Holders of Notes who wish to deliver consents prior to the expiration date of 5:00 p.m. today may use the original consent form that accompanied the Dec. 20, 2006 Consent Solicitation Statement. Only holders of Notes who validly provide consent on or before the expiration date and do not properly revoke such consent will be eligible to receive a consent payment. At any time following the receipt of the requisite consents from the holders of Notes, and in accordance with the terms of the Consent Solicitation Statement, the company may execute and deliver to the trustee supplemental indentures with respect to the proposed amendments described in the Consent Solicitation Statement. Holders may revoke consents until the earlier of the effective time or the expiration date. Citigroup Corporate and Investment Banking is acting as the solicitation agent for the Consent Solicitation. Global Bondholder Services Corporation is acting as the information and tabulation agent. Document requests and inquiries should be directed to: Global Bondholder Services Corporation Phone: (866) 470-3800 Questions related to the Consent Solicitation should be directed to: Citigroup Corporate and Investment Banking Phone: (800) 558-3745. iStar Financial (NYSE: SFI) -- http://www.istarfinancial.com/-- is a publicly traded finance company focused on the commercial real estate industry. The Company provides custom-tailored financing to high-end private and corporate owners of real estate nationwide, including senior and junior mortgage debt, senior and mezzanine corporate capital, and corporate net lease financing. * * * iStar Financial Inc.'s preferred stock carry Moody's Investors Service's Ba1 rating with a stable outlook. Fitch Ratings raised the Company's preferred stock rating to 'BB+' from 'BB' in January 2006. Fitch said the Rating Outlook is Stable. J.C.'S GRADING: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: J.C.'s Grading Service, Inc. 2520 Spotswood Lane Fisherville, KY 40023 Tel: (502) 968-1892 Bankruptcy Case No.: 06-33595 Type of Business: The Debtor is an excavating and grading contractor. Chapter 11 Petition Date: December 22, 2006 Court: Western District of Kentucky (Louisville) Judge: David T. Stosberg Debtor's Counsel: Stephen J. Tillman, Esq. Rex Dunn, Esq. Sales, Tillman, Wallbaum, Catlett and Satterley, PLLC 1900 Waterfront Plaza 325 West Main Louisville, KY 40202 Tel: (502) 589-5600 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million Debtor's 19 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Caterpillar Financial $277,545 Services Corp. P.O. Box 730669 Dallas, TX 75373-0669 Citizens Union Bank $129,244 P.O. Box 189, 1854 Midland Trail Shelbyville, KY 40066 Navistar Financial Corp. $72,778 P.O. Box 96070 Chicago, IL 60693 River City Bank $33,573 10130 Taylersville Road Jeffersontown, KY 40299 G.E. Capital Colonial Pacific $25,703 P.O. Box 642752 Pittsburgh, PA 15264-9752 Chase Card Services $21,390 GMAC $18,318 Internal Revenue Service $16,000 Bridgefield Casualty Insurance Co. $10,000 Chella Subramanian $5,502 Shelby County $5,000 Jefferson County Sheriff $4,060 Americon $4,000 Speedway Super America $4,000 Albert Oil Co., Inc. $3,577 Secura Insurance $3,000 Lowes $2,000 Hemingway & Travelstead $1,642 Home Depot Credit Services $1,128 JAMES URBAN: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: James R. Urban, Jr. 23 Saddlebrook Drive East Greenwich, RI 02818-2035 Bankruptcy Case No.: 06-11527 Chapter 11 Petition Date: December 27, 2006 Court: District of Rhode Island (Providence) Judge: Arthur N. Votolato Debtor's Counsel: Andrew S. Richardson, Esq. Boyajian Harrington & Richardson 182 Waterman Street Providence, RI 02906 Tel: (401) 273-9600 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. JOHN B. SANFILIPPO: Posts $4.8 Mil. Net Loss in 1st Fiscal Quarter ------------------------------------------------------------------ John B. Sanfilippo & Son Inc. filed its financial statements for the first fiscal quarter ended Sept. 28, 2006, with the Securities and Exchange Commission on Dec. 15, 2006. Johm B. Sanfilippio & Son Inc. reported a net loss of $4.8 million for the quarter ended Sept. 28, 2006, after accounting for a pre- tax gain of $3 million from real estate sales of three Chicago area facilities, in comparison with a net loss for the first quarter of fiscal 2006 of $1.1 million. Net sales for the fiscal 2007 first quarter decreased by 3.5% to approximately $133.8 million from approximately $138.7 million in the first quarter of fiscal 2006. Pounds shipped to customers in the current quarter increased by approximately 4% primarily as a result of significant increases in pounds of walnuts and cashews shipped to customers. Pounds sold increased in all channels except the consumer channel. The gross margin for the first quarter of fiscal 2007 decreased to 4.3% of net sales from 9.6% of net sales for the first quarter of fiscal 2006. The decline in gross margin primarily was attributable to a 6.8% decline in the weighted average price per pound sold while the weighted average cost per pound sold decreased by 3.1% in the quarterly comparison. The weighted average price per pound for almonds sold in the current quarter declined mainly because the company commenced shipping against lower priced new crop almond industrial sales contracts while the company still had high cost old crop almonds on hand. Walnut prices declined in part as a result of Fisher walnut promotional activity that occurred late in the current quarter at a nominal gross margin. Additionally, the final shell out of pecans and one variety of walnuts near the end of the current quarter led to unfavorable inventory adjustments in relation to the estimated balances of these bulk inshell nuts on hand. These factors coupled with the decline in net sales led to the decline in gross profit dollars of approximately $7.6 million. Selling and administrative expenses decreased to 8.7% of net sales for the first quarter of fiscal 2007 from 9.6% in the first quarter of fiscal 2006. The decline in operating expenses occurred because the company recorded a net gain of $3 million from the sale of its three Chicago area facilities in July. Primarily because of the decline in gross profit dollars, operating income for the current quarter declined by approximately $5.8 million. As a result of higher short term borrowing rates, interest expense in the first quarter of fiscal 2007 increased to approximately $1.7 million from $1.5 million in the first quarter of fiscal 2006. At Sept. 28, 2006, the company's balance sheet showed $382.2 million in total assets, $206.8 million in total liabilities, and $175.4 million in total stockholders' equity. Noncompliance with Financing Covenants During the first quarter of fiscal 2007, the company's unfavorable operating results caused noncompliance with certain restrictive covenants under its financing facilities. Specifically, the company did not achieve the minimum quarterly earnings before interest, taxes, depreciation and amortization (EBITDA) requirement under its long-term financing facility, which is a cross-default under the company's bank credit facility. The company received waivers from its lenders on Nov. 13, 2006, for this event of default. The company's announcement on Nov. 22, 2006, that the consolidated financial statements in its Form 10-K for fiscal 2006 filed on Sept. 27, 2006, could no longer be relied upon caused a default pursuant to the company's note agreement and bank credit facility. In addition, the company did not file this quarterly report on Form 10-Q for the quarter ended Sept. 28, 2006, with the Securities and Exchange Commission by the Nov. 27, 2006, deadline required in the note agreement, which caused an additional event of default. The company has received waivers from its lenders for these events of non-compliance. As a result of the non-compliance with these restrictive covenants and the uncertainty relating to the company's ability to comply with covenants and warranties during future periods, the note agreement for the first quarter of fiscal 2007 has been classified as currently due. "The current quarter was a difficult quarter as the company transitioned into a new crop year with high cost old crop almonds still on hand in a declining price environment," chief executive officer Jeffrey T. Sanfilippo stated. "In November, the company completed the sale of its old crop almond inventories. The company was also burdened by the impact of having to increase its final settlement payments to walnut growers in last year's third quarter after a majority of its walnuts had been sold at fixed prices. Consequently, sales of walnuts have delivered a nominal gross margin for the last three quarters. As the company moves into new crop walnut sales contracts, selling prices should be more in line with walnut acquisition costs, and walnut gross margins should return to normal levels," Mr. Sanfilippo explained. About John B. Sanfilippo & Son John B. Sanfilippo & Son, Inc. (Nasdaq: JBSS) -- http://www.fishernuts.com/-- is a processor, packager, marketer and distributor of shelled and in-shell nuts and extruded snacks that are sold under a variety of private labels and under the company's Fisher(R), Evon's(R), Snack 'N Serve Nut Bowl(TM), Sunshine Country(R), Flavor Tree(R) and Texas Pride(TM) brand names. The company also markets and distributes a diverse product line of other food and snack items. JOHN ESSMAN: Case Summary & 17 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: John Fredrick Essman 326 Orchard Hills Drive Bryan, OH 43506 Bankruptcy Case No.: 06-33781 Chapter 11 Petition Date: December 26, 2006 Court: Northern District of Ohio (Toledo) Judge: Richard L. Speer Debtor's Counsel: Steven L. Diller, Esq. 124 East Main Street Van Wert, OH 45891 Tel: (419) 238-5025 Fax: (419) 238-4705 Estimated Assets: $10,000 to $100,000 Estimated Debts: $1 Million to $100 Million Debtor's 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Equity Bank Equipment Loan $1,675,000 539 West 1-30 P.O. Box 540 Mount Vernon, TX 75457 National City Personal Loan $350,000 535 South Main Plymouth, MI 48170 CIT CNC Lathe - $150,000 P.O. Box 27248 Machinery used Secured: Tempe, AZ 85285 in John Essman Co. $100,000 National City Private Line Credit Card $95,594 P.O. Box 856176 Purchases Louisville, KY 40285 American Express - Credit Card $51,919 Business Capital Purchases P.O. Box 360002 Fort Lauderdale, FL 33336 Capital One Bank Credit Card $51,806 Purchases Star Bank 2003 Ford Excursion $28,000 Secured: $20,000 Siemans Financial Machinery $25,000 Wells Fargo Business Line Business Line of $24,962 Credit Bank of America - Credit Card $23,008 Platinum VISA Purchases VW Credit, Inc. Repossession of $14,641 2001 Audi S8 American Express - Credit Card $13,563 Platinum Card Travel Expenses Citibusiness Platinum Card Credit Card $12,373 Purchases VISA N/C Bank Credit Card $11,500 Purchases National City Bank Personal Loan $18,288 Montpelier American Express Credit Card $8,221 Purchases St. Luke Hospital Medical Bills $900 JOHNSFIELD II: Case Summary & Two Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Johnsfield II, LLC P.O. Box 249 Shelby, NC 28151 Bankruptcy Case No.: 06-40745 Chapter 11 Petition Date: December 21, 2006 Court: Western District of North Carolina (Shelby) Judge: George R. Hodges Debtor's Counsel: R. Keith Johnson, Esq. 312 West Trade Street Builders Bldg., Suite 600 Charlotte, NC 28202 Tel: (704) 372-3867 Total Assets: $1,885,708 Total Debts: $1,164,334 Debtor's 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Charles B. Camp, Sr. $243,987 101 Park Circle Dr. Shelby, NC 28150 Craig, Barry & Poston, CPA $783 5 North Lafayette St. Shelby, NC 28150 JP MORGAN: Moody's Affirms Low-B Ratings on Six Cert. Classes ------------------------------------------------------------- Moody's Investors Service affirmed the ratings of 23 classes of J.P. Morgan Chase Commercial Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2004-C2: Class A-1, $67,099,721, Fixed, affirmed at Aaa Class A-2, $100,000,000, WAC, affirmed at Aaa Class A-3, $431,388,000, WAC, affirmed at Aaa Class A-1A, $266,214,442, WAC, affirmed at Aaa Class X, Notional, affirmed at Aaa Class B, $24,581,000, WAC, affirmed at Aa2 Class C, $10,350,000, WAC, affirmed at Aa3 Class D, $24,580,000, WAC, affirmed at A2 Class E, $9,056,000, WAC, affirmed at A3 Class F, $11,644,000, WAC, affirmed at Baa1 Class G, $7,762,000, WAC, affirmed at Baa2 Class H, $11,643,000, WAC, affirmed at Baa3 Class J, $6,469,000, WAC, affirmed at Ba1 Class K, $5,175,000, WAC, affirmed at Ba2 Class L, $2,587,000, WAC, affirmed at Ba3 Class M, $3,881,000, WAC, affirmed at B1 Class N, $2,588,000, WAC, affirmed at B2 Class P, $2,587,000, WAC, affirmed at B3 Class RP-1, $5,743,132, Fixed, affirmed at A2 Class RP-2, $4,455,879, Fixed, affirmed at A3 Class RP-3, $4,703,427, Fixed, affirmed at Baa1 Class RP-4, $5,099,506, Fixed, affirmed at Baa2 Class RP-5, $7,723,523, Fixed, affirmed at Baa3 As of the Dec. 15, 2006 distribution date, the transaction's aggregate certificate balance has decreased by approximately 3.2% to $1.03 billion from $1.06 billion at securitization. The Certificates are collateralized by 129 mortgage loans ranging in size from less than 1% to 12.5% of the pool, with the top 10 loans representing 48.6% of the pool. The pool includes three shadow rated investment grade loans comprising 24.7% of the pool. Two loans, representing 2.3% of the pool balance, have defeased and are collateralized by U.S. Government securities. Three loans have been liquidated from the pool, resulting in an aggregate loss of approximately $500,000. Currently one loan, representing less than 1.0% of the pool, is in special servicing. Moody's is not projecting a loss from this loan. Twenty three loans, representing 9.6% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2005 and partial year 2006 operating results for approximately 98.6% and 60%, respectively, of the pool. Moody's loan to value ratio for the conduit component is 88.5%, compared to 91.2% at securitization. Although the overall performance has improved since securitization, the pool has experienced greater LTV dispersion. Based on Moody's analysis, 17.9% of the pool has a LTV greater than 100%, compared to 12.5% at securitization. The largest shadow rated loan is the Somerset Collection Loan at $125.5 million (12.5%), which is a 50% pari passu interest in a $251.0 million first mortgage loan. The loan is secured by the borrower's interest in a 1.4 million square foot regional mall located in Troy, Michigan. The mall is the dominant mall in its trade area and is anchored by Macy's, Nordstrom, Saks Fifth Avenue and Neiman Marcus. The property is 97.7% occupied, essentially the same as at securitization. The property is also encumbered by a B Note which is held outside the trust. The loan is interest only for its entire 10-year term. Moody's current shadow rating is A2, the same as at securitization. The second shadow rated loan is the Republic Plaza Loan at $106.0 million (10.6%), which represents the pooled portion of a $133.7 million first mortgage loan. The non-pooled portion is in the trust and supports non-pooled Classes RP-1, RP-2, RP-3, RP-4 and RP-5. The loan is secured by a 1.3 million square foot Class A office building located in downtown Denver, Colorado. The property is 86.0% occupied, compared to 79.9% at securitization. The largest tenants include Teacher's Insurance and Annuity Association of America and Duke Energy Field Services. The property is also encumbered by a B Note that is held outside the trust. Moody's current shadow rating of the pooled portion of the loan is A1, the same as at securitization. The third shadow rated loan is the Amerige Heights Town Center Loan at $16.5 million, (1.6%), which is secured by a 97,000 square foot community shopping center located in Fullerton, California. The property is 97.9% occupied, compared to 100% at securitization. The property is anchored by Albertsons. The property is part of a larger retail center that is anchored by Target, Ross, Linen-n-Things and Old Navy. Moody's current shadow rating is Baa3, the same as at securitization. The top three conduit loans represent 15.5% of the outstanding pool balance. The largest conduit loan is the Hometown America Portfolio VII Loan at $97.7 million, (9.8%), which is secured by 13 manufactured housing communities located in Florida, Michigan, Massachusetts, New Jersey, Colorado and Illinois. The portfolio totals 3,900 pads. Moody's LTV is 82.5%, compared to 89.3% at securitization. The second largest conduit loan is the Robert Duncan Plaza Loan at $41.1 million (4.1%), which is secured by a 322,600 square foot Class A office building located in downtown Portland, Oregon. The anchor tenant is the GSA, which leases 96.6% of the premises under several leases expiring in September 2011. The property is 98.4% occupied, essentially the same as at securitization. Moody's LTV is 78.5%, compared to 85% at securitization. The third largest conduit loan is the Shoppes at English Village Loan at $31.6 million (3.1%), which is secured by a 103,000 square foot lifestyle retail center located approximately 30 miles northwest of downtown Philadelphia in North Wales, Pennsylvania. The center is 98.5% occupied, compared to 96.2% at securitization. The largest tenants are Talbots, Iron Hill Brewery & Restaurant and Bombay Co. KIDs. Moody's LTV is 92.1%, compared to 96.9% at securitization. The pool's collateral is a mix of retail, multifamily, office and mixed use, industrial and self storage and U.S. Government securities. The collateral properties are located in 33 states. The highest state concentrations are Michigan, California, Colorado, Florida, and Texas. All of the loans are fixed rate. KEARNY INDUSTRIAL: Case Summary & 5 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Kearny Industrial Associates, LP 40 Marshall Street Kearny, NJ 07032 Bankruptcy Case No.: 07-10169 Chapter 11 Petition Date: January 4, 2007 Court: District of New Jersey (Newark) Debtor's Counsel: Daniel J. Yablonsky, Esq. Yablonsky & Associates LLC 1430 Route 23 North Wayne, NJ 07470 Tel: (973) 686-3800 Fax: (973) 686-3801 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's Five Largest Unsecured Creditors: Entity Claim Amount ------ ------------ S&A Realty Corp. $609,000 c/o Fox Rothschild, LLP 997 Lenox Drive - Bldg. 3 Lawrenceville, NJ 08648 Quality Tax Holdings $400,000 c/o Scarinci & Hollenbeck, LLC Value of 1100 Valley Brook Ave. Collateral: Lyndhurst, NJ 07071 $6,000,000 Waters, McPherson, McNeill $385,000 300 Lighting Way NJ 07096 New Jersey Department of $0 Environmental Protection US EPA $0 KEYSTONE TRUCK: Case Summary & 40 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: Keystone Truck Equipment, Inc. 440 West Butler Avenue New Britain, PA 18901 Bankruptcy Case No.: 06-16067 Debtor affiliate filing separate chapter 11 petitions: Entity Case No. ------ -------- Keystone Truck Equipment Sales 06-16069 & Service, Inc. Type of Business: The Debtors sell truck equipment parts and accessories. See http://www.keystonetruck.com/ Chapter 11 Petition Date: December 22, 2006 Court: Eastern District of Pennsylvania (Philadelphia) Judge: Bruce I. Fox Debtor's Counsel: Douglas J. Smillie, Esq. Fitzpatrick Lentz and Bubba P.C. P.O. Box 219 Center Valley, PA 18034 Tel: (610) 797-9000 Fax: (610) 797-6663 Estimated Assets Estimated Debts ---------------- --------------- Keystone Truck Equipment, $1 Million to $100,000 to Inc. $100 Million $1 Million Keystone Truck Equipment $100,000 to $100,000 to Sales & Service, Inc. $1 Million $1 Million A. Keystone Truck Equipment, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Freedom International Trade debt $327,780 6601 New State Road Philadelphia, PA 19135 Bayshore Ford Truck Sales Trade debt $171,124 P.O. Box 627 New Castle, DE 19720 DMF Trade debt $109,435 665 Pylant Street Atlanta, GA 30306 Elliott Equipment Company Trade debt $101,094 4427 S. 76th Circle Omaha, NE 68127 Grove U.S., L.L.C. Trade debt $78,855 75 Remittance Drive Suite 3051 Chicago, IL 60675 Knapheide Manufacturing Trade debt $60,859 Co., Inc. Dept. 4365 Carol Stream, IL 60122 Eaton Corporation Trade debt $11,483 P.O. Box 905473 Charlotte, NC 28290 TriCounty Electrical Supply Trade debt $5,205 175 Jacksonville Road Warminster, PA 18974 Tommy Gate Company Trade debt $3,587 P.O. Box 31001 Pasadena, CA 91110 Lanescan, LLC Trade debt $2,654 207B Carter Drive West Chester, PA 19382 Miller Electric Mfg. Co. Trade debt $2,491 75 Remittance Drive Suite 1462 Chicago, IL 60675 Pioneer Consoliated Corp. Trade debt $2,346 P.O. Box 55393 Boston, MA 02205 Whelen Engineering Co. Trade debt $2,211 Route 145 Chester, CT 06412 Pennsylvania Dept. of $1,936 Revenue Dept. 280406 Harrisburg, PA 17128 Vanner, Inc. Trade debt $1,856 4282 Reynolds Drive Hilliard, OH 43026 Beth Allen Ladder Company Trade debt $1,631 2124 W. Broad Street Bethlehem, PA 18018 Matweld, Inc. Trade debt $1,623 P.O. Box 2816 Paducah, KY 42002 Nelson Wire Rope Trade debt $449 3051 Penn Avenue Hatfield, PA 19440 FedEx Freight East Trade debt $336 P.O. Box 406708 Atlanta, GA 30384 B. Keystone Truck Equipment Sales & Service, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Kane Steel Co. Trade debt $6,220 P.O. Box 52236 Newark, NJ 07101 Muncie Power Products, Inc. Trade debt $5,219 P.O. Box 548 Muncie, IN 47308 Florig Equipment of Trade debt $5,124 Philadelphia 904 Ridge Pike Conshohocken, PA 19428 Karas Automotive Paints Trade debt $3,873 Inc. 46 Cedar Hill Road Chalfont, PA 18914 Northshore Mfg., Inc. Trade debt $3,274 P.O. Box 273 Two Harbors, MN 55616 Grainger Trade debt $3,156 Dept. 823541867 Palatine, IL 60038 Grove U.S., LLC Trade debt $3,156 75 Remittance Drive Suite 3051 Chicago, IL 60675 Flotran Pneu-Draulics, Inc. Trade debt $2,857 3527 W. 9th Street Trainor, PA 1906 ARSCO Trade debt $1,812 223 Roesch Avenue Oreland, PA 19075 Buyers Products Company Trade debt $1,715 P.O. Box 74237 Cleveland, OH 44194 TruckLite Co., Inc. Trade debt $1,557 Dept. #78279 P.O. Box 78000 Detroit, MI 48778 Safety Kleen Systems, Inc. Trade debt $1,500 P.O. Box 382066 Pittsburgh, PA 15250 Tommy Gate Company Trade debt $1,134 P.O. Box 31001 Pasadena, CA 91110 Transportation Safety Trade debt $942 Technologies P.O. Box 660158 Indianapolis, IN 46266 Kenco Hydraulics Co. Trade debt $930 63 E. Broad Street Hatfield, PA 19440 Electro-Fast Distribution Trade debt $812 Inc. P.O. Box 758 Camp Hill, PA 17001 McNichols Co. Trade debt $776 Box 101211 Atlanta, GA 30392 Ultron Life Corp. Trade debt $708 P.O. Box 201496 Houston, TX 77216 Knapheide Manufacturing Co. Trade debt $699 Dept. 4365 Carol Stream, IL 60122 Scully Welding Supply Corp. Trade debt $655 P.O. Box 1333 Collingdale, PA 19023 KIMBERLY BODNAR: Case Summary & 18 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Kimberly Bodnar 30130 Mulholland Highway Cornell, CA 91301 Bankruptcy Case No.: 06-12486 Chapter 11 Petition Date: December 20, 2006 Court: Central District Of California (San Fernando Valley) Judge: Geraldine Mund Debtor's Counsel: Kenneth B. Rodman, Esq. Law Office of Kenneth B. Rodman 223 East Thousand Oaks Boulevard, Suite 405 Thousand Oaks, CA 91360 Tel: (805) 371-0555 Fax: (805) 371-0558 Estimated Assets: $1 Million to $100 Million Estimated Debts: Less than $50,000 Debtor's 18 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Citibank $28,547 P.O. Box 6241 Sioux Falls, SD Portfolio Recoveries $21,403 120 Corporate Boulevard, Suite 1 Norfolk, VA 23502 GMAC $10,428 P.O. Box 12699 Glendale, AZ 85318 Porsche Financial Srvc. $10,213 4343 Commerce Court, Suite 214 Lisle, IL 60532 Wfs Financial $5,215 Bank of America $2,974 Chase $2,567 Tnb - Target $1,653 Blmdsnb $856 West Asset Management $578 Prosche Financial Service $474 Mcydsnb $452 Grant and Weber $168 Allied Interstate Inc. $151 C B Santa Monica Bay D $124 California Service Bur $104 Metro Rep Comm Service Inc. $84 Metro Republic $62 KINDER MORGAN: S&P Lowers Corporate Credit Rating to BB- -------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Kinder Morgan Inc. to 'BB-' from 'BBB'. At the same time, Standard & Poor's withdrew its 'A-2' short-term corporate credit and commercial paper ratings on the company. The ratings on KMI were removed from CreditWatch with negative implications. Standard & Poor's also lowered its long-term corporate credit rating on master limited partnership Kinder Morgan Energy Partners L.P. to 'BBB' from 'BBB+' and removed the rating from CreditWatch with negative implications. At the same time, Standard & Poor's affirmed its 'A-2' short-term and commercial paper ratings on KMP. The ratings on the companies were originally placed on CreditWatch on May 30, 2006, after the report of an offer by a group of Kinder Morgan management and private investors to purchase the outstanding shares of KMI. The outlook on all entities is stable. KMI and KMP, both based in Houston, Texas, have about $7.6 billion and $5.6 billion of debt, respectively. "The significant increase in debt that KMI will issue at closing to fund the buyout will drop the credit profile well into the speculative grade area," said Standard & Poor's credit analyst Todd Shipman. "The MLP is also affected by the transaction due its close ties with KMI, but management will be taking steps to insulate the partnership and preserve its investment-grade rating and the 'A-2' commercial paper rating," said Mr. Shipman. KMI has received the necessary shareholder approval to complete the transaction, but several regulatory approvals are pending. The buyout is expected to close in the first quarter of 2007. K-TEL INTERNATIONAL: Grant Thornton Raises Going Concern Doubt -------------------------------------------------------------- Grant Thornton LLP expressed substantial doubt about K-tel International Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended June 30, 2006. The auditing firm pointed to K-tel's significant recurring losses from operations and net working capital deficit at June 30, 2006. During the years ended June 30, 2006, 2005 and 2004, the company incurred net losses from continuing operations of $1,200,000, $608,000 and $382,000, respectively. Additionally, the Company had a working capital deficit of $12,373,000 at June 30, 2006. Net sales for the year ended June 30, 2006, were $4,804,000, a decrease of 20.5% from fiscal 2005 sales of $6,041,000. This sales decrease was attributed to reduced domestic music revenue. The net loss for fiscal 2006 was $1,211,000, compared to a net loss of $457,000 in fiscal 2005. Also, in fiscal 2005, the company recorded and received $350,000 from the settlement of a lawsuit that involved the discontinued subsidiary, K-tel Consumer Products, Inc. At June 30, 2006, the company's balance sheet showed $3,272,000 in total assets and $15,254,000 in total liabilities, resulting in a $11,982,000 shareholders' deficit. A full-text copy of the company's annual report is available for free at http://researcharchives.com/t/s?182b About K-tel Based in Plymouth, Minnesota, K-tel International, Inc., -- http://www.ktel.com/-- licenses its music catalog internationally and markets entertainment products mainly derived from its catalog through retail and direct response marketing channels in the United States and Europe. The Company has a focused method of distribution that targets the strengths of selected individual retailers and supplies products suited to each retailer's needs. LAIDLAW INT'L: Earns $40.1 million in Fiscal Quarter Ended Nov. 30 ------------------------------------------------------------------ Laidlaw International Inc. reported $40.1 million of net income on $858.1 million of revenue for the quarter ended Nov. 30, 2006, compared with a $58.3 million of net income on $846.8 million of revenue for the same period in 2005. "We enjoyed a solid first quarter," Laidlaw International president and chief executive officer Kevin E. Benson said. "Education Services showed strong revenue growth while its reduced earnings reflected the investments we are making to improve operating efficiencies and provide for future margin expansion. Greyhound continued with its strong performance, but its results were overshadowed by last year's exceptional first quarter." An 8% growth in revenue at Education Services, fueled by new business and price increases, more than offset the impact of a $25 million reduction of revenue at Greyhound. The decline in revenue at Greyhound was due in part to unusually strong hurricane- related demand in the first quarter of last year, and fewer passengers this year as a result of price increases and network changes instituted to improve operating efficiencies and profitability. EBITDA of $142 million was down 9% from the prior year and EBITDA margin decreased to 16.5%. At Education Services, increases in spending associated with the development of systems designed to lower future operating costs, startup costs attributable to driver shortages in select markets and the large number of new contracts initiated during the quarter, and higher fuel costs reduced EBITDA margins and EBITDA as compared to prior year. Greyhound's EBITDA was down $9 million as a result of lower revenue due to softer travel volume and the realization in the first quarter of fiscal 2006 of a one-time gain of $5 million from a business interruption insurance claim associated with the Sept. 11, 2001, terrorist attacks. Public Transit's EBITDA and EBITDA margin declined slightly as new contract revenue nearly offset the impact of the loss of a major contract. As of Nov. 30, 2006, Laidlaw had cash and cash equivalents of $96 million and debt outstanding of $812 million. Net capital expenditures for the first quarter of fiscal 2007 were $110 million, as compared to $55 million in the prior year, and reflected the early delivery of vehicles at the Education Services segment. During the quarter, Laidlaw completed its $500 million share repurchase plan with the purchase of 2.5 million shares for approximately $69 million. About Laidlaw International Headquartered in Arlington, Texas, Laidlaw International, Inc. (NYSE:LI) -- http://www.laidlaw.com/-- is the largest school bus operator in the United States and Canada, providing student transportation services to more than a thousand school districts, operating a fleet of approximately 41,000 buses. The company transports approximately two million students each school day to and from school. Laidlaw filed for chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No. 01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP, represented the Debtors. Laidlaw International emerged from bankruptcy on June 23, 2003. * * * As reported in the Troubled Company Reporter on July 11, 2006, Moody's Investors Service affirmed Laidlaw International Inc.'s corporate family rating at Ba2 following the company's announcement of a $500 million debt-financed share repurchase program. Moody's also assigned a Ba2 rating to the company's new senior secured term loan. The rating outlook is stable. LENOX GROUP: Marc Pfefferle is Interim Chief Executive Officer -------------------------------------------------------------- Lenox Group Inc. disclosed that Susan E. Engel has stepped down as chairwoman and chief executive officer effective immediately. Marc L. Pfefferle, a partner at Carl Marks Advisory Group LLC, will replace Ms. Engel as interim chief executive officer. Stewart Kasen, Lead Director of the Board of Lenox Group, will serve as Board Chairman. Mr. Pfefferle has 25 years of management consulting, interim executive and restructuring officer experience. He previously served as Chief Restructuring Officer of Oneida Ltd. He holds a BS in Engineering and an MBA from Lehigh University and is a Certified Turnaround Professional and a Certified Fellow in Production and Inventory Management. The company also retained a team of professionals from Carl Marks Advisory Group LLC to assist Mr. Pfefferle in addressing business improvements and help implement necessary operational changes. "This year, we took significant steps to strengthen our businesses and further increase awareness of our brands" Ms. Engel commented. "The Company will continue to implement operational changes during 2007. However, based upon preliminary results for December, it has become clear that the company's results for 2006 will not meet our earlier expectations. The fourth quarter was significantly impacted at Department 56 by delayed shipping from our overseas vendors, which resulted in order cancellations and higher than normal inventory levels. "Our retail network, and the Lenox outlet stores in particular, experienced considerably slower than expected sales and margins as we shifted their focus to liquidating excess inventory, much of which came as part of the Lenox acquisition. "The Board and I decided that this is an appropriate time for the Company to bring in an individual with substantial operational expertise and skills that will complement the strengths of the existing management team," she said. "During her 12 years with the Company, Susan has worked tirelessly to invigorate and strengthen our brands while building the company and guiding the development of creative and innovative products to meet our customers' needs. We appreciate her leadership in starting the company's transformation through the acquisition of the Lenox brands. Her decision to step aside to bring in the experience necessary to realize the acquisition's full potential demonstrates her professionalism and her concern for all of our stakeholders," Mr. Kasen said. "I am pleased to be joining the senior leadership team at Lenox Group and working with the Company's talented people to maximize the sales and profit potential of its outstanding brands. Among our objectives will be a continued focus on the company's efforts to improve inventory management and increase the efficiency of the company's supply chain in addition to simplifying the business to enhance overall operational effectiveness," Mr. Pfefferle said. On Dec. 28, 2006, the Company closed the sale of the Hagerstown, MD facility for approximately $26.3 million, which was used to pay down outstanding debt under the company's term loan credit agreement. Together with the proceeds from the company's Pomona, New Jersey, facility sale earlier this fall, it reduced its term debt by $32.9 million, to $48.8 million as of Dec. 30, 2006. The company has commenced discussions with its lenders in connection with obtaining appropriate waivers in order to be in compliance with its loan agreements. The company believes that, as of Dec. 30, 2006, it was not in compliance with two financial covenants under its loan agreements that, without obtaining appropriate waivers, would give the lenders the right to accelerate the outstanding amounts owed thereunder. Total principal amounts outstanding under its loan agreements were approximately $96.3 million at Dec. 30, 2006. The company also announced that it has retained Berenson & Company LLC to advise the Board on certain financial matters, including obtaining any waivers and the strengthening of the Company's balance sheet. Based in Eden Prarie, Minnesota, Lenox Group Inc (NYSE: LNX) was formed on Sept. 1, 2005, when Department 56, Inc., a designer, wholesaler and retailer of collectibles and giftware products purchased Lenox, Inc., a designer, manufacturer and marketer of fine china, dinnerware, silverware, crystal and giftware products. The Company sells its products through wholesale customers who operate gift, specialty and department store locations in the United States and Canada, company-operated retail stores, and direct-to-the-consumer through catalogs, direct mail, and the Internet. LENOX GROUP: Poor Performance Cues Moody's Ratings Downgrade ------------------------------------------------------------ Moody's Investors Service has lowered the debt ratings of Lenox Group Inc. The rating outlook remains negative. The downgrade reflects the company's severely strained financial condition and liquidity that has resulted from lower-than-expected earnings and cash flows in 2006, which, in Moody's opinion, has increased the risk of a restructuring, including the potential for a distressed exchange, in the near to intermediate term. Lenox Group has stated that it likely violated two financial covenants under its bank agreements as of Dec. 30, 2006. The company reported that it has appointed a partner at Carl Marks Advisory Group LLC as interim CEO, and that it has retained Berenson & Company, LLC to advise the Board on certain financial matters, including waiver discussions with its banks. The weaker-than-expected results in the all-important fourth quarter stem from delayed shipments from Department 56's overseas vendors which resulted in order cancellations and higher than normal inventory levels. In addition, Lenox's retail network, particularly Lenox outlet stores, experienced considerably slower-than-expected sales and margins as it shifted focus to liquidating excess inventory. The company had $96.3 million of bank debt outstanding as of Dec. 30, 2006, down from $212 million at the end of Sept. 30, 2006. Debt reduction stemmed mainly from $32.9 million of asset sales that reduced term debt to $48.8 million, and seasonal working capital inflows that reduced outstandings under the borrowing-based revolving credit facility to about $47.5 million. Nonetheless, external financing remains tight given the likely breach of covenants and the company's expected peak working capital needs later in 2007. Lenox Group's Caa2 corporate family rating is driven by its poor operating performance, cash flows and extremely weak liquidity position, as reflected in the Speculative Grade Liquidity Rating of SGL-4. Lenox Group's ratings will face additional downward pressure if there is further significant erosion in the company's financial condition, decreased protection for debt holders due to rising default probability or likely recovery rates, or any deterioration in its vendor relationships. Positive rating action is not likely at this time. These ratings were downgraded: * Lenox Group, Inc. -- Corporate Family Rating to Caa2 from B2; -- Probability of default rating to Caa2 from B2; -- $175 million revolving credit facility to B3, LGD 2, 29% from B1, LGD3, 32%; and, -- $100 million term loan to Caa2, LGD 4, 57% from B2, LGD3, 46%. The SGL-4 Speculative Grade Liquidity Rating was affirmed The rating outlook remains negative Based in Eden Prarie, Minnesota, Lenox Group Inc. was formed in September 2005 after Department 56, Inc., a leading designer, wholesaler and retailer of collectibles and giftware products purchased Lenox, Inc., a leading designer, manufacturer and marketer of fine china, dinnerware, silverware, crystal and giftware products. The combined company has proforma revenue exceeding $500 million. LENOX GROUP: Weak Performance Cues S&P's Negative CreditWatch ------------------------------------------------------------- Standard & Poor's Ratings Services reported that its 'B+' corporate credit rating and other ratings for Prairie, Minnesota-based collectibles company Lenox Group Inc. remain on CreditWatch with negative implications, where they initially were placed on Nov. 3, 2006, reflecting the company's reported weak third-quarter operating performance and Standard & Poor's expectations that Lenox will be challenged to meet prior expectations. "The CreditWatch update follows the company's announcement today that Susan E. Engel, chairwoman and chief executive officer, will step down from her role," said Standard & Poor's credit analyst Bea Chiem. Lenox also reported that the company's fiscal 2006 results will be weaker than anticipated, and that it is seeking a waiver to be in compliance with financial covenants. In order to resolve the CreditWatch listing, Standard & Poor's will meet with management to assess recovery prospects for the company's operating performance and ability to improve credit measures, as well as the company's progress in securing a waiver from its lenders. The ratings on Eden Lenox Group Inc. reflect its narrow business focus, declining channel sales, and leveraged financial profile. MANARIS CORP: Unit Inks Technology License Agreement with iMetrik ----------------------------------------------------------------- Manaris Corporation's wholly owned subsidiary, C-Chip Technologies Corporation (North America), has entered into a technology license agreement with its technology partner, iMetrik Solutions Inc. Last spring, C-Chip, in partnership with iMetrik, launched the Credit-Chip 200G, a GSM-based product developed by iMetrik, with a complete web-based "locate and disable" platform, for the North American used car market. The relationship with iMetrik has been a key factor in the development of the Credit-Chip product and has allowed C-Chip to provide its customers with a reliable solution. To date, C-Chip has shipped in excess of 10,000 units of the Credit-Chip 200G. Building upon the relationship, C-Chip has entered into an agreement with iMetrik whereby iMetrik will have the exclusive right to manufacture and sell products based on the GSM-based "locate and disable" technology platform for the "Buy Here Pay Here" market worldwide. In exchange, C-Chip will receive royalties for each product sold by iMetrik. "We are very excited with our new arrangement with iMetrik. The purpose of consolidating our efforts via a unified sales channel is to develop economies of scale as well as a more focused sales strategy," said John Fraser, President and CEO of Manaris. "We strongly believe that this will benefit both companies." About iMetrik iMetrik Solutions Inc. provides wireless solutions to the Machine- to-Machine marketplace. iMetrik's solutions improve the management of mobile and remote enterprise assets. The company offers its clients a complete wireless service delivery chain as a mobile virtual network aggregator to allow them to efficiently deploy M2M solutions. About Manaris Manaris Corporation -- http://www.manariscorp.com/-- through its two wholly owned subsidiaries, offers risk mitigation solutions. C-Chip Technologies (North America) specializes in the high-tech sector of the security industry, offering technology that allows business users to access, control, manage and monitor remote assets at low cost. Avensys, Inc., enables businesses to monitor different types of environments, including air, soil and water, as well as buildings and materials. Avensys also produces fiber optic components and sensors. * * * As reported in the Troubled Company Reporter on Oct. 6, 2006, PricewaterhouseCoopers LLP expressed substantial doubt about Manaris Corp.'s ability to continue as a going concern after auditing the Company's financial statements for the fiscal year ended June 30, 2006. PwC pointed to the Company's recurring losses from operations, reliance on non-operational sources of financing to fund operations, and negative working capital at June 30, 2006. The auditing firm also cited the Company's failure to comply with certain covenants and the fund restrictions imposed by a supplier under a loan arrangement. MANUFACTURERS & TRADERS: Fitch Holds BB Rating on Class B-4 Certs. ------------------------------------------------------------------ Fitch Ratings has affirmed the ratings on Manufacturers and Traders Trust Company Mortgage Corp.'s residential mortgage-backed certificates: Series 2002-1: -- Class A at 'AAA'; -- Class B-1 at 'AAA'; -- Class B-2 at 'AAA'; -- Class B-3 at 'AA'; and, -- Class B-4 at 'BBB'. Series 2003-1: -- Class A at 'AAA'; -- Class B-1 at 'AA'; -- Class B-2 at 'A'; -- Class B-3 at 'BBB'; and, -- Class B-4 at 'BB'. The affirmations, affecting approximately $729 million of the outstanding certificates, reflect a stable relationship between credit enhancement and expected loss. In addition, series 2002-1 and 2003-1 have experienced a growth in CE of at least 2.3x and 1.5x the original CE, respectively. Both of the transactions have only suffered minimal losses to date. The collateral of the above transactions consists primarily of 15- year to 30-year fixed-rate and adjustable-rate mortgage loans extended to Prime borrowers and secured by first liens on one to four-family residential properties. The loans were originated or acquired by M&T Bank and are serviced by M&T Mortgage Corp., which is rated 'RPS2' by Fitch. As of the December 2006 distribution date, the pool factor for series 2002-1 is 18% and for series 2003-1 is 64%. In addition, series 2002-1 is seasoned 49 months and series 2003-1 is seasoned 37 months. MARION TOWN: Mayor Says Town Can't Pay $350K Sewage Treatment Fee ----------------------------------------------------------------- Marion Mayor Elvis Hudson said the town could be forced into bankruptcy in the event a judge requires it to pay more than $350,000 of sewage treatment fees to Meridian City, The Meridian Star reports. Mr. Hudson's statement follows a December 1 meeting with a presiding judge -- attended by the attorneys for Marion and Meridian City -- for a ruling on an unpaid sewerage bill. "Meridian was denied contempt of court, court fees and attorney fees," Mr. Hudson told the source. "However, the city was granted $351,000 in sewage treatment costs from July 2003 to December 2006." Marion's obligation to Meridian relates to the 1986 shut down of Marion's sewage treatment plant due to lack of maintenance and repair. The city of Meridian agreed to treat Marion's sewage at that time which gave way to a number of disputes over appropriate charging rate for the services. Marion is a small town located in southeastern Massachusetts. MCCLINTOCK DIARY: Case Summary & 13 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: McClintock Dairy LLC 1300 Pigs Ear Road Grantsville, MD 21536 Bankruptcy Case No.: 07-10077 Debtor-affiliate filing separate chapter 11 petition: Entity Case No. ------ -------- McClintock Family Partnership 07-10079 Chapter 11 Petition Date: January 3, 2007 Court: District of Maryland (Greenbelt) Judge: Paul Mannes Debtors' Counsel: William L. Needler, Esq. 555 Skokie Boulevard, Suite 500 Northbrook, IL 60062 Tel: (847) 559-8330 -- and -- Donald Goldbloom, Esq. 12590 National Pike Grantsville, MD 21536 Tel: (301) 895-5240 Estimated Assets Estimated Debts ---------------- --------------- McClintock $1 Million to $1 Million to Dairy LLC $100 Million $100 Million McClintock Family $1 Million to $1 Million to Partnership $100 Million $100 Million A. McClintock Dairy LLC's 13 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Larry Reams $97,623 223 Turkeyfoot Trail Road Markleton, PA 15551 Graham Dairy Supply Inc. $60,237 R D Suite 3 P.O. Box 382, Route 66 Greensburg, PA 15601 Renaissance Nutrition $44,967 P.O. Box 229 Roaring Spring, PA 16673 Hemley Custom Harvesting $32,195 432 Ream Road New Paris, PA 15554 Casselman Vet Services $22,171 P.O. Box 60 Grantsville, MD 21536 John Deere Credit $9,324 Card Member Service $7,957 Yachere Mobile Feed Service $5,574 Agi Service Agency $3,066 Grantsville Truck & Trailer $2,699 Peters Fuel $1,869 Wagner IBA Dairy Supplies $1,700 M M Weaver & Sons Inc. $1,265 B. The McClintock Family Partnership does not have any creditors who are not insiders. MEDICALCV INC: Posts $3.1 Mil. Net Loss in Quarter Ended Oct. 31 ---------------------------------------------------------------- MedicalCV Inc. reported a $3.1 million net loss for the second fiscal quarter ended Oct. 31, 2006, compared with a $712,474 net loss for the same period in 2005. The company had zero revenue in both periods as the company discontinued production of its mechanical heart valve products in November 2004 and the marketing of said product in April 2005. The increase in net loss in the current quarter is attributable to increases in sales and marketing expenses and in research and development expenses, partly offset by the decrease in general and administrative expenses. In addition, the company recorded in the fiscal 2005 quarter an $822,164 income in connection with the reduction in the fair value of warrants issued in connection with 1,803 shares of 5% series A redeemable convertible preferred stock issued on April 1, 2005. Sales and marketing expenses increased $377,575 primarily due to expanded sales and marketing efforts in preparation for the launch of the company's minimally invasive system. General and administrative expenses decreased $181,656 primarily due to a $272,034 reversal of an accrual of consulting expenses related to a proposed public offering of common stock that the company subsequently decided not to pursue. This credit was partially offset by expenses of $205,237 in employee stock-based compensation and $40,990 in director stock-based compensation. At Oct. 31, 2006, the company's balance sheet showed $7.6 million in total assets, $3.8 million in total liabilities, and $3.8 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Oct. 31, 2006, are available for free at http://researcharchives.com/t/s?182f Going Concern Doubt Lurie Besikof Lapidus & Company, LLP, expressed substantial doubt about MedicalCV Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ending April 30, 2006. The auditor pointed to the company's operating losses and negative cash flows from operations and its need for additional funds to finance its working capital and capital expenditure needs. About MedicalCV Inc. Headquartered in Inver Grove Heights, Minnesota, MedicalCV Inc. -- http://www.medicalcvinc.com/-- is a cardiothoracic surgery device manufacturer. Previously, its primary focus was on heart valve disease. It developed and marketed mechanical heart valves known as the Omnicarbon 3000 and 4000. In November 2004, after an exhaustive evaluation of the business, MedicalCV decided to explore options for exiting the mechanical valve business. The company intends to direct its resources to the development and introduction of products targeting treatment of atrial fibrillation. MESABA AVIATION: Shareholder Opposes Northwest's Purchase Proposal ------------------------------------------------------------------ Riley Investment Management LLC has opposed Northwest Airlines Corp.'s proposal to acquire Mesaba Airlines Inc. As a large shareholder of MAIR Holdings, Inc., the owner of Mesaba Airlines, Riley Investment Management LLC believes that Northwest Airlines' proposed offer to acquire Mesaba Airlines in exchange for the allowance of Mesaba $145 million claim against Northwest is grossly inadequate considering the total value of the Mesaba estate to be in excess of $300 million. The company will pursue all avenues to ensure that such a transaction is not consummated. The company's contemplated actions may include any or all of these: filing objections to the creditors' current motion requesting the termination of exclusivity period for filing a plan of reorganization, pursuing litigation against various parties to the transaction, offering our own competing plan of reorganization if exclusivity is terminated, or entering into discussion with MAIR Holdings or other regional carriers. Additionally, Riley would like to note that contrary to what has been stated in the press, Mesaba Airlines has not agreed to any terms of the Northwest agreement. Riley believes this would require board approval at Mesaba as well as board approval at MAIR, neither of which has occurred. Riley believes that Northwest Airlines has destroyed value for MAIR shareholders, Mesaba and Mesaba's employees, enabling Northwest to buy Mesaba below fair market value and avoid fairly paying Mesaba's valid claims in the Northwest bankruptcy. Its unions and the press have unfairly criticized MAIR and Mesaba management for actions Riley believes were forced by Northwest. Northwest's bankruptcy filing and request for new RFPs for additional flying forced Mesaba to subject its employees to new labor contracts so that Mesaba could make attractive proposals to Northwest to continue to fly aircraft. Northwest is now attempting to purchase Mesaba and use this low cost structure as a vehicle to continue and buildup Northwest's regional business with all future value only going to Northwest Airlines. Riley has provided a timeline of events related to the Mesaba bankruptcy and Northwest Airlines. * Prior to Mesaba bankruptcy filing: Mesaba operates a fleet of 63 SAAB-340 and 35 Avro-Regional Jet aircraft for NWA. Trailing twelve-month revenue at Mesaba through 9/30/2005 was $416MM. * Aug. 29, 2005: Northwest signs a new ASA with Mesaba in which MAIR is required to invest $31.7 million into Mesaba. Under the terms, Mesaba would operate 35 AVRO and up to 15 CRJ-200/440 aircraft along with all of the existing 63 SAAB aircraft under a 10-year contract. * Sept. 9, 2005: Bryan Ebensteiner, NWA Director of Airlink Planning, sends an email to MAIR inquiring whether MAIR had made the required $31.7 payment to Mesaba; Mesaba advises NWA that it had made the payment. * Sept. 12, 2005: After it is ensured that liquidity had been provided to Mesaba from MAIR, Northwest fails to make its regular semi-monthly payment to Mesaba of $18.5 million for the second half of August. * Sept. 14, 2005: Northwest files for bankruptcy. Riley finds it hard to imagine that Northwest management did not know that it was contemplating filing for bankruptcy two weeks prior when it signed a new ASA with Mesaba. Shares of MAIR drop from $9.50/share to $4.50/share costing MAIR shareholders $100 million in value. A few days after Northwest files for bankruptcy, Doug Steenland, CEO of Northwest, resigned from the board of directors of MAIR. * Sept. 26, 2005: Northwest failed to make the full semi-annual payment to Mesaba for the first half of September, reducing the payment to $1.9 million. Total missed payments are approximately $36.4 million. * Aug. 16, 2006: Mesaba files a $250 million claim against Northwest Airlines, which does not include the value of its current SAAB business which we value at an additional +$100 million. * Nov. 27, 2006: After Northwest's bankruptcy filing, Mesaba was forced to seek labor concession with its unions in order to continue operations and ensure continued and future business with Northwest. Labor currently has a $22.7 million claim against Mesaba for contract concession. * Dec. 20, 2006: Northwest offers Mesaba a $145 million claim in total to purchase the entire company. In all Riley values the offer at 63% of the value of Mesaba prior to filing for bankruptcy, which ignores incremental value which would have accrued to Mesaba since under the new ASA, where it had rights to operate the next 35 CRJ aircraft in Northwest's regional fleet. * Dec. 22, 2006: Northwest settles with Pinnacle Airlines for a $377.5 million claim and awards Pinnacle a new ASA that allows it to continue flying for Northwest as a standalone public entity. Terms of the new ASA allow Pinnacle to continue to operate all of its existing 124 CRJ-200/440 aircraft plus up to an additional 17 CRJ-200/440 aircraft for 10 years. 15 of these CRJ's were originally promised to Mesaba when they signed their ASA. In all, Riley estimates the value Pinnacle's award to be worth $530 million, which is approximately 135% of the estimated value of its prior contract. In light of the items mentioned, Riley believes that not only is Northwest Airlines not offering fair value for Mesaba, it also pursued a strategy of destroying value in order to purchase Mesaba's at a huge discount to its fair value. At best, Northwest and its executives ignored clear conflict of interest issues (Northwest owns 28% of MAIR and a director of Northwest also sat on MAIR's board) and at worst, fraud occurred. Under the proposed transaction, Northwest stands to reap the entire economic benefit of Mesaba's labor concessions with cheaper flying costs for Northwest going forward, but only after Mesaba and therefore MAIR shareholders pay for the $22.7 million claim owed to Mesaba's labor unions. To be clear, Riley is not opposed to Northwest acquiring Mesaba, as it believes all parties including employees, creditors, customers and shareholders can be made whole under appropriate terms. But Riley is strongly opposed to the offer of $145 million. In light of this, we will continue to pursue any and all strategies that will maximize value for shareholders of MAIR. 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. About Mesaba Aviation Headquartered in Eagan, Minnesota, Mesaba Aviation Inc. dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. MICHELEX CORP: Wins More Time to Complete Ag-Pro Purchase --------------------------------------------------------- Michelex Corp. signed an extension to the Letter of Intent to acquire Ag-Pro Ltd. allowing it the extra time needed to raise additional capital to complete the transaction. The company disclosed that if the transaction is completed, it will put the company in the emerging bio-diesel market in the U.S. The company also disclosed that all its obligations with Wells Fargo Business Credit have been satisfied after a final payment in the sum of $256,874.80 that was made on Dec. 15, 2006. As a result of the transaction, the company received an aggregate amount of $728,000 in debt reduction. Thomas Gramuglia, chief executive officer and president, stated: "We hope that this ending of the WFBC chapter in the company's history will bring good fortunes for us in 2007." With its plastic manufacturing offices in Utah and audio record production group located in New York, Michelex Corp. (Pink Sheets:MLXO) provides precision products manufactured with state-of-the-art equipment. Michelex Division manufactures, imports and distributes Optical Media Packaging products. It also produces, imports, and distributes a complete line of plastic injection molded multimedia packaging products. Michele Audio Division replicates services for the spoken words industry. It also owns a large catalogue of music, which the company intends to market. As reported in the Troubled Company Reporter on Dec. 7, 2006, the company's balance sheet, at Sept. 30, 2006, showed $4.6 million in total assets and $9.3 million in total liabilities, resulting in a $4.7 million total stockholders' deficit. Going Concern Doubt As reported in the Troubled Company Reporter on Nov. 14, 2006, Seligson & Giannattasio LLP expressed substantial doubt about Michelex Corp.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2005. The auditing firm pointed to the company's significant recurring losses and dependence on its ability to meet its future needs and the success of its future operations on the realization of a major portion of its assets. MIDLAND OIL: Case Summary & 30 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: Midland Oil Co., Inc. 33330 West 8 Mile Road Farmington, MI 48336 Bankruptcy Case No.: 06-59456 Debtor-affiliates filing separate chapter 11 petitions on December 29, 2006: Entity Case No. ------ -------- 17785 Grand River, LLC 06-59485 F & H Oil Co. 06-59474 F & J Oil Corporation 06-59468 Debtor-affiliate filing separate chapter 11 petition on December 27, 2006: Entity Case No. ------ -------- Property Property, LLC 06-59287 Chapter 11 Petition Date: December 29, 2006 Court: Eastern District of Michigan (Detroit) Judge: Steven W. Rhodes Debtors' Counsel: Richard F. Fellrath, Esq. 4056 Middlebury Drive Troy, MI 48085 Tel: (248) 519-5064 Fax: (248) 519-5065 Total Assets Total Debts ------------ ----------- Midland Oil Co., Inc. $177,472 $3,859,000 17785 Grand River, LLC $1,025,000 $3,745,397 F & H Oil Co. $118,510 $4,053,000 F & J Oil Corporation $331,462 $3,989,000 Property Property, LLC $1,200,000 $4,482,000 A. Midland Oil Co., Inc.'s Six Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ La Salle Bank, Midwest N.A. Bank Loan $3,000,000 fka Standard Federal Bank, N.A. Secured: 2600 West Big Beaver Road $58,919 Troy, MI 48084 Unsecured: $2,941,081 Julia Beydoun Bank Loan $700,000 26040 Timber Trail Secured: Dearborn Heights, MI 48127 $76,392 Unsecured: $700,000 Safiediene Oil Co. Trade Debt $81,000 30401 Utica Road Roseville, MI 48066 Internal Revenue Service $35,000 Kansas City, MO 64999-0030 Martin & Snyder Trade Debt $31,000 8880 Hubbell Avenue Detroit, MI 48228 State of Michigan Tax $12,000 430 West Allegan Lansing, MI 48922 B. 17785 Grand River, LLC's Five Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ La Salle Bank, Midwest N.A. Bank Loan $3,000,000 fka Standard Federal Bank, N.A. Secured: 2600 West Big Beaver Road $1,025,000 Troy, MI 48084 Unsecured: $1,975,000 Julia Beydoun Debt to former $700,000 26040 Timber Trail spouse Secured: Dearborn Heights, MI 48127 $1,025,000 Unsecured: $700,000 O.W. Larson Co. Bank Loan $24,000 10100 Dixie Highway Clarkston, MI 48346 City of Detroit Tax $11,397 c/o LDC Collection System Secured: P.O. Box 310277 $1,025,000 Detroit, MI 48231-0277 Unsecured: $11,397 PM Environmental Bank Loan $10,000 2655 South Chrysler Drive Hazel Park, MI 48030 C. F & H Oil Co.'s Seven Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ La Salle Bank, Midwest N.A. $3,000,000 fka Standard Federal Bank, N.A. Secured: 2600 West Big Beaver Road $91,464 Troy, MI 48084 Unsecured: $2,908,536 Julia Beydoun $700,000 26040 Timber Trail Secured: Dearborn Heights, MI 48127 $95,510 Unsecured: $700,000 State of Michigan $165,000 430 West Allegan Lansing, MI 48922 Armada Oil & Gas $80,000 13530 Michigan Avenue, Suite 400 Dearborn, MI 48126 O.W. Larson Co. Construction $48,000 10100 Dixie Highway Clarkston, MI 48346 Internal Revenue Service $40,000 P.O. Box 970011 St. Louis, MO 63197-0011 Martin & Snyder $20,000 8880 Hubbell Avenue Detroit, MI 48228 D. F & J Oil Corporation's Eight Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ La Salle Bank, Midwest N.A. Bank Loan $3,000,000 fka Standard Federal Bank, N.A. Secured: 2600 West Big Beaver Road $55,670 Troy, MI 48084 Unsecured: $2,944,330 Julia Beydoun Bank Loan $700,000 26040 Timber Trail Secured: Dearborn Heights, MI 48127 $55,670 Unsecured: $700,000 Robert Abraham $88,000 509 Kinloch Street Dearborn Heights, MI 48127 State of Michigan $80,000 430 West Allegan Lansing, MI 48922 Martin & Snyder Trade Debt $41,000 8880 Hubbell Avenue Detroit, MI 48228 Safiedine Oil Trade Debt $38,000 30401 Utica Road Roseville, MI 48066 Chase Bank Bank Loan $25,000 2320 Ford Road Dearborn Heights, MI 48127 Internal Revenue Service $17,000 Kansas City, MO 64999-0030 E. Property Property, LLC's Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ La Salle Bank, Midwest N.A. Real and Personal $3,000,000 fka Standard Federal Bank, N.A. Property Secured: 2600 West Big Beaver Road $1,200,000 Troy, MI 48084 Unsecured: $1,800,000 G & S Development Real and Personal $750,000 181 Woodcrest Property Secured: Dearborn, MI 48124 $1,200,000 Unsecured: $750,000 Julia Beydoun Real and Personal $700,000 26040 Timber Trail Property Secured: Dearborn Heights, MI 48127 $1,200,000 Unsecured: $700,000 P M Environmental $7,000 2655 South Chrysler Drive Hazel Park, MI 48030 MILLS CORP: Secures March 31 Senior Term Loan Maturity Extension ---------------------------------------------------------------- The Mills Corporation has disclosed that the lenders and Goldman Sachs, as administrative agent, have agreed to extend the maturity date of the company's Senior Term Loan from Dec. 31, 2006, to March 31, 2007, subject to certain conditions, including that the company files its 2005 restated financial statements with the Securities and Exchange Commission by Jan. 31, 2007, and its audited financial statements for the fiscal year ended Dec. 31, 2006 by March 1, 2007. The New York Stock Exchange has further granted the company an additional two-month trading period through March 1, 2007, subject to reassessment on an ongoing basis. Mills also indicated that it is currently targeting filing its 2005 Form 10-K with the SEC by the end of January 2007 and its Form 10-Qs for the first three quarters of 2006 within 45 days after the filing of the 2005 Form 10-K. The company also disclosed that it does not expect to timely file its 2006 audited financial statements due to the delay in completing its 2005 audited financial statements. Headquartered in Chevy Chase, Maryland, The Mills Corporation (NYSE:MLS) -- http://www.themills.com/-- develops, owns, manages retail destinations including regional shopping malls, market dominant retail and entertainment centers, and international retail and leisure destinations. The Company owns 42 properties in the U.S., Canada and Europe, totaling 51 million square feet. In addition, The Mills has various projects in development, redevelopment or under construction around the world. * * * As reported in the Troubled Company Reporter on March 24, 2006, The Mills Corporation disclosed that the Securities and Exchange Commission has commenced a formal investigation. The SEC initiated an informal inquiry in January after the Company reported the restatement of its prior period financials. Mills is restating its financial results from 2000 through 2004 and its unaudited quarterly results for 2005 to correct accounting errors related primarily to certain investments by a wholly owned taxable REIT subsidiary, Mills Enterprises, Inc., and changes in the accrual of the compensation expense related to its Long-Term Incentive Plan. As reported in the Troubled Company Reporter on April 17, 2006, The Mills Limited Partnership entered into an Amendment No. 3 and Waiver to its Second Amended and Restated Revolving Credit and Term Loan Agreement, dated as of Dec. 17, 2004, among Mills Limited, JPMorgan Chase Bank, N.A., as lender and administrative agent, and the other lenders. The agreement provides a conditional waiver through Dec. 31, 2006, of events of default under the facility that are associated, among other things, with: the pending restatement of the financial statements of Mills Corporation and Mills Limited, and the delay in the filing of the 2005 Form 10-K of Mills Corp. and Mills Limited. MIRANT CORP: Has Until February 15 to File Chapter 11 Plan ---------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas extends the exclusive periods within which the Excluded Mirant Corp. and its debtor-affiliates may: (i) adopt Mirant Corporation's Plan of Reorganization or file their own plan until Feb. 15, 2007; and (ii) solicit acceptances of their plan or plans until April 14, 2007. The Excluded Debtors are: -- Mirant NY-Gen, LLC -- Mirant Bowline, LLC -- Mirant Lovett, LLC -- Mirant New York, Inc., and -- Hudson Valley Gas Corporation. Headquartered in Atlanta, Georgia, Mirant Corporation (NYSE: MIR) -- http://www.mirant.com/-- is an energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03- 46590), and emerged under the terms of a confirmed Second Amended Plan on Jan. 3, 2006. Thomas E. Lauria, Esq., at White & Case LLP, represented the Debtors in their successful restructuring. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. The Debtors emerged from bankruptcy on Jan. 3, 2006. (Mirant Bankruptcy News, Issue No. 111; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * Moody's Investors Service assigned its B2 corporate family rating, effective July 13, 2006, on Mirant Corporation MORGAN STANLEY: Moody's Hold Low-B Ratings on Six Cert. Classes --------------------------------------------------------------- Moody's Investors Service upgraded the ratings of two classes and affirmed the ratings of 18 classes of Morgan Stanley Capital I Trust 2003-IQ6, Commercial Mortgage Pass-Through Certificates, Series 2003-IQ6: Class A-1, $18,423,946, Fixed, affirmed at Aaa Class A-2, $45,000,000, Fixed, affirmed at Aaa Class A-3, $83,000,000, Fixed, affirmed at Aaa Class A-4, $470,824,000, affirmed at Aaa Class A-1A, $214,656,967, affirmed at Aaa Class X-1, Notional, affirmed at Aaa Class X-2, Notional, affirmed at Aaa Class X-Y, Notional, affirmed at Aaa Class B, $26,191,000, Fixed, upgraded to Aa1 from Aa2 Class C, $29,932,000, Fixed, upgraded to A1 from A2 Class D, $11,224,000, Fixed, affirmed at A3 Class E, $7,483,000, Fixed, affirmed at Baa1 Class F, $11,225,000, Fixed, affirmed at Baa2 Class G, $7,483,000, Fixed, affirmed at Baa3 Class H, $6,236,000, Fixed, affirmed at Ba1 Class J, $4,989,000, Fixed, affirmed at Ba2 Class K, $2,494,000, Fixed, affirmed at Ba3 Class L, $2,494,000, Fixed, affirmed at B1 Class M, $2,494,000, Fixed, affirmed at B2 Class N, $2,495,000, Fixed, affirmed at B3 As of the Dec. 15, 2006 distribution date, the transaction's aggregate certificate balance has decreased by approximately 4.1% to $956.6 million from $997.7 million at securitization. The Certificates are collateralized by 175 mortgage loans. The loans range in size from less than 1% to 12.5% of the pool, with the top 10 loans representing 44% of the pool. Six loans, representing 3.3% of the pool, have defeased and been replaced with U.S. Government securities. The balance of the pool consists of five shadow rated loans, representing 23.3% of the pool, a group of shadow rated residential co-op loans, representing 12.7% of the pool and a conduit component, representing 60.7% of the pool. There have been no loans liquidated from the pool and there are no loans in special servicing. Thirteen loans, representing 4% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2005 borrower financials for 91.3% of the performing loans and partial year 2006 borrower financials for 26.2% of the performing loans. Moody's loan to value ratio is 81.8%, compared to 85.4% at securitization. Moody's is upgrading Classes B and C due to improved overall pool performance, defeasance and credit support buildup. The largest shadow rated loan is the Mall at Tuttle Crossing Loan at $119.9 million (12.5%), which is secured by the borrower's interest in a 1.1 million square foot regional mall located in Dublin, Ohio, approximately 15 miles north of Columbus. Built in 1997, the center is anchored by Kaufman's, Lazarus, Sears, and J.C. Penney. All of the above tenants own their respective buildings and lease the underlying land. Other major tenants include The Gap, Finish Line, Express, Abercrombie & Fitch and Pottery Barn. As of July 2006, the center's in-line shop occupancy was 94.7%, compared to 88.7% at securitization. The loan is interest only for the first three years but now amortizes on a 360-month schedule. The loan sponsor is General Motors Asset Management. Moody's current shadow rating is A3, compared to Baa1 at securitization. The second largest shadow rated loan is the Westshore Plaza Loan at $32.4 million (3.4%), which represents a 34.7% participation interest in a $93.9 million first mortgage loan. The loan is secured by the borrower's interest in a 1.1 million square foot super-regional mall located in Tampa, Florida. Built in 1967 and renovated in 2000, the mall is anchored by Macy's, J.C. Penney, Sears and Saks Fifth Avenue. All of the above tenants own their respective buildings and lease the underlying land. Other major tenants include The Gap, Bath & Body Works, Bebe, Lerner and The Limited. As of June 2006, the mall's in-line shop occupancy was 96.9%, compared to 92.3% at securitization. Cash flow has increased due to rent and occupancy increases and loan amortization. The loan sponsor is Glimcher Realty Trust. Moody's current shadow rating is A3, compared to Baa2 at securitization. The third largest shadow rated loan is the 3 Times Square Loan at $31.5 million (3.3%), which is secured by a 883,405 square foot, 30-story Class A office building located in the Times Square submarket of New York City. The building's anchor tenant is Reuters Group PLC. As of March 2006 occupancy was 99%, compared to 98.8% at securitization. The loan sponsors are Rudin Times Square Associates and Reuters Property LLC. The loan amortizes on a 218-month schedule. Moody's current shadow rating is Aaa, the same as at securitization. The remaining two shadow rated loans comprise 4.1% of the pool. The 250 West 19th Street Loan at $20.1 million (2.1%) is secured by a 200-unit, 16-story, Class B apartment building built in 1986 and located in the Chelsea submarket of New York City. Moody's current shadow rating is Aa1, compared to Aa2 at securitization. The Country Club Mall Loan at $19.1 million (2%) is secured by a 392,139 square foot regional mall located in Cumberland, Maryland. Moody's current shadow rating is Baa2, compared to Baa3 at securitization. The top three conduit loans represent 14.4% of the pool. The largest conduit loan is the 840 North Michigan Avenue Loan at $59.3 million (6.2%), which is secured by an 87,000 square foot retail property located on the "Magnificent Mile" in Chicago, Illinois. The four-story building was built in 1991 and is located across from Water Tower Place, a regional mall. The three tenants are H&M, Escada and Waterstone. As of June 2006 the property was 100% occupied, the same as at securitization. Moody's LTV is 80.2%, compared to 84.6% at securitization. The second largest conduit loan is the 88 Sidney Street Loan at $40.2 million (4.2%), which is secured by a 145,000 square foot, five-story, Class A biotechnology building located in Cambridge, Massachusetts adjacent to MIT. Built in 2002, the property is 100.0% occupied by Alkermes. Alkermes is a biotechnology company specializing in the development of products based on sophisticated drug delivery technologies. Alkermes posted a $4.2 million letter of credit as additional support for its lease obligations. The loan amortizes on a 300-month schedule. Moody's LTV is 81.4%, compared to 85.8% at securitization. The third largest conduit loan is 609 Fifth Avenue Loan at $37.9 million (4%), which represents a 37.3% participation interest in a $101.8 million first mortgage loan. The loan is secured by a 148,000 square foot mixed use property located in the Rockefeller Center submarket of New York City. The 13-story building is comprised of approximately 69% office space and 31% retail space. Built in 1925 and renovated in 1990, the property is located at the corner of Fifth Ave and 49th Street. The major office tenants are DZ Bank. The retail tenant is American Girl Place Inc. As of March 2006, the property was 98.5% occupied, compared to 98.6% at securitization. The loan was interest only for the first three years, but now amortizes on a 360 month schedule. Moody's LTV is 96.4%, compared to 99.9% at securitization. The pool collateral is a mix of retail, multifamily and manufactured housing, office, residential cooperative, U.S. Government securities and industrial and self storage. The collateral properties are located in 25 states and the District of Columbia. The top five state concentrations are New York, Ohio, Illinois, Florida, and Texas. All of the loans are fixed rate. MORGAN STANLEY: Moody's Holds Junk Rating on Class N Certificates ----------------------------------------------------------------- Moody's Investors Service upgraded the ratings of five classes and affirmed the ratings of eight classes of Morgan Stanley Capital I Inc., Commercial Mortgage Pass-Through Certificates, Series 1999- WF1: Class A-2, $424,866,924, Fixed, affirmed at Aaa Class X, Notional, affirmed at Aaa Class B, $48,425,000, Fixed, affirmed at Aaa Class C, $43,583,000, Fixed, affirmed at Aaa Class D, $9,685,000, WAC, affirmed at Aaa Class E, $29,056,000, WAC, upgraded to Aaa from A3 Class G, $9,685,000, WAC, upgraded to A1 from Ba1 Class H, $19,370,000, Fixed, upgraded to Baa2 from Ba2 Class J, $7,264,000, Fixed, upgraded to Ba1 from Ba3 Class K, $8,232,000, Fixed, upgraded to Ba3 from B1 Class L, $12,107,000, Fixed, affirmed at B2 Class M, $4,842,000, Fixed, affirmed at B3 Class N, $4,843,000, Fixed, affirmed at Caa2 As of the Dec. 15, 2006 distribution date, the transaction's aggregate certificate balance has decreased by approximately 33.2% to $647 million from $968.5 million at securitization. The Certificates are collateralized by 223 mortgage loans ranging in size from less than 1% to 5.6% of the pool, with the top 10 loans representing 25.5% of the pool. Twenty two loans, representing 14.1% of the pool, have defeased and have been replaced with U.S. Government securities. One loan has been liquidated from the pool, resulting in a realized loss of approximately $615,000. Currently there are no loans in special servicing. Twenty eight loans, representing 12.7% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2005 and partial year 2006 operating results for 99% and 74% respectively, of the pool. Moody's loan to value ratio is 62.8%, compared to 70.1% at Moody's last full review in January 2006 and compared to 78.5% at securitization. Moody's is upgrading Classes E, G, H, J and K due to increased subordination levels, improved overall pool performance and defeasance. Classes C, D and E were upgraded on December 8, 2006 based on a Q tool based portfolio review. The top three non-defeased loans represent 11.0% of the outstanding pool balance. The largest loan is the Silvertree Hotel & Wildwood Lodge Loan at $29.7 million (4.6%), which is secured by two adjacent full service hotels located approximately 10 miles northwest of Aspen in Snowmass Village, Colorado. The two properties contain 410 rooms. Although financial performance has declined significantly since securitization there has been modest improvement during the past two years. For the trailing 12-month period ending December 2005 RevPAR was $73.75, compared to $65.57 for calendar year 2004 and compared to $82.60 at securitization. The loan has been on the servicer's watchlist for several years due to low debt service coverage. Moody's LTV is in excess of 100%, the same as at last review. The second largest loan is the Galleria Palms Apartments Loan at $26.0 million (4%), which is secured by a 568-unit apartment complex located in Tempe, Arizona. As of December 2005 the property was 97% occupied, compared to 95% at last review. Moody's LTV is 83.9%, compared to 87.4% at last review. The third largest loan is the Grapevine Town Shopping Center Loan at $15.3 million (2.4%), which is secured by a 187,000 square foot retail center located in approximately 21 miles northwest of downtown Dallas in Grapevine, Texas. The property, which is anchored by Linens-n-Things, Office Depot and Ross Store, is 100% leased. Moody's LTV is 66.2%, compared to 73.9% at last review. The pool's collateral is a mix of multifamily, industrial and self storage, retail, U.S. Government securities, office, lodging and mixed use. The collateral properties are located in 25 states. The highest state concentrations are California, Texas, Colorado, Arizona and Florida. All of the loans are fixed rate. Approximately 67% of the loans in the pool mature within the next 12 months. MORGAN STANLEY: Fitch Holds Rating on Class H Certificates at BB+ ----------------------------------------------------------------- Fitch Ratings upgrades Morgan Stanley Dean Witter Capital I Trust commercial mortgage pass-through certificates, series 2003-HQ2 as: -- $39.6 million class B to 'AAA' from 'AA'; -- $41.9 million class C to 'AA-' from 'A'; -- $9.3 million class D to 'A' from 'A-'; and, -- $9.3 million class E to 'A-' from 'BBB+'. In addition, Fitch affirms these classes: -- $159.4 million class A-1 at 'AAA'; -- $522.2 million class A-2 at 'AAA'; -- Interest-only classes X-1 and X-2 at 'AAA'; -- $10.5 million class F at 'BBB'; -- $8.2 million class G at 'BBB-'; and, -- $14.0 million class H at 'BB+'. Fitch does not rate classes J, K, L, M, N, and O. The upgrades are due to the stable pool performance, scheduled amortization, and 5% defeasance since Fitch's last review. As of the December 2006 distribution date, the pool's aggregate principal balance has decreased 10.1% to $837.1 million from $931.6 million at issuance. A total of six loans have defeased. There are no delinquent or specially serviced loans. At issuance, Fitch considered five loans to have investment grade credit assessments, of which one loan has paid in full. Fitch reviewed operating statement analysis reports and other performance information provided by Wells Fargo Bank, N.A., the master servicer, for the four remaining credit assessed loans. 1290 Avenue of the Americas is secured by a 43-story class A office building totaling 2 million square feet, located in midtown Manhattan, New York. The whole loan was divided into four pari passu notes and a subordinate B-note. The $130 million A-4 and the $35 million A-5 notes serve as collateral in the subject transaction. Occupancy as of June 2006 is 96% compared to 98.7% at issuance. Oakbrook Center is secured by the fee interest in 942,039 square feet of owned retail space, 240,223 sq. ft. of office space in three buildings, and the ground leases for a 172-room Renaissance Hotel, Nordstrom, Neiman Marcus, and a Bloomingdale's Home Store in Oak Brook, Illinois. The whole loan as of January 2007 has an outstanding principal balance of $224.7 million and is divided into four pari passu notes. In-line occupancy as of June 2006 is 93.9% compared to 94.3% at issuance. 52 Broadway is secured by a 399,935 sq. ft. single tenant office property in New York City. The property was 100% occupied as of March 31, 2006, same as at issuance. TruServ Portfolio I is secured by three industrial properties located in Springfield, Oregon, Fogelsville, Pennsylvania, and Kingman, Arizon. As of June 30, 2006, the portfolio is 100% occupied, same as at issuance. MORTGAGE ASSET: Fitch Holds Low-B Ratings on Various Certificates ----------------------------------------------------------------- Fitch Ratings affirmed the ratings on Mortgage Asset Securitization Transactions, Inc.'s residential mortgage-backed certificates: Series 2003-6 Total Pools 1, 2, & 5 thru 9: -- Class A at 'AAA'; -- Class 30-B-2 at 'AA'; -- Class 30-B-4 at 'BBB'; and, -- Class 30-B-5 at 'BB'. Series 2003-6 Total Pools 3 & 4: -- Class A at 'AAA'; -- Class 15-B-2 at 'AA-'; and, -- Class 15-B-5 at 'B+'. Series 2003-7: -- Class A at 'AAA'. Series 2003-9: -- Class A at 'AAA'; and, -- Class B-3 at 'A-'. Series 2004-4 Pool 1: -- Class A at 'AAA'. Series 2004-4 Total Pools 2 & 3: -- Class A at 'AAA'; -- Class B-1 at 'AA'; -- Class B-2 at 'A'; -- Class B-3 at 'BBB'; and, -- Class B-4 at 'BB'. Series 2004-6 Pool 1: -- Class A at 'AAA'; and, -- Class I-B-3 at 'BBB'. Series 2004-6 Total Pools 2 thru 7: -- Class A at 'AAA'; -- Class B-1 at 'AA'; and, -- Class B-3 at 'BBB'. Series 2004-8 Total Pools 1, 2, & 3: -- Class A at 'AAA'. Series 2004-9 Total Pools 1, 5, 6, & 7: -- Class A at 'AAA'. Series 2004-9 Total Pools 2 & 4: -- Class A at 'AAA'; -- Class 30-B-1 at 'AA'; -- Class 30-B-2 at 'A'; -- Class 30-B-3 at 'BBB'; and, -- Class 30-B-4 at 'BB'. Series 2004-9 Pool 3: -- Class A at 'AAA'. Series 2004-10: -- Class A at 'AAA' -- Class B-1 at 'AA'; -- Class B-2 at 'A'; -- Class B-3 at 'BBB'; and, -- Class B-4 at 'BB'. Series 2004-11: -- Class A at 'AAA' -- Class B-1 at 'AA'; -- Class B-2 at 'A'; -- Class B-3 at 'BBB'; -- Class B-4 at 'BB'; and, -- Class B-5 at 'B'. The affirmations, affecting approximately $3.8 billion of the outstanding certificates, reflect a stable relationship between credit enhancement and expected loss. In addition, all of the above transactions have experienced growth in CE and have suffered no losses to date. The collateral of the above transactions consists of conventional, fully amortizing, jumbo-prime, 10-year to 30-year fixed-rate mortgage loans secured by first liens on one- to four-family residential properties and, in some cases, certificates from previous MASTR deals. MASTR 2004-4 Pool 1, is backed by three certificates: MASTR 2003-10 class 3-A-1, which Fitch does not rate, and MASTR 2003-11 classes 1-A-1 and 2-A-1, both of which Fitch rates 'AAA'. MASTR 2004-6 Pool 2, is backed by a pool of 30-year, fixed-rate mortgage loans and MASTR 2003-8 class 1-A-1, which Fitch rates 'AAA.' MASTR 2003-9 Pool 3, is backed by MASTR 2004-6 class 7-A-1, which Fitch rates 'AAA.' The loans collateralizing the MASTR transactions were acquired by UBS from various originators and are master serviced by Wells Fargo Bank Minnesota, N.A., which is rated 'RMS1' by Fitch. As of the December 2006 distribution date, the pool factors range from 41% to 79%. In addition, the transactions are seasoned from 25 months to 42 months. MORTGAGE ASSET: Fitch Holds Rating on Class B-I-4 Certs. at BB -------------------------------------------------------------- Fitch Ratings affirmed the ratings on Mortgage Asset Securitization Transactions, Inc. Alternative Loan Trust's mortgage pass-through certificates: Series 2004-13 Total 1, 2, 4, & 6: -- Class A at 'AAA'; -- Class B-I-1 at 'AA'; -- Class B-I-2 at 'A'; -- Class B-I-3 at 'BBB'; and, -- Class B-I-4 at 'BB'. Series 2004-13 Total 3, 5, & 7-12: -- Class A at 'AAA'. The affirmations, affecting approximately $294 million of the outstanding certificates, reflect a stable relationship between credit enhancement and expected loss. In addition, both of the groups of the above transaction have experienced growth in credit enhancement of at least 1.27x the original CE and have suffered no losses to date. The collateral of the above transaction consists of fully amortizing, 10-year to 30-year fixed-rate mortgage loans extended to Alt-A borrowers and secured by first liens on one- to four- family residential properties. The loans were acquired by UBS from various originators and are master serviced by Wells Fargo Bank Minnesota, N.A., which is rated 'RMS1' by Fitch. As of the December 2006 distribution date, the pool factor for Total 1, 2, 4, & 6 is 74% and for Total 3, 5, & 7-12 is 66%. In addition, the transaction is seasoned 24 months. MT. PLEASANT: Case Summary & Eight Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Mt. Pleasant Partners, LLC c/o Anthony Warren 126 West Stonebrook Mt. Pleasant, IA 52641 Bankruptcy Case No.: 06-03023 Chapter 11 Petition Date: December 29, 2006 Court: Southern District of Iowa (Davenport) Judge: Lee M. Jackwig Debtor's Counsel: James M. Becker, Jr., Esq. Becker Law Office, P.C. 201 South Main Street P.O. Box 602 Mt. Pleasant, IA 52641 Tel: (319) 385-3911 Fax: (319) 385-3993 Total Assets: $838,600 Total Debts: $2,323,196 Debtor's Eight Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Brown Bark I, L.P. Bank Loan $1,874,126 c/o David L. Wetsch, Esq. Secured Value: 974-73rd Street, Suite 20 $817,000 Des Moines, IA 50312 Tel: (515) 223-6000 $31,059 Secured Value: $817,000 Stonebrook Partners, Inc. Trade Debt $224,100 126 West Stonebrook Drive Mt. Pleasant, IA 52641 Henry County Treasurer Trade Debt $98,381 Courthouse Mt. Pleasant, IA 52641 Kinney & Sons Excavating Trade Debt $65,863 1105 West Washington Street Mt. Pleasant, IA 52641 TD&T Financial Group, P.C. Trade Debt $13,691 204 North Main Mt. Pleasant, IA 52641 Robin R. Williams dba Trade Debt $7,960 Modern Applications Drywall Lake Cooper Millwork Trade Debt $4,473 Cady Insurance Trade Debt $3,544 NEWCOMM WIRELESS: Court Sets Feb. 28 Auction for All Assets ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Puerto Rico authorized NewComm Wireless Services Inc. to sell substantially all of its assets to PR Wireless Inc. for $103.2 million, subject to higher and better offers. Under the asset purchase agreement, PR Wireless is liable to pay $3 million if it wins the bidding but fails to consummate the sale, while it stands to get $3.3 million break-up fee if it loses to another bidder. Proceeds from the sale will be used to pay NewComm's secured prepetition debt and fund its network upgrade project that would give it a competitive advantage. Interested parties have until Jan. 28, 2007, to submit bidder qualifications, and until 4:00 p.m. Eastern Time on Feb. 21, 2007, to submit bids. Auction is scheduled on Feb. 28, 2007, at 9:00 a.m. Eastern Time, with location to be determined in or around San Juan, Puerto Rico. The Court will convene a hearing to consider the sale on March 7, 2007, 9:30 a.m. Atlantic Time, at Jose V. Toledo Federal Bldg. And United States Courthouse, 300 Calle Del Recinto Sur, in San Juan, Puerto Rico. Objections to the proposed sale are due Feb. 21, 2007, at 3:00 p.m. Eastern Time. For questions and copies of the bidding procedures and the order approving it are available upon faxed or written request made to counsel to the Debtor: Sonnenschein Nath & Rosenthal LLP 1221 Avenue of the Americas New York City 10020-1089 Fax: 212-768-6800 Based in Guaynabo, Puerto Rico, NewComm Wireless Services Inc. is a PCS company that provides wireless service to the Puerto Rico market. The company is a joint venture between ClearComm, L.P. and Telefonica Larga Distancia. The company filed for chapter 11 protection on Nov. 28, 2006 (Bankr. D. P.R. Case No. 06-04755). Carmen D. Conde Torres, Esq., at C. Conde & Assoc. and Peter D. Wolfston, Esq., at Sonnenschein Nath & Rosenthal LLP represent the Debtor in its restructuring efforts. On Dec. 6, 2006, the United States Trustee for Region 21 appointed a five-member committee of unsecured creditors. When the Debtor filed for protection from its creditors, it reported assets and liabilities of more than $100 million. NEWPARK RESOURCES: Secures New $100 Mil. Revolving Line of Credit ----------------------------------------------------------------- Newpark Resources Inc. has secured a new $100 million revolving line of credit with its current bank group led by JP Morgan Chase Bank, N.A. The new facility replaces the company's current revolving credit facility of $70 million. The maturity date of the new facility is June 25, 2011, which is a three-year extension of the current facility. Additionally, the company may elect to increase the facility, subject to approval by the board of directors and the bank group, by $30 million. Paul Howes, president and chief executive officer, stated, "This new revolving credit facility gives us the liquidity and flexibility to capitalize on the robust drilling market and pursue opportunities in our businesses, both domestically and internationally, over the next several years." Additionally, the company disclosed that all items voted upon at its Dec. 28, 2006, shareholder meeting were approved. The items were the election of nine directors, approval of the 2006 Equity Incentive Plan, approval of an amendment to the 1999 Employee Stock Purchase Plan and ratification of the appointment of Ernst & Young LLP as the company's independent auditor for 2006. Newpark Resources Inc. (NYSE: NR) -- http://www.newpark.com/-- provides drilling fluids, environmental waste treatment solutions, and temporary worksites and access roads for oilfield and other commercial markets. * * * As reported in the Troubled Company Reporter on Oct. 5, 2006, Moody's Investors Service confirmed Newpark Resources Inc.'s B1 Corporate Family Rating and its B2 rating on the company's Senior Secured Guaranteed Term Loan B in connection with the rating agency's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology. NORTHWEST AIRLINES: MAIR Shareholder Balks at Mesaba Purchase Bid ----------------------------------------------------------------- Riley Investment Management LLC has opposed Northwest Airlines Corp.'s proposal for Mesaba Airlines Inc. As a large shareholder of MAIR Holdings, Inc., the owner of Mesaba Airlines, Riley Investment Management LLC believes that Northwest Airlines' proposed offer to acquire Mesaba Airlines in exchange for the allowance of Mesaba $145 million claim against Northwest is grossly inadequate considering the total value of the Mesaba estate to be in excess of $300 million. The company will pursue all avenues to ensure that such a transaction is not consummated. The company's contemplated actions may include any or all of these: filing objections to the creditors' current motion requesting the termination of exclusivity period for filing a plan of reorganization, pursuing litigation against various parties to the transaction, offering our own competing plan of reorganization if exclusivity is terminated, or entering into discussion with MAIR Holdings or other regional carriers. Additionally, Riley would like to note that contrary to what has been stated in the press, Mesaba Airlines has not agreed to any terms of the Northwest agreement. Riley believes this would require board approval at Mesaba as well as board approval at MAIR, neither of which has occurred. Riley believes that Northwest Airlines has destroyed value for MAIR shareholders, Mesaba and Mesaba's employees, enabling Northwest to buy Mesaba below fair market value and avoid fairly paying Mesaba's valid claims in the Northwest bankruptcy. Its unions and the press have unfairly criticized MAIR and Mesaba management for actions Riley believes were forced by Northwest. Northwest's bankruptcy filing and request for new RFPs for additional flying forced Mesaba to subject its employees to new labor contracts so that Mesaba could make attractive proposals to Northwest to continue to fly aircraft. Northwest is now attempting to purchase Mesaba and use this low cost structure as a vehicle to continue and buildup Northwest's regional business with all future value only going to Northwest Airlines. Riley has provided a timeline of events related to the Mesaba bankruptcy and Northwest Airlines. * Prior to Mesaba bankruptcy filing: Mesaba operates a fleet of 63 SAAB-340 and 35 Avro-Regional Jet aircraft for NWA. Trailing twelve-month revenue at Mesaba through 9/30/2005 was $416MM. * Aug. 29, 2005: Northwest signs a new ASA with Mesaba in which MAIR is required to invest $31.7 million into Mesaba. Under the terms, Mesaba would operate 35 AVRO and up to 15 CRJ-200/440 aircraft along with all of the existing 63 SAAB aircraft under a 10-year contract. * Sept. 9, 2005: Bryan Ebensteiner, NWA Director of Airlink Planning, sends an email to MAIR inquiring whether MAIR had made the required $31.7 payment to Mesaba; Mesaba advises NWA that it had made the payment. * Sept. 12, 2005: After it is ensured that liquidity had been provided to Mesaba from MAIR, Northwest fails to make its regular semi-monthly payment to Mesaba of $18.5 million for the second half of August. * Sept. 14, 2005: Northwest files for bankruptcy. Riley finds it hard to imagine that Northwest management did not know that it was contemplating filing for bankruptcy two weeks prior when it signed a new ASA with Mesaba. Shares of MAIR drop from $9.50/share to $4.50/share costing MAIR shareholders $100 million in value. A few days after Northwest files for bankruptcy, Doug Steenland, CEO of Northwest, resigned from the board of directors of MAIR. * Sept. 26, 2005: Northwest failed to make the full semi-annual payment to Mesaba for the first half of September, reducing the payment to $1.9 million. Total missed payments are approximately $36.4 million. * Aug. 16, 2006: Mesaba files a $250 million claim against Northwest Airlines, which does not include the value of its current SAAB business which we value at an additional +$100 million. * Nov. 27, 2006: After Northwest's bankruptcy filing, Mesaba was forced to seek labor concession with its unions in order to continue operations and ensure continued and future business with Northwest. Labor currently has a $22.7 million claim against Mesaba for contract concession. * Dec. 20, 2006: Northwest offers Mesaba a $145 million claim in total to purchase the entire company. In all Riley values the offer at 63% of the value of Mesaba prior to filing for bankruptcy, which ignores incremental value which would have accrued to Mesaba since under the new ASA, where it had rights to operate the next 35 CRJ aircraft in Northwest's regional fleet. * Dec. 22, 2006: Northwest settles with Pinnacle Airlines for a $377.5 million claim and awards Pinnacle a new ASA that allows it to continue flying for Northwest as a standalone public entity. Terms of the new ASA allow Pinnacle to continue to operate all of its existing 124 CRJ-200/440 aircraft plus up to an additional 17 CRJ-200/440 aircraft for 10 years. 15 of these CRJ's were originally promised to Mesaba when they signed their ASA. In all, Riley estimates the value Pinnacle's award to be worth $530 million, which is approximately 135% of the estimated value of its prior contract. In light of the items mentioned, Riley believes that not only is Northwest Airlines not offering fair value for Mesaba, it also pursued a strategy of destroying value in order to purchase Mesaba's at a huge discount to its fair value. At best, Northwest and its executives ignored clear conflict of interest issues (Northwest owns 28% of MAIR and a director of Northwest also sat on MAIR's board) and at worst, fraud occurred. Under the proposed transaction, Northwest stands to reap the entire economic benefit of Mesaba's labor concessions with cheaper flying costs for Northwest going forward, but only after Mesaba and therefore MAIR shareholders pay for the $22.7 million claim owed to Mesaba's labor unions. To be clear, Riley is not opposed to Northwest acquiring Mesaba, as it believes all parties including employees, creditors, customers and shareholders can be made whole under appropriate terms. But Riley is strongly opposed to the offer of $145 million. In light of this, we will continue to pursue any and all strategies that will maximize value for shareholders of MAIR. About Mesaba Aviation Headquartered in Eagan, Minnesota, Mesaba Aviation Inc. dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. 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. OMEGA HEALTHCARE: Earns $14.6 Million in Quarter Ended Sept. 30 --------------------------------------------------------------- Omega Healthcare Investors Inc. reported $14.6 million of net income on $35.2 million of revenues for the quarter ended Sept. 30, 2006, compared with $5.7 million of net income on $27.1 million of revenues for the same period in 2005. The $8.1 million increase in revenues was primarily a result of new investments made throughout 2005 and 2006. The increase in operating revenues from new investments was partially offset by a reduction in mortgage interest income. The $8.9 million increase in net income in the quarter ended Sept. 30, 2006, is principally due to the $8.2 million increase in revenues, the $2.7 million gain on sale of equity securities, the $1.8 million change in fair value of derivatives, and the $1.2 million gain on assets sold, partly offset by the $2.7 million increase in operating expenses and the $3.5 million increase in interest expense. In addition, the company recorded a lower loss from discontinued operations of $33,000 in the current quarter compared to a $1.1 million loss from discontinued operations in the prior period quarter. The increase in operating expenses was primarily due to $2.2 million of increased depreciation expense and $3.6 million of restricted stock expense, partially offset by a 2005 provision for impairment on real estate properties. The increase of $3.5 million in interest expense was primarily due to higher debt and from consolidation of a variable interest entity in 2006. The gain on sale of securities in the third quarter of 2006 relates to the company's sale of its remaining 760,000 shares of Sun's common stock for approximately $7.6 million, realizing a gain on the sale of these securities of approximately $2.7 million. The $1.8 million change in fair value of derivatives relates to the mark-to-market adjustment to reflect the fair value of the company's redeemable convertible preferred stock security in Advocat, a publicly traded company. At Sept. 30, 2006, the company's balance sheet showed $1.2 billion in total assets, $716.6 million in total liabilities, and $466.5 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2006, are available for free at http://researcharchives.com/t/s?181d At Sept. 30, 2006, the company had $157.5 million outstanding under its $200 million revolving senior secured credit facility and $2.5 million was utilized for the issuance of letters of credit, leaving availability of $40.0 million. About Omega Healthcare Headquartered in Timonium, Maryland, Omega HealthCare Investors, Inc. (NYSE:OHI) -- http://www.omegahealthcare.com/-- is a real estate investment trust investing in and providing financing to the long-term care industry. At Sept. 30, 2006, the company owned or held mortgages on 239 skilled nursing facilities and assisted living facilities with approximately 27,446 beds located in 27 states and operated by 33 third-party healthcare operating companies. * * * As reported in the Troubled Company Reporter on June 29, 2006, Fitch upgraded Omega Healthcare Investors' senior unsecured notes to 'BB' from 'BB-' and its preferred stock to 'B+' from 'B'. Additionally, Fitch assigned the company's secured credit facility at 'BB+'. The Outlook on all Ratings is Stable. ON ASSIGNMENT: Buys Oxford Global for $200 Million -------------------------------------------------- On Assignment Inc. signed a definitive agreement to acquire Oxford Global Resources Inc. for $200 million, of which $190 million is in cash and $10 million in common stock. In addition, Oxford shareholders have the opportunity to achieve an earn-out of up to $12 million based on Oxford's 2007 and 2008 performance. The Company intends to utilize its existing cash position and a new $165 million senior secured credit facility it is negotiating to finance the acquisition. The new facility is expected to include a $20 million revolving credit facility and a $145 million term loan facility. The company disclosed that it may achieve an annual after tax savings of approximately $5 million per year over the next 15 years as a result of the election to classify the Oxford transaction as an asset sale for tax purposes under section 338(h)(10) of the IRS code. After the closing of the proposed transaction, On Assignment expects to have approximately $16 million cash on hand. Peter Dameris, president and chief executive officer, said, "Oxford is a well-established, leading player in the large and growing information technology and engineering staffing sectors. Oxford employs a disciplined strategy of focusing on temporary staffing assignments that require high-end skill sets. "The acquisition is a significant fit with On Assignment's growth strategy of operating in strong niche staffing practices with durable business models that are characterized by high bill rates, high and sustainable gross margins and low customer concentration. "As with our recent VISTA acquisition, Oxford adds a growth segment of the professional staffing business that generates higher than industry average bill rates and gross margins with a large, attractive and diverse client base. On Assignment expects, with the acquisitions of Oxford and VISTA, to have pro forma revenues in excess of $520 million for 2006." Mr. Dameris continued, "When we were on the roadshow for our recent follow-on offering in November, we discussed a growth strategy that involved vigorously pursuing growth opportunities in our core Healthcare and Lab Support staffing businesses, and augmenting this growth with acquisitions in other complementary, high-end professional staffing verticals. "I feel we have been very successful in growing our core businesses, having grown consolidated revenues 22% in the first three quarters of 2006. "Pro forma for the Oxford and VISTA acquisitions, our Healthcare (including VISTA) and Lab Support practices will represent roughly two-thirds of our overall revenues and continue to present us with exciting growth opportunities in those areas going forward. "The acquisition of Oxford will augment the growth we are experiencing in our core staffing businesses by providing us with access to the robust IT staffing market, which represents approximately $17 billion-plus of annual spend, and the $6 billion-plus technical/engineering market, both with double digit annual growth. "I believe the collective experience of our management team, in the IT area and in acquisitions, will be invaluable in building shareholder value from this transaction. Having successfully deployed the capital we raised in November, we will now focus the majority of our resources on operating our existing business and supporting the two businesses we have agreed to acquire." UBS Investment Bank is acting as On Assignment's financial advisor and arranging the financing in this transaction. About Oxford Global Resources Headquartered in Beverly, Massachusetts, Oxford Global Resources -- http://www.oxfordcorp.com-- is a leading provider of high-end information technology and engineering staffing services. Founded in 1984, Oxford delivers senior information technology, software and hardware engineering, mechanical, electrical and validation engineering and telecommunications engineering professionals to clients in a wide range of industries. Headquartered in Beverly, Massachusetts, Oxford has 20 offices throughout the United States and an office in Ireland to serve the European market. About On Assignment Headquartered in Calabasas, California, On Assignment, Inc. (Nasdaq: ASGN) is a diversified professional staffing firm providing staffing solutions in specialty skills including Laboratory/Scientific, Healthcare, and Medical, Financial & Health Information Services. The company has approximately 60 branch offices across the United States, the United Kingdom, the Netherlands, and Belgium. * * * As reported in the Troubled Company Reporter on Jan. 5, 2007, Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Calabasas, Calif.-based temporary professional staffing provider On Assignment Inc. The rating outlook is stable. ORION DIVERSIFIED: Posts $9,758 Net Loss in Quarter Ended Oct. 31 ----------------------------------------------------------------- Orion Diversified Technologies Inc. reported a $9,758 net loss for the quarter ended Oct. 31, 2006, compared with a $6,799 net loss for the same period in 2005. The company had no revenues in both periods. At Oct. 31, 2006, the company's balance sheet showed $1.8 million in total assets, $64,007 in total liabilities, and $1.7 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Oct. 31, 2006, are available for free at http://researcharchives.com/t/s?181b Going Concern Doubt Bloom & Co. LLP, in Hempstead, New York, expressed substantial doubt about Orion Diversified Technologies Inc.'s ability to continue as a going concern after auditing the company's financial statements for the years ended April 30, 2006, and 2005. The auditing firm pointed to the company's losses from operations for several years and net capital deficiency. About Orion Technologies Based in New York, New York, Orion Diversified Technologies Inc. (OTC BB: ORDT.OB) was incorporated in 1959. Previously, the company was engaged in real estate investment. Presently Orion Diversified does not have significant operations. The company intends to acquire or merge with a business entity. RADIO ONE: $30 Million Entercom Sale Cues S&P's CreditWatch ----------------------------------------------------------- Standard & Poor's Ratings Services reported that its ratings, including the 'BB-' corporate credit rating, on Radio One Inc. remain on CreditWatch, after the company's disclosure that it completed the sale of radio station WKAF-FM in Boston to Entercom Communications Corp. for $30 million. The ratings were originally placed on CreditWatch with negative implications on Sept. 7, 2006, reflecting concerns of increasing leverage and a weakened credit profile. The Maryland-based radio broadcaster had approximately $973.5 million in debt as of Sept. 30, 2006. The company used the majority of proceeds from the sale to reduce borrowings under its bank credit facility. Still, current leverage is meaningfully higher than our target leverage for the company at the 'BB-' rating level. "Notwithstanding further noncore asset sales, we believe that Radio One has limited ability to significantly deleverage in the intermediate term," said Standard & Poor's credit analyst Michael Altberg. In resolving the CreditWatch listing, Standard & Poor's will assess the company's year-end results and its prospects for reducing leverage and addressing its narrow margin of covenant compliance. RAYMOND PEDDEN: Case Summary & 15 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Raymond A. Pedden 820 Seal Point Drive Redwood City, CA 94065 Bankruptcy Case No.: 06-31234 Chapter 11 Petition Date: December 26, 2006 Court: Northern District of California (San Francisco) Judge: Thomas E. Carlson Debtor's Counsel: James F. Beiden, Esq. Law Offices of James F. Beiden 840 Hinckley Road #245 Burlingame, CA 94010 (650) 697-6100 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million Debtor's 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ MercedesBenz Credit $20,071 P.O. Box 3415 Portland, OR 97208 Drive Financial $18,617 14101 Myford Road FL2 Tustin, CA 92780 Chase Credit card $17,944 600 Community Drive Manhasset, NY 11030 USAA Savings Bank Credit card $10,083 Wells Fargo Bank Credit cars $10,805 Bank of America Credit card $9,287 BOA MBNA Credit card $8,464 Bank of America Credit card $7,816 BOA MBNA Credit card $6,228 AMEX Credit card $5,537 Wells Fargo $5,472 Bank of America Credit card $5,286 Chase Credit card $4,448 Bank of America Credit card $4,158 BOA MBNA Credit card $2,957 RESIDENTIAL ASSET: Fitch Lifts Rating on Class B-2 Certs. to BB- ---------------------------------------------------------------- Fitch Ratings has taken rating actions on these Residential Asset Mortgage Products, Inc. issues: RAMP series 2002-RM1 Group 1: -- Classes A-I-1 to A-I-3, AP-1, AV-1 affirmed at 'AAA'; -- Class M-I-1 affirmed at 'AAA'; -- Class M-I-2 upgraded to 'AAA' from 'AA+'; -- Class M-I-3 upgraded to 'AA' from 'A+'; -- Class B-I-1 upgraded to 'A' from 'A-'; and, -- Class B-I-2 upgraded to 'BBB', from 'BB'. RAMP series 2002-RM1 Group 2: -- Classes A-II, AP-II, AV-II affirmed at 'AAA'; -- Class M-II-1 affirmed at 'AAA'; -- Class M-II-2 affirmed at 'AA+'; -- Class M-II-3 affirmed at 'A+'; -- Class B-II-1 affirmed at 'BBB-'; and, -- Class B-II-2 affirmed at 'B+'. RAMP series 2003-RM1: -- Classes A-2 to A-8, A-8A, A-P, A-V affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'A'; -- Class B-1 upgraded to 'BBB-' from 'BB+'; and, -- Class B-2 upgraded to 'BB-' from 'B+'. RAMP series 2003-RM2 Groups 1 & 2: -- Classes A-I-1 to A-I-6, AP-I, AV-I, A-II, AP-II, AV-II affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'BBB'; -- Class B-1 affirmed at 'BB'; and, -- Class B-2 affirmed at 'B'. RAMP series 2003-RM2 Group 3: -- Classes A-III, AP-III, AV-III affirmed at 'AAA'; -- Class M-III-1 affirmed at 'AAA'; -- Class M-III-2 affirmed at 'AA+'; -- Class M-III-3 affirmed at 'AA-'; -- Class B-III-1 affirmed at 'A'; and, -- Class B-III-2 affirmed at 'BBB'. The upgrades reflect an improvement in the relationship of credit enhancement to future loss expectations and affect about $3.35 million of outstanding certificates, as of the Dec. 26, 2006 distribution date. The affirmations reflect satisfactory CE relationships to future loss expectations and affect about $333 million of outstanding certificates. The collateral in the 2002-RM1 and 2003-RM2 transactions consists of 15 and 30 year fixed-rate mortgage loans secured by first liens on one- to four- family residential properties. The collateral in the 2003-RM1 transaction consists of 30 year fixed-rate mortgage loans secured by first liens on one- to four- family residential properties. Residential Funding Company, LLC, is the master servicer for these loans. As of the Dec. 26, 2006 distribution date, the transactions were seasoned from a range of 43 to 48 months and the pool factors ranged from 16.51% to 40.77%. The upgraded classes benefit from CE three to more than four times the original levels. ROO GROUP: Posts $3.7 Million Net Loss in Quarter Ended Sept. 30 ---------------------------------------------------------------- ROO Group Inc. has filed an amendment to its quarterly report on form 10-QSB for the quarter ended Sept. 30, 2006, originally filed with the Securities and Exchange Commission on Nov. 20, 2006. The amendment was made to correct the presentation in the company's Consolidated Statement of Operations and Comprehensive Loss, and Consolidated Statements of Cash Flows for placement agent fees and the value of placement agent warrants. These have been corrected as an offset against the proceeds of an Aug. 23, 2005, private placement. ROO Group, reported a net loss before income taxes of $3,745,000 for the three months ended Sept. 30, 2006, compared to $3,512,000 for the three months ended Sept. 30, 2005, an increase of $233,000 or 7%. For the nine months ended Sept. 30, 2006, the company incurred a $9,579,000 net loss before income taxes, compared to $6,975,000 for the same period in the prior year. Total net revenue increased by $625,000 from $1,605,000 for the three months ended Sept. 30, 2005 to $2,230,000 for the three months ended Sept. 30, 2006. The company generated $6,024,000 of revenue for the nine months ended Sept. 30, 2006, an increase of 27% compared to revenues of $4,742,000 of revenues recorded for the same period in the prior year. Management attributes the overall revenue increase principally on increasing sales revenue from operations. At Sept. 30, 2006, the company's balance sheet showed $9,220,000 in total assets, $3,980,000 in total liabilities and stockholders' equity of $5,117,000. As of Sept. 30, 2006, the company had working capital of approximately $1,811,000 with a cash balance of $2,269,000. A full-text copy of ROO Group's quarterly report is available for free at http://researcharchives.com/t/s?1829 New CEO In December, ROO Group disclosed the appointment of Lou Kerner as its new Chief Financial Officer. Mr. Kerner will work with senior management to develop new business opportunities for the company. He will be based in New York. "Lou's global experience in both the technology and financial sectors will be a great asset to ROO as we accelerate the company's current global momentum." Said Robert Petty, CEO and Chairman. Former CFO Robin Smyth will continue to focus his time on expanding the company's international operations in Europe and the Asia Pacific regions. As Executive Director, Mr. Smyth will continue to work toward strengthening ROO Group's global presence by expanding additional international operations. Going Concern Doubt As reported in the Troubled Company Reporter on May 29, 2006, Moore Stephens, P.C., in New York, raised substantial doubt about ROO Group's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the company's recurring losses and negative cash flows from operations. About ROO Group ROO Group Inc. -- http://www.roo.com/-- provides digital media solutions and technology that enables the activation, marketing and distribution of digital media video content over the Internet and emerging broadcasting platforms such as set top boxes and wireless. ROO offers turnkey video solutions for businesses seeking to improve their web presence with video broadcasts or broadcast their own latest video clips. SAMSONITE CORP: Earns $8.9 Million in Quarter Ended October 31 -------------------------------------------------------------- Samsonite Corp. reported $8.9 million of net income on $285.9 million of net sales for the quarter ended Oct. 31, 2006, compared with a $3 million net loss on $248.7 million of net sales for the same period in 2005. Sales in all geographic areas increased. Sales from Asian operations increased 43.9%, followed by European operations, Latin America, and North America, with increases of 13.5%, 11.5%, and 7.1%, respectively. In absolute terms, the biggest contributors to the increase in sales were Asian operations followed by European operations, with increases of $15.1 million and 14.5 million, respectively. The increase in sales in Asian operations is primarily driven by increased travel and geographic expansion in the region, particularly in China and India. Licensing revenues decreased to $3.2 million in the third quarter of fiscal 2007 from $3.4 million in the third quarter of fiscal 2006, a decrease of $200,000 primarily due to the termination of one of the company's license agreements. Consolidated gross margin increased by 2.2 percentage points, to 50.7% in the third quarter of fiscal 2007 from 48.5% in the third quarter of fiscal 2006. Operating income increased to 25.6 million in the quarter ended Oct. 31, 2006, compared with $6.9 million in the prior quarter. Income tax expense increased to $7.2 million in the third quarter of fiscal 2007 from a benefit of $400.000 in the third quarter of fiscal 2006. At Oct. 31, 2006, the company's balance sheet showed $653 million in total assets, $668.3 million in total liabilities, and $20.1 million in minority interests in consolidated subsidiaries, resulting in a $35.4 million total stockholders' deficit. Full-text copies of the company's consolidated financial statements for the quarter ended Oct. 31, 2006, are available for free at http://researcharchives.com/t/s?181f At Oct. 31, 2006, the company had cash and cash equivalents of $71.5 million and working capital of $182.9 million. Cash availability under the company's senior credit facility was $35 million in the U.S., and EUR22 million for its European subsidiary at Oct. 31, 2006. At Oct. 31, 2006, the company had $4.6 million of letters of credit outstanding under the U.S. portion of the facility, which reduced the net availability on the U.S. line of credit to $30.4 million. At Oct. 31, 2006, no amounts were outstanding under the European portion of the facility. About Samsonite Samsonite Corp. (OTCBB: SAMC.OB) -- http://www.samsonite.com/-- designs, manufactures and distributes luggage and related consumer products. The company's sells its products using a number of brand names, including SAMSONITE(R) Black Label, SAMSONITE(R), AMERICAN TOURISTER(R), LACOSTE(R) and TIMBERLAND(R). * * * As reported in the Troubled Company Reporter on Dec. 14, 2006, Standard & Poor's Ratings Services assigned a BB- rating on Samsonite Corporation's senior secured facility. As reported in the Troubled Company Reporter on Dec. 13, 2006, Moody's affirmed its B1 corporate family rating for Samsonite Corp. SANKOFA SHULE: Moody's Affirms Caa3 Rating with Negative Outlook ---------------------------------------------------------------- Moody's Investors Service confirmed the Caa3 rating on Sankofa Shule, Michigan, Full Term Certificates of Participation and removed the rating from Watchlist. At this time Moody's has also assigned a negative outlook to the credit, reflecting continuing financial pressures that create significant additional risk for bondholders. The certificates are outstanding in the amount of $2.455 million. The Caa3 rating incorporates the school's tenuous financial position given its precipitous enrollment decline at the beginning of the 2006-2007 school year as well as the increased likelihood that the school's charter will not be renewed beyond its scheduled expiration date of June 30, 2007. In addition, the rating reflects a still fully funded debt service reserve fund that could cover at least a portion of the debt service payments due in the next year. Moody's will continue to monitor Sankofa's enrollment situation as well as the charter reauthorization process over the next several months and expects to review the rating again in three to four months. The loss of students at Sankofa Shule has had a severely negative impact on the school's enrollment-driven state aid payments which make up close to 90% of the school's operating revenues. The certificates are secured by a pledge of 20% of Sankofa's state aid. At current enrollment levels, pledged revenues would not be sufficient to cover debt service. This situation creates concerns that the school will have difficulty meeting its scheduled debt service payments. The presence of a fully funded debt service reserve in the amount of maximum annual debt service does provide some near-term cushion and the school does expect to use at least a portion of the reserve for the next debt service payment on July 1, 2007. Of further concern is the likelihood that Sankofa's charter, authorized by the Central Michigan University board of trustees and scheduled to expire on June 30, 2007, will not be renewed. CMU has indicated in writing that it cannot currently justify reauthorizing the charter contract given Sankofa's recent enrollment declines and weakening financial position. After significant delay, a revised fiscal year 2007 budget for Sankofa was finally adopted on Dec. 18, 2006. On the revenue side, state aid was revised downward to $803,119 from $1,394,250. State aid reflects a blended enrollment figure using attendance figures from February of the prior fiscal year plus September of the current fiscal year. The original budget for fiscal year 2007 incorporated an enrollment figure of 195, similar to fiscal year 2006. However, the blended figure was approximately 109 due to the severe enrollment falloff at the beginning of the new school year. With no improvement in enrollment since early fall the blended figure for fiscal 2008 would be even lower. The fiscal year 2007 budget results in an operating deficit of approximately $127,000 with draws on the General Fund balance as well as a portion of the debt service reserve. Sankofa Shule, located in Lansing, Michigan, is a public school academy operating as a charter school. The school has its own independent board which oversees operations although CMU provides fiscal and administrative oversight, for which it charges a fee of 3% of state school aid. The school's charter has been renewed twice: in August 2000 for five years and in August 2005, but only through June 2007. Sankofa Shule began operation in 1995 with 111 students in grades kindergarten to four, eventually expanding to grade nine. Enrollment fell far short of initial projections that called for 200 students by fiscal 2001. After a dispute over fees, among other issues, the school's original director and management team were replaced during the 2001-2002 school year, after which enrollment dropped to 129 in January 2002. The school continued to have turnover problems, although fiscal year 2006 enrollment reached a high of 196 students. The recent, and steepest, enrollment drop to 82 students followed the departure of the school's second director. A third director was hired during the summer of 2006. The school's COPs are secured by a pledge of 20% of state aid school payments that are distributed by the State of Michigan directly to the trustee via CMU within ten days of receipt. The state aid payments are not subject to annual appropriation. Revenues in excess of the amount required to pay debt service on the certificates and replenish the debt service reserve, if necessary, are returned to the school for operations. The debt service reserve fund is maintained at the required amount of $234,575. Legal provisions also include a pledge of the asset, a building that is completed and occupied by the school, as well as the land. Key facts: -- Enrollment fiscal year 2006: 196 -- Enrollment fiscal year 2007: 82 -- Blended enrollment count fiscal year 2007: 108.75 -- Debt Service Coverage by Pledged Revenues, FY2005: 1.09x -- Debt Service Coverage by Pledged Revenues, FY2006: 1.22x -- Projected Debt Service Coverage by Pledged Revenues, FY2007: 0.68x -- Unrestricted Cash and Investments, FY 2006: $83,071 -- Unrestricted Net Assets, FY 2006: $168,000 -- State aid as % of General Fund Revenues, FY 2006: 87.8% -- Debt Service Funds, FY2006: $302,788 SCOTTISH RE: Shareholder To Vote Against MassMutual/Cerberus Deal ----------------------------------------------------------------- In a letter to the Board of Directors of Scottish Re Group Limited, Grace Brothers Ltd. strongly urged the Board to immediately reconsider alternatives to the transaction disclosed in November between the company, Mass Mutual Capital Partners LLC, and affiliates of Cerberus Capital Management, L.P. Grace Brothers, as beneficial owner of ordinary shares of Scottish Re, has formally advised the Board that it intends to vote against the MassMutual/Cerberus transaction when the transaction is submitted for stockholder approval. Grace Brothers strongly believes that the value of the company would be higher without this dilutive transaction, and that meaningful alternatives exist to maximize stockholder value, including as one example a rights offering in which all shareholders were allowed to participate in recapitalizing the Company on a pro rata basis. Grace Brothers further believes that even if such a rights offering would only raise enough capital to allow the company to undergo an orderly liquidation or a runoff of its assets, the value to existing stockholders would be higher than that resulting from the proposed MassMutual/Cerberus transaction. In its letter, Grace Brothers further indicated its disapproval of the course of action taken by management and its investment bankers. Instead of seeking the best value for existing stockholders, management has accepted a highly dilutive transaction that carries an onerous break-up fee of over $30,000,000, with the stated goal of rebuilding Scottish Re as a "growth" insurance company. Regardless of whether that can be achieved, the transaction almost certainly maximizes returns for new investors at the expense of existing shareholders, and Grace Brothers is at a loss to understand how this course of action is consistent with management's fiduciary duties. The extreme equity dilution as well as other costs associated with the announced transaction make it highly unlikely that the current shareholders will benefit from the transaction. Even with payment of the ill-advised break-up fee, however, Grace Brothers believes other financing alternatives are a better choice from the point of view of the company's owners, the current stockholders. About Scottish Re Group Scottish Re Group Limited -- http://www.scottishre.com/-- provides reinsurance of life insurance, annuities and annuity-type products through its operating companies in Bermuda, Charlotte, North Carolina, Dublin, Ireland, Grand Cayman, and Windsor, England. At March 31, 2006, the reinsurer's balance sheet showed $12.2 billion assets and $10.8 billion in liabilities * * * Moody's Investors Service continues to review the ratings of Scottish Re Group Ltd. with direction uncertain following the announcement by the company that it has entered into an agreement to sell a majority stake to MassMutual Capital Partners LLC, a member of the MassMutual Financial Group and Cerberus Capital Management, L.P., a private investment firm. Ratings under review include Scottish Re Group Limited's senior unsecured debt which is rated at Ba3 and preferred stock rated at B2. Standard & Poor's Ratings Services has also revised the CreditWatch status of its ratings on Scottish Re Group Ltd., Scottish Re's operating companies, and dependent unwrapped securitized deals to positive from negative. Scottish Re has a 'CCC' counterparty credit rating, and Scottish Re's operating companies have 'B+' counterparty credit and financial strength ratings. These ratings were placed on CreditWatch negative on July 31, when Scottish Re announced poor second-quarter results and that liquidity was tight. Fitch Ratings added that Scottish Re Group Ltd.'s ratings remain on Rating Watch Negative following the announcement that SCT has entered into an agreement which will result in a new equity investment into the company of $600 million. SCT's ratings were placed on Rating Watch Negative on July 31, due to concerns regarding the company's ability to repay $115 million of senior convertible notes that are expected to be put to the company on Dec. 6. Ratings on Rating Watch Negative include the company's BB issuer default rating and the BB- rating on its 4.5% $115 million senior convertible notes. A.M. Best Co. has downgraded the Financial Strength Rating to B from B+ and the issuer credit ratings to "bb+" from "bbb-" of the primary operating insurance subsidiaries of Scottish Re Group Limited. A.M. Best has also downgraded the ICR of Scottish Re to "b" from "bb-" and all of Scottish Re's debt ratings. All ratings remain under review with negative implications. SMITTY INVESTMENT: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Smitty Investment Group, LLC dba SIG Management 4816 Lakes Edge Place Garden City, ID 83714 Bankruptcy Case No.: 07-00020 Chapter 11 Petition Date: January 4, 2007 Court: District of Idaho (Boise) Debtor's Counsel: Joseph M. Meier, Esq. Cosho Humphrey, LLP P.O. Box 9518 800 Park Blvd., Ste. 790 Boise, ID 83707 Tel: (208) 344-7811 Fax: (208) 338-3290 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bradshaw Trust Money Loaned $876,157 3529 Plantation River Dr. Boise, ID 83703 Bradshaw Trust Money loaned $691,622 3529 Plantation River Dr. Boise, ID 83703 Reginald Gardner Money loaned $564,100 P.O. Box 817 Marsing, ID 83639 BoDo Partners, LLC Lease arrearage $543,290 c/o Terry Copple P.O. Box 1583 Boise, ID 83701 Lola Pershall Money loaned $350,000 P.O. Box 817 Marsing, ID 83639 Robert C. Clauson Money loaned $300,000 1998 W. Idaho Blvd. Emmett, ID 83617 Jack Helm Money loaned $200,000 3897 W. Elm Road Vale, OR 97918 Robert Smith Money loaned $190,000 2505 E. Meadow Wood Ct. Meridian, ID 83642 NEC Financial Services Leased $169,172 300 Frank W. Burr Blvd. communications Teaneck, NJ 07666 equipment and proceeds Joe and Wilma Rinke Money loaned $165,000 1201 Fox Run Road Homedale, ID 83628 Van H. Allen Money loaned $100,000 1614 S. Loggers Pond Pl. #31 Boise, ID 83706 Joe and Wilma Rinke Money loaned $100,000 1201 Fox Run Road Homedale, ID 83628 Rocky Mountain $48,000 c/o Terry Copple P.O. Box 1583 Boise, ID 83701 Finch Brown Equipment, $42,323 P.O. Box 7542 Inventory, fixtures Boise, ID 83707 & computer equipment ADT Security Services $32,213 909 South Latah Boise, ID 83705 Cole Poe Architects Notice only - $22,153 519 W. Front St. Debtor disputes Boise, ID 83702 liability. Debt of $22,153 owed by Mountain West Realtors, LLC Reed DeMordaunt Judgment entered $22,000 c/o Saetrum Law Offices 10/10/06 in Case P.O. Box 7425 No. CVOC0614267 Boise, ID 83707 American Express Credit card $21,506 c/o United Recovery Systems purchases P.O. Box 722929 Houston, TX 77272 Frontier Communications Unpaid $18,833 c/o Jeffrey Wilson communications P.O. Box 1544 bill for phone in Boise, ID 83701 McCall, Idaho. Judgment entered 10/2/06 in Case No. CVOC0609383 Farmers & Merchants State Credit line $11,000 Bank 703 E. First Street P.O. Box 738 Meridian, ID 83642 SONTRA MEDICAL: To Sell 6 Million Common Shares for $600,000 ------------------------------------------------------------ Sontra Medical Corporation entered into a definitive common stock and warrant purchase agreement with Sherbrooke Partners LLC and certain members of the company's board of directors and management team to issue 6,000,000 shares of common stock for $0.10 per share and two-year warrants to purchase 1,500,000 shares of common stock at an exercise price of $0.21 per share in exchange for $600,000. The closing of the transaction is subject to several conditions, including: (i) completion of delisting of the company's common stock from the NASDAQ Capital Market, expected to occur on Jan. 18, 2007; (ii) satisfactory completion by Sherbrooke Partners of due diligence of the company; (iii) participation in the financing by certain members of the management team and board of directors of the company; and (iv) other customary closing conditions. The purchasers will own approximately two-thirds of the company's outstanding common stock upon completion of the financing. The parties expect that the financing will close on or about Jan. 18, 2007. In connection with the transaction, Thomas W. Davison, PhD, acting chief executive officer, resigned from all positions, including as a member of the Board. Harry G. Mitchell, acting chief financial officer, will become the interim chief executive officer. The company expects Walter Witoshkin, chief executive officer of Quantrx Biomedical Corporation, will be elected to its Board upon closing of the financing. Michael Wigley, chairman of the Board, commented, "We are excited that Sherbrooke Partners sees the strength of our technology and that we have this opportunity to continue Sontra's business and to remain focused on the development and on-going clinical evaluations of our Symphony Continuous Transdermal Glucose Monitor. Harry G. Mitchell will lead the Sontra team to further develop our technology, continue our clinical studies, and obtain the necessary financing that we will require in the future. Sontra has developed an operating plan that should enable the Company to continue operations for approximately one year with its current cash and the amounts the Company expects to receive in this financing." Mr. Wigley, chairman and also the largest current stockholder, along with other members of the Board and management will invest approximately $120,000 in the financing transaction, as required by Sherbrooke Partners as a closing condition. The common stock and warrants to purchase common stock were offered and will be issued solely to accredited investors in a transaction that will be exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, and Regulation D of the Securities Act. As reported in the Troubled Company Reporter on Dec. 29, 2006, the company disclosed that it will cease operations because it has been unable to raise additional capital. Sontra previously said that it had sufficient cash to continue operations until Dec. 31, 2006. In connection with Sontra's decision to cease operations, Sontra has elected to voluntarily delist from the Nasdaq Capital Market. The company has provided a voluntary delisting notice to the Nasdaq Stock Market. About Sontra Medical Based in Franklin, Massachusetts, Sontra Medical Corporation (Nasdaq: SONT) -- http://www.sontra.com/-- develops platform technology for transdermal science. In addition, the company owns technology for transdermal delivery of large molecule drugs and vaccines. SOUNDVIEW HOME: Moody's Rates Class M-10 Certificates at Ba1 ------------------------------------------------------------ Moody's Investors Service assigned an Aaa rating to the senior certificates issued by Soundview Home Loan Trust 2006-EQ2 and ratings ranging from Aa1 to Ba1 to the subordinate certificates in the deal. The securitization is backed by EquiFirst Corporation originated adjustable-rate and fixed-rate subprime residential mortgage loans. The ratings are based primarily on the credit quality of the loans and on the protection against credit losses provided by subordination, excess spread, overcollateralization, an interest rate swap agreement, interest rate cap agreements, and mortgage insurance provided by Mortgage Guaranty Insurance Corp. After taking into account the benefits of mortgage insurance, Moody's expects collateral losses to range from 4.9% to 5.4%. Ocwen Loan Servicing, LLC will service the securitized mortgage loans and Wells Fargo Bank, N.A. will act as master servicer. Moody's has assigned Ocwen Loan Servicing, LLC its servicer quality rating of SQ2- as a primary servicer of subprime residential mortgage loans. Moody's has assigned Wells Fargo Bank, N.A. its top servicer quality rating of SQ1 as a master servicer of residential mortgage loans. These are the rating actions: * Soundview Home Loan Trust 2006-EQ2 * Asset-Backed Certificates, Series 2006-EQ2 Class A-1, Assigned Aaa Class A-2, Assigned Aaa Class A-3, Assigned Aaa Class A-4, Assigned Aaa Class M-1, Assigned Aa1 Class M-2, Assigned Aa2 Class M-3, Assigned Aa3 Class M-4, Assigned A1 Class M-5, Assigned A2 Class M-6, Assigned A3 Class M-7, Assigned Baa1 Class M-8, Assigned Baa2 Class M-9, Assigned Baa3 Class M-10,Assigned Ba1 The Class M-10 certificate was sold in privately negotiated transactions without registration under the Securities Act of 1933 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under Rule 144A. SOUTHERN DATA: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Southern Data Solutions, Inc. 2029B Airport Boulevard Box 103 Mobile, AL 36606 Bankruptcy Case No.: 07-10028 Chapter 11 Petition Date: January 4, 2007 Court: Southern District of Alabama (Mobile) Debtor's Counsel: C. Michael Smith, Esq. Paul and Smith, P.C. 150 South Dearborn St. Mobile, AL 36602 Tel: (251) 433-0588 Fax: (251) 433-0594 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Edwin Rivera Network Access $124,509 2695 Edmund Drive Royalty Gulf Breeze, FL 32563 ($14,770) and loan for working capital and business development ($109,739) PC Connection, Inc. Computer equipment $36,843 730 Milford Road Merrimack, NH 03054 Quickware Qtern software $33,945 2432 West Peoria Avenue provider Suite 1266 Phoenix, AZ 85029 Integrated Data Services Programming $21,671 contract labor GMAC 2002 Chevrolet C $19,698 1500 Suburban (black) Secured Value: $15,000 CompUSA, Inc. Contract labor: $14,625 Technical services GMAC 2003 Saturn Vue $8,989 Secured Value: $8,000 DP Solutions Computer equipment $8,643 AT&T Wireless Cellular telephone $8,102 BellSouth Communication Network routers $7,520 Systems, Inc. Stone, Granade & Crosby P.C. Professional $5,570 services: Legal Comstor/Wescon Computer equipment $4,862 Capital One Bank Revolving charge $3,903 for computer equipment Merritt-Pearson Partnership Office rent $3,160 Alltel Cellular telephone $2,315 Southern Light LLC Equipment hosting $1,800 Office Depot Revolving charge $1,779 for office supplies Intermedia Communications Data circuits $1,687 Inc. BP Oil Revolving charge $1,495 for gasoline and automotive purchases Joseph K. Necaise Employee travel $1,391 expenses STRUCTURED ASSET: Fitch Places Class B5 Certs. on Watch Negative ---------------------------------------------------------------- Fitch Ratings has placed one class of Structured Asset Securities Corp. residential mortgage-backed certificates on Rating Watch Negative and affirmed 11 classes, as: Series 2002-AL1: -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; and, -- Class B5 affirmed at 'B'. Series 2003-AL1: -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; and, -- Class B4 affirmed at 'BB'. -- Class B5 rated 'B' is placed on Rating Watch Negative. The affirmations on the above classes reflect adequate relationships of credit enhancement to future loss expectations and affect approximately $527.9 million of certificates. Then negative rating action, affecting approximately $7.6 million of outstanding certificates, reflects deterioration in the relationship between CE and expected losses. As of the December 2006 distribution date, series 2002-AL1 is 58 months seasoned, and series 2003-AL1 is 46 months seasoned. Cumulative losses as a percent of the original collateral balance are 0.73% and 2.87%, respectively. All classes in series 2002-AL1 and classes A, B1, B2 and B3 in series 2003-AL1 have experienced slight to moderate growth in CE since the closing date. Classes B4 and B5 of series 2003-AL1 have experienced a deterioration of credit support due to higher-than-expected delinquencies and losses. Approximately 4.73% of the pool is more than 60 days delinquent. Monthly losses have averaged approximately $495 thousand for the past six months. Class B4 currently has 6.18% of credit support remaining. Class B5 currently has 2.66% of credit support remaining. Fitch will continue to closely monitor these transactions. The pool factor is 42% for series 2002-AL1 and 49% for series 2003-AL1. The underlying collateral consists of fully amortizing, fixed- rate, first and junior lien disaster home loans. The mortgage loans were originated by the U.S. Small Business Administration to borrowers who incurred losses in a federally recognized disaster. The mortgage loans are master serviced by Aurora Loan Services, Inc., which is rated 'RMS1-' by Fitch. TECHNICAL OLYMPIC: Shareholder Class Action Filed in S.D. Fla. -------------------------------------------------------------- The law firm of Schiffrin Barroway Topaz & Kessler LLP has given notice that a class action lawsuit was filed in the U.S. District Court for the Southern District of Florida on behalf of all securities purchasers of Technical Olympic USA Inc. from Aug. 1, 2005, through Nov. 6, 2006, inclusive. Shareholders of the company may contact Schiffrin Barroway Topaz & Kessler, LLP (Darren J. Check, Esq. or Richard A. Maniskas, Esq.) toll-free at 1-888-299-7706 or 1-610-667-7706. The complaint charges TOUSA and certain of its officers and directors with violations of the Securities Exchange Act of 1934. More specifically, the complaint alleges that the company failed to disclose and misrepresented the following material adverse facts, which were known to defendants or recklessly disregarded by them. The complaint alleges that, throughout the Class Period, defendants failed to disclose: (1) that the company's debt related to its joint venture involving Transeastern Properties, Inc. was not "non- recourse" debt; (2) as such, the company would be liable for full repayment of its Transeastern Joint Venture debt upon the occurrence of certain triggering events, including a declaration of bankruptcy by the joint venture; (3) that, due to a severe slowdown in the housing market, the Transeastern Joint Venture was experiencing significant losses and would be unable to meet its projections; and (4) that, as a consequence of the foregoing, the company would likely lose its investment in the Transeastern Joint Venture, including any loans or receivables owed to it. On June 5, 2006, before the market opened, TOUSA disclosed that the company's second quarter net sales had been negatively impacted due to decreased demand. On this news, shares of TOUSA stock fell $1.61 per share, or 8.9%, to close, on June 5, 2006, at $16.48 per share. TOUSA shares continued to fall the next day, shedding an additional $1.30 per share, or 7.9%, to close, on June 6, 2006, at $15.18 per share. On Sept. 27, 2006, while the market was open, TOUSA declared that the company had met with the lenders to the Transeastern Joint Venture to update them on the financial position of the joint venture and the Florida housing market conditions. TOUSA also reported that the Florida housing market had severely slowed, which "negatively impacted the joint venture's ability to meet its projections." On this news, shares of TOUSA's stock sank $1.47, or 12.1%, to close, on Sept. 27, 2006, at $10.71, on heavy trading volume. On Nov. 6, 2006, after the market closed, the company shocked investors when it revealed in a Form 8-K filed with the SEC that a declaration of bankruptcy by the Transeastern Joint Venture would trigger the Company's obligation to repay its debts related to the joint venture in full. On this news, shares of the company's stock plunged an additional $3.79, or 35.1%, to close, on Nov. 7, 2006, at $7.00, on unusually heavy trading volume. Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Schiffrin Barroway Topaz & Kessler which prosecutes class actions in both state and federal courts throughout the country. Members of the class may, not later than Feb. 12, 2007, move the Court to serve as lead plaintiff of the class. About Schiffrin Barroway Topaz & Kessler Schiffrin Barroway Topaz & Kessler -- http://www.sbtklaw.com/-- is a driving force behind corporate governance reform, and has recovered billions of dollars on behalf of institutional and individual investors from the United States and around the world. About TOUSA Headquartered in Hollywood, Florida, Technical Olympic USA, Inc. (NYSE:TOA) -- http://www.tousa.com/-- is a homebuilder in the United States, operating in various metropolitan markets in 10 states located in four major geographic regions: Florida, the Mid- Atlantic, Texas, and the West. TOUSA designs, builds, and markets high-quality detached single-family residences, town homes, and condominiums to a diverse group of homebuyers, such as "first- time" homebuyers, "move-up" homebuyers, homebuyers who are relocating to a new city or state, buyers of second or vacation homes, active-adult homebuyers, and homebuyers with grown children who want a smaller home. It also provides financial services to its homebuyers and to others through its subsidiaries, Preferred Home Mortgage Company and Universal Land Title, Inc. * * * As reported in the Troubled Company Reporter on Nov. 16, 2006, Moody's Investors Service downgraded all of the ratings of Technical Olympic USA, Inc., including its corporate family rating to B1 from Ba3, senior unsecured notes to B2 from Ba3 and its senior subordinated notes to B3 from B2. At the same time, Moody's lowered the Loss-Given Default assessment and rate on the senior unsecured notes to LGD4, 58% from LGD4, 53%, and on the subordinated notes to LGD5, 88% from LGD5, 87%. The ratings remain on review for downgrade, an action that was commenced on Sept. 27, 2006. TERASEN INC: S&P Pares Corporate Credit Rating to BB- from BBB -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Terasen Inc. to 'BB-' from 'BBB' after the downgrade of its parent, Houston, Texas-based Kinder Morgan Inc., to 'BB-' from 'BBB'. At the same time, the senior unsecured debt rating on Terasen was lowered to 'BB-' from 'BBB-', and the subordinated debt rating to 'B-' from 'BB+'. The ratings on Terasen were removed from CreditWatch, where they were placed May 30, 2006. The outlook is stable. The ratings on Terasen Gas Inc. remain on CreditWatch with negative implications, where they were placed May 30, 2006. TGI has about CDN$1.5 billion of total debt outstanding. "The corporate credit rating on Terasen was equalized with the rating on KMI, reflecting Standard & Poor's consolidated rating methodology," said Standard & Poor's credit analyst Joe Morin. "The ratings on TGI remain on CreditWatch with negative implications pending final review of the degree of regulatory insulation afforded TGI. Our view that the ratings on TGI will remain in the investment-grade category is unchanged; as such, the rating on TGI will either be lowered one notch or affirmed at the current level," Mr. Morin added. By separating the corporate credit ratings on TGI and parent KMI, Standard & Poor's acknowledges the wide differential in the stand- alone credit profiles of the parent and its subsidiary. Standard & Poor's believes that a strong degree of insulation is provided by the British Columbia Utilities Commission at this rating level and that, in general, regulators are more likely to intercede to prevent credit deterioration below the investment- grade level. Standard & Poor's has concluded that TGI will remain in the 'BBB' category, as S&P believes that the utility's credit profile would be unlikely to suffer significant deterioration from the parent's activities. The separation is substantiated by management actions that have been consistent with maintaining the utility's investment-grade credit quality during the time KMI has controlled TGI. More importantly, explicit conditions established in BCUC's order approving KMI's purchase help support investment-grade ratings. The specific conditions that help insulate the utility from KMI include an obligation to maintain a minimum common equity in its capital structure, a requirement for BCUC approval of dividends under certain circumstances, and restrictions on financial and other transactions between the utility and KMI. The stable outlook on Terasen reflects the outlook on parent KMI. KMI is projected to rapidly deleverage its balance sheet in the next three years in order to reach financial metrics that correspond to the ratings. Standard & Poor's considers the deleveraging plan to be achievable through a combination of asset sales, partial sales of equity interests in major subsidiaries, and commitments by KMI shareholders to back up the plan with new equity if the timing or realization of sale proceeds fall short of projections. Any meaningful delays in debt reduction or the emergence of fundamental problems in the business prospects of either KMI or Kinder Morgan Energy Partners L.P., could imperil the outlook or ratings on KMI. TOWER AUTOMOTIVE: Court Okays Increased Equity Investors Payments ----------------------------------------------------------------- The Honorable Allen L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York authorizes Tower Automotive Inc. and its debtor-affiliates to increase the payments permitted by the Diligence Payment Order up to an aggregate of $2,000,000 to induce Prospective Equity Investors and Prospective Lenders to complete the due-diligence necessary to confirm the terms of an Equity Raise or DIP Facility refinancing. The Debtors may pay amounts in excess of the Increased Due- Diligence Amount with either consent of the Creditors Committee or further Court ruling after notice and a hearing. If the Debtors exceed the Increased Due-Diligence Amount, they will file a notice stating the new expenditure amount. The Debtors will give the Creditors Committee five days advance notice of any disbursement of the Increased Due-Diligence Amount. Richard M. Cieri, Esq., at Kirkland & Ellis LLP, in New York, reminded the Court that the Debtors have spent the past several months formulating, negotiating and drafting their proposed Chapter 11 Plan. As part of their Plan, the Debtors will likely need a substantial equity investment, possibly raised through a rights offering, to emerge from bankruptcy. The Debtors are in discussions with numerous parties who may be willing to underwrite, or "backstop" a rights offering as well as parties who may be willing to provide other forms of equity investments, Mr. Cieri related. As previously reported, the Debtors sought and obtained a Court order authorizing them due diligence payments to prospective equity investors in the aggregate amount not to exceed $1,000,000. Mr. Cieri noted that since the Diligence Payment Order was entered, several parties have performed substantial due diligence and have incurred significant fees in connection with it. Most significantly, the Debtors have participated in active and intense negotiations with a group of their current senior bondholders with respect to a commitment letter and term sheet for a backstop to the Equity Raise. Given that the Equity Raise currently contemplated by the Debtors is in the range of hundreds of millions of dollars, Mr. Cieri continued, the diligence parties must perform to evaluate whether the investment is substantial. Accordingly, the diligence fees incurred by these Prospective Equity Investors are collectively reaching the $1,000,000 cap provided for in the Diligence Payment Order. Furthermore, since the Debtors' postpetition credit facility will expire on Feb. 2, 2007, they have begun negotiations with their existing lenders to extend or refinance the DIP Facility, Mr. Cieri noted. The DIP Lenders are beginning the necessary due diligence in connection with the negotiations. Moreover, the Debtors are commencing discussions with other parties who could refinance the DIP Facility. According to Mr. Cieri, the Debtors have given the Official Committee of Unsecured Creditors a notice of all invoices received, and they have received no objection to the reimbursement requests. The Debtors propose giving the Creditors Committee five days advance notice of any disbursements by the Debtors of any portion of the Increased Due-Diligence Amount. The Debtors believe that: (a) the request is necessary to attract the participation of the Prospective Equity Investors and Prospective Lenders; (b) by obtaining the authority to advance funds to Prospective Equity Investors and Prospective Lenders, in the Debtors' discretion, multiple parties may proceed with due diligence efforts on a parallel and competitive basis, which will result in financing commitments on the best possible terms and conditions; (c) An increase in the payment cap to $2,000,000, in the aggregate, to the Prospective Equity Investors and Prospective Lenders is consistent with amounts normally demanded in the marketplace. Creditors Committee's Objection Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, asserted that the request exposes what the Creditors Committee has come to believe is an inherent flaw in the Debtors' search for, and negotiations with, Prospective Equity Investors: the absence of a level playing field and competitive process to ensure that the Debtors obtain financing on the best possible terms and conditions for their estates. Mr. Dizengoff noted that unlike the Debtors' first request for the initial fee reimbursement, the current request is devoid of description as to what efforts the Debtors have taken, if any, to make the process competitive and to explore all possible financing, sale or other business combination options, including the Equity Raise. Rather, the request merely pays lip service to "multiple parties proceed[ing] with due-diligence efforts on a parallel and competitive basis." Additionally, the Debtors concede that instead of negotiating with "numerous" or "multiple" parties, they have focused their negotiations on one group of senior bondholders who have already incurred diligence fees that exceed the $1,000,000 cap authorized by the Diligence Payment Order. Mr. Dizengoff said the Creditors Committee is concerned that the request by the Debtors for the Increased Due-Diligence Amount will only inure to the further benefit of the Bondholder Group, and will be used essentially to tide them over until a request seeking authorization to enter into a binding commitment is filed. The Creditors Committee believed that the request should only be granted with the express limitation that the Increased Due- Diligence Amount may not be used to reimburse other fees incurred by the Bondholder Group -- a limitation that is essential to providing additional Potential Equity Investors with an opportunity to conduct comparable levels of due diligence and then submit a competing offer or proposal to the Debtors. The fact that one group has already incurred $1,000,000 in due- diligence fees only serves to underscore this point, Mr. Dizengoff told Judge Gropper. With respect to the Debtors' request to use a portion of the Increased Due-Diligence Amount to reimburse the fees of Prospective Lenders, the Creditors Committee noted that before the DIP Facility amendments that the Court approved in October 2006, the Committee took the position with the Debtors that they should actively seek to extend or refinance their DIP Facility at that juncture. The Committee believed that success in the Debtors' belated extension or refinancing negotiations can only enhance their ability to attract the best possible offer from Prospective Equity Investors, and provide parties-in-interest with much-needed breathing room to negotiate and reach consensus on a reorganization structure. Accordingly, the Creditors Committee asked the Court to prohibit the Debtors' use of the Increased Due-Diligence Amount to reimburse: (a) the fees incurred by the Bondholder Group; and (b) the fees of the DIP Lenders. Debtors Answer Back Mr. Cieri asserted that the Debtors have been providing the Creditors Committee with frequent updates regarding the status of negotiations relating to the Equity Raise, including information regarding which parties were performing due diligence. Pursuant to the Diligence Payment Order, the Debtors have timely provided the Creditors Committee with copies of all the invoices they have received, and as of Dec. 19, 2006, the Committee has not objected to payment of any of the invoices. "While the Debtors acknowledge that the diligence costs incurred by the Initial Committee Purchasers are substantial, the Debtors note that, as existing bondholders, the Initial Committed Purchasers already possessed significant knowledge regarding the Debtors prior to the beginning of their diligence process," Mr. Cieri told Judge Gropper. "Accordingly, any party performing due diligence on the Debtors 'from scratch' would likely incur more due diligence expense." To ensure that that other parties have a fair opportunity to participate in the due diligence process so that it will result in the best terms and conditions possible for the Equity Raise, the Debtors must have sufficient authority to reimburse additional parties for their due diligence, Mr. Cieri explained. He further asserts that the Diligence Payment Order does not contemplate any of those payments to Prospective Lenders. Contemporaneously with the filing of this reply, the Debtors have filed a request seeking approval to incur certain indemnification obligations, and pay certain fees to a group of their existing bondholders, Mr. Cieri said. The commitment letter and term sheet -- both contained in the request -- outline the terms and conditions under which the Initial Committed Purchasers have agreed to backstop a $250,000,000 rights offering to fund a Reorganization Plan. Mr. Cieri assured that if the Court grants the Debtors' request, the Debtors would continue to provide the Creditors Committee with copies of invoices before payment, and the Committee would still have five days to object to any payments. The Debtors submit that: * The remaining issues raised by the Creditors Committee are not before the Court; and * The fees permitted to be paid under the Diligence Payment Order have been a productive use of estate resources as they have yielded the Commitment Letter and Term Sheet. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 51; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). TOWER AUTOMOTIVE: Wants to Employ Pay Foley & Lardner as an OCP --------------------------------------------------------------- Tower Automotive Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to enter a ruling supplementing the retention and employment of Foley & Lardner LLP as their special labor negotiation counsel under Section 327(e) of the Bankruptcy Code, by permitting the submission of Excess Ordinary Course Professional Fees to the Court and other parties-in-interest for approval, despite the Monthly Fee Cap imposed by the OCP Order. At this time, the Debtors do not ask the Court that Foley be permitted to exceed the OCP Order's aggregate case cap of $450,000 for OCP Work. The scope of Foley's services will be the same as previously authorized in the Employment Order. Following the Court's approval of the Debtors' application to employ Foley & Lardner LLP, as their special labor negotiation counsel, the Debtors asked Foley to provide additional services for matters arising in the ordinary course of the Debtors' businesses. Consequently, the Debtors notified the Court and other parties- in-interest of their intent to employ and compensate Foley as an "ordinary course professional," within the meaning of the Court's March 16, 2005, Order authorizing the employment of ordinary course professionals. Anup Sathy, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, notes that since their bankruptcy filing, the Debtors' needs for Foley's issuance on matters arising in the ordinary course of their businesses have increased. The Debtors' management believes that the attorneys at Foley are well-qualified to act on the Debtors' behalf given their extensive knowledge and expertise in the specific fields in which they are employed. Following expiration of the notice period, contemplated by the OCP Order, in April 2006, Foley was employed, and continues to be compensated, as an ordinary course professional for "certain labor and employment and other commercial matters that arise in the ordinary course of the Debtors' businesses." The OCP Order provides that the Debtors' payment of the fees, excluding costs and disbursements, to each of the professionals will not exceed (a) $25,000 per month, and (b) $450,000, in the aggregate, over the course of the Debtors' reorganization cases. Any payments in excess of the fee caps will not be made by the Debtors without prior authority from the Court. Mr. Sathy relates that for the month of October 2006, and possibly November as well, Foley has exceeded the Monthly Fee Cap by approximately $17,000, largely as a result of services provided for a recent U.S. Equal Employment Opportunity Commission investigation involving the Debtors. Foley will have to request payment of the first $25,000 of the October and possibly November bills in accordance with the OCP Order. The Debtors submit that Foley does not hold or represent any interest adverse to the Debtors or their estates with respect to the matters for which Foley is to be employed. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 51; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). TYRINGHAM HOLDINGS: Disclosure Statement Hearing Set for Jan. 24 ---------------------------------------------------------------- The Honorable Douglas O. Tice, Jr., of the U.S. Bankruptcy Court for the Eastern District of Virginia will convene a hearing at 12:30 p.m., on Jan. 24, 2007, at Judge Tice's Courtroom, 1100 East Main Street, Room 335 in Richmond, Va., to consider approval of the Disclosure Statement explaining Tyringham Holdings Inc.'s Chapter 11 Plan of Reorganization. Overview of the Plan The Debtor's Plan provides for the liquidation of its assets for the benefit of creditors. The Official Committee of Unsecured Creditors will select a Trustee that will take control of the liquidation of these assets. The Trustee will establish a separate fund, which will contain the sale proceeds deposit. Treatment of Claims Professional Fee Claims will be paid in full under the Plan. However, claims by the Official Committee of Unsecured Creditors or advisors arising out on and after Oct. 4, 2006, will be deducted from the creditors' trust. Bank of America's secured claim will receive an amount equal to the outstanding principal, interest, fees, and charges under the DIP financing agreement. BofA will also receive cash, equal to the allowed amount of its collateral from Tyringham Holdings Inc. On Oct. 11, 2006, the Debtor paid $10,773,915 to BofA from the sale proceeds. Thereafter, Tyringham Investments paid $4,496,325 guaranty to BofA. Investments Secured Loan Claim of Tyringham Investments, totaling $4.68 million, secured by a second priority lien on all of the Debtor's assets, will be paid equal to the outstanding principal under the loan. Holders of Miscellaneous Secured Claims will be treated as general unsecured claim. General Unsecured Claims will receive a pro-rata distribution from the proceeds of avoidance actions. In addition, General Unsecured Claims will be paid between 7% and 12% from the claim approximately totaling $9,000,000. Holders of Other Priority Claims against the Debtor will be paid equal to the allowed claim by the Debtor or the creditor's trustee. Holders of Administrative Convenience Claims will be paid a one-time distribution equal to 25% of the allowed amount of the claim or $250. Holders of Equity Interests will get nothing and will be cancelled under the Plan. A full-text copy of Tyringham Holdings Inc.'s Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=070108011140 About Tyringham Holdings Headquartered in Richmond, Virginia, Tyringham Holdings, Inc., sells premium brand name jewelry to a broad base of middle and upper income customers. The Company filed for chapter 11 protection on Sept. 6, 2006 (Bankr. E.D. Va. Case No. 06-32385). Charles A. Dale, III, Esq., at McCarter & English, LLP, represents the Debtor in its restructuring efforts. Scott L. Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represents the Official Committee of Unsecured Creditors. At August 30, 2006, the Debtor disclosed that it had $25.0 million in total assets and $23.7 million in total debts. UNITED HOUSING: Case Summary & 41 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: United Housing II, LLC 4001 Presidential Parkway, Suite 1506 Atlanta, GA 30340 Bankruptcy Case No.: 06-77025 Debtor-affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Zohouri Group Mustang Island, L.P. 06-77027 Zohouri Group South Padre, L.P. 06-77028 Chapter 11 Petition Date: December 31, 2006 Court: Northern District of Georgia (Atlanta) Judge: James Massey Debtors' Counsel: Rodney L. Eason, Esq. The Eason Law Firm, Suite 200 6150 Old National Highway College Park, GA 30349-4367 Tel: (770) 909-7200 Fax: (770) 909-0644 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million A. United Housing II, LLC's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ DeKalb County Tax Commission 2006 Property $11,015 P.O. Box 10004 Taxes Decatur, GA 30031 B. Zohouri Group Mustang Island, L.P.'s 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Nueces County Tax Assessor $511,850 901 Leopard, Room 301 Corpus Christi, TX 78401 FDZ's $153,248 500 Chicon Austin, TX 78702 Morris Architects $124,584 1001 Fannis, Suite 300 First City Power Houston, TX 77002 SWA $90,415 P.O. Box 5904 Sausalito, CA 94966 Haynes Boone $91,213 901 Main Street, Suite 3100 Dallas, TX 75202 Chase Collaborative $24,029 Watershed $22,450 Langley & Banack $21,751 LG Consulting $19,712 Mattox, Terrell & Associates $18,667 Kreps De Maria $15,450 Universal Engineering $12,080 ERIS $11,700 Urbas Engineering $10,542 Jose Lora $6,037 Holdar Engineering $4,345 Browning Bushman P.C. $2,457 AFA Systems $1,092 Verizon $442 Corpus Christi Association $178 C. Zohouri Group South Padre, L.P.'s 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Lyda Swinerton $188,517 55 Waugh Drive, Suite 1200 Houston, TX 77007 FD2's $150,248 500 Chico Austin, TX 78702 Naismith Engineering $127,589 4561 Gollihar Road Corpus Christi, TX 78411 Morris Architects First City $123,340 1001 Fannis, Suite 300 Houston, TX 77002 SWA $90,825 P.O. Box 5904 Sausalito, CA 94966 John Thobe $51,284 Reiss Environmental Consulting $25,168 Haynes Boone $23,282 LG Consulting $19,712 Kreps De Maria $15,461 Decorative Center Houston $10,191 David Dearing, Esq. $10,103 Jose Lora $6,011 Tony Yzaquirre, Jr. $4,735 Chase Collaborative $2,003 Manifest Funding Services $1,465 Integrus Insurance $1,273 MBM Financial Interests, L.P. $1,238 Inter-Tel $1,250 Browning Bushman, P.C. $1,346 US MORTGAGE: Case Summary & 17 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: US Mortgage 5825 West Sahara Avenue Las Vegas, NV 89102 Bankruptcy Case No.: 06-13977 Type of Business: Chapter 11 Petition Date: December 20, 2006 Court: District of Nevada (Las Vegas) Judge: Mike K. Nakagawa Debtor's Counsel: Terry V. Leavitt, Esq. 601 South 6TH Street Las Vegas, NV 89101 Tel: (702) 385-7444 Fax: (702) 385-1178 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ U.S. Bank $3,619,955 P.O. Box 790401 Saint Louis, MO 63179-0401 Wells Fargo Bank Minnesota $2,200,000 9062 Old Annapolis Columbia, MD 21405-1951 Gross Family Trust $348,810 2031 Bannie Avenue Las Vegas, NV 89102 Licking Family Trust $254,875 3940 Gresham Street 122 San Diego, CA 92109 New York Life $183,368 Gordon and Silver Ltd. $114,119 Pitney Bowes $16,100 First American Real Estate $9,850 Deaner and Deaner $8,588 Michael K. Levy, Esq., P.C. $8,100 First American Food Services $7,641 Pitney Bowes Equipment $3,764 System Supply Inc. $3,025 Wells Fargo $1,600 Horizon Business Systems $1,573 Insight $1,265 Eastman Kodak Company $1,171 VICTORIA INGENIERO: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Victoria Ingeniero aka Victoria Sigrist dba Engie's Convenience Mart 4500 Robert Way Richmond, CA 94803 Bankruptcy Case No.: 06-42512 Chapter 11 Petition Date: December 22, 2006 Court: Northern District of California (Oakland) Judge: Edward D. Jellen Debtor's Counsel: Marc Voisenat, Esq. Law Offices of Marc Voisenat 1330 Broadway #1035 Oakland, CA 94612 Tel: (510) 272-9710 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of her 20 Largest Unsecured Creditors. WALTER BEARD: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Walter Beard 2208 Purple Majesty Court Las Vegas, NV 89117 Bankruptcy Case No.: 06-14055 Chapter 11 Petition Date: December 28, 2006 Court: District of Nevada (Las Vegas) Judge: Linda B. Riegle Debtor's Counsel: Rodney K. Okano, Esq. Law Office of Rodney K. Okano 4180 South Rainbow Boulevard, #804 Las Vegas, NV 89103 Tel: (702) 566-3600 Fax: (702) 564-8200 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ American Servicing Co. Conventional Real $665,600 7485 New Horizon Way Estate Mortgage Frederick, MD 21703 Graystone Mortgage Mortgage $316,654 324 Commercial Street Manchester, NH 03101 Saxon Mortgage Service Conventional Real $208,521 4708 Mercantile Drive North Estate Mortgage Fort Worth, TX 76137 Amex Credit card $8,237 American Express Credit card $7,321 Rai/Brendan Diamonds Charge account $2,790 Brendan Diamonds Credit card $2,729 Taylor Association Association fees $2,440 Management New Millennium Bank Credit card $1,693 Tangerine Express, Inx Credit $1,637 New Millennium Bank Credit card $1,129 Consolidated Ventures, Inc. Long distance $815 service SKO Brenner American ADT Security $687 Services, Inc. First Premier Bank Credit card $582 Union Bank Check, Credit or $477 Line of Credit Direct TV Service $360 Allied Coll Med102 Radiology $328 Assoc NV Pb City of Las Vegas Sewer services $262 Dept. of Finance & Business Service Nevada Professional Co. Collection Resort $234 Coronado Ranch EMBARQ Phone service $196 WASTEQUIP INC: Moody's Places Corporate Family Rating at B2 ----------------------------------------------------------- Moody's Investors Service assigned a B2 Corporate Family Rating to Wastequip Inc. Additionally, Moody's assigned a Ba3 rating to the company's proposed $381 million senior secured credit facility. Moody's has not rated the Company's $200 million senior subordinated loan and a $40 million Holdco senior PIK loan. The rating outlook is stable. The ratings are subject to review of the final financing documentation. Ratings Assigned: -- Corporate family rating, B2; -- Probability of default rating, B2; -- $50 million senior secured revolving credit facility due 2012, Ba3, LGD3, 30.2%; and, -- $331 million senior secured first lien term loan due 2013, Ba3, LGD3, 30.2%. Outlook is stable. Odyssey Investment Partners, LLC agreed to acquire Wastequip from DLJ Merchant Banking Partners LLC for $611 million which represents a 7.9 times multiple of the Company's Pro Forma Adjusted EBITDA of $77.4 million for the trailing twelve months ended Dec. 31, 2006. Odyssey intends to finance the acquisition with the abovementioned credit facility, senior subordinated loan, Holdco loan and a $145 million equity contribution. Wastequip's ratings reflect high pro forma leverage at closing, modest cash flow generation relative to debt levels and the operational and financial risks associated with its acquisitive growth strategy. On the other hand, the ratings are supported by Wastequip's unique competitive position as the only supplier with a national footprint in a fragmented waste equipment industry, its track record of relatively stable financial results through the economic cycle and its long-standing relationships with a diverse base of national, regional and local waste haulers. The stable outlook reflects Moody's expectation of solid organic revenue growth and strong operating margins. Moody's believes that demand for the Company's products should remain strong supported by increased spending by the larger haulers coupled with the positive outlook for non-residential fixed investment and durable goods shipments. Wastequip, based in Cleveland, Ohio, is a leading manufacturer of non-mobile equipment used to collect, process and transport waste materials. Pro forma for recent acquisitions, revenues for the fiscal year ended Dec. 31, 2006, totaled approximately $523 million. WEIGHT WATCHERS: S&P Holds Corporate Credit Rating at BB --------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating for New York, New York-based commercial weight-loss service provider Weight Watchers International Inc. At the same time, all WWI ratings were removed from CreditWatch, where they were placed with negative implications on Dec. 20, 2006, reflecting WWI's increasingly aggressive financial policy after the company's disclosure 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. At the same time, Standard & Poor's assigned its 'BB' rating to the company's proposed $700 million term loan A-1 and $500 million term loan B, with a recovery rating of '2', indicating the expectation for substantial recovery of principal in the event of a payment default. Standard & Poor's also lowered the existing bank loan ratings on WWI's $350 million term loan A and $500 million revolving credit facility to 'BB' from 'BB+' and the recovery rating on these facilities to '2' from '1'. The rating outlook is negative. Proceeds from the new $1.2 billion of term loans will be used to finance the tender offer and to repay outstanding debt at wholly owned subsidiary WeightWatchers.com. Artal Luxembourg S.A., WWI's majority shareholder, plans to retain its 55.2% pro rata share of common stock outstanding following the completion of the Dutch auction repurchase. WWI intends 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. Standard & Poor's expects all ratings on WW.com to be withdrawn upon the completion of the planned refinancing of its existing senior secured debt. WILLIAM LEACH: Case Summary & 41 Largest Unsecured Creditors ------------------------------------------------------------ Lead Debtor: William H. Leach Enterprises, Inc. 3642 Apache Street Northwest P.O. Box 830 Uniontown, OH 44685 Bankruptcy Case No.: 06-62712 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Hartville Redi-Mix, Inc. 06-62713 Leach Trucking & Disposal Services, Inc. 06-62714 W.H.L. Leasing, Inc. 06-62715 Chapter 11 Petition Date: December 29, 2006 Court: Northern District of Ohio (Canton) Judge: Russ Kendig Debtors' Counsel: Anthony J. DeGirolamo, Esq. 116 Cleveland Avenue, Northwest Suite 625 Canton, OH 44702 Tel: (330) 588-9700 Fax: (330) 588-9713 Estimated Assets Estimated Debts ---------------- --------------- William H. Leach Less than $10,000 $1 Million to Enterprises, Inc. $100 Million Hartville Redi-Mix, Inc. Less than $10,000 $1 Million to $100 Million Leach Trucking & Disposal Less than $10,000 $1 Million to Services, Inc. $100 Million W.H.L. Leasing, Inc. Less than $10,000 $1 Million to $100 Million A. William H. Leach Enterprises, Inc.'s Two Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Alpine Design $250,000 10689 Cleveland Avenue Northwest Uniontown, OH 44685 Swallen, Lawhun & Co. $3,525 1201 30th Street Northwest Canton, OH 44709 B. Hartville Redi-Mix, Inc.'s 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ St. Mary's Cement $538,962 933 Dearborn Street Detroit, MI 48209 Hilltop Aggregate Inc $154,283 1124 Randolph Road Mogadore, OH 44260 Akron-Canton Waste Oil $102,666 2090 May Road Mogadore, OH 44260 Mcintosh Oil Co $54,970 Massillon Materials Inc $35,081 Heiser Sand & Gravel $31,014 Bureau Of Workers Compensation $20,862 Belden Brick Co. $20,840 Excel Cement Technologies $20,839 Durand Forms Inc. $16,305 Pauli Electric, Inc. $15,597 Schory Cement Products $14,516 National Lime & Stone $10,549 Chas Svec Block Inc $9,485 Swallen Lawhun & Company $8,800 Ameri Gas $8,212 Ziegler Tire $8,059 Degussa Admixtures, Inc. $7,601 Hanson Aggregates Midwest $6,990 Canton Aggregate $6,436 C. Leach Trucking & Disposal Services, Inc.'s 19 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ McIntosh Oil Co $13,178 Rear 2973 Harrisburg Road, Northeast Canton, OH 44705 National Lime & Stone Company $9,931 551 Lake Cascade Parkway Findlay, OH 45839 Wingfoot Commercial Tire Systems $7,699 1266 Starlight Drive Akron, OH 44306 Ziegler Tire-Canton $7,026 Rupp Construction, Inc. $5,577 Lynn Truck Parts & Service Center, Inc. $4,168 Hanson Aggregates Midwest Inc $2,270 J&J Ringer, Inc. $2,000 Ohio Edison $1,804 Tarpco Inc $1,801 Acuity $1,176 Transportation Management Consultants $1,130 Stark C&D Disposal, Inc. $1,000 Hartville Hardware Inc $946 Speedway Superamerica LLC $836 Harsco Multiserv $766 B & S Properites $750 Portable Crushing $726 Sam Winer Motors Inc $720 WINNING EDGE: Posts $668,468 Net Loss in Quarter Ended October 31 ----------------------------------------------------------------- Winning Edge International Inc. reported a $668,468 net loss on $2 million of total revenues for the quarter ended Oct. 31, 2006, compared with a $462,848 net loss on $1.8 million of revenues for the same period in 2005. The increase in revenue resulted from increases in revenues from sports handicapping services and advertising. Sports handicapping services revenues increased to $1.6 million from $1.4 million in the previous quarter. This increase was primarily the result of improved utilization of the company's database and lead sources along with improved training and management of the company's account representatives. Advertising revenues increased to $353,486 from $347,250 in the previous quarter due to the addition of new sponsors for the company's media properties. The increase in net loss is mainly due to higher operating and interest expenses in the current quarter, which more than offset the increase in total revenues. At Oct. 31, 2006, the company's balance sheet showed $1.3 million in total assets and $2.9 million in total liabilities, resulting in a $1.6 million total stockholders' deficit. The company's balance sheet at Oct. 31, 2006, also showed strained liquidity with $1.1 million in total current assets available to pay $2.8 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Oct. 31, 2006, are available for free at http://researcharchives.com/t/s?181c Going Concern Doubt Moore Stephens P.C., in Cranford, New Jersey, expressed substantial doubt about Winning Edge International Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended July 31, 2006. The auditing firm pointed to the company's losses from operations, working capital deficiency and accumulated deficit. About Winning Edge Headquartered in Las Vegas, Nevada, Winning Edge International Inc. (OTC: WNED) primarily develops, produces and markets sports handicapping analysis and information via television, radio and the internet. Majority of sales is related to football and basketball handicapping. * David Sweet's 3-Attorney Team Joins Buchanan Ingersoll & Rooney ----------------------------------------------------------------- Buchanan Ingersoll & Rooney PC disclosed that a three-attorney team led by shareholder David Sweet has joined the firm in its Harrisburg office. Accompanying Mr. Sweet, are shareholder Donna Kreiser and counsel Eloise Frazier, both Republicans, worked for former Pennsylvania Governor Tom Ridge and have significant governmental experience. All three attorneys join the firm from Pepper Hamilton. "While their practice is in a market where we've seen recent growth, it's clear that the addition of this outstanding group will benefit all of our offices in the commonwealth of Pennsylvania. These extremely talented individuals expand our existing government relations and public finance practices, and that growth is in line with the strategic goals we've established on a firmwide basis. We know this will allow us to serve all our clients even better." John Quain, co-head of Buchanan's Harrisburg office and former chairman of the Pennsylvania Public Utility Commission, indicated that the firm anticipated demand for the services the three attorneys have to offer in the region. "Harrisburg continues to be a focal point for growth at Buchanan. We have two centers of practice here - a law center and a government relations center - that allow us room to literally grow and develop our practices." About David Sweet David Sweet is a shareholder in the Harrisburg office of Buchanan Ingersoll & Rooney PC and is a member of the firm's State Government Relations Section. He focuses on administrative and regulatory matters, legislative advocacy and public finance. He is a former member of the Pennsylvania House of Representatives (D-Washington County) from 1977 to 1988 and campaign manager of Ed Rendell's successful run for Pennsylvania governor in 2002. He was chairman of the House Local Government Committee for the 1987- 1988 legislative session. In 1993 to 1994, Mr. Sweet chaired Pennsylvania Gov. Casey's Commission on Corrections Planning and the Pennsylvania Chamber of Business and Industry's State Government Committee. In 1991, he received the County Commissioners Association of Pennsylvania's "Friend of County Government Commendation," He also has received awards from the Pennsylvania League of Cities, the Commission on Crime and Delinquency, the Economic Development Association and the Southwestern Pennsylvania Regional Planning Commission. Mr. Sweet serves on the board of trustees of the University of Pennsylvania, and is vice chair of the board of Pennsylvania Partnerships for Children. He is a member of the American, Pennsylvania and Washington County Bar Associations, the National and Pennsylvania Association of Bond Lawyers and the Pennsylvania Association of Health Care Lawyers. Mr. Sweet received his J.D. degree from the Dickinson School of Law, his M.A. degree from the University of Chicago and his B.A. degree from the University of Pennsylvania. He is admitted to practice in Pennsylvania. About Donna Kreiser Donna Kreiser is a shareholder in the Harrisburg office of Buchanan Ingersoll & Rooney PC and is a member of the firm's State Government Relations Section. She focuses on public and project finance, economic development and real estate matters. As former deputy general counsel in the Pennsylvania Governor's Office of General Counsel, Ms. Kreiser was OGC's chief legal liaison with the Pennsylvania Housing and Finance Agency, the Department of Community and Economic Development, the Pennsylvania Infrastructure Investment Authority and the State Employees' Retirement System. She was OGC's liaison on all public finance transactions, working directly with the issuing agencies. Ms. Kreiser also was chief counsel to the Pennsylvania Historical and Museum Commission, counsel to the first lady's staff and the Governor's Residence and the general counsel's designee on the Board of Finance and Revenue. Before joining the OGC, Ms. Kreiser was associate general counsel and assistant secretary at McCrory Corporation in York, Pennsylvania. She coordinated with bankruptcy counsel during McCrory's Chapter 11 proceeding, including the closing and disposal of more than 500 stores. Appointed by Governor Ed Rendell to serve as commissioner on the Pennsylvania Commission for Women in 2003, she previously served as chairperson of the Commission, having been appointed by then- Governor Tom Ridge in 2001. In 2002, she was appointed by the Senate of Pennsylvania to serve on the board of trustees of the Thaddeus Stevens College of Technology in Lancaster. She is a member of the Board of School Directors of the Columbia Borough School District. Ms. Kreiser is a member of the Pennsylvania and Dauphin County Bar Associations, the National Association of Bond Lawyers and the Pennsylvania Association of Bond Lawyers. She received her J.D. degree from the University of Pittsburgh School of Law and her B.A. degree, magna cum laude, from Shippensburg University. She is admitted to practice in Pennsylvania. About Eloise Frazier Eloise Frazier is counsel in the Harrisburg office of Buchanan Ingersoll & Rooney PC and is a member of the firm's State Government Relations Section. She focuses her practice on the representation of major corporate, health care and environmental clients and is experienced in public finance. With more than 15 years of experience in the Pennsylvania legislature, the Pennsylvania Governor's Office and the U.S. Attorney General's Office, Ms. Frazier served as deputy general counsel for legislation in the first year of Pennsylvania Governor Tom Ridge's administration (1995-96). She has held various positions within the Republican Caucus of the House of Representatives, including several years as director of legislative programs for the Republican leader. In addition to her presence in Pennsylvania government, Ms. Frazier is skilled in legislative and regulatory drafting. She received her J.D. degree from Dickinson School of Law and her B.S. degree, with highest honors, from the Pennsylvania State University. Ms. Frazier is a member of the Pennsylvania and Dauphin County Bar Associations and the Pennsylvania Association of Bond Lawyers. She is admitted to practice in Pennsylvania. About Buchanan Buchanan Ingersoll & Rooney PC -- http://www.buchananingersoll.com -- has more than 550 attorneys and government relations professionals practicing throughout the United States, with offices in Harrisburg, Pittsburgh, Philadelphia, Alexandria, New York, Buffalo, Washington, D.C., Miami, Aventura, Tampa, Wilmington, Princeton, Newark, Cleveland, San Diego and Silicon Valley. Buchanan Ingersoll PC and Klett Rooney Lieber & Schorling PC merged, effective July 1, 2006, to form Buchanan Ingersoll & Rooney PC. Buchanan has undergone a series of acquisitions and additions during the past two years, including: government relations boutique Hill Solutions; a group of nine litigators from Saul Ewing; the 55 attorneys and patent professionals of Burns, Doane, Swecker & Mathis; a team of IP and business litigators in San Diego; a group of three government relations professionals in Washington, D.C.; a group of seven high- profile tax and immigration lawyers in Miami; and the litigation boutique of Slotnick, Shapiro & Crocker in New York. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Accorda Therapeut. ACOR (8) 40 5 AFC Enterprises AFCE (40) 157 4 Affymax Inc. AFFY (114) 61 53 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) 9,777 (400) Carrols Restaurant TAST (104) 497 (25) Centennial Comm CYCL (1,092) 1,422 112 Charter Comm-a CHTR (5,632) 15,198 (999) Choice Hotels CHH (78) 286 (48) Cincinnati Bell CBB (679) 1,889 55 Claymont Stell H PLTE (30) 177 112 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 Dayton Superior DSUP (171) 281 63 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) Double-Take Soft DBTK (54) 19 (2) Echostar Comm DISH (365) 9,352 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 ICO Global C-New ICOG (60) 657 (380) 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 Life Sciences LSR (25) 205 23 Ligand Pharm LGND (239) 232 (162) Lodgenet Entertainment LNET (62) 269 18 Maxxam Inc. MXM (201) 992 26 McMoran Exploration MMR (38) 438 (46) Navisite Inc. NAVI (3) 100 (9) New River Pharma NRPH (65) 170 135 Northwest Airlines NWACQ (7,718) 13,498 659 NPS Pharm Inc. NPSP (182) 237 150 Obagi Medical OMPI (51) 50 12 Omnova Solutions OMN (2) 366 72 ON Semiconductor ONNN (1) 1,417 316 Qwest Communication Q (2,576) 21,114 (1,569) Radnet Inc. RDNT (74) 127 (1) 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, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Marie Therese V. Profetana, Shimero Jainga, Joel Anthony G. Lopez, Robert Max Quiblat, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, Christian Q. Salta, Jason A. Nieva, Lucilo M. Pinili, Jr., Tara Marie A. Martin and Peter A. Chapman, Editors. Copyright 2007. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***