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/raid1/www/Hosts/bankrupt/TCR_Public/070115.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, January 15, 2007, Vol. 11, No. 12 Headlines ADELPHIA COMMS: Effective Date of Plan Extended Until Friday ADVANCED MEDICAL: Buying IntraLase for $808 Million in Cash ADVANCED MARKETING: Wants to Pay $12 Million PGW Publisher Claims ADVANCED MICRO: Shares Drop 10% as Lower Prices Cut Profit ALLIANCE ATLANTIS: Inks CDN$2.3 Billion Deal with CanWest ALLIANCE ATLANTIS: Moody's Changes Direction of Ratings Review ALLIED HOLDINGS: Has Until March 31 to Decide on Leases AMERICAN ACHIEVEMENT: Posts $5.8 M Loss in Quarter Ended Nov. 25 AMERICAN CAMSHAFT: Files Schedules of Assets and Liabilities AMERICAN CAMSHAFT: Hires Carson Fischer as Bankruptcy Counsel AMERICAN REAL: Good Market Conditions Cue Debt Offering Increase AMERICAN REAL: Debt Issuance Prompts S&P to Affirm BB+ Rating AMERICAN ROCK: Mild Weather Prompts S&P's Negative CreditWatch AMR CORP: 4.5% Senior Notes Become Convertible to Common Stock ARAMARK CORP: Fitch to Downgrade Issuer Default Rating to B ASARCO LLC: Court Extends Plan Filing Period to April 6 ASARCO LLC: Has Until May 16 to Decide on Unexpired Leases AXS-ONE INC: AMEX Reviewing Plan of Compliance BEAR STEARNS: Moody's Holds Low-B Ratings on Six Certificates BENJAMIN CASTON: Voluntary Chapter 11 Case Summary BOMBARDIER INC: To Lay Off 170 Business-Jet Jobs in Montreal BOWNE & CO: Board Appoints Marcia Hooper as Director CABLEVISION SYSTEMS: Dolans Raises Private Offer to $30 Per Share CALPINE CORP: Can Transfer Siemens Deal to Greenfield Partnership CANWEST GLOBAL: Buying Alliance Atlantis for CDN$2.3 Billion CANWEST MEDIAWORKS: Moody's Says Direction of Review is Uncertain CAROLINA COUNTRY: Case Summary & 20 Largest Unsecured Creditors CASE FINANCIAL: Chang G. Park CPA Raises Going Concern Doubt CATHOLIC CHURCH: Fund Share and Property Sale Under Spokane Plan CHEF UNO: Voluntary Chapter 11 Case Summary CHENIERE ENERGY: Subsidiary to Launch Underwritten IPO CLEAR CHOICE: Is Insolvent and in Default of Credit Obligations CLIFTON STREET: Fitch Rates EUR12 Million Class H Notes at BB+ CNET NETWORKS: Expects to File Delinquent Reports on January 29 COLLINS & AIKMAN: Court Approves IHDG Litigation Trust Accord COLLINS & AIKMAN: Wants Hayashi Recoupment Claims Pact Approved CORUS HARDWARE: Case Summary & 20 Largest Unsecured Creditors CROWN CASTLE: Unit Inks New $250 Million Revolving Credit Facility CROWN CASTLE: Stockholders Approve Global Signal Merger DANA CORP: Court Approves Assumption of 11 Real Property Leases DANA CORP: Moody's Puts Low-B Ratings on Amended DIP Financing DANA CORP: S&P Rates $1.55 Billion DIP Facilities at BB- DELPHI CORPORATION: Former Employees Can Seek Fee Advancement DELTA AIR: Want Huron to Provide Valuation Services DELTA AIR: Wants Court Approval on Bombardier Letter Agreement D & M LAND: Case Summary & 13 Largest Unsecured Creditors DURA AUTOMOTIVE: U.S. Trustee Objects to Miller Buckfire Retention DURA AUTOMOTIVE: Discloses David L. Harbert's Terms of Employment EASTMAN KODAK: Onex Deal Prompts Moody's to Continue Review EASTMAN KODAK: Onex Deal Prompts S&P's Negative CreditWatch EATON VANCE: Fitch Holds BB Rating on $14 Million Class D Notes ECV DEVELOPMENT: Voluntary Chapter 11 Case Summary ENESCO GROUP: Selling Assets to Tinicum Affiliate Under Chapter 11 ENESCO GROUP: Case Summary & 30 Largest Unsecured Creditors FORD MOTOR: Closing Plants and Cutting Jobs Ahead of Schedule FRIENDLY ICE: Appoints George Condos as President and CEO GATEWAY ACCESS: Case Summary & 20 Largest Unsecured Creditors GENERAL MOTORS: Outlines Priorities for 2007 and Increases CapEx GRANITE BROADCASTING: Moody's to Withdraw Ratings GREEN VALLEY: Moody's Junks Rating on $300 Mil. 2nd Lien Facility GREEN VALLEY: S&P Junks Rating on Proposed $300 Mil. Senior Loan GREENWICH CAPITAL: Fitch Ups Rating on $4.4 Million Certs. to B GUARANTY NATIONAL: Merger Prompts A.M. Best to Withdraw C++ Rating HAROLD OSTENSON: Case Summary & 11 Largest Unsecured Creditors HUNTSMAN CORP: S&P Holds BB- Rating and Removes Positive Watch IMMUNE RESPONSE: Receives $900,000 Payment from NovaRx JACK IN THE BOX: Inks New $625 Million Credit Agreement JACUZZI BRANDS: Extends Solicitation Deadline Until February 6 JAMES MCCLAIN: Case Summary & 11 Largest Unsecured Creditors KL GROUP: Three Hedge Fund Principals Indicted in S.D. Florida KNOLOGY INC: Inks Agreement to Acquire PrairieWave for $255 Mil. LB COMMERCIAL: Fitch Affirms Low-B Ratings on $60.5 Mil. Certs. LENOX GROUP: S&P Downgrades Ratings and Removes Negative Watch LEVEL 3: Lenders Agree to $490 Million Debt-for-Equity Swap MARCAL PAPER: Hires Windels Marx as Special Regulatory Counsel MARCAL PAPER: Court Approves Getzler Henrich as Consultant MEDICAL STAFFING: Case Summary & 46 Largest Unsecured Creditors MEDICAL TECH: Posts $310,501 Net Loss in Quarter Ended Sept. 30 MERRILL LYNCH: Moody's Holds Rating on $1.015 Mil. Certs. at B3 MORGAN STANLEY: Fitch Holds B- Rating on $1.8 Mil. Class N Certs. MOSAIC CO: Expects to File Delinquent Form 10-Q by End of January NAVISTAR INTERNATIONAL: Receives $1.3 Billion Loan Commitment NEWPAGE CORP: Negotiates Senior Secured Credit Facilities Pricing NORTHWEST AIRLINES: Files Plan of Reorganization in New York NORTHWEST AIRLINES: S&P Says Plan Filing Won't Affect Ratings NOVELL INC: Asserts Inevitable Bankruptcy of SCO Group NYU HOSPITALS: Moody's Rates Upcoming $170 Million Bonds at Ba2 OWENS CORNING: MACtac Wants $271,066 Administrative Claims Paid PERFORMANCE TRANSPORTATION: Can Expand FTI's Advisory Services PERKINELMER INC: Completes Euroscreen and Evotec Acquisitions PILGRIM'S PRIDE: Names Wayne Lord as VP of Governmental Affairs POWERCOLD CORP: Williams & Webster Resigns as Auditor REFCO INC: RCM Trustee Withdraws Objection to PlusFunds' Claims REFCO INC: Wants West Loop's Claims Reduced RIGEL CORP: Chapter 7 Trustee Hires KPMG LLP as Tax Accountants RITE AID: Earns $1.1 Million in Third Quarter Ended Dec. 2 ROBERT HEMMER: Case Summary & 20 Largest Unsecured Creditors RODNEY SUMLER: Case Summary & 15 Largest Unsecured Creditors ROYAL CARIBBEAN: Moody's Rates New Euro Senior Notes at Ba1 ROYAL & SUNALLIANCE: Pending Sale Cues A.M. Best to Review Ratings SCO GROUP: Denies Looming Bankruptcy Rumors from Novell SECOND STREET: Voluntary Chapter 11 Case Summary SHAW COMMS: Earns $81.1 Million in First Quarter Ended Nov. 30 SHREWSBURY STREET: Voluntary Chapter 11 Case Summary SIX FLAGS: S&P Holds Negative Watch Despite Sale of Seven Parks SKYEPHARMA PLC: Lehman Europe Share Ownership Totals 10.12% SNOQUALMIE ENTERTAINMENT: S&P Rates Proposed $320 Mil. Notes at B SOVRAN SELF: Earns $9.5 Million in Third Quarter Ended Sept. 30 STALLION OILFIELD: S&P Rates $300 Million Senior Notes at B- STRATUS SERVICES: Gruber & Company LLC Raises Going Concern Doubt STRUCTURED ASSET: Losses Prompts S&P's Negative CreditWatch STRUCTURED ASSET: S&P Junks Rating on Series 2005-S5 Debt SWEETMAN RENTAL: Case Summary & 20 Largest Unsecured Creditors TERAYON COMM: Posts $3.1 Million Loss in Quarter Ended Sept. 30 TERRA CAPITAL: Launches Cash Offering on Senior Secured Notes TITANIUM METALS: Dr. Charles Entrekin Rejoins as President and COO TRANSDIGM GROUP: Buying Aviation Tech. for $430 Million in Cash TRANSDIGM INC: Fitch Puts Subor. Notes' B- Rating on Neg. Watch TRANSDIGM INC: S&P Affirms B+ Corporate Credit Rating UNITED SURGICAL: Merging with UNCN in $1.8 Billion Deal USG CORP: Four Bankruptcy Professionals Want $2.5 Mil. Fees Paid WACHOVIA BANK: Fitch Ups Rating on $6.7 Mil. Class M Certs. to BB W.R. GRACE: Court Okays $13 Million Settlement Pact with IRS * BOND PRICING: For the week of January 8 - January 12, 2006 ********* ADELPHIA COMMS: Effective Date of Plan Extended Until Friday ------------------------------------------------------------ Adelphia Communications Corporation has been informed by the Official Committee of Unsecured Creditors that the Settlement Parties have extended the deadline for the Effective Date contained in Section 12.2(c) of the First Modified Fifth Amended Joint Chapter 11 Plan of Reorganization from Jan. 12, 2007 to Jan. 19, 2007. As reported in the Troubled Company Reporter on Jan 9, 2007 the Honorable Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York confirmed 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 was subject to a stay pending appeal, which would expire on Jan. 16, 2007. If no additional stay is issued, the ACOM Debtors expected the Plan to become effective on Jan. 17, 2007. The occurrence of the Effective Date of the Plan is subject to conditions, many of which are outside the control of Adelphia. There can be no assurance whether or when the Effective Date will occur. 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. ADVANCED MEDICAL: Buying IntraLase for $808 Million in Cash ----------------------------------------------------------- Advanced Medical Optics, Inc., and IntraLase Corp. have entered into a definitive agreement for AMO to acquire IntraLase for approximately $808 million in cash. Under terms of the agreement, approved by the boards of directors of both companies, following the receipt of fairness opinions from their respective financial advisors, AMO will pay $25 in cash per share of IntraLase stock and the individually determined cash value per share of outstanding stock options. AMO has arranged committed financing from a consortium of banks to complete the transaction. AMO expects the transaction to be completed early in the second quarter of 2007. The transaction is subject to IntraLase stockholder approval as well as regulatory approvals and other customary closing conditions. "This acquisition offers significant strategic value by further establishing AMO as the global refractive technology leader, positioning us with a broad range of technologies and expertise to serve the needs of comprehensive refractive practices," said AMO Chairman, President and CEO Jim Mazzo. "We believe the transaction benefits eye care practitioners and their patients by bringing together state-of-the-art technologies to define a new standard of care in laser vision correction. Additionally, we believe the transaction is financially attractive and will create significant operating leverage and growth opportunities, as well as stockholder value." "Besides the value that we believe will be created for both companies' stockholders, we think this transaction provides truly unique opportunities," commented IntraLase President and CEO Robert J. Palmisano. "There will now be the ability to advance our femtosecond laser technology in a coordinated way, both developmentally and commercially, with the world's leading excimer laser technology. Also, this combination provides the opportunity for further innovation and beneficial refinement of LASIK procedures that can and should grow the overall LASIK market." Mr. Palmisano concluded, "I am confident that this combination will provide for better surgical procedures for patients, happier customers and future opportunities for employees." AMO expects the transaction to be dilutive to 2007 adjusted earnings per share and slightly accretive to 2008 adjusted EPS. As a result of this transaction, AMO expects amortization to increase by approximately $30 million on an annualized basis, which would bring the company's total annual amortization to approximately $70 million or about $0.70 per share on an after-tax basis. UBS Investment Bank is acting as lead financial advisor and Goldman Sachs is acting as co-financial advisor to AMO. UBS Investment Bank is acting as lead arranger of a $900 million acquisition facility for AMO. Bank of America and Goldman Sachs are acting as joint-arrangers of the acquisition facility. Bank of America is acting as lead financial advisor and JPMorgan is acting as co-financial advisor to IntraLase. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to AMO. Stradling Yocca Carlson & Rauth is acting as legal advisor to IntraLase. About IntraLase Headquartered in Irvine, California, IntraLase Corp. -- http://www.intralase.com/-- designs, develops, and manufactures an ultra-fast laser that is revolutionizing refractive and corneal surgery by creating safe and more precise corneal incisions. IntraLase is presently in the process of commercializing applications of its technology in the treatment of corneal diseases that require corneal transplant surgery. The company's proprietary laser and disposable patient interfaces are presently marketed throughout the United States and 33 other countries. About Advanced Medical Based in Santa Ana, California, Advanced Medical Optics, Inc. (NYSE: EYE) -- http://www.amo-inc.com/-- develops, manufactures and markets ophthalmic surgical and contact lens care products. AMO employs approximately 3,600 worldwide. The company has operations in 24 countries and markets products in 60 countries including Puerto Rico and Brazil. * * * As reported in the Troubled Company Reporter on Jan. 12, 2007, Moody's Investors Service placed the ratings of Advanced Medical Optics Inc. on review for possible downgrade after the company's disclosure that it has entered into a definitive agreement to acquire IntraLase. The proposed transaction is outside of Moody's expectations that was outlined in its last rating action in June 2006. As reported in the Troubled Company Reporter on Jan. 10, 2007, Standard & Poor's Ratings Services placed its ratings for Advanced Medical Optics Inc., including the 'BB-' corporate credit rating, on CreditWatch with negative implications, reflecting the company's intention to acquire IntraLase Corp. for $808 million. ADVANCED MARKETING: Wants to Pay $12 Million PGW Publisher Claims ----------------------------------------------------------------- Advanced Marketing Services Inc. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to pay, in the ordinary course of business, up to $12,000,000 in prepetition claims of publishers who supply goods and credit critical to the continued operation of Publishers Group West, Incorporated's business. The Debtors want to make the payments to minimize disruption and possible "domino effect" of further insolvencies that could be caused if PGW immediately ceased all payments with respect to the PGW Publisher Claims. The Debtors estimate that PGW owed approximately $36,009,556 to PGW Publishers as of December 31, 2006. Unlike majority of Advanced Marketing Services, Inc.'s publisher creditors, PGW's publisher clients are smaller, independent producers. The Debtors relate that the Distribution Agreements with the PGW Publishers are not "consignments" governed by Article 9 of the Uniform Commercial Code, but rather are true bailments governed by common law. The Debtors tell the Court that they will seek the most advantageous of credit terms possible from each PGW Publisher as a condition of making the payments. At minimum, the Debtors will seek trade credit for postpetition transactions for PGW, on not less than 30-day terms, for new postpetition purchases at least equal to the amount of the PGW Publisher Claims paid. The Debtors also propose that payments made be credited against the ultimate distributions that would otherwise be paid to the PGW Publisher in order of priority -- that is, first, against any allowed administrative claim under Section 503(b)(1) of the Bankruptcy Code; second, against any allowed administrative claims under Section 503(b)(9); and, against any allowed general unsecured claims. If a PGW Publisher refuses to sell books to the Debtors on terms agreed by the parties following payment of any portion of its PGW Publisher Claim, or fails to comply with any trade agreement, the Debtors will seek authority to: -- declare that the parties' trade agreement is terminated; -- declare that any payments made on account of the PGW Publisher Claims be deemed to have been in payment of then -outstanding postpetition claims of that PGW Publisher, without further Court order; and -- recover any payment made to the PGW Publisher, without giving effect to any rights of set-off, claims, provision for payment of reclamation or trust fund claims, or other defense. PGW acts as a warehouser, marketer, and distributor of books for the PGW Publishers pursuant to a series of written marketing and distribution agreements. Upon receipt of an order for certain titles, PGW purchases the books from the PGW Publishers on credit terms and sells them to the third party retailers. PGW is under no obligation to purchase the books held in its warehouses if it receives no orders for those books from third party retailers. For a fee, PGW returns to the PGW Publisher or destroys any books that have become old or unmarketable. A substantial number of PGW Publishers provide PGW with significant trade credit -- up to 90 days between the time PGW purchases the products for further sale, and the time PGW is required to pay the PGW Publishers for the purchase. About Advanced Marketing 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). Suzzanne S. Uhland, Esq., Austin K. Barron, Esq., and Alexandra B. Feldman, Esq., at O'Melveny & Myers, LLP, represent the Debtors. Chun I. Jang, Esq., Mark D. Collins, Esq., Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A., are the Debtors' local counsel. 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. (Advanced Marketing Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ADVANCED MICRO: Shares Drop 10% as Lower Prices Cut Profit ---------------------------------------------------------- Advanced Micro Devices Inc.'s shares dropped nearly 10% Friday after the company warned of substantially lower profits caused by a price war with its bigger rival Intel Corp., Chris Nuttall writes for the Financial Times. AMD disclosed expects revenue, excluding ATI-related segments, for the fourth quarter ended Dec. 31, 2006, to increase approximately three percent from the $1.33 billion reported in the third quarter of 2006. Fourth quarter operating income, excluding ATI-related segments and acquisition-related charges, is expected to be positive but substantially lower than in the third quarter. The company said that its fourth quarter gross margin and operating income were impacted by "significantly lower microprocessor average selling prices, which largely offset a significant increase in unit sales." FT reports that AMD's total expected sales of $1.72 billion for the fourth quarter, including expected revenue of $350 million from the purchase of ATI Technologies, is below analyst expectations of $1.85 billion for the fourth quarter. Bank of America semiconductor analyst Sumit Dhanda expressed the figures as a big miss. Joe Osha, an analyst at Merrill Lynch, warned that AMD might lose money in the first half of 2007 citing competition from rival Intel, slower discovery in its ATI's graphics card business and the need to raise capacity. AMD will report fourth quarter 2006 consolidated results after market close on January 23, 2007. About AMD Based in Sunnyvale, California, Advanced Micro Devices Inc. (NYSE: AMD) -- http://www.amd.com/-- designs and produces innovative microprocessor and graphics and media solutions for the computer, communications, and consumer electronics industries. The company has corporate locations in Sunnyvale, California, Austin, Texas, and Markham, Ontario, and global operations and manufacturing facilities in the United States, Europe, Japan, and Asia. * * * As reported in the Troubled Company Reporter on Oct. 31, 2006, in connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. technology semiconductor and distributor sector, the rating agency affirmed its Ba3 corporate family rating on Advanced Micro Devices, Inc. As reported in the Troubled Company Reporter on Oct. 6, 2006, Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on AMD. The rating agency also assigned its 'BB-' bank loan rating, one notch above the corporate credit rating, and a '1' recovery rating to the company's proposed $2.5 billion senior secured term loan, to be used as partial funding of the acquisition. S&P further raised its rating on the company's $600 million ($390 million outstanding) senior notes to 'B+' from 'B'. ALLIANCE ATLANTIS: Inks CDN$2.3 Billion Deal with CanWest --------------------------------------------------------- CanWest Global Communications Corp. and GS Capital Partners, a private equity affiliate of Goldman, Sachs & Co., reported that a new acquisition company has entered into a definitive agreement with Alliance Atlantis Communications Inc. to acquire all of Alliance's outstanding Class A voting and Class B non-voting shares at a purchase price of CDN$53 per share in cash for an aggregate price of approximately CDN$2.3 billion. "[Wednes]day's transaction is consistent with CanWest's strategy to enhance its existing television business and expand its presence in the fast growing specialty television sector," said Leonard Asper, President & CEO of CanWest. "The combined expertise of CanWest and Alliance Atlantis will enable us to produce even better Canadian content, promote it more effectively, and provide greater access to more viewers across more platforms. We are thrilled to be working with Goldman Sachs to effect this strategic transaction." "I believe this transaction represents great value for our shareholders," said Michael MacMillan, Executive Chairman of Alliance Atlantis. "The combination of CanWest's conventional and specialty television businesses and Alliance Atlantis' 13 specialty television channels creates an excellent foundation for future growth in both businesses." The acquisition of Alliance Atlantis is to be carried out by way of a statutory Plan of Arrangement. The newly formed acquisition company is an indirect wholly owned subsidiary of CanWest. The Arrangement requires a vote by Alliance Atlantis' Class A voting and Class B non-voting shareholders at a meeting of shareholders, which is currently expected to be held in the spring of 2007. Shareholders representing approximately 80% of the Class A voting shares, have agreed to vote their shares of Alliance Atlantis in favor of the shareholders' resolution approving the Arrangement. The Arrangement is also subject to court approval as well as certain other customary conditions, including the receipt of regulatory approvals. Pending approval from the Canadian Radio- television and Telecommunications Commission for the change of ownership and transfer of control of the specialty television channels, the securities of the relevant regulated entities will be deposited with a trustee pursuant to a voting trust agreement approved by the CRTC. A special committee of the Board of Directors of Alliance Atlantis, comprised of Robert Steacy (Chair), Barry Reiter and Anthony Griffiths, has reviewed the Plan of Arrangement in consultation with its legal and financial advisors. The Special Committee unanimously recommends the Plan of Arrangement to the company's Board of Directors, and the Board of Directors unanimously recommends (with one director recusing himself due to conflict) that shareholders vote in favor of the Arrangement. RBC Capital Markets has provided an opinion to the Board of Directors indicating that, as of the date of such opinion, the consideration under the Plan of Arrangement is fair from a financial point of view to the shareholders. A CanWest-controlled company will be the controlling shareholder of Alliance Atlantis following the closing of the transaction (expected to occur by summer 2007). It is intended that a reorganization of Alliance Atlantis will take place to separate the businesses of the Company: -- upon receipt of CRTC approval, Alliance Atlantis' specialty television business and CanWest's Canadian television business will be managed on an integrated basis by CanWest and ultimately combined; -- it is intended that Alliance Atlantis' Motion Picture Distribution business will be controlled by a Canadian partner of GS Capital Partners; and -- it is intended that GS Capital Partners will own 100% of Alliance Atlantis' financial interest in the highly successful CSI franchise. As part of this new relationship with Goldman Sachs, CBS will assume international distribution of CSI, CSI: Miami and CSI: NY. The formal combination of the broadcast businesses will occur sometime in 2011. The equity of each of CanWest and GS Capital Partners in the combined entity will be determined by the EBITDA of the combined operation at that time. There are a variety of customary liquidity mechanisms that will be available to the parties following the combination. "We are looking forward to this relationship with CanWest to support the expansion of its television business and to facilitate the combination of two great Canadian media companies," said Gerry Cardinale, a Managing Director of GS Capital Partners. CanWest was advised by Genuity Capital Markets and GS Capital Partners was advised by Goldman, Sachs & Co. Alliance Atlantis was advised by RBC Capital Markets. About CanWest CanWest Global Communications Corp. -- http://www.canwestglobal.com/-- is Canada's largest media company. CanWest is Canada's largest publisher of daily newspapers and also owns, operates or holds substantial interests in conventional television, out-of-home advertising, specialty cable channels, web sites and radio stations and networks in Canada, New Zealand, Australia, Turkey, Singapore, Indonesia, Malaysia, the United Kingdom and the United States. About Alliance Atlantis Headquartered in Toronto, Canada, Alliance Atlantis Communications Inc. -- http://www.allianceatlantis.com/-- is a specialty channel broadcaster with a 50% ownership interest in the CSI TV franchise. The company has worldwide offices in the United Kingdom, Spain and Australia. * * * As reported in the Troubled Company Reporter on Jan. 12, 2007, Standard & Poor's Ratings Services reported that the ratings on Alliance Atlantis Communications Inc., including the 'BB' long- term corporate credit rating, remain on CreditWatch. The implications, however, have been revised to negative from developing. The ratings were first placed on CreditWatch with developing implications Dec. 20, 2006, after Alliance Atlantis' disclosure that it is exploring strategic alternatives, namely the possible sale of the entire company. ALLIANCE ATLANTIS: Moody's Changes Direction of Ratings Review -------------------------------------------------------------- Moody's Investors Service placed all long term ratings of CanWest MediaWorks Inc. under review direction uncertain and changed the direction of its current ratings review of Alliance Atlantis Communications Inc. to down from up. The rating actions follow the announcement made jointly by the companies that CanWest's parent, CanWest Global Communications Corp. and Goldman Sachs Capital Partners have reached an agreement to acquire AACI in a transaction valued at roughly $2.6 billion. The transaction will initially see CanWest contribute cash of $132 million into a new entity to own a 17% equity interest in AACI 's specialty broadcasting channels. CanWest will also have the option to contribute an additional $70 million to increase its equity interest. There will be future mechanisms for CanWest to increase its stake in the specialty channels beginning in 2011 when CanWest will contribute its Canadian broadcasting assets to newco in exchange for an increased ownership of that entity, which the company currently believes may then approximate 50%. CanWest will not have any interest in either the CSI TV franchise or Movie Distribution business currently owned by AACI. The transaction remains subject to shareholder approval and regulatory rulings. It is expected to close in the summer of 2007. While CanWest's initial cash investment is relatively small, Moody's is concerned that the transaction may eventually increase CanWest's leverage to levels above previous expectations. On the other hand, CanWest continues to review the strategic alternatives for its assets in the South Pacific, which Moody's believes could be sold for significant value and used to reduce leverage. The ratings review for CanWest will focus on the likelihood that the AACI transaction will be completed, the potential for some or all of its assets in the South Pacific to be sold, as well as the expected change to CanWest's overall capital structure, cash flows and strategic direction that may result. The direction of the review of AACI's rating was changed to down as it appears likely that AACI will be acquired by a more highly levered entity, superseding the previous review for possible upgrade, which was largely based on AACI's strengthening fundamentals. The review of AACI's ratings will focus on the potential for the transaction to be completed, or alternatives AACI may pursue in the event it is not acquired as is now currently expected. Moody's noted that should the acquisition of AACI by CanWest and GSCP be completed as announced, AACI's rated debt will likely be repaid pursuant to a Change of Control clause in its bank agreement and its debt ratings withdrawn. CanWest ratings placed under review direction uncertain: Corporate Family Rating, Ba3 Probability-of-Default rating, Ba3 Senior Subordinate rating, B2 Loss-Given-Default rating for Senior Subordinate debt, LGD5 (87%) AACI ratings placed under review down: Corporate Family Rating, Ba2 Probability-of-Default rating, Ba3 Senior Secured rating, Ba1 Loss-Given-Default rating for Senior Secured debt, LGD2 (26%) CanWest MediaWorks Inc. is a communications holding company based in Winnipeg, Manitoba Canada, with interests in TV, radio and publishing operations in Canada, Australia, New Zealand, and other international locations. Alliance Atlantis Communications Inc., headquartered in Toronto, Canada, is specialty channel broadcaster with a 50% ownership interest in the CSI TV franchise. ALLIED HOLDINGS: Has Until March 31 to Decide on Leases ------------------------------------------------------- The Honorable Coleman Ray Mullins of the U.S. Bankruptcy Court for the Northern District of Georgia granted Allied Holdings Inc. and its debtor-affiliates a 98-day extension of their deadline to assume, assume and assign or reject all non-residential real property leases through and including March 31, 2007. As reported in the Troubled Company Reporter on Dec. 5, 2006, the Debtors told the Court that they continue to be lessees to 51 non- residential real property leases. The Debtors reasoned that they need additional time to continue paying all postpetition lease obligations under the Leases, and to determine whether the Leases should be assumed or rejected. A list of the 51 Leases is available for free at: http://researcharchives.com/t/s?164a About Allied Holdings Based in Decatur, Georgia, Allied Holdings Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/ or 215/945-7000) AMERICAN ACHIEVEMENT: Posts $5.8 M Loss in Quarter Ended Nov. 25 ---------------------------------------------------------------- American Achievement Corp. reported a $5.8 million net loss on $52.8 million of sales for the first quarter ended Nov. 25, 2006, compared with a $3.7 million net loss on $58.4 million of sales for the same period ended Nov. 26, 2005. The increase in net loss is primarily due to the decrease in net sales attributable to decreases in yearbook, graduation products and achievement publications sales, partly offset by the increase in class rings sales and in affinity jewelry sales. At Nov. 25, 2006, the company's balance sheet showed $502.5 million in total assets and $374.8 million in total liabilities, resulting in a $127.7 million total stockholders' equity. Full-text copies of the company's consolidated financial statements for the first quarter ended Nov. 25, 2006, are available for free at http://researcharchives.com/t/s?1861 Liquidity and Capital Resources Operating activities provided $6.4 million of cash for the quarter ended Nov. 25, 2006, compared to cash provided of $3 million for the quarter ended Nov. 26, 2005. The $3.4 million increase in cash provided by operating activities was mainly attributable to lower working capital requirements. Capital expenditures for the quarter ended Nov. 25, 2006, were $2.3 million compared to capital expenditures of $2.7 million for the quarter ended Nov. 26, 2005. Financing activities used cash of $5.1 million for the quarter ended Nov. 25, 2006, compared to cash provided of $3.8 million for the quarter ended Nov. 26, 2005. During the quarter ended Nov. 25, 2006, the company paid down $3.2 million of the revolver of the Senior Credit Facility. About American Achievement Austin, Texas-based American Achievement Corporation -- http://www.cbi-rings.com/-- is an indirect wholly owned operating subsidiary of AAC Group Holding Corp. American Achievement provides products associated with graduation and important event commemoration, including class rings, yearbooks, graduation products, achievement publications and affinity jewelry through in-school and retail distribution. American Achievement's brands include: Balfour and ArtCarved, providers of class rings and graduation products; Educational Communications, Inc., publisher of Who's Who Among American High School Students(R); Keepsake Fine Jewelry; and Taylor Publishing, publisher of yearbooks. AAC has 1,840 employees and is majority-owned by Fenway Partners Capital Fund II, L.P. * * * As reported in the Troubled Company Reporter on Oct. 31, 2006, Moody's Investors Service revised its probability-of-default rating on American Achievement Corporation's $150 million senior subordinated notes due 2012 from B2 to B1. Moody's also assigned an LGD3 rating on said notes. AMERICAN CAMSHAFT: Files Schedules of Assets and Liabilities ------------------------------------------------------------ American Camshaft Specialties Inc. and its debtor-affiliates delivered its Schedules of Assets and Liabilities with the U.S. Bankruptcy Court for the Eastern District of Michigan disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $1,004,640 C. Property Claimed as Exempt D. Creditors Holding $11,666,897 Secured Claims E. Creditors Holding $0 Unsecured Priority Claims F. Creditors Holding $1,614,835 Unsecured Nonpriority Claims ----------- ----------- Total $1,004,640 $13,281,732 About American Camshaft American Camshaft Specialties Inc. is located at the southwest corner of M-45 and U.S. 31, includes two plants - ACS Grand Haven, which is solely owned by Asimco Technologies, and a joint venture between Nippon Piston Ring and ACS Inc. Asimco Technologies -- http://www.asimco.com/-- is headquartered in Beijing, China, and produces a wide range of power train, chassis and diesel fuel injection products for light duty and commercial vehicle applications. Asimco assembles semi-fully finished cast, steel and assembled camshafts. Aside from its U.S. operations, Asimco has 18 manufacturing facilities and 52 sales offices in China and one regional office in Europe and Japan. Asimco's major customers are automotive-based, such as DaimlerChrysler, Ford, GM, Cummins and CAT. American Camshaft and three other U.S. affiliates filed for chapter 11 protection on Dec. 9, 2006 (Bankr. E.D. Mich. Lead Case No. 06-58298). When the Debtors filed for protection from their creditors they listed estimated assets and debts between $10 million and $50 million. AMERICAN CAMSHAFT: Hires Carson Fischer as Bankruptcy Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Michigan allowed American Camshaft Specialties Inc. and its debtor- affiliates to employ Carson Fischer, P.L.C., as its bankruptcy counsel. Carson Fischer will: a) provide information to the Debtors with regard to their duties and responsibilities as Debtors-in-Possession; b) assist in the preparation of schedules and statements of affairs; c) assist in the preparation of financial statements, balance sheets, and business plans; d) pursue any and all of the Debtors' claims against third parties, including, but not limited to, preferences, fraudulent conveyances, and accounts receivable; e) represent the Debtors with regard to any actions brought against them by third parties in the bankruptcy proceeding; f) assist in the negotiations with secured, unsecured, and priority creditors and prepare a plan of reorganization with a likelihood of confirmation; and g) obtain confirmation of a plan. The firm's professionals bill: Designation Hourly Rate ----------- ----------- Partners $335 - $495 Associates $150 - $300 Legal Assistants $110 Law Clerks $95 To the best of the Debtors' knowledge, Carson Fischer is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About American Camshaft American Camshaft Specialties Inc. is located at the southwest corner of M-45 and U.S. 31, includes two plants - ACS Grand Haven, which is solely owned by Asimco Technologies, and a joint venture between Nippon Piston Ring and ACS Inc. Asimco Technologies -- http://www.asimco.com/-- is headquartered in Beijing, China, and produces a wide range of power train, chassis and diesel fuel injection products for light duty and commercial vehicle applications. Asimco assembles semi-fully finished cast, steel and assembled camshafts. Aside from its U.S. operations, Asimco has 18 manufacturing facilities and 52 sales offices in China and one regional office in Europe and Japan. Asimco's major customers are automotive-based, such as DaimlerChrysler, Ford, GM, Cummins and CAT. American Camshaft and three other U.S. affiliates filed for chapter 11 protection on Dec. 9, 2006 (Bankr. E.D. Mich. Lead Case No. 06-58298). Christopher A. Grosman, Esq., and Robert A. Weisberg, Esq., at Carson Fischer, P.L.C., represent the Debtors. When the Debtors filed for protection from their creditors they listed estimated assets and debts between $10 million and $50 million. AMERICAN REAL: Good Market Conditions Cue Debt Offering Increase ---------------------------------------------------------------- American Real Estate Partners, L.P. said Friday that due to positive market conditions it has increased its previously announced offering of 7-1/8% senior notes due 2013 from $300 million to $500 million. The transaction is expected to close on January 17, 2007. The notes have not been registered under the Securities Act of 1933 or applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act of 1933 and applicable state securities laws. The company had disclosed on Jan. 11, 2007, that it issues in a private placement $300 million aggregate principal amount of its 7-1/8% senior notes due 2013. About American Real American Real Estate Partners, LP -- http://www.arep.com/-- (NYSE:ACP) a master limited partnership, is a diversified holding company engaged in a variety of businesses. The company's businesses currently include gaming, oil and gas exploration and production, real estate and home fashion. The company is in the process of divesting its Oil and Gas operating unit and their Atlantic City gaming property. The company owns a 99% limited partnership interest in American Real Estate Holdings Limited Partnership. Substantially all of the assets and liabilities are owned by AREH and substantially all of the company's operations are conducted through AREH and its subsidiaries. American Property Investors, Inc., or API, owns a 1% general partnership interest in both the company and AREH, representing an aggregate 1.99% general partnership interest in the company and AREH. API is owned and controlled by Mr. Carl C. Icahn. AMERICAN REAL: Debt Issuance Prompts S&P to Affirm BB+ Rating ------------------------------------------------------------- Standard & Poor's Rating Services affirmed its 'BB+' long-term counterparty credit rating on American Real Estate Partners L.P. (AREP; NYSE ACP). The outlook is stable. The announcement followed AREP's issuance of $300 million of additional senior debt to support corporate operations. "The ratings on AREP reflect the company's good investment track record, commitment to sustain strong liquidity at the parent level, and the proven track record of its dominant shareholder, Carl Icahn," said Standard & Poor's credit analyst Jeffrey Zaun. Offsetting factors include increasing financial leverage at portfolio investments, the limited ability of subsidiaries to upstream dividends, and a lack of visibility around future strategic moves. In November 2006, AREP closed on the sale of approximately 40% of its total operating investments, realizing gains of $40 million (for its Atlantic City Gaming properties) and $560 million (for the sale of its oil and gas investments). The sales of two major assets for significant cash gains demonstrates AREP's ability to realize profit by selling investments after strategic business combinations and active management have increased their value. The stable outlook balances AREP's investment track record and management's policy of maintaining a strong cash position against the lack of visibility with respect to the financial implications of future strategic investments. AMERICAN ROCK: Mild Weather Prompts S&P's Negative CreditWatch -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including its 'B' corporate credit rating, on Mount Morris, N.Y.-based American Rock Salt Co. LLC on CreditWatch with negative implications. "The action reflects the company's very thin liquidity and weak operating performance stemming from the unprecedented mild weather in ARSC's upstate New York operating area," said Standard & Poor's credit analyst Marie Shmaruk. "A mild winter so far has lowered the demand for the company's highway deicing salt, forcing ASRC to temporarily idle its lone mining operation." Although the company's availability on its $30 million asset-based revolving credit facility was $8 million on Sept. 30, 2006, its current liquidity position has weakened, as the lack of demand has resulted in negative free cash flow. Ms. Shmaruk said, "While we expect that the company's liquidity will improve over the next four weeks from some working capital contraction and that idling the mining operations will slow the company's liquidity burn, a continuation of mild weather conditions through the rest of the winter could negatively affect financial performance and liquidity, hence raising concerns about the company's ability to meet operating expenses, amortization, and interest payments throughout the remainder of the year." The company has a $4.5 million interest payment due on March 15, 2007. If weather patterns remain mild, the company may have to engage in discussions with its lenders to increase availability under its revolving credit facility. The company's current salt stockpile could potentially serve as a backing for additional liquidity. S&P could resolve the CreditWatch quickly and affirm the ratings if normal weather patterns return that improve the company's liquidity and financial performance. AMR CORP: 4.5% Senior Notes Become Convertible to Common Stock -------------------------------------------------------------- AMR Corporation reported that its 4.5% senior convertible notes due 2024 have become convertible into shares of AMR common stock. As provided in the indenture under which the Notes were issued, the Notes have become convertible because the sale price of AMR's common stock for at least 20 trading days in a period of 30 consecutive trading days ending on Dec. 31, 2006, was greater than 120% of the conversion price per share of AMR common stock on the last trading day of year. The Notes are convertible into common stock at the conversion rate specified in, and otherwise in accordance with the terms of, the Notes and the indenture under which the Notes were issued, and they will remain convertible for so long as they are outstanding. AMR Corporation is the parent company of American Airlines Inc. American Airlines -- http://www.AA.com/-- is the world's largest airline. American, American Eagle and the AmericanConnection regional airlines serve more than 250 cities in over 40 countries with more than 3,800 daily flights. The combined network fleet numbers more than 1,000 aircraft. American Airlines is a founding member of the oneworld Alliance, whose members serve more than 600 destinations in over 135 countries and territories. * * * Standard & Poor's Ratings Services, effective June 6, 2006, placed its ratings on AMR Corp. (B-/Watch Pos/B-3) and subsidiary American Airlines Inc. (B-/Watch Pos/--) on CreditWatch with positive implication. ARAMARK CORP: Fitch to Downgrade Issuer Default Rating to B ----------------------------------------------------------- Fitch expects to downgrade the Issuer Default Rating (for both ARAMARK Corporation and its wholly owned subsidiary, ARAMARK Services, Inc. to 'B' from 'BB-' and rate the proposed financings of ARAMARK Corporation as: -- $600 million revolving senior secured credit facility due 2013 'BB-/RR2'; -- $3.66 billion senior secured term loans due 2014 'BB-/RR2'; -- $250 million senior secured synthetic letter of credit facility due 2013 'BB-/RR2'; -- $1.7 billion senior unsecured notes due 2015 'B-/RR5'; -- $570 million senior subordinated notes due 2017 'CCC+/RR6'; In addition, the rating for the $250 million senior unsecured notes due 2012 is expected to be downgraded to 'CCC+/RR6' from 'BB-'. The assignment of these ratings is pending review of the final transaction documentation. Upon closing of the transaction, Fitch expects to withdraw its 'BB-' unsecured bank facility rating and withdraw its 'BB-' senior unsecured notes rating for existing senior unsecured notes due 2007 and 2008 with the successful completion of debt tender offers. Fitch also expects that the Negative Rating Watch will be resolved and the Outlook will then be Stable. The ratings reflect ARAMARK's substantially higher leverage ratio and debt service requirements following the completion of its leveraged buyout and Fitch's expectations for significantly reduced free cash flow. ARAMARK is in the process of being acquired by management together with a consortium of private equity firms in an LBO for approximately $8.5 billion. The transaction is to be financed through approximately $2 billion in equity commitments with the remainder consisting of various debt instruments noted above. The transaction is expected to close in late January 2007. Pro forma September 29, 2006 total adjusted leverage (adjusted for rents and A/R securitizations) is expected to be approximately 7.0 times (x) with interest coverage at approximately 1.6x. Fitch expects credit protection measures to remain near pro forma levels through the intermediate term. The ratings also incorporate potential margin pressure from competitive pricing and higher operating costs. Positively, the ratings and outlook reflect ARAMARK's leading positions in its core services, brand recognition, a well diversified customer portfolio, and high customer retention rates. In addition, ARAMARK's operating performance has been relatively stable through various market conditions, including the company's exposure to unforeseen events over the last couple of years. The expected Stable Outlook is also supported by the company's adequate liquidity position pro forma the proposed transaction, which includes $103 million of pro forma cash, $600 million revolving credit facility (of which $150 million is expected to be drawn at closing for seasonal working capital purposes), and a $250 million accounts receivable securitization program. With the closing of the LBO transaction, Fitch believes that ARAMARK will have limited ability to improve its credit protection measures in the next few years. However the company's stable organic revenue growth and solid market positions should limit any significant deterioration of credit measures. In the event that the senior unsecured and senior subordinated note offerings are not completed by the transaction's close, ARAMARK has in place a committed bridge loan facility to fund the remainder of the transaction's purchase price. The bridge loans will be subordinated to the new senior secured credit facilities. The security for the senior secured credit facilities is expected to include a first-priority pledge on all capital stock held at the holding company, the borrower, and any subsidiary guarantor; a perfected first-priority security interest in the assets of the holding company, borrower, and subsidiary guarantors. According to company filings, the 2012 notes will only be guaranteed by the holding company, ARAMARK Corporation, and will not be guaranteed by the company's operating subsidiaries, thereby resulting in structural subordination of these notes in relation to all of the new debt issuances which will be fully and unconditionally guaranteed by substantially all of the company's domestic material operating subsidiaries. The indenture for the 2012 bonds generally provides no protection from a change in control event and does not limit the company's ability to incur additional indebtedness. The recovery ratings and notching reflect Fitch recovery expectations under a distressed scenario. ARAMARK's recovery ratings reflect Fitch's expectation that the enterprise value of the company, and hence, recovery rates for its creditors, will be maximized in a restructuring scenario (going concern), rather than a liquidation. The 'RR2' recovery rating for the company's credit facilities reflects Fitch belief that 71-90% recovery is reasonable given its priority position. The recovery rating of 'RR5' for the $1.7 billion of senior unsecured notes, 'RR6' for the $570MM of senior subordinated notes and 'RR6' $250MM 5% senior unsecured notes due 2012 reflects Fitch's estimate that negligible recovery would be achievable due to their position in the capital structure. ASARCO LLC: Court Extends Plan Filing Period to April 6 ------------------------------------------------------- The Hon. Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi further extends ASARCO LLC and its debtor-affiliates' exclusive period to file a plan of reorganization until April 6, 2007, and their exclusive period to solicit acceptances of that plan until June 6, 2007. As reported in the Troubled Company Reporter on Dec. 15, 2006, James R. Prince, Esq., at Baker Botts L.L.P., in Dallas, Texas, argued that an extension of the Debtors' exclusive periods will provide them additional time to quantify, either by estimation or negotiation, contingent claims and move forward with presenting a confirmable plan of reorganization for the benefit of all creditors and stakeholders. During the extension period, Mr. Prince sais the Debtors will continue their efforts to resolve various cases and controversies with their various creditor constituencies, and to work with all deliberate speed in resolving issues necessary to formulate a confirmable plan in an orderly manner, which will, in the Debtors' opinion, be of substantial benefit to the estate and their creditors. 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: Has Until May 16 to Decide on Unexpired Leases ---------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi extends the deadline within which ASARCO LLC and its debtor-affiliates may decide whether to assume or reject their unexpired non-residential real property leases until May 16, 2007. As reported in the Troubled Company Reporter on Dec. 18, 2006, Judith W. Ross, Esq., at Baker Botts L.L.P., in Dallas, Texas, told the Court that the Debtors need additional time to determine their reclamation obligations under certain leases with the Bureau of Land Management and Bureau of Indian Affairs of the U.S. Department of the Interior, and the members of the San Xavier District of the Tohon O'odham Nation. 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). AXS-ONE INC: AMEX Reviewing Plan of Compliance ---------------------------------------------- The staff of the American Stock Exchange has reviewed the AXS-One Inc.'s plan of compliance to meet the AMEX's continued listing standards and will continue the company's listing while the company seeks to regain compliance with the listing standards during the period ending April 6, 2008. The AMEX staff notified AXS-One on Oct. 6, 2006, that the company had fallen below the listing standard set forth in Section 1003(a)(i) of the AMEX Company Guide. During the plan period, the company must continue to provide the AMEX staff with updates regarding initiatives set forth in its plan of compliance. The company will be subject to periodic review by the AMEX staff during the plan period. If the company is not in compliance with the continued listing standards on April 6, 2008 or the company does not make progress consistent with the plan during the plan period, then the AMEX may initiate immediate delisting proceedings. About AXS-One Headquartered in Rutherford, NJ, AXS-One Inc. (AMEX: AXO) -- http://www.axsone.com-- is a leading provider of high-performance Records Compliance Management solutions. The AXS-One Compliance Platform enables organizations to implement secure, scalable and enforceable policies that address records management for corporate governance, legal discovery and industry regulations such as SEC17a-4, NASD 3010, Sarbanes-Oxley, HIPAA, The Patriot Act and Gramm-Leach Bliley. AXS-One has offices worldwide including the United States, Australia, Singapore, United Kingdom and South Africa. At Sept. 30, 2006, the company's balance sheet showed $7.3 million in total assets and $17 million in total liabilities, resulting in a $9.8 million total stockholders' deficit. BEAR STEARNS: Moody's Holds Low-B Ratings on Six Certificates ------------------------------------------------------------- Moody's Investors Service upgraded the ratings of two classes and affirmed the ratings of 16 classes of Bear Stearns Commercial Mortgage Securities Trust 2003-TOP12, Commercial Mortgage Pass- Through Certificates, Series 2003-TOP12 as: - Class A-1, $82,068,408, Fixed, affirmed at Aaa - Class A-2, $150,600,000, Fixed, affirmed at Aaa - Class A-3, $185,900,000, Fixed, affirmed at Aaa - Class A-4, $487,288,000, Fixed, affirmed at Aaa - Class X-1, Notional, affirmed at Aaa - Class X-2, Notional, affirmed at Aaa - Class B, $30,479,000, Fixed, upgraded to Aaa from Aa2 - Class C, $31,931,000, Fixed, upgraded to A1 from A2 - Class D, $13,063,000, Fixed, affirmed at A3 - Class E, $14,514,000, Fixed, affirmed at Baa1 - Class F, $7,257,000, Fixed, affirmed at Baa2 - Class G, $7,257,000, Fixed, affirmed at Baa3 - Class H, $5,805,000, Fixed, affirmed at Ba1 - Class J, $5,806,000, Fixed, affirmed at Ba2 - Class K, $2,903,000, Fixed, affirmed at Ba3 - Class L, $2,902,000, Fixed, affirmed at B1 - Class M, $2,903,000, Fixed, affirmed at B2 - Class N, $2,903,000 Fixed, affirmed at B3 As of the December 13, 2006 distribution date, the transaction's aggregate certificate balance has decreased by approximately 10.0% to $1.0 billion from $1.2 billion at securitization. The Certificates are collateralized by 147 mortgage loans ranging in size from less than 1.0% to 6.0% of the pool, with the top 10 loans representing 34.8% of the pool. The pool includes nine shadow rated investment grade loans comprising 21.9% of the pool. Eight loans, representing 8.1% of the pool balance, have defeased and are collateralized by U.S. Government securities. There have been no losses since securitization. Currently there is one loan, representing less than 1.0%, in special servicing. Moody's is not projecting any loss on this loan. Fourteen loans, representing 5.8% 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 93.3% and 60.0%, respectively, of the pool. Moody's loan to value ratio for the conduit component is 74.3%, compared to 79.6% at securitization. Moody's is upgrading Classes B and C due to stable overall pool performance and increased credit support. The largest shadow rated loan is the Westshore Plaza Loan ($62.9 million - 6.0%), which represents a 66.0% pari passu interest in a $95.3 million first mortgage loan. The loan is secured by the borrower's interest in a 1.1 million square foot regional mall located in Tampa, Florida. The center is anchored by Macy's, Sears and Saks Fifth Avenue. The center is 99.3% occupied, compared to 97.4% at securitization. Financial performance has improved since securitization due to increased revenues and loan amortization. The loan sponsor is Glimcher Realty Trust (Moody's senior unsecured shelf rating (P)Ba2; stable outlook), a publicly traded REIT. Moody's current shadow rating is A3, compared to Baa2 at securitization. The second shadow rated loan is the West Valley Mall Loan ($61.0 million -- 5.8%), which is secured by the borrower's interest in a 717,573 square foot regional mall located approximately 60 miles east of San Francisco in Tracey, California. The center is anchored by Gottschalk's, Target (anchor owned), J.C. Penney and Sears. The center is 96.0% leased, the same as at securitization. Financial performance has improved since securitization due to increased revenue and loan amortization. The loan is structured with a 25-year amortization schedule and has amortized by approximately 8.4% since securitization. The loan sponsor is General Growth Properties Inc. (Moody's senior unsecured shelf rating (P)Ba2; stable outlook), a publicly traded REIT. Moody's current shadow rating is A1, compared to Baa1 at securitization. The third shadow rated loan is the Sun Valley Apartments Loan ($24.2 million -- 2.3%), which is secured by a 305-unit Class A multifamily property located in Florham Park, New Jersey. The property is 92.0% occupied, compared to 95.0% at securitization. The loan is structured with a 15-year amortization schedule and has amortized by approximately 16.3% since securitization. Moody's current shadow rating is Aaa, compared to Aa2 at securitization. The remaining six shadow rated loans comprise 6.1% of the pool and their shadow ratings are the same as at securitization. The Cedar Knolls Shopping Center Loan ($18.6 million -- 1.8%) is secured by a 270,000 square retail center located in Cedar Knolls, New Jersey and is shadow rated Baa3. The 284 Mott Street Loan ($18.5 million -- 1.8%) is secured by a 163-unit multifamily property located in New York City and is shadow rated Aaa. The Eagle Plaza Shopping Center Loan ($16.7 million -- 1.6%) is secured by a 227,000 square foot retail center located in Voorhees, New Jersey and is shadow rated Baa2. The three smallest shadow rated loans -- Carriage Way MHP Loan ($10.0 million -- 1.0%), Deerfield Estates MHP ($9.4 million -- 0.9%) and Wayne Towne Center Loan ($7.9 million - - 0.8%) are all shadow rated Aaa. The top three conduit loans represent 8.9% of the outstanding pool balance. The largest conduit loan is the 360 Lexington Avenue Loan ($38.6 million -- 3.7%), which is secured by a 251,000 square foot Class B office building located in the Grand Central office submarket in New York City. The property is 90.0% occupied, essentially the same as at securitization. The tenant roster is diverse with no single tenant accounting for more than 10.0% of the premises. The loan is interest only for its entire 10-year term. Moody's LTV is 83.8%, compared to 91.1% at securitization. The second largest conduit loan is the GGP Portfolio Loan ($35.5 million -- 3.4%), which is secured by nine retail properties totaling 735,000 square feet. The properties are located primarily in tertiary markets in Utah (5), Oregon (2), Arizona and Colorado. The portfolio is 94.0% leased, essentially the same as at securitization. The loan is structured on a 25-year amortization schedule and has amortized by approximately 7.4% since securitization. The portfolio's performance has improved since securitization due to increased revenues, stable expenses and loan amortization. The loan sponsor is General Growth Properties Inc. Moody's LTV is 67.1%, compared to 83.5% at securitization. The third largest conduit loan is the Campus Marketplace Loan ($19.2 million -- 1.8%), which is secured by a 144,000 square foot retail center located in San Marcos, California. The property is 99.0% occupied and is anchored by Ralph's Grocery (40.0% GLA; lease expiration January 2022). The loan is interest only for its entire 10-year term. Moody's LTV is 70.2%, compared to 72.3% at securitization. The pool's collateral is a mix of retail (49.4%), office and mixed use (19.9%), multifamily (11.0%), industrial and self storage (8.7%), U.S. Government securities (8.1%) and lodging (2.9%). The collateral properties are located in 29 states. The highest state concentrations are California (20.3%), Florida (13.3%), New York (11.0%), New Jersey (10.9%) and Massachusetts (10.0%). All of the loans are fixed rate. BENJAMIN CASTON: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Benjamin Franklin Caston 389 Oxford Bend Road Fayetteville, AR 72703 Tel: (479) 872-8000 Bankruptcy Case No.: 07-70063 Chapter 11 Petition Date: January 9, 2007 Court: Western District of Arkansas (Fayetteville) Judge: Richard D. Taylor Debtor's Counsel: Stanley V. Bond, Esq. Bond Law Office P.O. Box 1893 Fayetteville, AR 72701-1893 Tel: (479) 444-0255 Fax: (479) 444-7141 Estimated Assets: Unknown Estimated Debts: $100,000 to $1 Million The Debtor did not file a list of his 20 largest unsecured creditors. BOMBARDIER INC: To Lay Off 170 Business-Jet Jobs in Montreal ------------------------------------------------------------ Bombardier Inc. will cut 170 jobs at its business-jet unit in Montreal next month, Frederic Tomesco writes for Bloomberg. Bombardier spokesman Leo Knaapen told Bloomberg that about 90 workers on the Challenger 604 model and 80 workers on the Global Express jet would lose their jobs. Mr. Knaapen disclosed that there were about 1,860 workers on the two planes at painting and interior-finishing plants near the city's airport. Citing Mr. Knaapen, Bloomberg relates that the company, which reorganizes production to cut cost, is getting the workforce in line with the completion requirements. "There is just a handful of 604 aircraft currently in completion, and they will be completed by the second quarter of this year." Mr. Knaapen adds. Bloomberg reports that the company will move its manufacturing and painting to a single facility between April and September, to make the operation more efficient. Bombairdier's Challenger 605 model, which will replace the 604, won't be available in service until September. About Bombardier Headquartered in Valcourt, Quebec, Bombardier Inc. (TSX: BBD) -- http://www.bombardier.com/-- manufactures transportation solutions, from regional aircraft and business jets to rail transportation equipment. * * * As reported in the Troubled Company Reporter on Nov. 1, 2006, Dominion Bond Rating Service confirmed the ratings of Bombardier Inc. and Bombardier Capital Ltd. The Senior Unsecured Debentures of both Bombardier Inc. and Bombardier Capital Ltd. are confirmed at BB, and Preferred Shares of Bombardier Inc. at Pfd-4. All trends are Negative. In October 2006, Fitch Ratings downgraded the debt and Issuer Default Ratings for both Bombardier Inc. The Company's issuer default rating was downgraded from BB to BB-. Other rating actions include, Senior unsecured debt revised to 'BB-' from 'BB'; Credit facilities revised to 'BB-' from 'BB' and Preferred stock revised to 'B' from 'B+'. The Rating Outlook is Stable. Also in October 2006, Standard & Poor's Ratings Services affirmed its 'BB' long-term corporate credit rating on Bombardier. At the same time, Standard & Poor's assigned its 'BB' issue rating to Bombardier's proposed issuance of up to EUR1.8 billion seven-to- ten-year multi-tranche senior unsecured notes. Bombardier Inc.'s proposed EUR1.8 billion in new senior unsecured notes carry Moody's Investors Service Ba2 rating. BOWNE & CO: Board Appoints Marcia Hooper as Director ---------------------------------------------------- Bowne & Co., Inc.'s board of directors unanimously elected Marcia J. Hooper a Director. Ms. Hooper is the 12th member of the Board. "Marcia brings a wide range of experience and perspective," Dave Shea, president and chief operating officer, said. "We're pleased to have her onboard." Ms. Hooper has served as a partner at Castile Ventures, a US-based venture capital firm, since 2002. Prior to that, she was a partner at Advent International, Viking Capital and Ampersand Ventures/Paine Webber Ventures. She began her career at IBM in marketing. Ms. Hooper received her Bachelor of Science degree in chemistry and mathematics from Brown University. She also earned a Master of Arts degree in chemistry from Columbia University and a Master of Business Administration degree from the Harvard Graduate School of Business. Ms. Hooper's appointment takes effect immediately. In accordance with the company's bylaws, she will serve an initial term until the company's next annual meeting on May 24, 2007, at which time she will be eligible for a three-year term. Based in New York City, Bowne & Co., Inc. (NYSE: BNE) -- http://www.bowne.com/-- is a printing company, which specializes in financial documents such as prospectuses, annual and interim reports, and other paperwork required by the SEC. Bowne also handles electronic filings via the SEC's EDGAR system and provides electronic distribution and high-volume mailing services. The financial printing business accounts for the bulk of the company's sales. Bowne also offers marketing and business communications services and litigation support software. The Company has 3,500 employees in 78 offices around the globe. * * * As reported in the Troubled Company Reporter on Jan. 11, 2007, Moody's Investors Service affirmed the Ba3 corporate family rating, Ba3 probability of default rating and B2 Convertible Subordinated Notes Rating, LGD5, 87% of Bowne & Co. Inc. The outlook remains positive. CABLEVISION SYSTEMS: Dolans Raises Private Offer to $30 Per Share ----------------------------------------------------------------- Cablevision Systems Corp. has received an offer of $30 per share from the controlling Dolan family, an 11% increase over their 27% bid in October, Peter Grant and Dennis K. Berman write for the Wall Street Journal. According to WSJ, the Dolan family raised its bid from $1 billion to $8.9 billion saying it was "the best and final offer." Cablevision founder Charles Dolan and his son, James Dolan, the company's chief executive, has reportedly set January 17 as the expiration date for the offer. The family also noted that the length of negotiations was creating potentially harmful uncertainty to the company. WSJ reports that the Dolans have arranged to put the deal to a majority vote of public shareholders, which would exclude the Dolans who own 20% of the company but control 70.4% of the voting shares. In a letter sent to a special panel of directors, the family stated that their plan isn't to sell the company for a profit soon after taking it private citing it would be willing to include terms in a proposal allowing shareholders to share in the revenues if that happens. WSJ relates that some Cablevision shareholders showed negative reactions to the new proposal saying they would vote against it. Headquartered in Bethpage, New York, Cablevision Systems Corporation is a domestic cable multiple system operator serving more than 3 million subscribers in and around the metropolitan New York area. Its wholly owned subsidiary, Rainbow National Services LLC, headquartered in Jericho, New York, supplies television programming to cable television and direct broadcast service providers throughout the United States. * * * As reported in the Troubled Company Reporter on Oct 11, 2006 Moody's Investors Service placed all ratings for Cablevision Systems Corporation, CSC Holdings, Inc., a wholly owned subsidiary of CVC, and Rainbow National Services LLC on review for downgrade following the Dolan family's announcement of a proposal to acquire Cablevision. The ratings on Cablevision Systems Corporation that are under review are: Corporate Family Rating, Placed on Review for Possible Downgrade, currently at B1; Probability of Default Rating, Placed on Review for Possible Downgrade, currently at B1; and Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently at B3, LGD6, 93%. CALPINE CORP: Can Transfer Siemens Deal to Greenfield Partnership ----------------------------------------------------------------- The Honorable Burton R. Lifland of U.S. Bankruptcy Court for the Southern District of New York authorized Calpine Corp. and its debtor-affiliates to: (1) take all actions and to execute all documents necessary to effectuate the Greenfield Financing Transaction; (2) consent to the purchase, sale, or transfer of any ownership interest of Calpine Energy Services Canada Ltd., in MIT Power Canada Investment, Inc., a subsidiary of Mitsui & Co., Ltd., to another wholly owned, direct or indirect subsidiary of Calpine Corporation if and when Calpine Energy Canada may choose to do so or as ordered by the appropriate court; (3) elect to waive any avoidance actions they may have with respect to the prepetition transfers of equipment and related assets from them to the Greenfield Partnership; and upon a waiver, the prepetition transfers of equipment and related assets will be valid, binding, and enforceable as between the relevant transferees and the U.S. Debtors and their estates; and (4) assume, amend, and assign or otherwise transfer the Siemens Agreement to the Greenfield Partnership. The Court also authorizes Greenfield Commercial Trust to establish a new, wholly owned subsidiary and transfer its limited partner interest in the Greenfield Partnership to the newly created subsidiary. If a transfer of the LP Interest to a newly created subsidiary occurs, the U.S. Debtors and their estates will not seek to avoid it on the basis that it is not valid, binding and enforceable against them. The Court clarifies that the Order will not be deemed to: -- validate or to enhance the validity of any purported transfer of the LP Interest that may be undertaken by Greenfield Commercial Trust; -- qualify any transferee of Greenfield Commercial Trust as a "bona fide purchaser for value without notice" of the LP Interest; or -- insulate the transferee from being adjudged liable to return the LP Interest to Greenfield Commercial Trust or to Calpine Energy Services Canada Partnership. The U.S. Debtors agree only to exercise the authority provided to them with the additional consent of each of the Official Committee of Unsecured Creditors, the Official Committee of Equity Security Holders and the Unofficial Committee of Second Lien Debtholders. If the Committees do not consent, the U.S. Debtors will not exercise authority without further Court order. The Court makes it clear that the Order does not limit any right or claim of any Canadian Calpine entity or any of their creditors. The Order does not allow or ratify any agreement concerning any transfer of any rights of any person that is subject to the stay of proceedings contained in the Initial Companies' Creditors Arrangement Act of the Honorable Madam Justice Romaine of the Alberta Court of Queen's Bench dated Dec. 20, 2005. The Order does not limit the rights of any Canadian Calpine entity or any of their creditors in the proceeding commenced by Calpine Canada Natural Gas Partnership against Calpine Energy Services Canada Partnership. Headquartered in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of ower plant engineering, construction and maintenance and operational services. The company previously produced a portion of its fuel consumption requirements from its own natural gas reserves. However, in July 2005, the company sold substantially all of its remaining domestic oil and gas assets to Rosetta Resources Inc. The company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities (Calpine Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CANWEST GLOBAL: Buying Alliance Atlantis for CDN$2.3 Billion ------------------------------------------------------------ CanWest Global Communications Corp. and GS Capital Partners, a private equity affiliate of Goldman, Sachs & Co., reported that a new acquisition company has entered into a definitive agreement with Alliance Atlantis Communications Inc. to acquire all of its outstanding Class A voting and Class B non-voting shares at a purchase price of CDN$53 per share in cash for an aggregate price of approximately CDN$2.3 billion. "[Wednes]day's transaction is consistent with CanWest's strategy to enhance its existing television business and expand its presence in the fast growing specialty television sector," said Leonard Asper, president & chief executive officer of CanWest. "The combined expertise of CanWest and Alliance Atlantis will enable us to produce even better Canadian content, promote it more effectively, and provide greater access to more viewers across more platforms. We are thrilled to be working with Goldman Sachs to effect this strategic transaction." "I believe this transaction represents great value for our shareholders," said Michael MacMillan, Executive Chairman of Alliance Atlantis. "The combination of CanWest's conventional and specialty television businesses and Alliance Atlantis' 13 specialty television channels creates an excellent foundation for future growth in both businesses." The acquisition of Alliance Atlantis is to be carried out by way of a statutory Plan of Arrangement. The newly formed acquisition company is an indirect wholly owned subsidiary of CanWest. The Arrangement requires a vote by Alliance Atlantis' Class A voting and Class B non-voting shareholders at a meeting of shareholders, which is currently expected to be held in the spring of 2007. Shareholders representing approximately 80% of the Class A voting shares, have agreed to vote their shares of Alliance Atlantis in favor of the shareholders' resolution approving the Arrangement. The Arrangement is also subject to court approval as well as certain other customary conditions, including the receipt of regulatory approvals. Pending approval from the Canadian Radio- television and Telecommunications Commission for the change of ownership and transfer of control of the specialty television channels, the securities of the relevant regulated entities will be deposited with a trustee pursuant to a voting trust agreement approved by the CRTC. A special committee of the Board of Directors of Alliance Atlantis, comprised of Robert Steacy (Chair), Barry Reiter and Anthony Griffiths, has reviewed the Plan of Arrangement in consultation with its legal and financial advisors. The Special Committee unanimously recommends the Plan of Arrangement to the company's Board of Directors, and the Board of Directors unanimously recommends (with one director recusing himself due to conflict) that shareholders vote in favor of the Arrangement. RBC Capital Markets has provided an opinion to the Board of Directors indicating that, as of the date of such opinion, the consideration under the Plan of Arrangement is fair from a financial point of view to the shareholders. A CanWest-controlled company will be the controlling shareholder of Alliance Atlantis following the closing of the transaction (expected to occur by summer 2007). It is intended that a reorganization of Alliance Atlantis will take place to separate the businesses of the Company: -- upon receipt of CRTC approval, Alliance Atlantis' specialty television business and CanWest's Canadian television business will be managed on an integrated basis by CanWest and ultimately combined; -- it is intended that Alliance Atlantis' Motion Picture Distribution business will be controlled by a Canadian partner of GS Capital Partners; and -- it is intended that GS Capital Partners will own 100% of Alliance Atlantis' financial interest in the highly successful CSI franchise. As part of this new relationship with Goldman Sachs, CBS will assume international distribution of CSI, CSI: Miami and CSI: NY. The formal combination of the broadcast businesses will occur sometime in 2011. The equity of each of CanWest and GS Capital Partners in the combined entity will be determined by the EBITDA of the combined operation at that time. There are a variety of customary liquidity mechanisms that will be available to the parties following the combination. "We are looking forward to this relationship with CanWest to support the expansion of its television business and to facilitate the combination of two great Canadian media companies," said Gerry Cardinale, a Managing Director of GS Capital Partners. CanWest was advised by Genuity Capital Markets and GS Capital Partners was advised by Goldman, Sachs & Co. Alliance Atlantis was advised by RBC Capital Markets. About Alliance Atlantis Headquartered in Toronto, Canada, Alliance Atlantis Communications Inc. -- http://www.allianceatlantis.com/-- is a specialty channel broadcaster with a 50% ownership interest in the CSI TV franchise. The company has worldwide offices in the United Kingdom, Spain and Australia. About CanWest CanWest Global Communications Corp. -- http://www.canwestglobal.com/-- is Canada's largest media company. CanWest is Canada's largest publisher of daily newspapers and also owns, operates or holds substantial interests in conventional television, out-of-home advertising, specialty cable channels, web sites and radio stations and networks in Canada, New Zealand, Australia, Turkey, Singapore, Indonesia, Malaysia, the United Kingdom and the United States. CANWEST MEDIAWORKS: Moody's Says Direction of Review is Uncertain ----------------------------------------------------------------- Moody's Investors Service placed all long term ratings of CanWest MediaWorks Inc. under review direction uncertain and changed the direction of its current ratings review of Alliance Atlantis Communications Inc. to down from up. The rating actions follow the announcement made jointly by the companies that CanWest's parent, CanWest Global Communications Corp. and Goldman Sachs Capital Partners have reached an agreement to acquire AACI in a transaction valued at roughly $2.6 billion. The transaction will initially see CanWest contribute cash of $132 million into a new entity to own a 17% equity interest in AACI 's specialty broadcasting channels. CanWest will also have the option to contribute an additional $70 million to increase its equity interest. There will be future mechanisms for CanWest to increase its stake in the specialty channels beginning in 2011 when CanWest will contribute its Canadian broadcasting assets to newco in exchange for an increased ownership of that entity, which the company currently believes may then approximate 50%. CanWest will not have any interest in either the CSI TV franchise or Movie Distribution business currently owned by AACI. The transaction remains subject to shareholder approval and regulatory rulings. It is expected to close in the summer of 2007. While CanWest's initial cash investment is relatively small, Moody's is concerned that the transaction may eventually increase CanWest's leverage to levels above previous expectations. On the other hand, CanWest continues to review the strategic alternatives for its assets in the South Pacific, which Moody's believes could be sold for significant value and used to reduce leverage. The ratings review for CanWest will focus on the likelihood that the AACI transaction will be completed, the potential for some or all of its assets in the South Pacific to be sold, as well as the expected change to CanWest's overall capital structure, cash flows and strategic direction that may result. The direction of the review of AACI's rating was changed to down as it appears likely that AACI will be acquired by a more highly levered entity, superseding the previous review for possible upgrade, which was largely based on AACI's strengthening fundamentals. The review of AACI's ratings will focus on the potential for the transaction to be completed, or alternatives AACI may pursue in the event it is not acquired as is now currently expected. Moody's noted that should the acquisition of AACI by CanWest and GSCP be completed as announced, AACI's rated debt will likely be repaid pursuant to a Change of Control clause in its bank agreement and its debt ratings withdrawn. CanWest ratings placed under review direction uncertain: Corporate Family Rating, Ba3 Probability-of-Default rating, Ba3 Senior Subordinate rating, B2 Loss-Given-Default rating for Senior Subordinate debt, LGD5 (87%) AACI ratings placed under review down: Corporate Family Rating, Ba2 Probability-of-Default rating, Ba3 Senior Secured rating, Ba1 Loss-Given-Default rating for Senior Secured debt, LGD2 (26%) CanWest MediaWorks Inc. is a communications holding company based in Winnipeg, Manitoba Canada, with interests in TV, radio and publishing operations in Canada, Australia, New Zealand, and other international locations. Alliance Atlantis Communications Inc., headquartered in Toronto, Canada, is specialty channel broadcaster with a 50% ownership interest in the CSI TV franchise. CAROLINA COUNTRY: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Carolina Country Barbecue, Inc. P.O. Box 2727 Gastonia, NC 28053-2727 Bankruptcy Case No.: 07-30017 Type of Business: The Debtor operates restaurants in Charlotte and Gastonia that specialize in barbecues and country-style dishes. See http://www.carolinacountrybbq.com/ 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 28053-1596 Tel: (704) 864-0235 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 ------ --------------- ------------ First National Bank of Shelby Bank Loan $2,756,000 529 South New Hope Road Secured: Gastonia, NC 28054-4040 $1,378,000 c/o Bruce Hodge Unsecured: Tel: (704) 865-1233 $1,378,000 Internal Revenue Service Trade Debt $1,131,196 P.O. Box 21126 Philadelphia, PA 19114-0326 Wesley, Mark and Trade Debt $956,138 D. Norman Morris c/o Fred W. DeVore, III 831 East Morehead Street Suite 245 Charlotte, NC 28202-2773 Tel: (704) 377-5242 NC Department of Revenue Trade Debt $184,000 Bankruptcy Unit P.O. Box 1168 Raleigh, NC 27602-1168 Tyson Meat Company Trade Debt $28,000 2545 East Ozark Avenue Gastonia, NC 28054-1423 City of Gastonia Trade Debt $27,820 First Gaston Bank Bank Loan $25,000 BB&T Insurance Services, Inc. Trade Debt $24,688 Mecklenburg Co. Tax Collector Trade Debt $16,338 Douglas P. Arthurs Trade Debt $10,550 Prime Rate Premium Trade Debt $8,500 Starr Electric Trade Debt $3,827 NCO Financial Systems Trade Debt $2,692 Bradford and Bradford, P.A. Trade Debt $2,280 McCannon Rogers Trade Debt $2,214 Driscoll and Associates Chicago Title Co. Trade Debt $2,200 Receivables Control Corp. Trade Debt $1,160 For Ecolab Inc. York Chester Investment Co. Trade Debt $0 UMC Investments Trade Debt $0 City County Tax Collector Trade Debt $0 CASE FINANCIAL: Chang G. Park CPA Raises Going Concern Doubt ------------------------------------------------------------ Chang G. Park, CPA, in Chula Vista, California, expressed substantial doubt about Case Financial Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Sept. 30, 2006. Mr. Park pointed to the company's accumulated deficit of $10,873,309 at Sept. 30, 2006. Case Financial Inc. reported a $1.1 million net loss for the year ended Sept. 30, 2006, compared with a $1.6 million net loss for the year ended Sept. 30, 2005. The company had no revenues for both periods. The decrease in net loss is mainly due to lower reported operating expenses, interest expense and non-cash finance expenses, and the $21,286 gain from discontinued operations in fiscal 2006, compared with a $208,219 loss in fiscal 2005. At Sept. 30, 2006, the company's balance sheet showed $2 million in total assets and $3.3 million in total liabilities, resulting in a $1.2 million total stockholders' deficit. The company's balance sheet at Sept. 30, 2006, also showed strained liquidity with $2 million in current assets available to pay $3.3 million in total current liabilities. 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?186b About Case Financial Case Financial Inc. (OTC BB: CSE.OB) -- http://www.casefinancial.com/-- provides pre-settlement and post- settlement litigation funding services to attorneys involved in personal injury and other contingency litigation, conducted primarily within the California courts. On Sept. 30, 2005, the company's Board of Directors approved a resolution to discontinue the company's further investment in its Litigation Finance Business other than the collection or other disposition of the company's existing loan and investment portfolio. CATHOLIC CHURCH: Fund Share and Property Sale Under Spokane Plan ---------------------------------------------------------------- The Joint Plan of Reorganization delivered by the Diocese of Spokane, the Tort Litigants Committee, the Tort Claimants Committee, the Future Claims Representative, and the Executive Committee of the Association of Parishes, provides that with respect to the $48,000,000 settlement amount, the Reorganized Debtor will deliver to the Plan Trustee, on or before 30 days after entry of the order confirming the Plan, loan documents consisting of: (a) a Note for $48,000,000, with the first $37,000,000 bearing no interest before October 1, 2007, the next $10,000,000 bearing no interest before October 1, 2007, and bearing interest at the rate of 6% per annum from and after October 1, and the last $1,000,000 bearing no interest before October 1, 2009. The Note is payable: -- from time to time upon the receipt by the Reorganized Debtor of payments on, or the proceeds of, any sale or other disposition of any item of the Diocese's Collateral; and -- $37,000,000 due October 1, 2007, $10,000,000 due December 31, and the remainder on October 1, 2009; (b) a first priority Deed of Trust and Security Agreement; (c) financing statements; (d) Lender's Policies of Title Insurance and UCC searches satisfactory to the Plan Trustee; and (e) other documents and instruments as the Plan Trustee will require to evidence and secure payment of the Debtor's Note. The Diocese's Collateral refers to all of the Reorganized Debtor's interest in any real and personal property owned by or held in the name of the Diocese as of, or acquired after, the Closing Date. According to United Press International, the Diocese would launch a fundraising campaign to raise the $10,000,000. United Press points out, however, that this could be controversial with Spokane Catholics, who stand to lose church buildings and schools if the campaign fails. The Diocese's Loan Documents and all rights and interests of the Plan Trustee under the Documents and in the Diocese's Collateral are referred to as the "Trust Property". Allocation of Trust Property According to the Joint Plan, the Plan Trustee will allocate: * all payments on the Trust Property, and all other proceeds of the Trust Property, attributable to the Release Portion of Catholic Entity Payments, the Release Portion of Parishes' Notes and the Insurance Settlements to a separate fund -- the Release Fund; and * all other payments on the Trust Property, and all other proceeds of the Trust Property, including but not limited to payments and proceeds attributable to the Estate's Portion of Catholic Entity Payments and the Estate's Portion of Parishes' Notes, to a separate fund -- the Estate Fund. Plan Trust Reserve After the effective date of the Plan, the Plan Trustee will establish a reserve for the costs and expenses of administration of the Plan Trust, fees and expenses like Professional Fees of a Tort Claim Reviewer and the Plan Trustee, and Post-Confirmation Professional Fees payable by the Plan Trust pursuant to reasonable contingencies. The Plan Trust Reserve will be funded from the Estate Fund and the Release Fund in proportion to the amount of the Funds, after the Estate Fund is reduced by payments of Allowed Administrative Expense Claims for Professional Fees. The balance of the Estate Fund and the Release Fund will be allocated to: (1) a Convenience Fund for an amount equal to the sum of all Allowed Convenience Tort Claims, plus a reserve of $15,000 multiplied by the number of Convenience Tort Claims that have not been Finally Determined -- to pay the aggregate Allowed Convenience Tort Claims; (2) Compromise Fund for an amount equal to the sum of (i) all Allowed Compromise Tort Claims, (ii) all Allowed Settled Compromise Tort Claims, (iii) all Tort Claims to which a Rule 9019 of the Federal Rules of Bankruptcy Procedure proceeding has not been determined by a Final Order, and (iv) the product of $45,000 multiplied by the number of Compromise Tort Claims that have not been Finally Determined -- to pay the aggregate Allowed Compromise Tort Claims and Allowed Settled Compromise Tort Claims; and (3) FC Fund for $1,000,000 for the Allowed Future Tort Claims- Initial. The balance of the Estate Fund, net of the portion of the Plan Trust Reserve, the Convenience Fund, the Compromise Fund, and the FC Fund charged to the Estate Fund, will be finally and conclusively allocated to: -- a Matrix Fund for payment of the aggregate Allowed Matrix Tort Claims and Allowed Settled Matrix Tort Claims; -- a Litigation Fund for the payment of the aggregate Allowed Litigation Tort Claims; and -- a Non-Releasing Litigation Fund for the payment of the aggregate Allowed Non-Releasing Litigation Tort Claims, based on the relative proportions of the sum of all estimated Matrix Tort Claims and all Allowed Settled Matrix Tort Claims; all estimated Litigation Tort Claims; and all estimated Non- Releasing Litigation Tort Claims. The balance of the Release Fund -- net of the portion of the Plan Trust Reserve, the Convenience Fund, the Compromise Fund, and the FC Fund charged to the Release Fund -- will be finally and conclusively allocated to the Matrix Fund and the Litigation Fund based on the relative proportions of (a) the sum of all estimated Matrix Tort Claims and all Allowed Settled Matrix Tort Claims, and (b) the sum of all estimated Litigation Tort Claims. The Tort Claim Reviewer will estimate the aggregate amount of the Matrix Tort Claims, Litigation Tort Claims and Non-Releasing Litigation Tort Claims by assigning each claim to a tier of the Matrix Protocol and utilizing the mean of the range of values for each claim in the tier. The Tort Claim Reviewer will mail a summary of the results of the estimation to all holders of Matrix Tort Claims, Litigation Tort Claims, and Non-Releasing Litigation Tort Claims and to their counsel. After the Estate Fund and the Release Fund are allocated, the Funds will be separately administered by the Plan Trustee. All Plan Trust Costs and Expenses of each Fund, including costs of litigating or otherwise determining Tort Claims potentially payable from the Fund, will be borne solely by the Fund. Sale of Diocesan Property On or before the Plan Effective Date: * all of the Diocese's interest in any real or personal property used by a Participating Catholic Entity whether held in the name of the Diocese, a Participating Catholic Entity or a third party; * all of the Diocese's interest in the Guse Trust; and * all of Diocese's interest with respect to the real and personal property subject to the Property of the Estate Dispute pursuant to Section 541 of the Bankruptcy Code, will be sold to the Participating Catholic Entity which uses the property, and in the case of the Guse Trust, to Catholic Charities of Spokane. The Participating Catholic Entities are Catholic Cemeteries of Spokane, Morning Star Boys' Ranch, Immaculate Heart Retreat Center, and Catholic Charities of Spokane. The sale will be free and clear of all Claims, liens, encumbrances, charges and other interests of the Diocese or any other party pursuant to a Quit Claim Deed and Bill of Sale, in consideration of these payments and transfers to the Reorganized Debtor on or before the Plan Effective Date: Cash Payments on or before Entity the Effective Date ------ -------------------------- Catholic Cemeteries of Spokane $3,400,000 Catholic Charities of Spokane $2,000,000 (less a credit for net proceeds of the sale of St. Anne's not to exceed $550,000) Transfer by Quit Claim Deed to Debtor on or before the Effective Date Morning Star Boys' Ranch 85% Interest in Heckett Ranch (Estimated value is approximately $425,000) Immaculate Heart Retreat Center 85% Interest in 20-acre parcel of real property (Estimated value is approximately $425,000) The Diocese's interest in the Section 541 Litigation with respect to the Catholic Entity Property will merge with each Participating Catholic Entity's title to the real and personal property upon delivery of the Quit Claim Deed and Bill of Sale. Release Payment Each Participating Catholic Entity, except Catholic Charities of Spokane, will make these payments and transfers to the Reorganized Debtor on or before the Effective Date: Cash Payments on or before Entity the Effective Date ------ -------------------------- Catholic Cemeteries of Spokane $600,000 Transfer by Quit Claim Deed to Debtor on or before the Effective Date Morning Star Boys' Ranch 15% Interest in Heckett Ranch (Estimated value is approximately $75,000) Immaculate Heart Retreat Center 15% Interest in a 20-acre parcel of real property (Estimated value is approximately $75,000) Moreover, all of the Diocese's interest in Parish Property, whether held in the name of the Diocese, a Parish or a third party, will be sold, transferred and conveyed to (a) the Parish Entity formed by the Parish which occupies or otherwise uses the Parish Property as designated by the Parishes with the approval and consent of the Catholic Bishop of Spokane, or (b) if the Parish Entity is not yet formed, to the Parish, free and clear of all Claims, liens, encumbrances, charges and other interests of the Diocese or any Tort Claimant claiming an interest in the Property pursuant to a Quit Claim Deed and Bill of Sale. In consideration of the entry of the Permanent Injunction, -- the Participating Parishes and their Parish Entities; -- Cathedral of Our Lady of Lourdes Parish, Assumption of the Blessed Virgin Parish, St. Augustine Parish, St. Mary Parish, Spokane Valley, Immaculate Heart Retreat Center; and -- Our Lady of Lourdes Parish and its Parish Entity, will pay $2,000,000 to the Reorganized Debtor. The Parishes and Parish Entities will receive all benefits of the Permanent Injunction. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 76; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CHEF UNO: Voluntary Chapter 11 Case Summary ------------------------------------------- Debtor: Chef Uno, Inc. ta Ristorante Sandro 2637 Philmont Avenue Huntingdon Valley, PA 19006 Tel: (215) 947-3620 Fax: (215) 947-3985 Bankruptcy Case No.: 07-10058 Type of Business: The Debtor operates an Italian-themed restaurant. See http://www.ristorantesandro.com/ Chapter 11 Petition Date: January 4, 2007 Court: Eastern District of Pennsylvania (Philadelphia) Judge: Stephen Raslavich Debtor's Counsel: Arsen Kashkashian, Esq. Kashkashian & Associates Canal Works 10 Canal Street, Suite 204 Bristol, PA 19007 Tel: (215) 781-9500 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor's list of its 20 largest unsecured creditors was not available at press time. CHENIERE ENERGY: Subsidiary to Launch Underwritten IPO ------------------------------------------------------ Cheniere Energy, Inc.'s wholly-owned subsidiary, Cheniere Energy Partners, L.P., filed a registration statement on Form S-1 with the Securities and Exchange Commission to become a publicly traded partnership through a proposed underwritten initial public offering. The registration statement covers the offering of common units representing approximately 8% of the limited partner interest in Cheniere Energy Partners, L.P., with anticipated aggregate gross proceeds of approximately $250 million. Upon completion of the offering, the company would retain common units representing approximately 8% of the limited partner interest, subordinated units representing approximately 84% of the limited partner interest, and general partner units representing the entire 2% general partner interest in the publicly traded partnership. Cheniere Energy Partners, L.P. will own 100% of the Sabine Pass LNG receiving terminal currently being constructed by Cheniere Energy, Inc. in western Cameron Parish, Louisiana on the Sabine Pass Channel. Citigroup Corporate and Investment Banking, Merrill Lynch & Co. and Credit Suisse are acting as joint book runners and underwriters of the offering. The offering will be made only by means of a prospectus. When available, a copy of the preliminary prospectus relating to the offering may be obtained from Citigroup Corporate and Investment Banking, Brooklyn Army Terminal, 140 58th Street, 8th Floor, Brooklyn, N.Y. 11220 tel. no. (718) 765-6732; Merrill Lynch, Pierce, Fenner & Smith Incorporated, 4 World Financial Center, 4th Floor, New York, New York 10080 tel. no. (212) 449-1000; and Credit Suisse Securities (USA) LLC, One Madison Avenue, New York, New York 10010 tel. no. (800) 221-1037. Based in Houston, Texas, Cheniere Energy Inc. (AMEX:LNG) -- http://www.cheniere.com-- operates a network of three, 100% owned, onshore LNG receiving terminals, and related natural gas pipelines, along the Gulf Coast of the United States. The company is in the early stages of developing a business to market LNG and natural gas. To a limited extent, it is also engaged in oil and natural gas exploration and development activities in the Gulf of Mexico. The company operates four business segments: LNG receiving terminal, natural gas pipeline, LNG and natural gas marketing, and oil and gas exploration and development. * * * Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Cheniere Energy Inc. and affirmed its 'BB' rating on the $600 million term B bank loan at Cheniere LNG Holdings LLC, an indirectly owned, 100% subsidiary of Cheniere Energy. The outlook is stable. CLEAR CHOICE: Is Insolvent and in Default of Credit Obligations --------------------------------------------------------------- Clear Choice Financial, Inc., is insolvent and in default on numerous obligations. Clear Choice has officially closed the mortgage lending offices of its wholly owned subsidiary, Bay Capital, located in Owings Mills, Maryland and Irvine, California. Out of an original workforce of over 150 people, 120 have been released. The Company is in default of its lease of its corporate headquarters located in Tempe, Arizona and has been locked out of its facility and is in default of a note with its former CEO and major shareholder Stephen G. Luke, and is in default of a note due to the two former owners of Bay Capital, Inc. Its operating company, Bay Capital, has been forced to shut down various warehouse lines of credit. On Jan. 8, 2007, the company's Board of Directors appointed David Birdsell as its Chief Restructuring Officer and the law firm of Keller Rohrback as its bankruptcy, corporate and securities counsel. Effective Jan. 9, 2007, Mr. Andrew Formato resigned from the Board. "We are exploring various options to remain in business but may be forced to declare bankruptcy if negotiations with creditors are unfavorable," Chad Mooney, acting CEO of the company, summarized. "The timing of our acquisition of Bay Capital coupled with a significant downturn in the mortgage lending market depleted our operating capital and we have been unable to raise additional capital to remain current on our pending obligations. We are assessing our various alternatives on a daily basis and do not know how long we can continue to remain in business." About Clear Choice Financial Headquartered in Tempe, Arizona, Clear Choice Financial, Inc. (OTCBB: CLRC) -- http://www.clearchoicecorp.com/-- is a publicly traded company that specializes in assisting consumers with the settlement of unsecured debt through its debt resolution business unit. The Company has acquired Bay Capital Corporation as part of the company's strategy to build a comprehensive financial solutions organization with a national presence. Going Concern Doubt As reported in the Troubled Company Reporter on Dec. 14, 2006, Clear Choice Financial, Inc.'s independent auditor, Farber & Hass LLP, expressed substantial doubt about Clear Choice's ability to continue as a going concern after it audited the Company's financial statements for the years ended June 30, 2006 and 2005. The auditing firm pointed to the company's significant net loss incurred in fiscal 2006 and working capital deficit at June 30, 2006. CLIFTON STREET: Fitch Rates EUR12 Million Class H Notes at BB+ -------------------------------------------------------------- Fitch affirms nine classes of notes issued by Clifton Street Finance Limited. These affirmations are the result of Fitch's review process and are effective immediately: -- EUR53,250,000 class A1 notes at 'AAA'; -- EUR48,750,000 class A2 notes at 'AAA'; -- EUR37,500,000 class B notes at 'AA+'; -- EUR32,000,000 class C notes at 'AA'; -- EUR30,000,000 class D notes at 'AA-'; -- EUR17,500,000 class E notes at 'A'; -- EUR15,000,000 class F notes at 'A-'; -- EUR15,000,000 class G notes at 'BBB'; -- EUR12,000,000 class H notes at 'BB+'. Clifton Street is a synthetic securitization referencing a portfolio of corporate names, directly and indirectly via single- tranche notional credit default swaps (inner tranche CDS), and asset-backed securities (ABS) (collectively referred to as referenced entities). Clifton Street closed on March 5, 2005 and is managed by KBC Investments Cayman Islands V, Ltd. The legal maturity of the deal is April 2043, but the deal is scheduled to amortize on or after the payment date in April 2015. The ratings assigned to the notes address the likelihood that investors will receive full and timely payments of interest and ultimate receipt of principal by the legal maturity date. The affirmations are the result of the stable performance of the referenced entities, the credit enhancement provided by subordination for each tranche, the strength of the counterparties, and the transaction's sound financial and legal structure. Fitch will continue to monitor and review this transaction for future rating adjustments. CNET NETWORKS: Expects to File Delinquent Reports on January 29 --------------------------------------------------------------- CNET Networks Inc. expects to file restated financial statements as well as delinquent quarterly reports with the Securities and Exchange Commission on Jan. 29, 2007. The company's restated financial statements for the years ended Dec. 31, 2003, 2004, and 2005 will be filed as an amended 2005 Annual Report on Form 10-K. The company also expects that on Jan. 29, 2007, it will file with the Securities and Exchange Commission an amended Form 10-Q for the quarter ended Mar. 31, 2006, as well as the delinquent Quarterly Reports on Form 10-Q for the quarters ended June 30, 2006, and Sept. 30, 2006. By filing on Jan. 29, 2007, CNET Networks expects to meet the conditions of the Nasdaq Listing Qualifications Panel for continued listing of its common stock on The Nasdaq Global Select Market. The company also reported that it will report its fourth quarter and full year 2006 financial results after market close on Monday, Jan. 29, 2007. Headquartered in San Francisco, California, CNET Networks, Inc. (Nasdaq: CNET) -- http://www.cnetnetworks.com/-- is an interactive media company that builds brands for people and the things they are passionate about, such as gaming, music, entertainment, technology, business, food, and parenting. The Company's leading brands include CNET, GameSpot, TV.com, MP3.com, Webshots, CHOW, ZDNet and TechRepublic. Founded in 1993, CNET Networks has a strong presence in the US, Asia and Europe including Russia, Germany, Switzerland, France and the United Kingdom. * * * On Oct. 23, 2006, Standard & Poor's Ratings Services lowered its ratings on CNET Networks Inc., including lowering the corporate credit rating to 'CCC+' from 'B', and placed the ratings on CreditWatch with developing implications. COLLINS & AIKMAN: Court Approves IHDG Litigation Trust Accord ------------------------------------------------------------- The Honorable Steven W. Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan approved a stipulation between Collins & Aikman Corp. and its debtor-affiliates and the IHDG Litigation Trust. Pursuant to a stipulation, the Debtors and the IHDG Litigation Trust agree that: a. C&A will have an allowed general unsecured claim against the estates of IHDG for $2,691,917 and the IHDG Litigation Trust will make distributions to C&A based on the claim in the same manner and, except for the distribution in November 2005, at the same time as distributions are made to other holders of general unsecured claims against the estates of IHDG; b. Within 15 business days after the approval of the Stipulation in the IHDG Cases and C&A cases, the IHDG Litigation Trust will pay $174,402 to C&A; c. The IHDG Litigation Trust will have an allowed general unsecured claim against the estate of C&A for $40,000; and d. The parties agree to mutual releases of all claims arising prior to the date of the Stipulation except for those agreed to in the Stipulation. As reported in the Troubled Company Reporter on Dec. 22, 2006, Collins & Aikman Products Co. sold in March 1998 the stock of its wholly owned subsidiary, Imperial Wallcoverings Inc., to Imperial Home Decor Group Inc. As part of the sale, IHDG assumed certain liabilities associated with the business of Imperial Wallcoverings, including workers compensation and other casualty claims that arose prior to the sale. After the sale closed, C&A (a) continued to administer and pay the claims, (b) provided freight hauling services to IHDG and (c) continued to permit former employees of Imperial Wallcoverings to use C&A's Diners Club corporate cards. IHDG was obligated to reimburse C&A for all the amounts. On Jan. 5, 2000, IHDG and certain affiliates filed voluntary petitions for relief commencing cases under Chapter 11 before the United States Bankruptcy Court for the District of Delaware. On Aug. 1, 2000, C&A filed general unsecured proofs of claim for $2,571,917 plus an unliquidated amount against the IHDG Debtors. The C&A Claims were comprised, in part, of: (a) payments made by C&A for IHDG workers compensation and other insurance claims that were not reimbursed, (b) projected future IHDG workers compensation and other insurance claims that would be paid by C&A, (c) amounts owed to C&A by IHDG for freight service and (d) amounts owed for Diners Club charges by IHDG employees. Pursuant to the Amended Joint Plan of Reorganization confirmed in the IHDG Cases, a trust was created to (1) prosecute certain causes of action belonging to the IHDG Debtors and certain objections to claims filed in the IHDG Cases; and (2) distribute a certain percentage of the proceeds to general unsecured creditors. On Aug. 2, 2001, the IHDG Litigation Trust filed objections to the C&A Claims. Then, on Jan. 4, 2002, the IHDG Litigation Trust commenced an adversary proceeding against C&A seeking to avoid and recover preferential transfers for $185,814. On Jan. 26, 2005, the court in the IHDG cases approved a settlement between the IHDG Litigation Trust and C&A resolving both the objection to the C&A Claims and the IHDG Preference Action. Pursuant to the 2005 Settlement, C&A agreed to pay $120,000 to the IHDG Litigation Trust in three installments of $40,000 payable on Jan. 14, 2005, April 15, 2005, and June 15, 2005. In exchange, among other things, the Litigation Trustee agreed to make distributions from the IHDG Litigation Trust to C&A as the holder of an allowed general unsecured claim in the amount of $2,691,917. C&A made the first two installment payments under the 2005 Settlement on Jan. 15, 2005, and April 15, 2005. The second installment payment was made on May 17, 2005, within 90 days of their bankruptcy filing. C&A has not made the third installment payment, which came due after their bankruptcy filing. On Dec. 27, 2005, the IHDG Litigation Trust filed a proof of claim in C&A's Chapter 11 cases for $105,814. The IHDG Claim amount is the amount sought in the IHDG Preference Action, $185,814, minus the two installments of $40,000 paid by C&A under the 2005 Settlement. Because C&A has not paid the final installment under the 2005 Settlement, the Litigation Trustee has not made any distributions to C&A from the IHDG Litigation Trust on account of the C&A Claims. The Debtors and the IHDG Litigation Trust had engaged in negotiations to resolve the IHDG Claim and provide for distribution from the IHDG Litigation Trust on account of the C&A Claims. 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. 49; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) COLLINS & AIKMAN: Wants Hayashi Recoupment Claims 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 their stipulation with Hayashi of America Inc. Before filing for bankruptcy, Collins & Aikman Products Co. sold automotive fabric material to Hayashi of America Inc. The Debtors' invoice no. 96367895 directed to Hayashi totaled $334,566 on account of the fabric provided. Hayashi disputes the stated amount and asserts that the claimed obsolescence amount should instead be $295,038, Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, relates. The contract underlying the Invoice provides for recoupment. Hayashi has asserted claims under the provision, which the Debtors dispute. The Recoupment Claim includes: -- an obsolescence claim in the amount of $39,528; -- an air shipment claim of $190,403 for expenses incurred to mitigate damages associated with the unavailability of the Fabric to meet customer production schedules; and -- a downtime charge of $77,970 for damages asserted by Hayashi customers as a result of the unavailability of the Fabric. The parties have conducted extensive, arm's-length negotiations to resolve the outstanding issues associated with the prepetition liabilities and recoupment claims. The parties have agreed that: * Hayashi will waive its rights, if any, to the Downtime Claim as it relates to the Debtors; * Hayashi is permitted to assert a recoupment claim in the full amount of the Obsolescence Claim; * Hayashi is permitted to assert a recoupment claim in the amount of $145,038 on account of the Shipment Claim; * the permitted recoupment claim amounts will be set-off and deducted from the Debtors' receivable; * Hayashi will pay $150,000 to the Debtors within 15 business days after Court approval of the Stipulation., which payment will satisfy in full the Debtors' Receivable, any and all claims that Hayashi may hold against the Debtors on account of the delayed availability of the Fabric, the Recoupment Claims and any other claims relating to the Invoice; and * The Debtors and Hayashi release each other from any and all claims, actions, rights or allegations with respect to any amounts owed to the Debtor, or the delayed availability of the Fabric. 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. 49; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CORUS HARDWARE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Corus Hardware Corp. P.O. BOX 1028 Catano, PR 00963 Bankruptcy Case No.: 07-00067 Chapter 11 Petition Date: January 9, 2007 Court: District of Puerto Rico (Old San Juan) Judge: Sara E. De Jesus Kellogg Debtor's Counsel: Alexis Fuentes Hernandez, Esq. P.O. Box 9022726 San Juan, PR 00902-2726 Tel: (787) 607-3436 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ International Steel $808,245 7975 Northwest 56th Street Miami, FL 33166 West Indian Product Corp. $164,255 P.O. Box 364427 San Juan, PR 00936-4427 SSW Realty, Inc. $120,000 Calle B Lot, 21 Luchetti Park Bayamon, PR 00961 Alabama Metal Industries Co. $55,460 P.O. Box 11407 Birmingham, AL 35246-035 China Rey Industrial Co. $54,685 Corazon 11, Milaville Rio Piedras, PR 00926 Florida Tube Corp. $32,667 Mendez & Company $21,319 Autoridad De Energia Electrica $20,553 La Cruz Azul De Puerto Rico $19,854 Eastern American Insurance Agency $10,832 Ames True Temper, Inc. $7,000 Triant Consulting Services $5,626 Puerto Rico Wire Company $5,380 Best Petroleum $4,278 Inter-Strap $2,448 Lcdo. Victor M. Rivera Torres $2,417 Ramon Pacheco $2,365 Priority Ro-Ro Services, Inc. $2,215 AAA de Puerto Rico $2,147 Mercedes Benz Credit $2,045 CROWN CASTLE: Unit Inks New $250 Million Revolving Credit Facility ------------------------------------------------------------------ Crown Castle International Corp. disclosed that on Jan. 9, 2007, its direct wholly owned subsidiary Crown Castle Operating Company entered into a new $250 million senior revolving credit facility which will mature on Jan. 8, 2008. The proceeds of the loans under the New Facility may be used for general corporate purposes, including investments, repurchases of shares of common stock of Crown Castle and dividends. The New Facility remained undrawn at closing. About Crown Castle Crown Castle International Corp. -- http://www.crowncastle.com/ -- engineers, deploys, owns and operates shared wireless infrastructure, including extensive networks of towers. Crown Castle offers wireless communications coverage to 68 of the top 100 United States markets and to substantially all of the Australian population. Crown Castle owns, operates and manages over 10,600 and over 1,300 wireless communication sites in the U.S. and Australia, respectively. * * * As reported in the Troubled Company Reporter on Dec. 1, 2006, Fitch placed a BB+ rating on Crown Castle's $249,000,000 class F Series 2006-1 commercial mortgage pass-through certificates and a BB rating to the company's $83,000,000 Class G Series 2006-1 commercial mortgage pass-through certificates. CROWN CASTLE: Stockholders Approve Global Signal Merger ------------------------------------------------------- Crown Castle International Corp.'s stockholders have voted to approve the merger of Global Signal Inc. into a subsidiary of Crown Castle at a special meeting held on Jan. 11, 2007. Global Signal's stockholders also voted to approve the Merger at a separate special meeting held on the same date. More than 99% of shares represented at the meeting and more than 87% of the outstanding shares of Crown Castle were voted in favor of the Merger at the Crown Castle stockholders meeting. More than 99% of shares represented at the meeting and more than 91% of the outstanding shares of Global Signal were voted in favor of the Merger at the Global Signal stockholders meeting. "We are excited about the combination of Crown Castle and Global Signal, which will create the largest US wireless tower company with the best-located assets in the industry, with approximately 55% and 72% of our towers in the top 50 and top 100 BTA's, respectively," stated John P. Kelly, President and Chief Executive Officer of Crown Castle. "The complementary nature of the US portfolios and our experienced management team position Crown Castle to remain a leading provider of infrastructure to the wireless industry. Further, we believe this Merger will add significant value to our shareholders by enhancing our expected long-term revenue and cash flow growth rates." About Crown Castle Crown Castle International Corp. -- http://www.crowncastle.com/ -- engineers, deploys, owns and operates shared wireless infrastructure, including extensive networks of towers. Crown Castle offers wireless communications coverage to 68 of the top 100 United States markets and to substantially all of the Australian population. Crown Castle owns, operates and manages over 10,600 and over 1,300 wireless communication sites in the U.S. and Australia, respectively. * * * As reported in the Troubled Company Reporter on Dec. 1, 2006, Fitch placed a BB+ rating on Crown Castle's $249,000,000 class F Series 2006-1 commercial mortgage pass-through certificates and a BB rating to the company's $83,000,000 Class G Series 2006-1 commercial mortgage pass-through certificates. DANA CORP: Court Approves Assumption of 11 Real Property Leases --------------------------------------------------------------- The Honorable Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York authorized Dana Corp. and its debtor-affiliates to assume 11 unexpired non-residential real property leases: Lessor Address Lease Expiry ------ ------- ------------ Circleport Reflections, LLC Erlanger, KY 05/31/11 Crosspoint Industrial Holding Charlotte, NC 02/28/08 Dura-Craft Millwork, Inc. Camden, TN 04/30/08 Eisenhower Commerce Center Ann Arbor, MI 07/15/08 Johnston Properties Elmhurst, IL 07/31/09 Kinsley Equities II Mechanisburg, PA 12/31/08 Louis & Dianne Bernadicou Stockton, CA 02/28/08 PR I Bell Tech Industrial Bell, CA 11/30/08 Robert M. Sander Blacklick, OH 07/31/09 RREEF Management Company Lenexa, KS 01/31/12 Stone Mountain Industrial Orangeburg, SC 12/31/17 All the leases comprise all of the unexpired leases currently subject to the Dec 31, 2006, deadline, Corinne Ball, Esq., at Jones Day, in New York, related. The Debtors maintained that the Leases are necessary to their business operations and may be essential to their future business operations and restructuring efforts. In addition, certain of the Leases may be valuable in connection with the sale of certain of the Debtors' businesses or otherwise may have a realizable value for the Debtors in the market. To preserve and maximize the potential market value, the Debtors reserved the right to sell and assign each Lease at a future date. The Debtors asserted that the immediate rejection of the Leases and turnover of the underlying properties would be disruptive and costly at this time. In connection with the assumption of the Leases, the Debtors proposed to pay each lessor the applicable amount to cure all defaults under each Lease. 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). DANA CORP: Moody's Puts Low-B Ratings on Amended DIP Financing -------------------------------------------------------------- Moody's Investors Service has assigned ratings to the amended $1.55 billion debtor-in-possession financing of Dana Corporation as a Debtor-in-Possession. The assigned ratings include a B1 rating for the $650 million (downsized from $750 million in the original DIP facility) super priority senior secured asset based revolving credit, and a B2 rating for the $900 million (upsized from $700 million in the original DIP facility) super priority senior secured term loan B. The ratings are assigned on a point-in-time basis, will not be monitored going forward, and, as a result, do not have an assigned rating outlook. While a plan of reorganization continues to be developed, the ratings incorporate Dana's progress on identifying restructuring components in the areas of improved pricing terms with its OEM customers, facility rationalizations, and overhead cost reductions which should facilitate an eventual emergence from Chapter 11. The ratings also continue to reflect the challenging automotive environment for North American OEMs. The ratings also consider the additional protection afforded DIP lenders by the collateral package underlying both facilities, and the benefits of a borrowing base governing availability under the revolving credit facility. The $650 million asset based revolving credit facility has a super priority first lien claim on all domestic current assets and a second lien on assets securing the DIP Term Loan B. The DIP Term Loan B has a super priority first lien claim on all domestic assets (excluding current assets), 66% of the stock of the foreign subsidiaries, and a second lien on assets securing the asset based revolving credit facility. Ratings assigned on a point in time basis: Dana Corporation as a Debtor-in-Possession * $650 million secured revolving credit, B1 * $900 million upsized secured term loan B, B2 The additional cash provided by the upsized term loan will be used to provide additional liquidity to Dana over the remainder of the life of the existing DIP facility. This need is driven by the impact of North American production declines during the last quarter of 2006, and the up front cash cost of planned restructuring initiatives in 2007. The DIP facilities will continue to be guaranteed by substantially all of Dana's direct and indirect domestic subsidiaries that filed for Chapter 11 protection. Both the revolving credit and upsized term loan B will continue to have a maturity of the earlier of March 3, 2008, or the date of substantial consummation of a Plan of Reorganization. The revolving credit is governed by a borrowing base of up to 85% of eligible trade accounts receivables of the DIP Loan Parties, and up to the lesser of (A) 85% of the net orderly liquidation value of eligible inventory of the DIP Loan Parties and (B) 65% of eligible inventory. Due to Dana's considerable exposure to U.S. auto OEMs the revolving credit borrowings are also subject to concentration limits. Moody's assessment of risk for DIP facilities addresses two factors. The first is the probability of the company successfully reorganizing and emerging from bankruptcy with DIP indebtedness being paid in full. The second, should reorganization be unsuccessful, is the extent of protection provided to DIP lenders by the liquidation value and character of the collateral. Moody's continues to expect that it is probable that Dana will emerge from bankruptcy. Dana is a leading global automotive supplier of light-and heavy-drivetrain products, structures, thermal, and sealing systems with long-standing relationships with leading OEMs. The revolving credit facility and additional cash from the upsized term loan is expected to provide sufficient liquidity through the planned reorganization. Dana has made progress on identifying targets for cost reduction and profit improvements. However, implementation of many of these initiatives is still in process. Restructuring targets include renegotiated customer contracts, savings from facility closures and consolidations, overhead cost improvements, and reductions in labor and benefit costs. These initiatives are expected to primarily impact Dana's domestic debtor operations. As a result of these initiatives and the upsized term loan, availability under the downsized DIP revolving credit facility is expected to be adequate through its maturity. Dana's international operations are expected to remain profitable, tempered by lower expected growth in demand in Western Europe. Dana will also continue to benefit from shifting its manufacturing base to lower cost countries. The proposed amendments to the DIP facilities also include accommodations to permit increased secured debt at certain foreign subsidiaries and permit the efficient repatriation of funds from foreign subsidiaries. The success of these efforts will supplement domestic liquidity. Dana continues to be exposed to North American production volumes and the loss of market share of the Big 3 OEMs. Dana also remains exposed to fluctuations in its raw material costs with a limited ability to pass increases on to customers. While Moody's believes the potential for labor actions which could disrupt automotive production lessened over the recent months, the ratings reflect the risk of a potential disruption at key customers, The proposed amendment to the DIP facility includes modifications to the minimum consolidated EBITDAR financial covenant ("EBITDAR" as defined with adjustments for certain restructuring and bankruptcy administrative costs as well as non-recurring items added back) which delays the ramp up minimum thresholds under this test and could provide flexibility in the event of any labor disruptions.. The B1 rating for the revolving credit benefits from the first lien pledge of current assets and will continue to be supported by regular borrowing base reporting, and quarterly field examinations. This collateral package, along with the advance limitations contained in the borrowing base is expected to provide strong asset protection for revolving credit lenders. The B2 rating for the term loan considers its first claim on fixed assets and stock of subsidiaries, as well as its second priority claim on current assets behind the revolver. An updated appraisal of real estate, and machinery and equipment was not performed as part of the facility amendment. However, considering the net orderly liquidation values used at the inception of the DIP facility and the current estimated values of the stock of the foreign subsidiaries, the term loan B continues to be adequately supported. Dana Corporation, headquartered in Toledo, OH, is a global supplier of drivetrain, chassis, structural, and engine technologies for the automotive, engine, heavy truck, off-highway, industrial and leasing markets. Dana Credit Corporation is a wholly owned leasing and finance subsidiary of Dana Corporation, which is in the process of being liquidated. Dana has annual sales of approximately $7.6 billion. DANA CORP: S&P Rates $1.55 Billion DIP Facilities at BB- -------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating to Dana Corporation's proposed $1.55 billion debtor-in-possession facilities, which consist of: * a $650 million revolving credit facility and * a $900 million term loan, both maturing in March 2008. The rating reflects Standard & Poor's view of Dana's likelihood of reorganizing in Chapter 11 bankruptcy proceedings, as well as the level of collateral protection afforded by the assets securing the DIP loans. The proposed $900 million DIP term loan, which is subject to bankruptcy court approval of an amendment to Dana's credit agreement, reflects a $200 million addition to an existing $700 million DIP term loan, which the company obtained in March 2006. The incremental $200 million in proceeds would be used to improve Dana's liquidity, which would have been stretched by increasing production cuts by its biggest automaker customers in North America. Separately, Dana has notified its DIP lenders that it is reducing the size of its DIP revolving credit facility to $650 million from the original $750 million, largely because lower sales levels due to the automaker production cuts have reduced the amount of availability under the facility's borrowing base. Dana expects to further reduce the unused portion of its revolving credit facility by another $50 million at a later date, reflecting planned asset sales. With the new DIP facilities, Dana would have $942 million of debt and about $1.6 billion of prepetition debt which is subject to compromise. DELPHI CORPORATION: Former Employees Can Seek Fee Advancement ------------------------------------------------------------- The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York authorizes J.T. Battenberg III, Alan S. Dawes, Paul R. Free, John G. Blahnik, Milan Belans, Catherine Rozanski, Pamela Geller, Peter Janak, and Laura Marion, Delphi Corp. and its debtor-affiliates' former officers and employees, to seek advancement from the proceeds of the Insurance Policies subject to these terms and conditions: (a) Any Advancements will not modify, amend, abridge, or compromise any term, condition, limitation, or right contained in the Insurance Policies; (b) Any Advancements will not modify, amend, abridge, compromise, or deprive any interested party of any right, protection, burden, obligation, or duty otherwise applicable or available under the Bankruptcy Code, or any other federal, state, local, or common law, statute, regulation, or ordinance; (c) From the effective date of the Order, during the pendency of the Debtors' Chapter 11 cases, the Former Employees and any other similarly situated insureds who receive any advancements under the Insurance Policies will submit reports to the Debtors and the Official Committee of Unsecured Creditors setting forth the amounts, if any, actually disbursed from the Policies, at least every 10th day after the close of each month; (d) All Advancements of defense costs will be capped at an aggregate amount equal to $5,000,000, without prejudice to the rights of the Former Employees, the Debtors, or any other parties-in-interest to seek or oppose additional advancements if and when that aggregate amount has been expended; and (e) Any Advancements of defense costs at or within the $5,000,000 aggregate cap will not be subject to challenge by the Debtors, their estates, their creditors, or other parties-in-interest. The National Union Fire Insurance Company of Pittsburgh, Pennsylvania, is permitted, but not required, to grant advancements for Defense Costs actually and reasonably incurred in connection with any claim entitled to coverage under the terms of the Policies, Judge Drain rules. The Court will address any disputes on whether the proceeds of the Insurance Policies constitute property of the Debtors' estates at a later date. 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). DELTA AIR: Want Huron to Provide Valuation Services --------------------------------------------------- Delta Air Lines, Inc., and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of New York for authority to employ Huron Consulting Services LLC, practicing as Huron Consulting Group, to provide fresh-start reporting and valuation services to them, nunc pro tunc to December 1, 2006, pursuant to a professional services agreement dated December 1, 2006. SOP 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code issued by the Accounting Standards Board of the American Institute of Certified Public Accountants requires the Debtors to do Fresh-Start Reporting, which includes: (a) recording the effects of their plan of reorganization; (b) revaluing their assets and liabilities in their books of entry; (c) developing an emergence balance sheet; and (d) early adopting any new accounting pronouncements. Huron is a multi-disciplined consulting firm with practices in areas including bankruptcy, financial restructuring advisory, valuation and litigation-related services for public and private companies, lenders, creditors, equity holders and impartial constituents, with offices throughout the United States. Edward H. Bastian, Delta Air Lines, Inc.'s executive vice president and chief financial officer, relates Huron has substantial experience in providing similar services for other companies in Chapter 11, including airlines. Most recently, Huron has provided Fresh-Start Reporting services to UAL Corporation and ATA Holdings Corp. Michael C. Sullivan, managing director of Huron, states that Huron's typical engagements include providing valuation, corporate finance, restructuring and turnaround services to companies and lenders; performing financial investigations, litigation analysis, expert testimony and forensic accounting for attorneys; and providing strategic planning, operational consulting, strategic sourcing and organizational and technology assessments in a variety of industries, including transportation, manufacturing, healthcare, higher education, legal, consumer products and energy. Huron's expertise in management, finance and accounting, combined with its understanding of the complex interests of stakeholders in a bankruptcy proceeding, allow Huron's professionals to provide the insight stakeholders need to weigh the risks and benefits of various actions in a bankruptcy setting, Mr. Bastian tells the Court. The Debtors believe that Huron's extensive experience and qualifications in providing the services to its clients, and the firm's familiarity with the Debtors' industry, businesses and financial affairs, will enable Huron to represent the Debtors in a cost-effective, efficient and timely manner. Mr. Bastian informs the Court that pursuant to a professional services agreement dated January 26, 2006, Huron has provided, and may in the future provide and be compensated for, certain non-legal ordinary course services to the Debtors, including advisory assistance in the interpretation and application of generally accepted accounting principles for companies in Chapter 11, and assisting in year-end goodwill impairment analysis. The Debtors paid $347,421 for the services provided by Huron. Delta recently requested Huron to expand its work scope to include items detailed in their December 2006 professional services agreement. Delta has informed the Office of the United States Trustee about the expansion. Based on Delta's discussion with the U.S. Trustee, Huron is seeking Court approval as a retained professional. The Debtors expect Huron to provide Fresh-Start Consulting, in which Huron will: (a) assist management in applying Fresh-Start adjustments to, and disclosures for, the projected financial information; (b) assist management in the development of an implementation approach for Fresh-Start Reporting, culminating in a strategy and work plan for the project; (c) assist management in connection with its recording of adjustments to reflect the impact of the discharge of debt and other plan of reorganization requirements, including related tax implications; (d) assist management in connection with its recording of adjustments to assets and liabilities as required by SOP 90-7; (e) assist management with its preparation of analyses supporting adjustments; (f) assist management with respect to responses to requests from Delta's external auditors with respect to Fresh- Start Reporting (g) assist management in connection with its determination of reorganization related and revaluation adjustments necessary to record these items to the books of entry of the appropriate legal entities, including, if necessary, preparation of supporting materials; (h) work with accounting, legal and tax advisors to assist management in determining the allocation of the earnings impact to separate legal entities within the Delta structure in accordance with statutory requirements; (i) assist management in connection with its estimating of recoveries to claimants for accrual accounting purposes, including comparison with Delta's claims database to estimate liabilities related to contingent, unliquidated and disputed claims; (j) assist management in allocation of reorganization value to Delta's legal entities; (k) assist management in preparing supporting accounting information for timely record keeping matters and financial reporting requirements; (l) assist management in preparing accounting information and disclosures in support of public financial filings such as Form 10-K's or 10-Q's; (m) assist management with regard to valuation matters that impact financial reporting; and (n) assist management with memoranda supporting accounting positions. Huron will also provide the Debtors with Valuation Consulting, in which the firm will: (1) assist management in the identification of tangible and intangible assets; (2) assist management with its estimate of the fair value of specific assets and liabilities, including performing valuations of certain assets and liabilities, as agreed to with management; (3) assist with assignment of values to reporting units, as required; (4) discuss valuation methodology and results with Delta's external auditors; and (5) assist Delta and its advisors with asset and liability valuation adjustments. The Debtors have retained as financial advisors during their Chapter 11 cases: -- The Blackstone Group L.P., to advise them on their capital raising efforts and certain valuation matters related to their equity; and -- Giuliani Capital Advisors LLC, to advise them in restructuring initiatives, assist in cash flow and liquidity forecasting and reporting and communicate with the various constituencies in Chapter 11. Huron will work closely with the Debtors and each of their retained professionals to prevent duplication of services, Mr. Bastian assures the Court. The Debtors will pay Huron a $290,000 monthly advisory fee, of which $165,000 will be for Fresh-Start Consulting and $125,000 will be for Valuation Consulting. Adjustments will be made when appropriate. Huron will be reimbursed for reasonable out-of-pocket expenses incurred, on a monthly basis. Mr. Sullivan discloses that Northwest Airlines Corporation; UAL; and ATA Holdings have retained the firm in their Chapter 11 cases. UAL and ATA Holdings both confirmed Chapter 11 plans during 2006. He states that Huron continues to provide services to Northwest and UAL. Mr. Sullivan assures the Court that the Huron personnel providing services as part of the engagement team to the Debtors will not provide services to Northwest. He has worked with the Northwest case in 2006 for consultation services, but has no current involvement with Northwest. James Lukenda, Huron managing director, is leading the Northwest engagement and has devoted approximately five hours to the Debtors' Chapter 11 cases, primarily for consultations on the technical interpretation and application of general bankruptcy accounting principles relating to the airline industry, and on the general application of SOP 90-7. Allen Arnett and Joseph DiSalvatore, may from time to time have high-level consultations and discussions relating to the application of intangible asset and liability valuation principles generally, Mr. Sullivan says, referring to Huron employees providing valuation services to the Debtors and Northwest as part of separate engagement teams. "At no time during any of these consultations will confidential information ever be discussed," he assures the Court. The firm may have in the past, and will likely in the future, be working with or against other professionals involved in the Debtors' Chapter 11 cases. However, none of the business relations constitute interests materially adverse to the Debtors in matters upon which Huron is to be employed, and none are in connection with the Case, Mr. Sullivan tells the Court. Huron will not accept any engagement or perform any service in the Debtors' Chapter 11 Cases for entities other than the Debtors. Huron will continue to provide professional services to entities that may be parties-in-interest to the Debtors' Chapter 11 cases, provided that the services do not relate to or have any direct connection with, the bankruptcy cases. Mr. Sullivan attests that Huron is a disinterested person, as defined in Section 101(14) of the Bankruptcy Code. About Delta Air Headquartered in Atlanta, Georgia, Delta Air Lines (OTC: DALRQ) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELTA AIR: Wants Court Approval on Bombardier Letter Agreement -------------------------------------------------------------- After arm's-length, good faith negotiations, Delta Air Lines, Inc., and Bombardier, Inc., have entered into a letter agreement dated Jan. 4, 2007, which provides the foundation for a definitive aircraft purchase and sale agreement and related documentation. Pursuant to the Letter Agreement, Delta will purchase from Bombardier 30 Canadair Regional Jet Series 900 aircraft model CL-600-2D24 -- the Firm Aircraft -- with options to purchase an additional 30 Aircraft -- the Option Aircraft. In addition, pursuant to the Letter Agreement, Bombardier has committed to provide firm backstop financing for Delta's purchase of the Aircraft. According to Richard F. Hahn, Esq., at Debevoise & Plimpton LLP, in New York, the transactions under the Letter Agreement will further Delta's reorganization efforts by, among other things, permitting Delta to: (i) acquire the Aircraft, which are necessary for Delta's future operations and business, on pricing and other terms favorable; and (ii) receive the benefit of various fleet support arrangements with Bombardier related to training, maintenance, repair and other support relating to the Aircraft. Mr. Hahn relates that the Aircraft are 76-seat regional jets, which will permit Delta to expand into new markets that it cannot now profitably serve and to upgrade, where appropriate, markets being served with smaller aircraft that can support 76-seat aircraft. Delta relates that it seeks the U.S. Bankruptcy Court for the Southern District of New York's authority to: (a) enter into the Letter Agreement; and (b) negotiate, execute and perform its obligations under the Purchase Agreement including, without limitation, to: * purchase the Aircraft; * pay certain pre-delivery payments relating to initial orders of the Aircraft; and * obtain secured postpetition financing in connection with the purchase of the Aircraft, and grant security interests, liens and administrative expense claims with respect to it. Delta also seeks the Court's authority to file the Letter Agreement and, to the extent applicable, the related agreements under seal. Copies of the Letter Agreement and related agreements will be provided to the professionals to the Official Committee of Unsecured Creditors Purchase of CRJ900 Aircraft Pursuant to the Purchase Agreement under the Letter Agreement, Delta will purchase the 30 Firm Aircraft from Bombardier with delivery dates ranging from September 2007 through February 2010, and will have options to purchase the additional 30 Option Aircraft with delivery dates ranging from January 2008 through March 2009. The Letter Agreement sets forth a schedule for payments to be made by Delta in connection with the delivery of each Aircraft and further provides that, due to the applicable near-term delivery dates for certain Aircraft, advance payments with respect to the Aircraft will be made within five business days of the execution and delivery of the Purchase Agreement. Under certain terms and conditions, Bombardier will permit Delta, at no penalty or charge, to: (a) reschedule the delivery dates of some of the Aircraft; (b) switch delivery positions for any Aircraft in lieu of exercising additional options in order to satisfy Delta's short-term delivery needs; and (c) convert orders for the Aircraft to Canadair Regional Jet Series 700 model aircraft. Financing Package Delta will not be obligated to enter into the Purchase Agreement unless it includes a firm commitment from Bombardier to provide Delta or its assignee with firm backstop financing for the purchase of the Aircraft on terms acceptable to Delta and no less favorable than those set forth in the Letter Agreement. The Letter Agreement sets forth the interest rate and term of the loans. Each loan will be secured by the Aircraft financed by the loan. The Purchase Agreement will include the agreed-upon form of definitive loan documentation evidencing the financing for each of the Aircraft, including, without limitation, the terms and conditions upon which the financing may be assignable to other operators to which Delta assigns delivery of any Aircraft. With respect to the financings, Bombardier, a lender arranged by Bombardier, or any indenture or security trustee, as the case may be, will be entitled to: (i) an administrative expense priority claim pursuant to Sections 503(b)(1) and 507(a)(2) of the Bankruptcy Code with respect to Delta's obligations under the Financing Documentation; and (ii) valid first priority security interests and liens in the Aircraft financed under the Financing Documentation pursuant to Section 364(c)(2). No other liens, including liens of a kind under Sections 364(d) and 364(c), will be granted to any third party on that Aircraft absent the express consent of Bombardier or the applicable assigns. The automatic stay will be lifted, upon written notice to Delta and the Official Committee of Unsecured Creditors, for Bombardier to exercise remedies in the event that Delta defaults under the Financing Documentation. Additional Terms Delta and Bombardier have agreed that, upon: (a) the conversion of Delta's Chapter 11 case to a case under Chapter 7 of the Bankruptcy Code; (b) Delta's filing of a plan of liquidation under Chapter 11 of the Bankruptcy Code; (c) the dismissal of Delta's Chapter 11 case; or (d) Bombardier's termination of the Agreement resulting from Delta's default prior to the effective date of its plan of reorganization, Bombardier's sole and exclusive remedy against Delta and its estate will be an administrative expense claim under Sections 503(b)(1) and 507(a)(2) for Delta's obligations arising under the Purchase Agreement. Bombardier has agreed that, to the extent that Delta assigns its rights in any Aircraft acquired pursuant to the Purchase Agreement, Delta may assign certain benefits and other agreements between Delta and Bombardier. About Delta Air Headquartered in Atlanta, Georgia, Delta Air Lines (OTC: DALRQ) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) D & M LAND: Case Summary & 13 Largest Unsecured Creditors --------------------------------------------------------- Debtor: D & M Land Company, LLC 10701 Glenwood Avenue Raleigh, NC 27617 Bankruptcy Case No.: 07-00054 Type of Business: The Debtor develops and manages real estate. Chapter 11 Petition Date: January 10, 2007 Court: Eastern District of North Carolina (Raleigh) Judge: A. Thomas Small Debtor's Counsel: Gregory B. Crampton, Esq. Nicholls & Crampton, P.A. P. O. Box 18237 Raleigh, NC 27619 Tel: (919) 781-1311 Fax: (919) 782-0465 Total Assets: $6,500,000 Total Debts: $4,950,000 Debtor's 13 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Macon M. White Promissory Note $34,000 1835 Eaton Ferry Road Littleton, NC 27850 Wake County Revenue Department 2006 Real Property $28,085 P.O. Box 96084 Taxes Charlotte, NC 28296 Gaston Pointe Contractors LLC $4,268 1835 Eaton Ferry Road Littleton, NC 27850 Allen & Woodall, LLP Unknown AT&T Unknown Austin Security Unknown Bobbitt Design Build, Inc. Unknown Boxley, Bolton, Garber and Unknown Haywood, LLP Cameron M. Harris & Co. Unknown City of Raleigh Unknown Core Building Company Unknown Duke Energy Unknown Verizon South Unknown Wachovia Insurance Services Unknown DURA AUTOMOTIVE: U.S. Trustee Objects to Miller Buckfire Retention ------------------------------------------------------------------ Kelly Beaudin Stapleton, the United States Trustee for Region 3, objects to DURA Automotive Systems, Inc. and its debtor affiliates' application to employ Miller Buckfire & Co., LLC, to the extent the firm is seeking approval for its request to apply to the U.S. Bankruptcy Court for the District of Delaware for its compensation pursuant to the standard set forth under Section 328(a) of the Bankruptcy Code. William K. Harrington, Esq., trial attorney, notes that the Application provides that the U.S. Trustee can only object to the fees of Miller Buckfire pursuant to the standards set forth in Section 328. In effect, according to Mr. Buckfire, the Debtors are seeking to have the Court approve not only the firm's retention, but to determine at the time of the retention that the fees they have agreed to pay to the firm are reasonable under the standards set forth in Section 328(a). The U.S. Trustee asserts that any present determination with respect to the reasonableness of the fees is premature and inconsistent with Sections 330 and 331, and merely serves to limit the Court's later review of the reasonableness of the fees as contemplated by those sections. Instead, Mr. Harrington asserts, review and approval by the Court should be made at an interim or final fee application hearing, when the benefit of the firm's services and the reasonableness of the fees can be better evaluated, with all rights of interested parties fully preserved until then. Mr. Harrington explains that the issue of the reasonableness of Miller Buckfire's fees is of particular concern because the fees requested are substantial and it is impossible at the present time to determine if the fees are reasonable. He notes that the firm will be paid a monthly fee of $200,000, plus a Transaction Fee of 1% of the aggregate gross consideration from a sale of the Debtors' assets or a flat Transaction Fee of $7,700,000 if a plan of reorganization is confirmed. Mr. Harrington notes, at the present time, it is impossible for any party to evaluate these fees as no sales have currently been proposed by the Debtors and no plan of reorganization has been proposed. The U.S. Trustee also objects to the Application on these grounds: (i) The liability cap provisions in the Engagement Letter protect Miller Buckfire's exposure if indemnification does not apply by limiting its damages to the fees it actually received. The U.S. Trustee asserts that these provisions are unreasonable and contrary to standard practice in the District of Delaware; and (ii) the Engagement Letter provides that the firm is providing services as an independent contractor and that the firm's employment does not create a fiduciary relationship between the firm and the Debtors. The provision is inconsistent with Section 327(a) of the Bankruptcy Code, the U.S. Trustee says. A professional employed on behalf of a debtor-in-possession under Section 327(a) owes fiduciary obligations to the debtor and its creditors to act solely in the best interests of the estate. In addition, given the breadth of the client-relationships identified by Marc D. Puntus, a managing director at Miller Buckfire, in his affidavit, the U.S. Trustee wants the firm to provide clarification as to its ability to take positions adverse to Debtor's secured and unsecured creditors. Moreover, The U.S. Trustee is concerned with certain provisions in the Engagement Letter regarding the expenses for which Miller Buckfire can be reimbursed. Miller Buckfire Responds Harold Neu, Esq., at Miller Buckfire, in New York, clarifies that the firm, like other investment bankers, does not charge for its services on an hourly basis. The customary practice of Miller Buckfire and other investment bankers is to charge fixed monthly fees plus additional fees that are payable upon the occurrence of certain transactions or events. However, Mr. Neu notes, if there is a Sale of substantially all assets, Miller Buckfire will receive only the Sale Transaction Fee and not a Restructuring Transaction Fee. Miller Buckfire submits that its proposed fees should be approved pursuant to Section 328(a). Section 328(a), not Section 330, is the section that addresses non-hourly fee arrangements such as Miller Buckfire's. Mr. Neu notes that there are numerous recent cases in this District in which Miller Buckfire's monthly fees and transaction-based fees have been approved pursuant to Section 328(a). This engagement should not be treated differently, he says. Miller Buckfire also has agreed to other modifications to the Engagement Letter that address the remaining issues raised by the U.S. Trustee. At the U.S. Trustee's behest: (i) the limited liability provision in the Engagement Letter is eliminated. (ii) the proposed order approving the application provides modifications to the indemnity provisions and the limitation of liability to conform to the orders customarily entered in the District of Delaware and in other cases involving the firm. About DURA Automotive 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: Discloses David L. Harbert's Terms of Employment ----------------------------------------------------------------- Dura Automotive Systems Inc. has informed the U.S. Securities and Exchange Commission that it has entered into an employment agreement with David L. Harbert as its interim vice president and chief financial officer, which agreement is subject to the U.S. Bankruptcy Court for the District of Delaware's approval. The terms of the agreement are: (a) The Employment Agreement will be deemed effective as of December 9, 2006; (b) As chief financial officer, Mr. Harbert will: * perform all duties as are consistent therewith as the Chief Executive Officer or the Board of Directors will designate; * report directly to Dura's chief executive officer; * devote his full time and attention and expend his best efforts, energies and skills on behalf of Dura in the performance of his duties and responsibilities; (c) Dura will pay Mr. Harbert $43,200 a month payable in accordance with the Company's normal payroll periods and procedures, but no less frequently than on a semi-monthly basis. Dura, in its sole discretion, may increase Mr. Harbert's salary. Dura will pay Mr. Harbert an early termination fee should it elect to terminate the Employment Agreement within 90 days of the Beginning Date. Dura will pay Mr. Harbert in an amount such that the total of Salary and Early Termination Fee paid is equal to $2,250 per day worked by Mr. Harbert from the Beginning Date to the date of termination of the agreement; (d) During the course of Mr. Harbert's employment, he will remain a partner at Tatum. Mr. Harbert will share with Tatum a portion of his economic interest in any stock options or equity bonus that Dura may, in its discretion, grant him. He may also share with Tatum a portion of any cash bonus and severance the Company may, in its discretion, pay him, to the extent specified in that certain Interim Engagement Resources Agreement between Dura and Tatum. Dura will promptly reimburse Mr. Harbert directly for reasonable travel and out-of-pocket business expenses in accordance with Dura's expense reimbursement policies and procedures and a per diem of $50.00; (e) Mr. Harbert will be eligible for: * any 401(k) plan offered to Dura's senior management in accordance with the terms and conditions of that 401(k) plan; * holidays consistent with Dura's policy as it applies to senior management; and * vacation accrued at 1.67 days per month. Mr. Harbert be exempt from any waiting periods required for eligibility under any benefit plan of Dura, other than a qualified retirement plan or if that exemption would otherwise cause impermissible discrimination under the income tax laws applicable to employee benefit plans; (f) Mr. Harbert must receive written evidence that Dura maintains directors' and officers' insurance to cover him in an amount comparable to that provided to senior management of the Company at no additional cost. Dura will maintain that insurance at all times while the Employment Agreement remains in effect. Furthermore, Dura will maintain that insurance coverage with respect to occurrences arising during the term of the Employment Agreement for at least three years after the termination or expiration of the Employment Agreement, or will purchase a directors' and officers' extended reporting period, or "tail," policy to cover Mr. Harbert. Dura has also agreed to indemnify Mr. Harbert for any claim arising from, related to or in connection with the his performance of the services. (g) Dura or Mr. Harbert may terminate the Employment Agreement for any reason on at least 30 days' prior written notice. Mr. Harbert will continue to render services and to be paid during that 30-day period, regardless of who give that notice; (h) Mr. Harbert may terminate the agreement immediately if Dura has not remained current in its obligations under the Employment Agreement or the Tatum Agreement, or if Dura engages in, or asks him to engage in or to ignore, any illegal or unethical conduct; (i) Dura may terminate the Employment Agreement immediately for cause; and (j) Either party may terminate the agreement in the event the Court declines to approve the Employment Agreement on or before January 23, 2007. Service Agreement with Mr. Harbert's Firm Dura entered into a related services agreement dated Dec. 20, 2006, with Tatum for the provision of resources and support in connection with Mr. Harbert's employment. The Tatum Agreement is subject to Court approval and will be deemed effective as of Dec. 9, 2006. Pursuant to the Tatum Agreement, Dura will pay directly to Tatum a fee equal to 25% of Mr. Harbert's salary as partial compensation for resources provided. In the event Mr. Harbert will be paid a bonus, Dura will pay Tatum, whether cash or equity, 25% of the total bonus paid by Dura during the term of the Tatum Agreement. Dura will have the opportunity to make Mr. Harbert a full-time permanent member of Dura management at any time during the term of the Tatum Agreement entering into another form of agreement. The Tatum Agreement will terminate immediately upon the earlier of: (a) the effective date of the Termination; (b) expiration of Mr. Harbert's employment with Dura; or (c) Mr. Harbert ceasing to be a partner of Tatum. During the 12-month period following termination or expiration of the Tatum Agreement, other than in connection with another agreement with the firm, Dura will not employ Mr. Harbert or engage him as an independent contractor, to render services of substantially the same nature as those for which Tatum is making him available pursuant to the Agreement. The parties agree that a breach by Dura of this provision would result in the loss to Tatum of Mr. Harbert's valuable expertise and revenue potential. Thus, in the event of breach, Tatum will be entitled to receive liquidated damages in an amount equal to 45% of Mr. Harbert's Annualized Compensation. In the event a court or arbitrator, as applicable, determines that liquidated damages are not appropriate for the breach, Tatum will have the right to seek actual damages. The amount will be due and payable to Tatum upon written demand to Dura. The Tatum Agreement defines "annualized compensation" as Mr. Harbert's most recent annual salary and the maximum amount of any bonus for which he was eligible with respect to the then current bonus year. Also, pursuant to the Tatum Agreement, Dura will provide Tatum or Mr. Harbert written evidence that it maintains directors' and officers' insurance covering the Partner as it covers similarly situated executive employees of the Company. 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. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). EASTMAN KODAK: Onex Deal Prompts Moody's to Continue Review ----------------------------------------------------------- Moody's Investors Service commented that it is continuing its review for possible downgrade for the Eastman Kodak Company, which will focus on not only the company's reported sale of the Kodak Health Group, but also on the fundamental operating performance of the company. Kodak reported that it has reached an agreement to sell its Health Group to Onex Healthcare Holdings, a subsidiary of Onex Corporation, for up to $2.55 billion, comprised of $2.35 billion in cash at closing, plus up to $200 million in additional future payments if Onex achieves an internal rate of return in excess of 25% on their investment. Moody's expects it will likely conclude its review concurrent with the closing of the Health Group sale, which Kodak expects to occur by June 30, 2007. "With this Health Group sale announcement, the company has established plans to make substantial improvements to its balance sheet" commented John Moore, VP/Senior Analyst. The company plans to use a portion of these sale proceeds to fully repay its approximately $1.15 billion of secured term debt. Because of tax-loss carry forwards, Kodak expects to obtain the vast majority of the initial $2.35 billion cash proceeds. At the same time the company continues to face challenges as it invests in new business development and transitions from a film to digital business portfolio. The review for possible downgrade continues to focus on the potential Health Group sale consummation, the application of proceeds from the Health Group sale toward debt reduction or any other potential uses, the company's management of recurring restructuring costs, and its prospects to grow earnings. In addition, Moody's will focus on the potential for separation and restructuring costs associated with the Health Group sale. The company expects to discuss other potential uses of Health Group sale proceeds at its investor meeting, scheduled for Feb. 8. Ratings on Review for Possible Downgrade: -- Corporate Family Rating B1 -- Senior Unsecured Rating B2 -- Senior Secured Credit Facilities Ba3 Headquartered in Rochester, New York, the Eastman Kodak Company is a worldwide provider of imaging products and services. EASTMAN KODAK: Onex Deal Prompts S&P's Negative CreditWatch ----------------------------------------------------------- Standard & Poor's Ratings Services reported that its ratings, including the 'B+' corporate credit rating, on Eastman Kodak Co. remain on CreditWatch with negative implications. The ratings were placed on CreditWatch on Aug. 2, 2006, after the company's disclosure that it had reached an agreement to sell its Health Group to Onex Healthcare Holdings Inc., a subsidiary of Onex Corp., for up to $2.55 billion. The purchase price is composed of $2.35 billion in cash at closing and potential additional consideration of $200 million depending on future operating performance of the Health Group. The company stated that it will use some of the proceeds to entirely pay off its $1.15 billion outstanding senior secured term loan, but the use of the balance of the funds is still under management review. The transaction is expected to close in the first half of 2007. The Rochester, New York-based imaging company had $3.3 billion in debt as of Sept. 30, 2006. "Debt reduction from the proceeds of the transaction may not fully offset what we regard as a negative shift in the company's business portfolio," said Standard & Poor's credit analyst Tulip Lim. "We are concerned about this, given the weakened fundamentals of Kodak's traditional businesses and the importance of developing its digital operations." In resolving the CreditWatch listing, Standard & Poor's will include an updated assessment of the company's near- and intermediate-term profit and cash flow potential in light of technology migration pressures, implementation challenges, and competition facing the remaining businesses. The rating agency's evaluation will also consider the ultimate use of proceeds from the pending sale of Kodak's Health Group. EATON VANCE: Fitch Holds BB Rating on $14 Million Class D Notes --------------------------------------------------------------- Fitch upgrades three and affirms three classes of notes issued by Eaton Vance CDO III, Ltd. These rating actions are effective immediately: -- $86,850,204 class A-1 notes affirmed at 'AAA'; -- $4,523,448 class A-2 notes affirmed at 'AAA'; -- $31,000,000 class B notes upgraded to 'AAA' from 'A-'; -- $21,000,000 class C-1 notes upgraded to 'A' from 'BBB+'; -- $2,000,000 class C-2 notes upgraded to 'A' from 'BBB+'; -- $14,000,000 class D notes affirmed at 'BB'. Eaton Vance III is a collateralized debt obligation that closed August 24, 2000 and is managed by Eaton Vance Management. Eaton Vance III exited its reinvestment period in August 2005 and now has a static portfolio composed of leveraged loans (97%) and high yield bonds (3%). As part of the review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. The affirmations of the class A-1 and A-2 notes and the upgrades to the class B, C-1 and C-2 notes are mainly due to the increase in credit enhancement as a result of the class A-1 and A-2 notes amortizing. Since the reinvestment period ended, the class A notes have collectively received approximately $211.6 million, or 70%, of their original balance. This has caused the overcollateralization tests to increase since the last review in September 2004. Between the most recent trustee report dated November 30, 2006 and the August 6, 2004 trustee report, the class A OC test increased to 181.9% from 126.1%, relative to a test level of 115%. The class B OC test increased to 135.8% from 114.4% with a test level of 107.4%, and the class C OC test increased to 114.3% from 107.1% with a test level of 103.9%. The affirmation of the class D notes is due to the offsetting factors of an increase in the class D OC test and deterioration in the weighted average rating of the portfolio since the last review. The class D OC test increased to 104.3%, according to the November 2006 report, from 103%, according to the August 2004 report. During this same period the weighted average rating declined to a 'B/B-' from 'B+/B', and is now failing its minimum requirement of 'B+/B'. The ratings of the class A-1 and A-2 notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class B, C-1, C-2 and D notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. Fitch will continue to monitor and review this transaction for future rating adjustments. ECV DEVELOPMENT: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: ECV Development, LLC 5050 Avenida Encinas, Suite 160 Carlsbad, CA 92008 Bankruptcy Case No.: 07-00052 Type of Business: The Debtor filed for chapter 11 protection on July 28, 2006 (Bankr. S.D. Calif. Case No. 06-02001). Chapter 11 Petition Date: January 8, 2007 Court: Southern District of California (San Diego) Judge: Louise DeCarl Adler Debtor's Counsel: Raymond R. Lee, Esq. Suppa, Trucchi & Henein, LLP 3055 India Street San Diego, CA 92103 Tel: (619) 297-7330 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor does not have any creditors who are not insiders. ENESCO GROUP: Selling Assets to Tinicum Affiliate Under Chapter 11 ------------------------------------------------------------------ An affiliate of Tinicum Capital Partners II, L.P., a private investment partnership, has agreed in principle to a financial restructuring for Enesco Group, Inc. As part of the restructuring, Enesco expects to enter into an asset purchase agreement with Tinicum, which would provide for an affiliate of Tinicum to purchase substantially all of the assets of Enesco and to assume certain of Enesco's unsecured liabilities. Under the agreement, the purchase price for Enesco's business, operations and assets would be paid by the forgiveness of all or substantially all of Enesco's senior secured debt. After the transaction, substantially all of Enesco's assets would be owned by the Tinicum affiliate, a private company. Enesco does not anticipate there would be any distribution to its stockholders from the transaction. In order to effect these transactions, Enesco and certain of its domestic subsidiaries filed voluntary petitions for reorganization relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division, which is located in Chicago, Illinois, on Jan. 12, 2007. Each of the transactions is subject to the finalization and execution of the definitive agreements and receipt of all requisite bankruptcy court approvals. "We are very pleased to have a financial and strategic partner in Tinicum who shares our vision for Enesco," Basil Elliott, Enesco President and CEO, said. "Tinicum is well versed with the demands and needs of our particular industry. With their expertise and resources, we believe Tinicum will help Enesco bring our customers the highest quality products and customer service that they and the marketplace require." "We are delighted to be associated with Enesco," Terence M. O'Toole, co-managing partner of Tinicum said. "The company has a long established tradition of excellence and we are excited to be part of its continued growth. We applaud the support and loyalty of Enesco's extraordinary employees, customers, suppliers and artists and we look forward to working with them." About Enesco Group Headquartered in Itasca, Illinois, Enesco Group, Inc. --- http://www.enesco.com/-- is a producer of giftware, and home and garden d,cor products. Enesco's product lines include some of the world's most recognizable brands, including Disney, Heartwood Creek, Nickelodeon, Cherished Teddies, Lilliput Lane, Border Fine Arts, among others. Enesco distributes products to a wide array of specialty gift retailers, home d,cor boutiques and direct mail retailers, as well as mass-market chains. The company serves markets operating in Europe, Australia, Mexico, Asia and the Pacific Rim. With subsidiaries in Europe, Canada and a business unit in Hong Kong, Enesco's international distribution network leads the industry. 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. ENESCO GROUP: Case Summary & 30 Largest Unsecured Creditors ----------------------------------------------------------- Lead Debtor: Enesco Group Inc. 225 Windsor Drive Itasca, IL 60143 Bankruptcy Case No.: 07-00565 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Enesco International Ltd. 07-00571 Gregg Manufacturing, Inc. 07-00574 Type of Business: The Debtors design, manufacture, and sells licensed and proprietary branded giftware and home and garden d,cor products to a variety of specialty gift, home d,cor, mass market, and direct mail retailers. Product lines include some of the world's recognizable brands including Heartwood Creek(TM) by Jim Shore, Foundations(R), Pooh & Friends(R), Walt Disney Classics Collections(R), Disney Traditions(R), Disney(R), Border Fine Arts(TM), Cherished Teddies(R), Halcyon Days(R), and Lilliput Lane(TM), among others. Products include diverse lines of accent furniture, wall decor, garden accessories, frames, desk accessories, figurines, cottages, musicals, music boxes, ornaments, waterballs, tableware, general home accessories, and resin figures. The company serves markets operating in Europe, Australia, Mexico, Asia and the Pacific Rim. The company has subsidiaries in Europe, Canada and a business unit in Hong Kong. See http://www.enesco.com/ Chapter 11 Petition Date: January 12, 2007 Court: Northern District of Illinois (Chicago) Judge: A. Benjamin Goldgar Debtors' Counsel: Brian L Shaw, Esq. Shaw Gussis Fishman Glantz Wolfson & Tow 321 N Clark Street, Suite 800 Chicago, IL 60610 Tel: (312) 541-0151 Fax: (312) 980-3888 -- and -- Skadden, Arps, Slate, Meagher & Flom LLP 333 West Wacker Drive Chicago, IL 60606-1285 Consolidated Financial Condition as of Nov. 30, 2006: Total Assets: $155,350,698 Total Debts: $107,903,518 Consolidated List of Debtors' 30 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Tax $5,400,000 Ogden, UT 84201-0012 UPS Supply Chain Solutions(SM) Trade Debt $1,260,916 P.O. Box 226717 Dallas, TX 75222-6717 Fax: (913) 469-8824 Jim Shore Designs, Inc. License Fees $1,147,509 426 N. Main Street Health Springs, SC 29058 Fax: (866) 665-0069 National Distribution Centers Trade Debt $870,866 P.O. Box 827600 Philadelphia, PA 19182-7600 United Parcel Service Trade Debt $834,104 Lockbox 577 Carol Stream, IL 60132-0577 Fax: (630) 851-7571 Citic Global Logistics Ltd. Trade Debt $610,581 11854 South Alameda Street Lynwood, CA 90262 Fax: (310) 638-3790 Churchward Ltd. Trade Debt $371,336 68/6 Moo 1 Salaya Puthamonthon Nadompathom, Thailand WBE Industries Co. Ltd. Trade Debt $338,267 17 Lane 99 Pei Yuan Street Tainan, Taiwan Fax: 86-752-367929 Victradco (H.K.) Limited Trade Debt $337,738 Suites 828-831, Ocean Center 5 Canton Road, Tsim Sha Tsui Kowloon, Tsinshatsui, Hong Kong Fax: 866-2-2721-5845 China Innovation Co. Ltd. Trade $311,177 No. 16 Chuang YI Road Long Hua Town, Baoan District ShenZhen, GuangDong China Disney Enterprises Inc. License Fees $310,068 File 55988 Los Angeles, CA 90074-5988 Fax: (818) 553-7210 Seagull D,cor Co. Ltd. Trade Debt $308,771 13F No. 167, Sec. 5 Ming Sheng E. Road Taipei, Thailand Fax: 886-2-2765-4174 Mesirow Financial Professional $288,130 Consulting LLC Services 350 N. Clark Street Chicago, IL 60610 Fax: (312) 595-4246 KPMG LLP Professional $258,000 Department 0970 Services P.O. Box 120001 Dallas, TX 75312-0970 Fax: (214) 840-2297 Faith Cartage Inc. Trade $231,313 7401 South 78th Avenue Bridgeview, IL 60455 Fax: (708) 458-4197 Vedder Price Professional $196,733 Kaufman & Kammholz, P.C. Services 222 North LaSalle Street Chicago, IL 60601-1003 Fax: (312) 609-5005 Illinois Department of Revenue Tax $151,118 Maritz Trade Debt $149,250 Blue Cross Blue Insurance Plan $128,811 Shield of Illinois Tukaiz Litho Inc. Trade Debt $121,822 City Forum Enterprises Ltd. Trade Debt $121,281 Phoenix International Trade Debt $112,856 Freight Service Federal Express Trade Debt $108,592 Oracle USA Trade Debt $107,323 Deloitte Touche Professional $106,000 Services Taiwan Merchant (HK) Co. Trade Debt $88,758 American Express Trade Debt $87,097 Priscilla Hillman 888 License Fees $81,787 Hild Studios Inc. Trade Debt $81,034 SGS Testing Company Inc. Trade Debt $60,146 FORD MOTOR: Closing Plants and Cutting Jobs Ahead of Schedule ------------------------------------------------------------- Ford Motor Co. will be implementing its cost reduction plan, including plant closures and job cuts, earlier than scheduled, Reuters reports, citing the company's chief executive officer Alan Mulally. The car company, Reuters says, is closing 16 plants and cutting nearly 45,000 jobs in a bid to return its North American automotive operations to profits. According to Mr. Mulally, the plan, which spans a five-year time frame, intends to reduce the number of vehicle platforms the company uses around the world and increase the number of shared parts. Ford is set to spend $17 billion cash over the next three years in restructuring and its automotive operations, Reuters relates. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures and distributes automobiles in 200 markets across six continents. With more than 324,000 employees worldwide, including Mexico, 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 Corp. * * * 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 US$3 billion of senior convertible notes due 2036. FRIENDLY ICE: Appoints George Condos as President and CEO --------------------------------------------------------- Friendly Ice Cream Corporation reported the appointment of George M. Condos as president and chief executive officer and a member of its board of directors, effective Jan. 8, 2007, replacing John L. Cutter, who resigned in September 2006. Mr. Condos brings with him 30 years of experience in the restaurant and hospitality industry, including his most recent position as brand officer for Dunkin Donuts. As Brand Officer, Mr. Condos was directly responsible for leading brand strategy and execution for more than 4,850 franchised stores in the U.S. Mr. Condos started his career in operations for International Dairy Queen, after which he joined Allied Domecq QSR, the parent company of Dunkin Brands, in 1987, serving in various roles for U.S. and international operations until being named Brand Officer in 2003 and served in that capacity until 2006. "Over the past few months, we conducted an extensive, national chief executive officer search and interviewed a number of well- qualified candidates. We are very excited to have attracted George Condos, a seasoned and accomplished executive with significant experience in the restaurant and ice cream industry, and we welcome his leadership at this important time in our company's history," Donald N. Smith, chairman, said. "His efforts in the development and marketing of over 2,000 Dunkin stores in the Northeast have resulted in making Dunkin Donuts a powerful brand." Mr. Smith added, "We admire and are attracted by the many innovations developed during George's time at Dunkin, which were designed to create a day-long experience at Dunkin Donuts and strengthen opportunities for and relationships with franchise owners. We are also impressed by his experience in the Northeast, the core of the Friendly's base, and his desire to remain in this area of the country. We look forward to the fresh ideas and experience George will offer us and our shareholders both in his capacity as a new member of our Board of Directors and as our President and Chief Executive Officer." The company also granted stock options to purchase 75,000 shares of its common stock to Mr. Condos as a material inducement to his employment. The non-qualified stock options were granted pursuant to an exemption from the stockholder approval requirements set forth in Section 711 of the American Stock Exchange Company Guide. The stock options have an exercise price equal to the company's closing price on Jan. 8, 2007 and vest over a three-year period. With principal executive office at Wilbraham, Mass., Friendly Ice Cream Corporation (AMEX: FRN) -- http://www.friendlys.com/-- is a vertically integrated restaurant company serving signature sandwiches, entrees and ice cream desserts in a friendly, family environment in 525 company and franchised restaurants throughout the Northeast. The company also manufactures ice cream, which is distributed through more than 4,500 supermarkets and other retail locations. With a 70- year operating history, Friendly's enjoys strong brand recognition and is currently remodeling its restaurants and introducing new products to grow its customer base. * * * As reported in the Troubled Company Reporter on Nov. 9, 2006, Moody's Investors Service confirmed Friendly Ice Cream Corp.'s B3 Corporate Family Rating. GATEWAY ACCESS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Gateway Access Solutions, Inc. 426 Mulberry Street, Suite 306 Scranton, PA 18503 Tel: (570) 341-9213 Bankruptcy Case No.: 07-50051 Type of Business: The Debtor (Pink Sheets: GWYA) provides tailored wireless broadband solutions to businesses of all sizes in small to mid-sized communities across the United States. See http://www.gwya.net/ Chapter 11 Petition Date: January 9, 2007 Court: Middle District of Pennsylvania (Wilkes-Barre) Judge: Robert N. Opel II Debtor's Counsel: Jill M. Spott, Esq. Sheils Law Associates, P.C. 108 North Abington Road Clarks Summit, PA 18411 Tel: (570) 587-2600 Fax: (570) 585-0313 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Carle, Mackie, Power $92,299 100 B Street, Suite 400 Santa Rosa, CA 95401 Robert S. Madia $51,333 9660 Old Kummer Road Allison Park, PA 15101 Frank J. Pelly $43,680 150 Lake Drive, Suite 103 Wexford, PA 15090 Krisar, Inc. $29,929 P.O. Box 457 Hamlin, PA 14464 Unified School #312 $29,852 414 Main Street Haven, KS 67543 Haskell School $29,852 Robert S. Madia $28,550 PPL $22,215 Education Service 12 $21,440 Xspedius $17,923 Laredo Industries $17,911 Education Service 9 $17,911 Roxton Independent School District $16,523 Yale Public Schools $16,523 DISH Network $15,876 Shawnee Heights USD $13,501 Lawrence Dyer $12,817 L.M. Beal $12,728 Central Texas College $11,897 Westwood Medical $11,471 GENERAL MOTORS: Outlines Priorities for 2007 and Increases CapEx ---------------------------------------------------------------- General Motors Corp. chairman and chief executive officer Rick Wagoner informed securities analysts that GM has made considerable progress in its North America turnaround, and outlined 2007 priorities for the automaker's ongoing transformation. "GM's North America turnaround plan moved faster and further than people expected a year ago," Mr. Wagoner said. "To be direct, 2006 needed to be a huge year for us -- and it was." Mr. Wagoner noted that through the third quarter of last year, GM's adjusted net income had improved by $4.2 billion to a profit of $1.9 billion, with most of the improvement coming in North America. GM's improvement was also aided by strong financials and positive results outside North America, particularly in China. In addition, liquidity remained strong with over $20 billion cash on hand at the end of the third quarter. An important area of improvement for GM in 2006 was in structural cost. The company far exceeded its reduction target of $6 billion in North America on an annual running-rate basis, achieving $9 billion of cost reduction on a running-rate basis by year-end 2006. "We expect to reflect at least $6 billion of these savings in our 2006 financials, and then realize the full $9 billion savings in 2007," Mr. Wagoner said. "This represents a major first step in achieving our aggressive global target of reducing structural costs to 25% of revenue by 2010." In fact, GM reduced its global automotive structural costs from 34% of revenue in 2005, to between 29% and 30% of global revenue in 2006, and expects to further improve on that figure during 2007. GM also made big moves on the revenue side of its turnaround plan in 2006, especially in terms of its sales and marketing strategy. Thanks to a disciplined approach that included reduced prices, lower incentives, and a renewed focus on products and brands, GM achieved its U.S. retail sales target of 3 million units. The other big move, Mr. Wagoner noted, came with GM's introduction last September of the best powertrain warranty of any full-line manufacturer -- five years or 100,000 miles on every 2007 model year GM car and light-duty truck. "Overall, there is a lot more work to do, but we stand today in a much more favorable position than we did just 12 months ago," he added. Mr. Wagoner said GM has five key priorities for 2007: -- Stay focused on the North America turnaround; -- Continue to drive aggressively in emerging markets, such as China, Brazil, Russia, and India; -- Maximize the benefits of running the business globally; -- Build on GM's comprehensive advanced propulsion strategy; and -- Continue to improve business results, especially improved earnings and cash flow. For the North American turnaround, Mr. Wagoner pointed out that product excellence was the most important element of the strategy, and "will continue to remain our absolute number-one focus." To that end, he announced that GM's global capital spending would increase from under $8 billion in 2005 and 2006, to between $8.5 billion and $9 billion in 2007 and 2008. "We have had a very positive reaction to our newest vehicles, including the Chevy Tahoe, GMC Yukon, and Cadillac Escalade full- size utilities, and the Saturn Outlook, GMC Acadia, and Buick Enclave midsize crossovers," Mr. Wagoner said. "We also swept the car and truck of the year awards at the North American International Auto Show in Detroit with the Saturn Aura and Chevrolet Silverado. "The progress in the execution of our new cars and trucks around the world is a credit to the men and women of General Motors. And we're going to continue raising the bar in future product, with a particular focus on outstanding design and technology leadership," he added. In terms of the global marketplace, Mr. Wagoner noted that 55% of the company's unit sales were outside the United States in 2006, and that this trend would likely continue. To capitalize on this opportunity, Mr. Wagoner said GM would continue to push hard and build on its already strong position in emerging markets. This worldwide sales growth will be aided by GM's continued efforts to run its business globally, particularly in product development, manufacturing, purchasing, and powertrain. "This move to run the business in a globally integrated manner is, in fact, probably the most profound change that is going on in the company today," Mr. Wagoner explained. "In 2007, we'll drive to accelerate the value we realize from global integration of GM." GM's leveraging of global resources is also a key element of the company's drive to achieve energy diversity and environmental leadership, as evidenced by the introduction this week of the Chevrolet Volt concept car, an extended-range electric vehicle based on GM's all-new E-Flex technology. E-Flex is a family of electrically driven propulsion systems for future small and midsize GM vehicles, and a potential "game- changer" for GM and the auto industry, Mr. Wagoner said. The final 2007 priority for GM is very clear: continue to improve business results. "The rate of improvement in our financials through three quarters of 2006 was significant, and it needed to be," Mr. Wagoner said. "But no one at GM believes that hitting breakeven in North America, or making a couple of billion in corporate net income is 'winning.' We know we need to move to steady revenue growth, solid earnings, consistent positive cash flow, and a stronger balance sheet. "We plan to make another significant step in the right direction on these metrics in 2007," he said. 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. GRANITE BROADCASTING: Moody's to Withdraw Ratings ------------------------------------------------- Moody's Investors Service affirmed the Corporate Family Rating and the senior secured notes rating on Granite Broadcasting Corporation and lowered the PIK preferred stock and Probability of default ratings. Following these actions, Moody's will withdraw all ratings because a voluntary petition for reorganization was filed under Chapter 11 of the bankruptcy code. Moody's has taken the following ratings actions: Issuer: Granite Broadcasting Corporation * Corporate Family Rating -- Affirmed Caa2 * Probability of Default Rating -- Downgraded Caa2 to D * 9-3/4% senior secured notes -- Affirmed Caa2 (from LGD 3, 48% to LGD 2, 22%) * 12-3/4% PIK exchange preferred stock -- Downgraded Ca to C (from LGD 6, 99% to LGD 6, 97%) Granite Broadcasting Corporation is a television broadcaster headquartered in New York, New York. GREEN VALLEY: Moody's Junks Rating on $300 Mil. 2nd Lien Facility ----------------------------------------------------------------- Moody's Investors Service assigned a Ba3/LGD-3 1st lien bank facility rating and a Caa1/LGD-5 2nd lien term loan rating to Green Valley Ranch Gaming, LLC. The 1st lien bank facility is comprised of a $30 million 5-year secured revolver and a $500 million 7-year secured term loan. The $300 million 2nd lien term loan will mature in 7-1/2 years. A B2 corporate family rating and B2 probability of default rating were also assigned. The ratings outlook is stable. In addition to Green Valley's relatively small size and single asset profile, its B2 CFR considers the highly leveraged nature of its planned debt refinancing transaction as well as Moody's expectation that the company will maximize its ability to use debt as a funding source to the extent it is allowed by the new credit agreements. Pro forma debt/EBITDAM (before management fees) will be over 7.0 times (x). Leverage and coverage maintenance covenants (debt/EBITDAM maximum allowed is initially 7.75x, stepping down to 6.0x by March 31, 2009) will only be included in the revolving portion of the 1st lien bank facility which is not expected to be drawn over the next two years. A majority of lenders under the revolver can waive or amend financial covenants without the approval of the holders of 1st or 2nd lien term debt. Positive rating consideration is given to Green Valley's strong growth trends and operating margins as well as the popularity of the casino which has substantially completed its second major expansion since it opened in December 2001. The company should start to benefit from this expansion and from the lack of construction disruption in the first quarter of 2007, and as a result, debt/EBITDAM has the potential to be below 6.0x by the end of 2007. Also considered are the repayment conditions outlined in the credit agreements, including a cash flow sweep mechanism that applies to both the 1st and 2nd lien bank debt and remains in effect so long as debt/EBITDAM is greater than 5.25x. Proceeds from Green Valley's new 1st and 2nd lien term loans will be used to refinance outstanding obligations under the Green Valley Second Amended and Restated Loan Agreement (about $226 million was outstanding at Sep. 30, 2006) and to make a special distribution in excess of $500 million to the company's owners. The revolving portion of the 1st lien bank facility will be un-drawn at closing and available for other general purposes. The transaction is expected to close in February 2007 and is anticipated to occur regardless of the outcome of Station Casino, Inc.'s (Ba2/on review for possible downgrade) announced management buyout proposal. The stable outlook considers the favorable regulatory environment, demographics, and growth trends of the Las Vegas locals gaming market. It also takes into account Green Valley's pro forma liquidity profile which includes a $30 million un-drawn revolver and no material scheduled debt maturities other than those of the new 1st and 2nd lien bank facilities. However, while Green Valley is expected to generate positive free cash flow going forward, making debt reduction possible, ratings upside is limited at this point given the ability of the company to continue to use debt as a funding source to the extent they are allowed by the credit agreements. Green Valley Ranch Gaming, LLC owns and operates the Green Valley Ranch Resort Spa Casino in Henderson, Nevada. The company is owned by GCR Gaming, LLC (an affiliate of the Greenspun Corporation) and GV Ranch Station, Inc. (a wholly-owned subsidiary of Station Casinos, Inc.) on a 50/50 basis. Reported net revenues and EBITDAM for the 12-month period ended Sep. 30, 2006 were approximately $256 million and $110 million, respectively. GREEN VALLEY: S&P Junks Rating on Proposed $300 Mil. Senior Loan ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' bank loan rating and its '1' recovery rating to Green Valley Ranch Gaming LLC's proposed $530 million senior secured first-lien credit facility, reflecting the expectation lenders would likely achieve full (at least 100%) recovery of principal in a payment default scenario. At the same time, a 'CCC+' bank loan rating and '5' recovery rating were assigned to GVRG's proposed $300 million senior secured second-lien term loan, reflecting the expectation lenders would likely achieve negligible (less than 25%) recovery of principal in a payment default scenario. Proceeds from the proposed bank facility will be used to refinance existing bank debt and to pay a special dividend to the company owners. In addition, a 'B' issuer credit rating was assigned to GVRG. The outlook is stable. Pro forma for the proposed bank facility, GVRG is expected to have about $800 million in debt outstanding. The ratings on Las Vegas-based GVRG reflect the company's reliance on a single source of cash flow, competitive market conditions in the Las Vegas 'locals' market, a somewhat moderating operating environment, and significantly higher debt balances and weaker credit measures due to the expected special dividend to owners. These factors are only partially tempered by Green Valley Ranch Station's steadily improving performance of, its high quality, good location, and solid market demographics. GREENWICH CAPITAL: Fitch Ups Rating on $4.4 Million Certs. to B --------------------------------------------------------------- Fitch Ratings upgrades Greenwich Capital Commercial Mortgage Trust's mortgage pass-through certificates, series 2002-C1 as: -- $16 million class G to 'AAA' from 'AA'; -- $17.4 million class H to 'AA+' from 'AA-'; -- $14.5 million class J to 'AA-' from 'A'; -- $20.4 million class K to 'A' from 'BBB+'; -- $20.4 million class L to 'BBB+' from 'BBB-'; -- $8.7 million class M to 'BBB' from 'BBB'; -- $5.8 million class N to 'BBB-' from 'BB+'; -- $8.7 million class O to 'B+' from 'B'; -- $4.4 million class P to 'B' from 'B-'. Fitch also affirms the following classes: -- $39.3 million class A-1 at 'AAA'; -- $74.3 million class A-2 at 'AAA'; -- $137.8 million class A-3 at 'AAA'; -- $608.2 million class A-4 at 'AAA'; -- Interest-only class XPB at 'AAA'; -- Interest-only class XP at 'AAA'; -- Interest-only class XC at 'AAA'; -- $46.5 million class B at 'AAA'; -- $11.6 million class C at 'AAA'; -- $14.5 million class D at 'AAA'; -- $20.4 million class E at 'AAA'; -- $16 million class F at 'AAA'. Fitch does not rate the $22.7 million class Q or the $15 million class SWD-B. The SWD-B certificate represents the non-pooled subordinate B-note secured by the 311 South Wacker Drive loan, which is now defeased. The rating upgrades reflect increased credit enhancement due to scheduled amortization and the additional defeasance of eight loans (14.1%) since Fitch's last rating action. As of the December 2006 distribution date, the pool's aggregate certificate balance has decreased 4.7 % to $1.12 billion from $1.18 billion at issuance. To date, 16 loans (28.7%) have defeased, including four (19.9%) of the top 10 loans in the pool. Currently, two loans (0.9%) are in special servicing. The larger specially serviced loan (0.6%) is a mixed-use property located in Kingwood, Texas. The loan remains current under a forbearance agreement. The other specially serviced loan (0.4%) is collateralized by a retail center in Gulfport, Mississippi and is current. The special servicer is in the process of documenting an assumption of the loan. GUARANTY NATIONAL: Merger Prompts A.M. Best to Withdraw C++ Rating ------------------------------------------------------------------ A.M. Best Co. has withdrawn the financial strength rating of C++ (Marginal) and the issuer credit rating of "b" and assigned an NR- 5 (Not Formally Followed) to Guaranty National Insurance Company. Effective Dec. 28, 2006, Guaranty National was merged into Security Insurance Company of Hartford. Security is an indirect wholly owned subsidiary of Royal & SunAlliance USA, Inc., which is expected to be sold to Arrowpoint Capital Corp., a new company formed by R&SA's existing management team in 2006. All companies are domiciled in Delaware. R&SA's FSR of C++ (Marginal) and ICR of "b" are under review with developing implications pending the completion of the proposed sale to Arrowpoint Capital Corp. later in 2007. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. HAROLD OSTENSON: Case Summary & 11 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Harold T. Ostenson Shirley M. Ostenson 1321 South Hills Drive Wenatchee, WA 98801 Bankruptcy Case No.: 07-00058 Chapter 11 Petition Date: January 9, 2007 Court: Eastern District of Washington (Spokane/Yakima) Judge: Frank L. Kurtz Debtors' Counsel: Dan O'Rourke, Esq. Southwell & O'Rourke 421 West Riverside Avenue, Suite 960 Spokane, WA 99201 Tel: (509) 624-0159 Fax: (509) 624-9231 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 11 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Greg Holzman $100,000 1625 Bush Street San Francisco, CA 94109 Jeffers, Danielson, Alyward & Sonn $17,999 P.O. Box 1688 Wenatchee, WA 98807 Chase $16,099 P.O. Box 15298 Wilmington, DE 19850-5298 Bank of America - Los Angeles $16,099 Discover $10,330 Bank of America - City of Industry $10,330 American Express Costco $9,921 Macy's Visa $5,660 American Express Business Management $4,495 American Express Delta $3,918 Greg Holzman, Inc. $1 HUNTSMAN CORP: S&P Holds BB- Rating and Removes Positive Watch -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating and other ratings on Salt Lake City, Utah-based chemicals producer Huntsman Corp. and its subsidiary Huntsman International LLC. The ratings were removed from CreditWatch with positive implications, where they were placed on Sept. 29, 2006, pending the completion of the previously announced sale of its European base chemicals and polymers business to Saudi Basic Industries Corp. (SABIC; A+/Stable/A-1). The outlook is positive. The rating actions follow the completion of the transaction, with proceeds substantially as expected including $685 million in cash (prior to closing adjustments) and the assumption of $126 million of pension liabilities. S&P views the transaction as an important step forward in the transformation of the portfolio toward greater reliance on differentiated product categories, while providing meaningful cash for debt reduction. "The positive outlook reflects our belief that the improved business portfolio, with its increased weighting toward the company's higher growth and more competitive business positions, will make Huntsman increasingly resilient during industry or economic downturns, less capital and energy intensive, and will provide more consistent free cash generation to support growth and additional debt reduction," said Standard & Poor's credit analyst Kyle Loughlin. The positive outlook indicates that we could raise the ratings if Huntsman remains committed to a financial policy that allows for the improvement of its balance sheet while pursuing its growth objectives. This commitment is a key support to higher ratings as we do not expect that the potential sale of the U.S. commodity petrochemical assets, if completed during the next year, to be a deleveraging event in terms of key measures of cash flow to adjusted debt. Huntsman Corp. is a holding company with diverse chemical operations that generated annual sales during 2006 of approximately $13 billion. IMMUNE RESPONSE: Receives $900,000 Payment from NovaRx ------------------------------------------------------ The Immune Response Corporation said that it received a milestone payment of $900,000 from NovaRx Corporation. Immune Response in-licensed the development and marketing rights to the Sidney Kimmel Cancer Center's patent portfolio for cancer cell line vaccines. In August 2004, Immune Response then entered into an agreement transferring those development and marketing rights to NovaRx Corporation, a privately held company dedicated to developing therapeutic vaccines to treat cancer. This agreement called for, among other things, a $900,000 payment to Immune Response in August 2007, to be accelerated if NovaRx achieved commercialization or financing milestones. NovaRx recently achieved the financing milestone, and accordingly paid the $900,000. "We are pleased with the progress NovaRx continues to make with the cancer cell line vaccines," said Dr. Joseph O'Neill, President and CEO of Immune Response. "In addition, this milestone payment further strengthens our balance sheet which will enable us to further the progress of our key products NeuroVax(TM), an investigational T-cell receptor peptide vaccine for the treatment of multiple sclerosis, and IR103, for the treatment of human immunodeficiency virus, both of which are at critical stages of their development." Headquartered in Carlsbad, California, The Immune Response Corporation (OTCBB:IMNR) -- http://www.imnr.com/-- is an immuno- pharmaceutical company focused on developing products to treat autoimmune and infectious diseases. The Company's lead immune- based therapeutic product candidates are NeuroVax(TM) for the treatment of multiple sclerosis and IR103 for the treatment of Human Immunodeficiency Virus infection. Both of these therapies are in Phase II clinical development and are designed to stimulate pathogen-specific immune responses aimed at slowing or halting the rate of disease progression. Going Concern Doubt As reported in the Troubled Company Reporter on June 8, 2006, Levitz, Zacks & Ciceric expressed substantial doubt about The Immune Response's ability to continue as a going concern after auditing the company's financial statements for the years ended Dec. 31, 2005 and 2004. The auditing firm pointed to the Company's stockholders' deficit and comprehensive loss for each of the years in the two-year period ended Dec. 31, 2005. JACK IN THE BOX: Inks New $625 Million Credit Agreement ------------------------------------------------------- Jack in the Box Inc., as borrower, entered into a new credit agreement, consisting of a $150 million revolving credit facility with a five year maturity and a $475 million term loan facility with a six year maturity, with Wachovia Bank, National Association, as administrative agent and certain lender parties. The Credit Agreement and related loan documents replace the company's prior amended and restated credit agreement dated as of Jan. 8, 2004 and related loan documents. All commitments under the Prior Credit Facility were terminated, all borrowings thereunder were repaid, and all liens thereunder were released effective Dec. 15, 2006. The company borrowed $275 million under the new term loan facility on Dec. 15, 2006. Proceeds from the borrowings were used to repay all borrowings under the Prior Credit Facility and to pay related transaction fees and expenses, including transaction fees and expenses associated with the credit facility established under the new Credit Agreement. Proceeds from the remaining available portion of the Term Loan Facility are required under the terms of the new Credit Agreement to be used to finance, together with cash on hand, the consummation of the company's tender offer to repurchase a portion of its outstanding Capital Stock, to pay fees and expenses incurred in connection with the Tender Offer, and for ongoing working capital requirements and other general corporate purposes. The company has not borrowed any funds under its new revolving credit facility. Any borrowings under the Revolving Credit Facility will be used for permitted share repurchases, permitted dividends, permitted acquisitions, ongoing working capital requirements and other general corporate purposes. To maintain availability of funds under the Revolving Credit Facility, undrawn amounts under the Revolving Credit Facility will accrue a commitment fee of between 25 basis points to 37.5 basis points per annum, based on the company's leverage ratio. The subsidiary Guarantors (as defined in the Credit Agreement) have guaranteed the obligations under the Credit Agreement pursuant to a separate guaranty agreement. Any future direct and indirect subsidiaries of the company, other than unrestricted subsidiaries (as defined in the Credit Agreement) and other than foreign subsidiaries, also are required to guarantee the obligations under the Credit Agreement. The obligations under the Credit Agreement are secured by a pledge of 100% of the equity interests issued by each domestic subsidiary owned by the company, 66% percent of the voting equity interests issued by any first tier foreign subsidiary owned by the company, 100% of the non-voting equity interests issued by any first tier foreign subsidiary owned by the company, and certain related collateral, pursuant to the terms of a collateral agreement. Each subsidiary Guarantor's obligations under the Guaranty are secured by a pledge of 100% of the equity interests issued by each domestic subsidiary owned by the subsidiary Guarantor, 66% of the voting equity interests issued by any first tier foreign subsidiary owned by the subsidiary Guarantor, 100% of the non- voting equity interests issued by any first tier foreign subsidiary owned by the subsidiary Guarantor, and certain related collateral, pursuant to the Collateral Agreement. A full text-copy of the Credit Agreement may be viewed at no charge at http://ResearchArchives.com/t/s?1867 A full text-copy of the Collateral Agreement may be viewed at no charge at http://ResearchArchives.com/t/s?1868 A full text-copy of the Guaranty Agreement may be viewed at no charge at http://ResearchArchives.com/t/s?1869 Headquartered in San Diego, Ca., Jack in the Box Inc. (NYSE: JBX) -- http://www.jackinthebox.com-- operates and franchises Jack in the Box(R) restaurants, with more than 2,000 restaurants in 17 states. The company also operates a proprietary chain of convenience stores called Quick Stuff(R), with more than 50 locations, each built adjacent to a full-size Jack in the Box restaurant and including a major-brand fuel station. Additionally, through a wholly owned subsidiary, the company operates and franchises Qdoba Mexican Grill(R), with more than 300 restaurants in 40 states. * * * As reported in the Troubled Company Reporter on Dec. 11, 2006, Standard & Poor's Ratings Services assigned its 'BB-' rating to Jack in the Box Inc.'s $475 million term loan due 2012 and $150 million revolver due 2011. The rating is equal to the 'BB-' corporate credit rating, which was affirmed. The outlook is negative. As reported in the Troubled Company Reporter on Dec. 6, 2006, Moody's Investors Service lowered the corporate family rating to Ba3 from Ba2 on Jack in the Box and its probability of default rating to B1 from Ba3. The outlook for the ratings is stable. JACUZZI BRANDS: Extends Solicitation Deadline Until February 6 -------------------------------------------------------------- Jacuzzi Brands Inc. has extended the expiration date of its reported cash tender offer and consent solicitation with respect to its 9-5/8% Senior Secured Notes due 2010. As a result of the extension, the tender offer and consent solicitation will now expire at 5:00 p.m., New York City time, on Feb. 6, 2007, unless terminated or further extended. Pursuant to the terms of the Offer to Purchase and Consent Solicitation Statement of Jacuzzi, dated Dec. 4, 2006, as a result of the extension of the tender offer for more than ten business days from the scheduled expiration date of Jan. 22, 2007, the price determination date will be extended and the total consideration for the Notes as described in the Statement will be recalculated. The Total Consideration for the Notes will now be determined as of 10:00 a.m., New York City time, on Jan. 23, 2007 unless otherwise extended. As of 5:00 p.m., New York City time, on Jan. 9, 2007, Jacuzzi had received tenders and consents for $379,950,000 in aggregate principal amount of the Notes, representing 99.99% of the outstanding Notes. The consummation of the tender offer is conditioned upon, among other things: i) the consummation of the previously announced acquisition of Jacuzzi by affiliates of Apollo Management, L.P.; and ii) the receipt by affiliates of Apollo of $985 million in new debt financing relating to the transactions and the availability of funds therefrom to pay the tender offer consideration described above. If any of the conditions are not satisfied, Jacuzzi may terminate the tender offer and return tendered Notes, may waive unsatisfied conditions and accept for payment and purchase all validly tendered Notes that are not validly withdrawn prior to expiration, may extend the tender offer or may amend the tender offer. The complete terms and conditions of the tender offer and consent solicitation are described in the Statement and the related Consent and Letter of Transmittal, copies of which may be obtained by contacting D.F. King & Co., Inc., the Information Agent for the tender offer and consent solicitation, at (212) 269-5550 or (800) 859-8509. Questions regarding the tender offer and consent solicitation may be directed to the Dealer Manager and Solicitation Agent for the tender offer and consent solicitation: Credit Suisse Securities LLC, which may be contacted at (800) 820-1653 (toll-free) or at (212) 538-0652. Jacuzzi Brands, Inc. (NYSE: JJZ) -- http://www.jacuzzibrands.com/ -- through its subsidiaries, manufactures and distributes branded bath and plumbing products for the residential, commercial and institutional markets. These include whirlpool baths, spas, showers, sanitary ware and bathtubs, as well as professional grade drainage, water control, commercial faucets and other plumbing products. The Company's products are marketed under its portfolio of brand names, including JACUZZI(R), SUNDANCE(R), ZURN(R), and ASTRACAST(R). * * * On October 2006, Moody's Investors Service placed Jacuzzi Brands Inc.'s corporate family rating at B2; $380 million 9.625% gtd notes due 2010 at B2 on review for possible downgrade to reflect the announcement that Jacuzzi has agreed to be acquired by private equity firm Apollo Management L.P. for approximately $1.25 billion. JAMES MCCLAIN: Case Summary & 11 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: James M. McClain, Sr. 2003 Whitelake Drive Fredericksburg, VA 22407 Bankruptcy Case No.: 07-30088 Chapter 11 Petition Date: January 10, 2007 Court: Eastern District of Virginia (Richmond) Debtor's Counsel: Robert Easterling, Esq. 2217 Princess Anne St., Ste. 100-2 Frederickburg, VA 22401 Tel: (540) 373-5030 Fax: (540) 373-5234 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ HomEq 2nd trust holder $42,140 4837 Watt Avenue secured value: North Highlands, CA 95660 $425,000 Dea Carpenter Claim against $26,295 c/o S. Keith Barker, P.C. vendor P.O. Box K150 Richmond, VA 23288 Courthouse Road Properties Guarantee on lease $17,636 LLC c/o W. J. Vakos & Company 4840 Southpoint Drive Fredericksburg, VA 22407 WFLS/WWUZ/WYSK Advertising $15,263 616 Amelia Street Fredericksburg, VA 22401 EMC Credit Credit card $9,701 P.O. Box 27306 Raleigh, NC 27611 BB&T Credit card $8,598 P.O. Box 2306 Wilson, NC 27894 Falcon Realty Investments Guarantee on lease $7,041 LLC c/o Sullivan Properties Inc. 725 Jackson Street Fredericksburg, VA 22401 Spotsylvania County Personal property $1,800 Treasurer P.O. Box C-9000 Spotsylvania, VA 22553 BB&T Credit Line $925 P.O. Box 2306 Wilson, NC 27894 Pritchard & Fallin, Inc. Air conditioning $509 P.O. Box 256 Callao, VA 22435 Hampton Hill POA Association dues $440 P.O. Box 153 Kinsale, VA 22488 KL GROUP: Three Hedge Fund Principals Indicted in S.D. Florida -------------------------------------------------------------- A federal grand jury in the Southern District of Florida indicted Jan. 10 three principals of KL Group LLC, reports said. The three principals, Won Sok Lee, Yung Bae Kim, and his brother Jung Bae Kim also known as John Kim, controlled these hedge funds: -- KL Group Fund LLC, -- KL Financial Group Florida LLC, -- KL Financial Group DB Fund LLC, -- KL Financial Group DC Fund LLC, -- KL Financial Group IR Fund LLC, and -- KL Triangulum Group Fund LLC. The principals also controlled these unregistered hedge fund investment advisers: K.L. Group LLC, KL Florida LLC, and KL Triangulum Management LLC. The defendants in the case are John B. Kim, Won Sok Lee, Yung B. Kim, KL Group, KL Florida, KL Triangulum Management, and Shoreland Trading. They were accused of raising from 2000 to March 2005 more than $194 million from 250 investors by boasting annualized returns of 125% to $150% when in fact, the hedge funds were losing. John Kim faced a 35-count indictment including wire fraud, mail fraud, money laundering, and conspiracy. Won Sok Lee and Yung Kim fled the county in 2005. KNOLOGY INC: Inks Agreement to Acquire PrairieWave for $255 Mil. ---------------------------------------------------------------- Knology, Inc. has entered into a definitive agreement to acquire PrairieWave Communications. Knology will pay cash consideration of $255 million, subject to customary closing adjustments. PrairieWave currently serves approximately 57,000 residential customers and 7,200 business customers in two primary market areas surrounding Sioux Falls and Rapid City, South Dakota. These customers represent over 156,000 broadband connections, including approximately 70,000 voice, 46,000 video and 40,000 internet connections. Knology expects the transaction to close in the second quarter of 2007, subject to the satisfaction of closing conditions, including the receipt of regulatory approvals with respect to the municipal franchises. "This is an exciting transaction for our company," said Rodger L. Johnson, President and Chief Executive Officer of Knology, Inc. "PrairieWave is a highly successful, customer-focused business that will expand Knology's footprint by adding meaningful scale to our existing operations. PrairieWave has achieved excellent bundled penetration and attractive EBITDA and free cash flow margins, and we believe this acquisition will complement our continued focus on organic growth in the existing Knology markets." Bruce Herman, president and chief executive officer of PrairieWave Communications said, "We have worked extremely hard to build an exceptional business and believe it is the right time to combine with Knology in order to maximize the benefit to our employees, our customers and our investors. This transaction will strengthen our business and provide more resources to better serve our customers." Credit Suisse acted as financial advisor to Knology and has provided a financing commitment for the transaction. PrairieWave was advised by Daniels & Associates, L.P. About PrairieWave PrairieWave Communications -- http://www.prairiewave.com/-- provides telephone, cable television, Internet, phone directory and cable advertising services for residential and business customers in the Rapid City and Sioux Falls, South Dakota regions, including parts of Minnesota and Iowa. With its proprietary network, approximately 400 employees and 16 local offices, PrairieWave is dedicated to enhancing the quality of life for its customers and supporting the economic development of their communities by providing reasonably priced, advanced communications services to their homes and businesses. About Knology Headquartered in West Point, Georgia, Knology Inc. -- http://www.knology.com/-- provides interactive communications and entertainment services in the Southeast. Offerings include over 200 channels of digital cable TV, local and long distance digital telephone service with the latest enhanced voice messaging features, and high-speed Internet access, which enables consumers to quickly download video, audio and graphic files using a cable modem. Knology's fiber-based business products include Passive Optical Network, which supplies IP architecture with segmented voice and data bandwidth, and Managed Integrated Network Solutions, an integrated IP-based technology that converges data and voice. * * * As reported in the Troubled Company Reporter on Jan. 12, 2007, Moody's Investors Service changed Knology, Inc.'s outlook to developing after the company's disclosure of its $255 million cash acquisition of PrairieWave. Knology's B2 corporate family rating reflects the company's lack of scale, financial risk, and concerns over competition, offset by the company's upgraded network, high penetration of multiple services, and reasonable diversification of cash flow among its markets relative to other companies of similar size. At the same time Standard & Poor's Ratings Services affirmed its ratings, including the 'B' corporate credit rating for Knology Inc. This comes after Knology's disclosure that it signed a definitive agreement to acquire the stock of unrated PrairieWave Communications for $255 million in cash. Standard & Poor's expect the transaction to close during the second quarter of 2007. The outlook remains stable. Total debt was $273 million as of Sept. 30, 2006. LB COMMERCIAL: Fitch Affirms Low-B Ratings on $60.5 Mil. Certs. --------------------------------------------------------------- Fitch Ratings upgrades LB Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 1998-C1 as: -- $34.6 million class G to 'AA' from 'A'; -- $17.3 million class H to 'A' from 'BBB+'. These classes are affirmed by Fitch: -- $495.7 million class A-3 at 'AAA'; -- Interest only class IO at 'AAA'; -- $86.4 million class B at 'AAA'; -- $86.4 million class C at 'AAA'; -- $90.7 million class D at 'AAA'; -- $34.6 million class E at 'AAA'; -- $51.8 million class F at 'AAA'; -- $43.2 million class J at 'BB-'; -- $17.3 million class K at 'B-'. Class L at $17.3 million remains at'C/DR6'. Fitch does not rate the $5.7 million class M certificates. Classes A-1 and A-2 have paid in full. The upgrades reflect increased subordination levels due to loan payoffs, scheduled amortization as well as the additional defeasance of five loans (5.3%) since Fitch's last rating action. Since issuance, 39 loans (24.6%) have defeased. As of the December 2006 distribution date, the collateral balance has been reduced 43.2% to $980.9 million from $1.73 billion at issuance; an additional 2.8% since Fitch's last rating action. Currently, two assets (1.9%) are in special servicing. The largest specially serviced asset (1.5%) is a retail center in Kansas City, MO and is real estate owned. As of December 2006 occupancy was 61%, the special servicer is attempting to increase occupancy at the property before listing it for sale. The second largest specially serviced asset (0.4%) is an REO office property in Nashville, TN. The December 2006 occupancy was 53% and the special servicer is also working to increase occupancy before listing it for sale. An additional specially serviced asset (0.29%) located in Youngstown, OH was disposed of in December 2006. Fitch projected losses on the specially serviced assets are expected to deplete class M and significantly impact class L. LENOX GROUP: S&P Downgrades Ratings and Removes Negative Watch -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Eden Prairie, Minnesota-based collectibles company Lenox Group Inc. to 'CCC+' from 'B+'. The rating on the senior secured debt was lowered to 'B-' from 'BB-' and the recovery rating was affirmed at '1', indicating expectations for a full recovery of principal. All ratings were removed from CreditWatch, where they were placed with negative implications on Nov. 3, 2006. The outlook is developing. About $96.3 million total debt was outstanding at Dec. 30, 2006. "The downgrade reflects the company's recent announcement that fiscal 2006 will be materially weaker than expected, near-term liquidity concerns, and expectations for ongoing operating challenges," said Standard & Poor's credit analyst Bea Chiem. The company is currently seeking a waiver for non-compliance with financial covenants for the period ended Dec. 2006 and will likely need to seek an amendment on covenants for future periods. Lenox continued to experience inventory management issues and weak retail sales during the fourth quarter of 2006, seasonally the company's strongest selling period. In addition, we are very concerned about the company's near-term liquidity. At Dec. 30, 2006, Lenox had minimal cash and is limited to the available borrowing base on its $175 million asset-based revolver. The company stated that it is working with Berenson & Company LLC to secure the waiver. Furthermore, it is likely the negative impact from the company's inventory issues (which resulted in canceled orders during the key holiday selling season) will continue into the first quarter of 2007. The ratings on Lenox Group Inc. reflect its near-term liquidity issues, narrow business focus, declining channel sales, and leveraged financial profile. Lenox is a leading designer, wholesaler, and retailer of collectibles and tabletop products. The company was originally incorporated under the name Department 56 Inc., and has since changed its name to Lenox Group Inc. following the acquisition of all the capital stock of Lenox Inc. from Brown-Forman Corp. in September 2005. With about $500 million in annual sales, Lenox remains a relatively small participant in the $1.2 billion U.S. collectibles, and $4.9 billion U.S. tabletop industries, both of which have numerous smaller participants and are characterized by high levels of competition. The company sells its products primarily through gift and specialty retailers (43% of sales) and department stores (40% of sales). Lenox's historical sales base in ornaments and collectibles has been declining in recent years because of the shrinking size of the specialty retailer channel and reduced consumer demand. Sales in the tabletop segment have also been negatively affected by private label competition and consolidation in the department store channel. LEVEL 3: Lenders Agree to $490 Million Debt-for-Equity Swap ----------------------------------------------------------- Pursuant to an exchange agreement, Southeastern Asset Management, on behalf of certain investment accounts, and Legg Mason Opportunity Trust have agreed to exchange $490 million aggregate principal amount of Level 3 Communications, Inc.'s 10% Convertible Senior Notes due 2011 for a total of approximately 160.1 million shares of Level 3's common stock, equivalent to approximately 326.78 shares per $1,000 note, and the payment of accrued and unpaid interest on the notes to the closing date. The shares of common stock to be issued under this agreement are exempt from registration pursuant to Section 3(a)(9) under the Securities Act of 1933, as amended. The notes are currently convertible into shares of Level 3's common stock at a rate of 277.77 shares per $1,000 note. As a result of the exchange, the company expects to reduce its 2007 cash interest expense by approximately $47 million. The notes are callable by the company on May 1, 2009. "This transaction is positive for our company as it helps us delever and reduce interest expense," said Sunit S. Patel, CFO of Level 3. "Throughout 2007, we expect to continue taking steps operationally and financially to improve our financial position." About Level 3 Headquartered in Bloomfield, Colorado, Level 3 Communications, Inc. (Nasdaq: LVLT) -- http://www.Level3.com/-- an international communications company, provides Internet connectivity for millions of broadband subscribers. The company provides a comprehensive suite of services over its broadband fiber optic network including Internet Protocol services, broadband transport and infrastructure services, colocation services, voice services and voice over IP services. * * * As reported in the Troubled Company Reporter on Dec. 20, 2006, Standard & Poor's Ratings Services assigned its 'CCC-' rating to $650 million of 9.25% senior notes due 2014 issued by Level 3 Financing Inc., a subsidiary of Broomfield, Colorado-based Level 3 Communications Inc. MARCAL PAPER: Hires Windels Marx as Special Regulatory Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey gave Marcal Paper Mills Inc. permission to employ Windels Marx Lane & Mittendorf LLP, as its special regulatory and environmental counsel. Windels March is expected to represent the Debtor in its regulatory, environmental antitrust and other litigation and administrative law matters. The Debtor paid the firm a chapter 11 retainer of $50,000. Gary F. Eisenberg, Esq., a partner at the firm, will bill $400 per hour for the engagement. Mr. Eisenberg also discloses the firm's professionals billing rates, including: Professional Designation Hourly Rate ------------ ----------- ----------- Samuel G. Destito, Esq. Attorney $495 Craig P. Murphy, Esq. Attorney $490 Anthony R. Coscia, Esq. Attorney $495 Edward Shea, Esq. Attorney $475 Leo Motiuk, Esq. Attorney $360 John Holden, Esq. Attorney $300 Mr. Eisenberg assures the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Eisenberg can be reached at: Gary F. Eisenberg, Esq. Windels Marx Lane & Mittendorf LLP 120 Albany Street Plaza New Brunswick, New Jersey, 08901 Tel: (732) 846-7600 Fax: (732) 846-8877 Headquartered in Elmwood Park, NJ, Marcal Paper Mills Inc. -- http://www.marcalpaper.com/-- produces over 160,000 tons of finished paper products, including bath tissue, kitchen towels, napkins and facial tissue, distributed to retail outlets for home consumption and to distributors for away-from-home use in hotels, restaurants, hospitals offices and factories. Marcal, founded in 1932, is a privately-held, fourth generation family business. It employs over 900 people in its Elmwood Park, New Jersey and Chicago, Illinois manufacturing operations. The Debtor filed for chapter 11 protection on Nov. 30, 2006 (Bankr. D. N.J. Case No. 06-21886). Gerald H. Gline, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, represent the Debtor. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. MARCAL PAPER: Court Approves Getzler Henrich as Consultant ---------------------------------------------------------- Marcal Paper Mills Inc. asks the U.S. Bankruptcy Court for the District of New Jersey for permission to retain Getzler Henrich & Associates LLC as an approved consultant pursuant to Section 327(a) of the Bankruptcy Code. The Debtor has negotiated a postpetition financing agreement with an affiliated entity of one of its subordinated lenders, Highland Financial Corp. As a condition to granting the DIP loan, Highland required the Debtor to retain a consultant with restructuring and industry experience. As consultant, Getzler Henrich will: a) consult with the Debtor's management, financial advisors and Board of Directors and be substantially involved in the development of all strategic efforts, business plans, material operations, projections (financial or otherwise), financial statements, budgets, restructuring efforts, asset sales or other reports prepared by the Debtor's employees; b) monitor the Debtor's business operations; c) after notice to and consultation with the Board, make weekly reports to, among others, the Agent, Lender and directly to the Debtor's management, financial advisors and the Board; d) engage in a regular dialogue with Agent's financial advisors (including, without limitation, Barrier Advisors) with respect to financial and operational aspects of the Debtor as well as conclusions with respect thereto; and e) approve a report and revised business plan for the Debtor's sales organization which includes these policies and procedures: -- an analysis of net sales results and selling expenses by quarter for fiscal year 2006 and the first quarter of fiscal year 2007, and a prospective analysis on budget plans for the second through fourth quarters of fiscal year 2007 (by product family and major customer), which analyzes significant trends and issues; occurring with the product family or customer that have impacted or are currently impacting results and covers impacts on volume, pricing, collections and profitability; -- an assessment of the place of Debtor's products in the market and market trends, and a comparison between Borrower's products and its competitors' products; -- an effectiveness analysis for the last twelve months of all selling expense related programs, including, without limitation, business development, promotional, and discounting programs by customer and product family with measurements of each program by total cost and margin impact, as well as changes in spending levels versus changes in volume and net pricing; -- a revised set of sales organization policies and procedures demonstrating how the Debtor intends to revise and gain control over pricing, selling expense programs, customer relationship management, market research, and new product marketing and sales, accompanied by a listing of required new hires, reassignments, and associated costs of implementation, and a project timeline for implementation of these revisions showing key milestones, which shall be monitored by the Approved Consultant; -- a proposed revised sales organization compensation and incentive plan accompanied by an assessment of how each change to this plan will better align the interests of the sales organization with the Debtor's interests; and -- confirmation that production capabilities by product compliment the product sales forecast. Getzler Henrich professionals' hourly billing rates are: Designation Hourly Rate ----------- ----------- Principal/Managing Director $385 - $500 Director $335 - $445 Associate $235 - $335 William Henrich, at Getzler Henrich, assures the Court that his firm does not hold or represent any interests adverse to the debtor, its creditors or estate and is a disinterested person within the meaning of Section 101(14) of the Bankruptcy Code. Headquartered in Elmwood Park, NJ, Marcal Paper Mills Inc. -- http://www.marcalpaper.com/-- produces over 160,000 tons of finished paper products, including bath tissue, kitchen towels, napkins and facial tissue, distributed to retail outlets for home consumption and to distributors for away-from-home use in hotels, restaurants, hospitals offices and factories. Marcal, founded in 1932, is a privately-held, fourth generation family business. It employs over 900 people in its Elmwood Park, New Jersey and Chicago, Illinois manufacturing operations. The Debtor filed for chapter 11 protection on Nov. 30, 2006 (Bankr. D. N.J. Case No. 06-21886). Gerald H. Gline, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, represent the Debtor. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. MEDICAL STAFFING: Case Summary & 46 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Medical Staffing Solutions, Inc. 8150 Leesburg Pike, Suite 1200 Vienna, VA 22182 Tel: (703) 641-8890 Bankruptcy Case No.: 06-11822 Debtor-affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- TeleScience International, Inc. 06-11823 Nurses Onsite Corporation 06-11821 Type of Business: Medical Staffing Solutions, Inc. (OTC-BB: MSSI), operates two subsidiaries, TeleScience International, Inc. and Nurses PRN. Based in Vienna, Virginia, TeleScience International is a government contractor that provides medical staffing services to state and federal government agencies. TeleScience staffs over 200 employees with operations in over 40 locations across 22 states. Nurses PRN, which was acquired by MSSI in 2005, is a provider of nurse staffing services to acute care facilities nationwide. The company operates a network of 13 staffing locations in 9 states, serving over 200 hospitals. These locations primarily focus on placing per diem nurses on an 'as needed' basis to hospitals facing a critical shortage of staff nurses. Nurses PRN employs over 1,200 nurses and 30 executive, management and administrative staff. See http://www.telescience.com/ Chapter 11 Petition Date: December 27, 2006 Court: Eastern District of Virginia (Alexandria) Judge: Robert G. Mayer Debtors' Counsel: Linda Dianne Regenhardt, Esq. Gary & Regenhardt PLLC 8500 Leesburg Pike, Suite 7000 Vienna, VA 22182-2409 Tel: (703) 848-2828 Fax: (703) 893-9276 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million A. Medical Staffing Solutions, Inc.'s 18 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $432,400 P.O. Box 105703 Atlanta, GA 30348-5703 B.B. Sahay $95,500 8150 Leesburg Pike Vienna, VA 22182 Premium Financing $87,389 P.O. Box 905131 Charlotte, NC 28290 Ellis & Preston Gates $83,458 1735 New York Avenue, Suite 500 Washington, DC 20006 Kirkpatrick & Lockhart $68,077 201 South Biscane Boulevard, Suite 2000 Miami, FL 33131 David & Brody $39,241 Joseph & Levine Bagell $38,839 Kemron Environmental, Inc. $31,181 American International Group $27,879 Nurses PRN $27,768 Seyfarth Shaw $27,221 Carefirst Blue Cross Blue Shield $26,357 Clearview Staffing Software $16,150 The Hartford $13,350 Broadlane, Inc. SS $12,610 Agoracom Investor $5,000 DC Office of Unemployment $4,741 Broadlane, Inc. TX $4,849 B. TeleScience International, Inc.'s 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $432,400 P.O. Box 105703 Atlanta, GA 30348-5703 B.B. Sahay $95,500 8150 Leesburg Pike Vienna, VA 22182 Ellis & Preston Gates $83,458 1735 New York Avenue, Suite 500 Washington, DC 20006 Kirkpatrick & Lockhart $68,077 201 South Biscane Boulevard, Suite 2000 Miami, FL 33131 David & Brody $39,241 12355 Sunrise Valley Drive, Suite 650 Reston, VA 20191 Joseph & Levine Bagell $38,839 Premium Financing $31,631 Kemron Environmental, Inc. $31,181 American International Group $27,879 Nurses PRN $27,768 Seyfarth Shaw $27,221 Carefirst Blue Cross Blue Shield $6,013 Agoracom Investor $5,000 DC Office of Unemployment $4,741 Hartford Insurance $4,126 Deltek Systems, Inc. $3,333 JAMS, Inc. $3,025 Selvan, Inc. $2,696 Department of Veterans Affairs $2,606 Law Offices of David Jaynes $2,500 C. Nurses Onsite Corporation's 18 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Premium Financing $55,758 P.O. Box 905131 Charlotte, NC 28290 Carefirst Blue Cross Blue Shield $20,344 P.O. Box 79779 Baltimore, MD 21279 Broadlane, Inc. $17,459 P.O. Box 915115 Dallas, TX 75391 Clearview Staffing Software $16,150 16801 Addison Road Addison, TX 75001 The Hartford $13,350 P.O. Box 2907 Hartford, CT 06104 Florida Department of Revenue $4,475 Covad Communications $1,536 Bell South $1,439 UPS $1,100 Forte Interactive $828 Reliant Energy $687 Milner Document Products $653 Pitney Bowes $560 LISTS $452 AT&T $432 Florida Power & Light $358 HC Pro $323 DS Waters of America $119 Jefferson Parish Water $57 MEDICAL TECH: Posts $310,501 Net Loss in Quarter Ended Sept. 30 --------------------------------------------------------------- Medical Technology and Innovations Inc. filed its financial statements for the first quarter ended Sept. 30, 2006, with the Securities and Exchange Commission on Jan. 11, 2007. Medical Technology and Innovations Inc. reported a $310,501 net loss for the quarter ended Sept. 30, 2006, compared with a $464,500 net loss for the same period in 2005. The company reported no revenues in both periods. At Sept. 30, 2006, the company's balance sheet showed $1.8 million in total assets and $2 million in total liabilities, resulting in a $234,366 total stockholders' deficit. The company's balance sheet at Sept. 30, 2006, also showed strained liquidity with $1.7 million in total current assets available to pay $2 million in total current liabilities. 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?186d Going Concern Doubt Stegman & Company in Baltimore, Maryland, expressed substantial doubt about Medical Technology and Innovations Inc.'s ability to continue as a going concern after auditing the company's financial statements for the years ended June 30, 2006, and 2005. The auditing firm pointed to the company's recurring losses from operations and net working capital deficit. About Medical Technology Medical Technology & Innovations Inc., formerly known as Southstar Productions Inc., was incorporated in the state of Florida in January 1989. Prior to Sept. 6, 2002, the company operated two wholly-owned subsidiaries, Medical Technology Inc. and Steridyne Corporation. The company manufactured and distributed the PhotoScreener, which is a specialized Polaroid-type instant film camera designed to detect conditions that lead to amblyopia and other eye disorders. Steridyne was a manufacturer and distributor of thermometer sheaths, probe covers, and anti-decubitus gel cushions. Steridyne also distributed both glass and digital thermometers. Between Sept. 6, 2002, and July 25, 2005, the company ceased operations except for liabilities associated with the LensCrafters' litigation and the liabilities associated with other litigation which the company is a party to. MERRILL LYNCH: Moody's Holds Rating on $1.015 Mil. Certs. at B3 --------------------------------------------------------------- Moody's Investors Service upgraded the ratings of four classes and affirmed the ratings of seven classes of Merrill Lynch Financial Assets Inc., Commercial Mortgage Pass-Through Certificates, Series 2003-Canada 11 as: - Class A, $206,012,068, Fixed, affirmed at Aaa - Class X, Notional, affirmed at Aaa - Class B, $6,100,000, Fixed, upgraded to Aaa from Aa2 - Class C, $7,500,000, Fixed, upgraded to Aa2 from A2 - Class D, $6,800,000, Fixed, upgraded to Baa1 from Baa2 - Class E, $2,370,000, Fixed, upgraded to Baa2 from Baa3 - Class F, $2,377,000, Fixed, affirmed at Ba1 - Class G, $2,370,000, Fixed, affirmed at Ba2 - Class H, $1,355,000, Fixed, affirmed at Ba3 - Class J, $2,370,000, Fixed, affirmed at B2 - Class K, $1,015,000, Fixed, affirmed at B3 As of the December 12, 2006 distribution date, the transaction's aggregate certificate balance has decreased by approximately 10.4% to $242.7 million from $270.9 million at securitization. The Certificates are collateralized by 48 mortgage loans ranging in size from less than 1.0% to 8.2% of the pool, with the top 10 loans representing 45.7% of the pool. The collateral primarily consists of the conduit component, representing 99.4% of the pool. The balance, 0.6% of the pool, has defeased and is collateralized by Canadian government securities. T here have been no realized losses since securitization and no loans in special servicing. Eight loans, representing 18.3% of the pool, are on the master servicer's watchlist. Moody's was provided with partial and full year 2005 operating results for 40.4% and 48.9% of the pool respectively. Moody's loan to value ratio is 76.3%, compared to 79.5% at securitization. Moody's is upgrading Classes B, C, D, and E due to improved pool performance, amortization, defeasance and increased credit support. The three largest loans represent 19.2% of the pool. The largest loan is the Poco Place Loan ($19.9 million - 8.2%), which is secured by a mixed use development including a 98,000 square foot, one-story shopping center component and a 66,000 square foot, seven-story office building component. Built in 1980 and renovated in 1995, the property is located 21 miles East of Vancouver in Port Coquitlam, British Columbia. The center includes Michael's (13.0% GLA; lease expiration 2011), Pier 1 Imports (7.4% GLA; lease expiration 2013) and Planet Organic (4.9% GLA; lease expiration 2013). Key office tenants include Hong Kong Bank of Canada (7.6% NRA; lease expiration 2009), London Life Insurance Company (3.3% NRA; lease expiration 2009), Canada Trust (3.0% NRA; lease expiration 2008) and Canada Life (3.0% NRA; lease expiration 2007). The center was 90.0% occupied as of September 2006, compared to 94.0% at securitization. The borrower is Narland Properties Limited. The loan amortizes on a 300-month schedule. Moody's LTV is 75.6%, compared to 84.9% at securitization. The second largest loan is the Cominar Industrial Portfolio Loan ($15.6 million - 6.4%), which is secured by nine industrial properties and one office property totaling 569,000 square feet. The properties were built between 1962 and 1991. Eight of the nine industrial properties are located in the Montreal metro area and the other is located in greater Quebec City. The office property is located in Sainte-Foy, a suburb of Quebec City. Key tenants include C.A.C Division DE (12.6% NRA; lease expiration January 2007), Sears Canada (10.1% NRA; lease expiration September 2008), Les Produits Paklab (7.7% NRA; lease expiration January 2009) and Les Produits Hydrauliques (5.1% NRA; lease expiration August 2007). As of September 2006 the property was 100.0% occupied, compared to 95.7% at securitization. The borrower is Fonds de Placement Immobilier Cominar, a Quebec REIT. The loan is full recourse to the borrower. The loan amortizes on a 240-month schedule. Moody's LTV is 57.4%, compared to 73.6% at securitization. The third largest loan is the Westmount Premier Loan ($11.0 million - 4.5%), which is secured by a 139,000 square foot Class B office building located in the Westmount district of Montreal, Quebec. The property was built in 1979. Key tenants include BDO Dunwoody LLP (19.2% NRA; lease expiration 2011), Intelco Canada (10.2% NRA; lease expiration 2013) and Groupe Financier AGA (10.2% NRA; lease expiration 2014). As of May 2006 the property was 93.0% occupied, compared to 91.2% at securitization. The loan is on the master servicer's watchlist due to past low occupancy. The loan is full recourse to the loan sponsors. The loan amortizes on a 300-month schedule. Moody's LTV is 72.6%, compared to 85.9% at securitization. The pool's collateral is a mix of multifamily and manufactured housing (35.2%), office and mixed use (32.1%), industrial and self storage (21.3%), retail (10.8%) and Canadian Government securities (0.6%). The collateral securing the loans is located in seven provinces of Canada. The top concentrations are Ontario (44.9%), British Columbia (20.5%), Quebec (15.6%), Alberta (9.9%) and Nova Scotia (8.6%). All of the loans are fixed rate. Approximately 69.5% of the pool is full or partial recourse to the respective borrowers. MORGAN STANLEY: Fitch Holds B- Rating on $1.8 Mil. Class N Certs. ----------------------------------------------------------------- Fitch upgrades Morgan Stanley Dean Witter Capital Trust's commercial mortgage pass-through certificates, series 2001-IQ as: -- $5.3 million class E to 'AAA' from 'AA+'; -- $8.9 million class F to 'AA' from 'AA-'. In addition, Fitch affirms these classes: -- $179.7 million class A-3 at 'AAA'; -- Interest-only class X-1 at 'AAA'; -- Interest-only class X-2 at 'AAA'; -- $22.3 million class B at 'AAA'; -- $18.7 million class C at 'AAA'; -- $5.3 million class D at 'AAA'; -- $5.3 million class G at 'A+'; -- $5.3 million class H at 'A'; -- $10.7 million class J at 'BBB-'; -- $3.6 million class K at 'BB+'; -- $1.8 million class L at 'BB'; -- $5.3 million class M at 'B'; -- $1.8 million class N at 'B-'. Fitch does not rate the $2.2 million class O. Classes A-1 and A-2 have paid in full. The upgrades reflect the stable performance of the pool, as well as increased credit enhancement due to paydown since issuance. As of the December 2006 distribution date, the pool's aggregate principal balance has been reduced by 61.2% to $276.4 million from $713 million at issuance. The deal has become increasingly concentrated with the top five loans constituting 39% of the collateral balance. In addition, 43 loans remain in the pool, down from 91 at issuance. There are currently no delinquent loans or loans in special servicing. Fitch reviewed the remaining credit assessed loan, which maintains an investment grade credit assessment. The Town Center Plaza loan (17.8%) is secured by 388,962 square feet (sf) of a retail shopping center located in Leawood, KS. The Fitch stressed DSCR as of year-end 2005 was 1.69 times (x) compared to 1.37x at issuance. The Fitch DSCR for the loan is calculated using borrower-provided net cash flow less required reserves divided by debt service payments based on the current balance using a Fitch stressed refinance constant. MOSAIC CO: Expects to File Delinquent Form 10-Q by End of January ----------------------------------------------------------------- The Mosaic Company has notified the Securities and Exchange Commission that it was not able to file its quarterly report on Form 10-Q for the fiscal quarter ended Nov. 30, 2006 on a timely basis. The 10-Q Report was due on Jan. 9, 2007. The company says the delay in filing the 10-Q Report is because of the implementation of its new enterprise resource planning system in October 2006, which has necessitated additional time to accurately complete its quarterly financial consolidation process and to prepare the related information to be included in the 10-Q Report. In its notice to the SEC, Mosaic stated that, based on currently available information, it believes that: -- net sales for the fiscal quarter ended Nov. 30, 2006 were slightly higher than net sales reported for the same fiscal quarter in the prior year and net earnings for the fiscal quarter ended Nov. 30, 2006 are expected to be approximately equivalent to the net earnings reported for the same fiscal quarter in the prior year; -- operating earnings for its Phosphates and Potash business segments for the second quarter of fiscal 2007 will be materially lower than those reported for the same fiscal quarter in the prior year period, and an operating profit is expected to be reported in its Offshore segment compared to an operating loss for the same prior year period; -- mosaic will report a large foreign currency transaction gain during the second quarter of fiscal 2007 due to the weakening of the Canadian dollar; and -- the effective tax rate for its second fiscal quarter will be materially lower than the tax rate in the second quarter of fiscal 2006. "We are working through start-up issues with a very complex, tightly integrated commercial and financial system and our focus is on accuracy," stated Larry Stranghoener, Mosaic's Executive Vice President and Chief Financial Officer. "Current business conditions are good, with solid demand and improved pricing for all three major nutrients, especially in North America. We look forward to a strong second half performance," Mr. Stranghoener added. Mosaic also noted that its earnings release to report interim financial results for the fiscal quarter ended Nov. 30, 2006 has also been delayed. Mosaic stated that it is working to complete the 10-Q Report as expeditiously as possible, and anticipates that it will be filed by the end of January 2007. About The Mosaic Company The Mosaic Company -- http://www.mosaicco.com/-- produces and markets concentrated phosphate and potash crop nutrients. For the global agriculture industry, Mosaic is a single source of phosphates, potash, nitrogen fertilizers and feed ingredients * * * As reported in the Troubled Company Reporter on Dec. 29, 2006, Standard & Poor's Ratings Services lowered its ratings on The Mosaic Co.'s $450 million revolving credit facility and $50 million term loan A, both maturing in 2010, to 'BB' with a recovery rating of '2' from 'BB+' with a recovery rating of '1' and removed them from CreditWatch, where they had been placed with negative implications on Nov. 10, 2006. As reported in the Troubled Company Reporter on Dec. 8, 2006, Fitch Ratings affirmed and removed The Mosaic Company from Rating Watch Evolving, where it was originally placed on July 26, 2006. Ratings affirmed include Fitch's BB- Issuer Default Rating and the BB+ rating on the company's senior secured revolver. As reported in the Troubled Company Reporter on Nov 9, 2006, Moody's Investors Service assigned Ba1 ratings to The Mosaic Company's proposed new $1.05 billion guaranteed senior secured credit facilities. Moody's also assigned B1 ratings to $900 million of proposed senior unsecured debt. Mosaic's Ba3 corporate family rating was affirmed but the ratings of the existing revolver and the term loan A were downgraded to Ba1 from Baa3 and those of the existing senior unsecured debt lowered to B1 from Ba3 in accordance with the LGD methodology. The ratings outlook is stable. NAVISTAR INTERNATIONAL: Receives $1.3 Billion Loan Commitment ------------------------------------------------------------- Navistar International Corporation has received a commitment for a five-year senior unsecured term loan facility and synthetic revolving facility in an aggregate amount of $1.3 billion. The facilities will be provided by J.P. Morgan Chase Bank and a group of lenders that includes Credit Suisse, Banc of America Securities and Citigroup Global Markets. The new loan facilities, which expire in January 2012, and will replace the company's existing senior unsecured $1.5 billion Credit Agreement, which expires in March 2009. Navistar will use the proceeds of the new facilities to repay the remaining amount outstanding under the existing loan facility. On Dec. 29, 2006, Navistar voluntarily repaid $200 million of the $1.5 billion Credit Agreement. "We are very pleased with the ongoing support of our lenders and relationship banks," said Bill Caton, Navistar executive vice president and chief financial officer. "This new lending commitment is a real vote of confidence in the company. The new loan facilities will enhance our liquidity and provide additional stability in our overall capital structure at a lower cost." About Navistar Based in Warrenville, Illinois, Navistar International Corp. (NYSE:NAV) -- http://www.nav-international.com/-- is the parent company of Navistar Financial Corp. and International Truck and Engine Corp. The company produces International(R) brand commercial trucks, mid-range diesel engines and IC brand school buses, Workhorse brand chassis for motor homes and step vans, and is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. The company also provides truck and diesel engine parts and service sold under the International(R) brand. A wholly owned subsidiary offers financing services. * * * As reported in the Troubled Company Reporter on Jan. 12, 2006, Fitch has assigned a 'BB-' rating to Navistar International Corp.'s proposed $1.3 billion senior unsecured credit facility. Fitch also withdraws the 'BB-' rating on the company's senior unsecured notes, the 'B' rating on company's senior subordinated debt, and the senior unsecured debt rating at Navistar Financial Corp., all of which have been substantially retired. Fitch expects to withdraw the 'BB-' rating on company's existing credit facility upon the closing of the new $1.3 billion facility. As reported in the Troubled Company Reporter on Dec. 13, 2006, Standard & Poor's Ratings Services reported that its 'BB-' corporate credit ratings on Navistar International Corp., and Navistar's subsidiary, Navistar Financial Corp., remain on CreditWatch with negative implications where they were placed on Jan. 17, 2006. NEWPAGE CORP: Negotiates Senior Secured Credit Facilities Pricing ----------------------------------------------------------------- NewPage Corporation reported that it is in the process of negotiating improved pricing of its senior secured credit facilities along with various other amended terms to its existing credit agreement. Headquartered in Dayton, Ohio, NewPage Corporation -- http://www.newpagecorp.com/-- produces coated papers in North America. With more than 4,300 employees, the company operates four integrated pulp and paper manufacturing mills located in Escanaba, Michigan; Luke, Maryland; Rumford, Maine; and Wickliffe, Kentucky. * * * As reported in the Troubled Company Reporter on Dec. 19, 2006, Moody's Investors Service upgraded NewPage Corporation's corporate family rating to B1 from B2; senior secured term loan rating to Ba2 from Ba3; second lien notes rating to B2 from B3; and senior subordinated notes rating to B3 from Caa1. NORTHWEST AIRLINES: Files Plan of Reorganization in New York ------------------------------------------------------------ Northwest Airlines Corporation and certain of its subsidiaries have filed their joint Chapter 11 plan of reorganization with the U.S. Bankruptcy Court for the Southern District of New York. The plan provides for the treatment of claims of creditors, the implementation of agreements with key labor groups, lenders and suppliers, as well as the raising of new equity capital for Northwest. "The filing of our plan of reorganization is a key milestone in our ongoing restructuring efforts and begins Northwest's emergence from Chapter 11 protection," Doug Steenland, Northwest Airlines president and chief executive officer, said. "Over the past 16 months, we have achieved the three key objectives we set for our restructuring: we have removed $2.4 billion in annual costs from the business, we have restructured our fleet and entered into new aircraft purchase agreements, and we have significantly strengthened our balance sheet. We remain on track to report a pre-tax profit for the full year 2006. "By returning to profitability, we will enable our employees, whose sacrifices have been essential to the successful reorganization of Northwest, to share in its success. For our employees, a healthy Northwest will ensure a future of job security, pension and retirement benefits, profit-sharing payments and access to a valuable claim." Restructuring Progress Discussing the airline's restructuring milestones to date, Mr. Steenland said, "We have moved through the bankruptcy process quickly because of our success in addressing key cost and revenue issues including labor costs and pensions, new agreements with key suppliers, restructuring the Northwest fleet, and substantially reducing debt. "Key to our successful restructuring efforts to date are the permanent labor savings agreements we have reached with the International Association of Machinists and Aerospace Workers, the Air Line Pilots Association, the Aircraft Mechanics Fraternal Association, the Aircraft Technical Support Association, the Transport Workers Union of America, and the Northwest Airlines Meteorologists Association, which have helped us realize the $1.4 billion in annual labor savings we required. "Recognizing the importance of pensions to our employees, we worked together over the past several years with our union leadership and the Congress on a carefully crafted solution, the Pension Protection Act, which has preserved pension benefits for the 73,000 Northwest pension plan participants. We have always believed saving our pension plans was the right thing to do for our valued employees, and despite the many obstacles we faced along the way, we did not waver from this commitment. "To ensure that Northwest has an efficient and comfortable fleet, we reaffirmed purchase agreements with Airbus, Boeing, GE Aircraft Engines and Pratt & Whitney that allow us to continue to modernize our long-range fleet with A330 and 787 aircraft. We also negotiated additional purchase agreements with Bombardier and Embraer for new, dual-class regional jetliners that will improve our domestic product." Discussing the airline's regional aircraft strategy, Mr. Steenland said, "We have nearly completed agreements with our three Airlink partners -- Pinnacle, Mesaba and Compass -- which will be operating the regional aircraft that will provide convenient connections to Northwest's global network through its three domestic hubs. "In addition, our operational costs were improved by reshaping our maintenance organization, which resulted in greatly improved economics while continuing Northwest's historic operational reliability." Speaking to the restructured balance sheet, Mr. Steenland said, "We have completed a $975 million refinancing of existing bank obligations at more favorable terms while gaining access to $250 million in incremental liquidity. Our new facility can be converted to permanent exit financing, securing the debt financing Northwest needs to emerge from Chapter 11 protection. "The completion of this refinancing clearly demonstrated that our key stakeholders in the capital markets recognized Northwest's progress towards its restructuring goal of positive cash flow and sustained profitability." "Reversing $4.2 billion in losses since early 2001 was not an easy task, but one that was essential to the future of the airline," Mr. Steenland added. "Through our many restructuring actions, we expect to report a significant year-over-year improvement in pre- tax earnings from 2005 to 2006." Terms of the Plan * Creditors The plan proposes to restructure Northwest's balance sheet through the elimination of all pre-petition unsecured debt. In exchange for their claims, unsecured creditors will receive common stock of the reorganized Northwest Airlines Corporation, and the right to purchase additional common stock in a rights offering. Terms of a rights offering will be provided at a later time. Unsecured creditors whose claims are guaranteed by certain other Northwest entities will receive an additional distribution of common stock on their claims. Because all unsecured creditor claims will not be satisfied in full, the pre-petition equity holders' interests in Northwest's common and preferred stock will be cancelled, and those holders will not receive a distribution. * Agreements The plan will implement the favorably renegotiated aircraft purchase agreements with Airbus, Boeing, Bombardier, GE Aircraft Engines and Pratt & Whitney, and new aircraft purchase agreements with Embraer and Bombardier. The plan will adopt and put in place the restructured lease and debt obligations for Northwest's aircraft fleet and airports and other facilities. All of these agreements will provide substantial cost savings to Northwest. In addition, the plan provides for the assumption of the company's ratified collective bargaining agreements with each of its labor groups, except for its flight attendants. Each labor group with a ratified collective bargaining agreement has a negotiated claim as part of that agreement. The Association of Flight Attendants does not have an approved claim because it does not yet have a ratified collective bargaining agreement. Should the flight attendants enter into a ratified agreement prior to Northwest finalizing its plan of reorganization, an approved claim would also be available to them. * Equity/Debt As noted, he plan provides for the option to raise exit equity financing via an equity rights offering. The plan also anticipates that Northwest may supplement the rights offering by obtaining additional new equity capital from one or more private equity investors. Northwest will have the option to convert its existing debtor-in- possession financing upon its emergence from bankruptcy into an exit financing facility consisting of a $175 million revolving credit facility and a $1.05 billion term loan, including a $75 million letter of credit facility, each of which has a maturity date of August 2013. Northwest also may elect to proceed with alternative exit financing if more attractive terms than those under the existing facility can be obtained. * Timing The bankruptcy court has granted Northwest an extension until Feb. 15, 2007 to file a disclosure statement providing additional information and detail regarding the plan. After approval by the court, Northwest will distribute the plan and disclosure statement to its creditors and begin a period of solicitation of creditors for acceptance of the plan. Northwest expects to emerge from Chapter 11 during the second quarter of 2007. 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. NORTHWEST AIRLINES: S&P Says Plan Filing Won't Affect Ratings ------------------------------------------------------------- Northwest Airlines Corp. and its Northwest Airlines Inc. subsidiary (both rated 'D') filed, on Jan. 12, 2007, a proposed plan of reorganization, foreseeing a second-quarter 2007 emergence from bankruptcy. "The development has no immediate impact on the companies' corporate credit ratings, which are based on their bankruptcy status," said Standard & Poor's credit analyst Philip Baggaley. "Upon emergence from bankruptcy, we would assign new corporate credit ratings." Ratings on certain equipment trust certificates remain on CreditWatch, excepting 'AAA' rated, bond-insured certificates, which are not on CreditWatch. Upon emergence from bankruptcy, S&P would resolve the CreditWatch review on affected securities. The 'BBB-' bank loan rating, also not on CreditWatch, on Northwest Airlines Inc.'s debtor-in-possession credit facility is likewise unaffected. That facility can convert to exit financing upon the fulfillment of certain conditions and at Northwest's option, at which time Standard & Poor's would re-rate it. The resulting bank loan rating is likely to be substantially lower than the current rating on the debtor-in-possession facility, as it would be notched up from Northwest's new corporate credit rating based on recovery prospects in a default scenario. Northwest did not file a disclosure statement, and the proposed plan of reorganization does not include many important details. The company received bankruptcy court permission to defer filing those items until Feb. 15, 2007. The company noted that the plan provides for an option to raise equity through a rights offering, and that Northwest may obtain additional equity investment from private equity sources. Because of this, the company's capital structure upon emergence is not yet finalized, and recovery for impaired classes of creditors, including unsecured creditors, remains to be determined. The airline has not yet negotiated a contract with its flight attendants, who are working under terms and conditions imposed by Northwest, with the court's permission. However, conclusion of a contract is not a precondition to emerge from Chapter 11. NOVELL INC: Asserts Inevitable Bankruptcy of SCO Group ------------------------------------------------------ In a document filed with the District Court of Utah, Novell Inc. claims that The SCO Group Inc., a UNIX vendor that is suing IBM for alleged illegal incorporation of its proprietary Unix code into Linux, is on the verge of bankruptcy, Jennifer Mears of LinuxWorld reports. "Contrary to SCO's assertion that a preliminary injunction should be denied because it may accelerate SCO's bankruptcy, SCO's imminent bankruptcy is a compelling reason to grant Novell's motion," Novell's attorneys write in the filing. "When SCO goes into bankruptcy, it will not be because of Novell's motion, but because of its own financial missteps. For SCO, bankruptcy is inevitable; it characterizes its assets as merely those 'remaining' and does not rebut Novell's arguments that its bankruptcy is imminent." In September last year, Novell demanded to recover a percentage of the revenue SCO earned from its UNIX licensing deals with Microsoft Corp. and Sun Microsystems Inc. Novell claims that it is entitled to 95% of all revenue derived from SCO's SVRX license agreements pursuant to a 1995 agreement governing SCO's purchase of UNIX from Novell. SCO, however, has refused to give up any money, claiming that the Microsoft and Sun licensing deals don't relate with any agreement signed in 1995. SCO also claims that such a move would harm its chances of winning its case against IBM, Ms. Mears reports. Utah District Court magistrate judge Brooke Wells in June dismissed 182 of SCO's claims against IBM and U.S. District Judge Dale Kimball upheld Judge Wells's ruling in a decision handed down November 29, InformationWeek reports. The company has filed a new motion claiming the November decision was procedurally and substantially flawed. SCO spokesman Blake Stowell has denied charges that the company is in financial disaster, Ms. Mears relates. "We will report our fourth quarter financials on Jan. 17, 2007 and give an update at that time," LinuxWorld quotes Mr. Stowell as saying. "We consider it irresponsible of Novell's lawyers to mischaracterize our financial well-being with these false statements." About SCO Group Headquartered in Lindon, Utah, The SCO Group Inc. (Nasdaq: SCOX) - - http://www.sco.com/-- provides software technology for distributed, embedded and network-based systems, offering SCO OpenServer for small to medium business and UnixWare for enterprise applications and digital network services. About Novell Inc. Headquartered in Waltham, Massachusetts, Novell, Inc. -- http://www.novell.com/-- delivers Software for the Open Enterprise. With more than 50,000 customers in 43 countries, Novell helps customers manage, simplify, secure and integrate their technology environments by leveraging best-of-breed, open standards-based software. Novell has sales offices in Argentina, Brazil and Colombia. Waiver of Default As reported in the Troubled Company Reporter on Sept. 29,2006, Novell Inc., received a letter from Wells Fargo Bank, NA, the trustee with respect to company's $600 million 0.50% convertible senior debentures due 2024, which asserts that Novell is in default under the indenture because of the delay in filing its Form 10-Q for the period ended July 31, 2006. On Nov. 10, 2006, Novell completed its consent solicitation with respect to certain amendments to, and a waiver of rights to pursue remedies available with respect to certain alleged defaults under, the provisions of the indenture, governing its 0.50% convertible senior debentures due 2024. Under the terms of the Consent Solicitation Statement, Novell will pay an additional 7.33% per annum in special interest on the Debentures from and after Nov. 9, 2006 to, but excluding, Nov. 9, 2007. NYU HOSPITALS: Moody's Rates Upcoming $170 Million Bonds at Ba2 --------------------------------------------------------------- Moody's Investors Service has assigned a Ba2 rating to NYU Hospitals Center's upcoming $170 million bond issue to be issued by the Dormitory Authority of the State of New York. The outlook is positive. This bond issue was incorporated into Moody's initial rating assignment in August 2006 when NYUHC refunded its 2000A bonds and separated from the Mount Sinai-NYU Health Obligated Group (Obligated Group) to become a stand-alone credit. The Ba2 rating is based on this academic medical center's weak balance sheet leverage as evidenced by high debt and modest cash reserves partially, mitigated by its large size (31,000 admissions at NYU Hospital), ability to maintain its market share and grow key services in the competitive New York City market through its multi-disciplinary approach and recent evidence that operating performance has stabilized. USE OF PROCEEDS: The three components of the financing include the acquisition of the Cancer Center and refinancing of the Tenant Improvement loan related to the Cancer Center, the refinancing of Series 2000B bonds, and financing of other facilities improvements. LEGAL SECURITY: The Series 2007A Bonds will be jointly secured by a pledge of gross receipts and a mortgage of all health care facilities of NYUHC and will be on parity with the Series 2000D, 2006A and 2006B (taxable) bonds and a note payable to New York University. Sale/leaseback transactions that may include a portion of the mortgaged property are permitted. Long term debt service coverage ratio of at least 1.10 times. A debt service reserve fund will be established. INTEREST RATE DERIVATIVES: NYUHC's total return and fixed payer swap related to its 2000B bonds ($24.7 million) will be terminated with the refunding of those bonds with Series 2007A. In connection with the 2000D bonds ($54.5 million), NYUHC entered into a fixed payer swap at a rate of 4.413% relative to LIBOR expiring in March 2008. In connection with a working capital loan ($15.0 million), NYUHC entered into two separate fixed payer swaps a rate of 4.4% relative to LIBOR expiring in December 2007. STRENGTHS * Integrated academic medical center provides opportunities to grow market share in the fragmented New York City market as an independent entity. * Programmatic growth aiding physician recruitment and volume. Designated centers of excellence in cancer, cardiovascular, children's' services, musculoskeletal and neurosciences are growing and generate profit margins. * Independence from the Obligated Group permits improved contracting ability by enabling NYUHMC to no longer accept averaged rate increases for the combined Obligated Group * Recent improvement noted in revenue cycle initiatives and financial performance. CHALLENGES * Very weak balance sheet indicators, characterized by modest cash and high debt load. Cash balances expected to improve on an absolute basis, but days' cash on hand is not expected to improve until at least 2010. * Additional debt of the Series 2007A bonds and $32 million debt (five year amortization) to be used to finance a pension obligation, will further stress already weak balance sheet ratios. Debt service coverage expected to hover under 2.0 times though the long term. * History of modest financial performance and cash flow generation. * Fragmented New York City market highlighted by the ability of physicians to change referral patterns and move volume within the market. * Retirement of long tenured dean and hospital CEO creates management uncertainty. MARKET POSITION/COMPETITIVE STRATEGY NYU Hospital Center's strategy to integrate basic and translational research into its inpatient and outpatient care has helped solidify its market position on the East Side of Manhattan. Emphasis on certain key services as centers of excellence has contributed to strong physician recruitments and increasing utilization trends for these key services which also produce a margin. Oncology, cardiovascular, children's services, musculoskeletal (NYUHC merged with 190-bed Hospital for Joint Diseases effective January 1, 2006), neurosciences and imaging are the key services identified for programmatic growth, and capital spending in the future will be to further enhance these service lines. Management believes its record of creating demand for services after making programmatic investments will contribute to a trend of growing inpatient and outpatient volume. For example, oncology visits have grown from 7,137 ambulatory visits in 2003 to 99,192 visits through September 30, 2006. Total inpatient volume at NYU Hospital has varied between 31,000 and 32,000 admissions for the last three years and a noticeable increase in outpatient surgical volume and top line growth will be necessary for NYUHC's financial recovery. Adding HJD's approximately 6,300 admissions per annum increased NYUHC's admissions to 37,000 admissions on a combined basis. NYUHC's primary service area encompasses lower Manhattan and Brooklyn. NYUHC reported a 2% market share for all New York City discharges (1.2 million discharges) during 2004 (most recent year available). While this seems quite small, no single hospital in New York City garners more than 5% market share due to the fragmented nature of the market although affiliated hospital systems maintain larger market shares when combined. New York City Health and Hospitals Corporation is not considered a direct competitor, because it caters to a mostly Medicaid and indigent population. A significant 61% market share is held by hospitals not located in the five boroughs of New York City, and management believes that there are more opportunities to gain market share from these providers than going head to head with its local competitors. Management expects its focused marketing of quality and outcomes of programs to be a differentiating factor to patient decisions. NYUHC's physical plant is in need of critical infrastructure improvements and the Series 2007A bond proceeds will address some of these facility shortcomings. Management had hoped to significantly rebuild its facility when it became a member of the Obligated Group, but the financial deterioration of the Obligated Group meant that those plans were never addressed over the last seven years. Additional surgical suites and recovery rooms, 35 new ICU beds, expansion of its emergency room, new operating rooms in its ambulatory surgery center, two new catheterization labs and various infrastructure upgrades will be financed with these bonds. Significant volume generated through improved through-put and this additional capacity will be needed to generate the revenue to cover the debt service associated with this financing and meet volume projections which are expected to increase to over 40,000 by 2010. Due to a planned reduction in rehabilitation volume, reduced obstetrics volume related to the departure of four obstetricians from the staff, and general softness in medical/surgical volume, total volume declined 3.4% through nine months 2006 compared to the comparable 2005 period. Cancer center visits continue their robust trend, with visits up 11.5% through September 30, 2006. A full asset merger with Hospital for Joint Diseases (HJD) was effective January 1, 2006 which should help improve the coordination (and retention of revenue) of orthopedic business between the two facilities. OPERATING PERFORMANCE: IMPROVED PERFORMANCE TO DATE IN 2006 The separation from Mount Sinai Hospital should allow NYUHC to focus on its own financial destiny. NYUHC has reduced its operating deficit since 2003, turning an $12.9 million operating deficit in 2003 into a $3.4 million operating profit in 2005 (Moody's excludes investment income from other operating revenue) as a result of improved contract negotiations that concluded in 2004 for its eight largest contracts (93% of its managed care revenue). These new contracts included material rate increases that are projected to generate a profit margin for the first time in fiscal 2006. Volume initiatives, pay for performance contracts that are aligned with its physician organization and contract compliance is also critical to generating additional revenue from these payers. Navigant, a national consulting firm, assisted with revenue cycle initiatives that in conjunction with length of stay reductions and performance management kept NYUHC on an improving financial trend. Price adjustments for service lines anticipated to see volume growth can also be expected going forward. A mid- year reduction of 90 FTEs and other expense reductions also contributed to the favorable financial performance year-to-date despite the inpatient volume decline. Through nine months of 2006, NYUHC has generated a favorable $8.3 million operating profit (1.1% operating margin), ahead of the $6.1 million for the comparable 2005 period (Moody's excludes $6.8 million malpractice dividend from nine months 2005 numbers). Outpatient volumes continue to exceed budgeted targets and management is budgeting an operating profit of $13.5 million for fiscal year 2006. Moody's believes management's projections are aggressive, reflecting operating income exceeding $12 million in each of the next four years and operating cash flow growing each year through the projection period given that the hospital has only performed at this level for the current fiscal year. Despite the projected improvement, operating margins remain modest at around 1.1% through the projection period and operating cash flow margins never exceeds 7.2%. NYUHC will need to meet these financial projections to maintain modest debt service coverage of 2.0 times. Moody's believes management is highly motivated to continue its current run rate and establish a longer term record of performance to gain investor confidence and market access in the future. BALANCE SHEET POSITION: HIGHLY LEVERAGED AND LIGHT ON CASH The competitive marketplace and a high expense base for teaching and research have limited NYUHC from building cash reserves over time. Furthermore, NYUHC's January 1998 disaffiliation from the New York University and medical school and its establishment as a corporation separate from the University resulted in NYUHC left with modest cash reserves and a $112 million obligation to the NYU School of Medicine for services rendered that was capitalized over the last seven years. The subsidies to the medical school have been terminated, but leave NYUHC with extremely weak balance sheet measures which limit the current rating level. At fiscal year end 2005, cash balances of $67.2 million equated to a modest 26.3 days of cash on hand (excludes restricted funds included in board designated funds). Through nine months of 2006, cash has improved to $83.5 million (32.7 days) through revenue initiatives that reduced days in accounts receivable by seven days. Cash is budgeted to reach $101.3 million by year end, but nonetheless remains weak at 38.8 days. Additional debt of $32 million in the form of a taxable five year loan is expected to fund a required pension contribution to be made for the frozen defined benefit plan in the first quarter of 2007. While this transaction will allow NYUHC to maintain its liquidity, this additional debt was unanticipated by Moody's at the time of our initial rating and exacerbates the overly leverage balance sheet. A defined contribution plan was established for new employees after July 2000. Cash balances are projected to increase to $138 million by 2010 but remain at modest levels of days cash on hand (42.2 days). The hospital is limited in its ability to grow cash by its significant debt load and annual debt service requirements. This debt refinances the outstanding $72 million lease for the ambulatory cancer center building that was constructed by an off-balance sheet entity but which Moody's had included in our calculation of debt. Bringing this cancer center on balance sheet reflects the importance of the oncology service and this building to meeting financial projections. Capital spending is limited to routine capital spending that approximates $45 million per annum plus the upcoming new money debt issue. An additional $120 million new money financing is expected to be issued during 2007. Including this financing, pro forma cash-to-debt declines to 15.7% from 20.3%, debt-to-cashflow increases to 8.71 times from 6.69 times and MADS coverage declines to 1.70 times from 2.07 times due to the increase in maximum annual debt service to $44.9 million/year with the additional $120 million of debt. Outlook The positive outlook is based on improving operating performance that has continued into the current fiscal year. The separation from the Obligated Group should enable NYUHC to focus on its service line strengths to generate an improved revenue stream which will mitigate the increasing debt service expected from the new money financing to be issued shortly. What could change the rating--UP Retirement of debt, material improvement in balance sheet measures What could change the rating--DOWN Additional debt beyond expectations, financial results that deviate negatively from projections KEY INDICATORS Assumptions & Adjustments: - Based on financial statements for NYU Hospitals Center - Consolidating Financial Statements - First number reflects Audit year ended December 31, 2005 (NYUHC includes HJD and CC550) and includes cancer center lease with debt numbers - Second number reflects pro forma nine months 2006 annualized (September 30 and includes HJD) with addition of Series 2006A and 2006B bonds issued in 2006 and the Series 2007A bonds and $32 million debt financing for pension obligation expected shortly. The numbers exclude an additional $120 million of new money debt to be issued in 2007. - Cash numbers exclude restricted cash that is included in board designated funds on the financial statements Admissions: 37,420; 36,444 Total operating revenue: $975.5 million; $983.9 million Net revenue available for debt service: $58.3 million; $77.2 million Total unrestricted cash: $67.3 million; $83.5 million Total debt outstanding: $328.6. million; $411.5 million Operating cashflow margin: 6.4%; 6.8% Cash-to-debt: 20.5%; 20.3% Debt-to-cashflow: 5.92 times; 6.69 times Days cash on hand: 26.35 days; 32.6 days Maximum annual debt service: $31.608 million; $37.291 million Maximum annual debt service coverage with actual investment income as reported: 2.20 times; 2.05 times Maximum Adjusted annual debt service coverage with investment income normalized at 6%:2.23 times; 2.07 times RATED DEBT Series 2000D, $52.2 million outstanding, Ba2 rating Series 2006A, $94.59 million outstanding, Ba2 rating Series 2006B, $27.4 million, taxable, not rated Series 2007A, $170 million, Ba2 rating OWENS CORNING: MACtac Wants $271,066 Administrative Claims Paid --------------------------------------------------------------- Morgan Adhesives Supply, doing business as MACtac, asks the U.S. Bankruptcy Court for the District of Delaware to (i) establish that it holds a valid administrative expense claim for $271,066 against the Reorganized Owens Corning and it debtor affiliates, (ii) entitle MACtac to administrative priority status with respect to its claim, and (iii) direct the Reorganized Debtors to immediately pay the claim. MACtac says it will promptly withdraw its request when the Reorganized Debtors pay the invoices, as well as other postpetition and pre-Effective Date amounts, before the hearing on its request. MACtac routinely supplied the Debtors with fiberglass insulation pipe sealing tape, related sealants for the sealing tape, and bonding tape used for sound dampening known as "sticky steel." The Debtors paid for the Goods purchased postpetition in the regular course of their business. James C. Carignan, Esq., at Pepper Hamilton LLP, in Wilmington, Delaware, says that as of Dec. 14, 2006, postpetition and pre- Effective Date invoices for Goods purchased by the Debtors, aggregating $271,066, remain unpaid. MACtac believes that the Reorganized Debtors will eventually pay the unpaid invoices via ordinary payment practices. However, out of abundance of caution and given the deadline for submitting administrative claims, MACtac has filed a request for payment of its administrative claim to preserve its rights to recover on the invoices in the event that the invoices are not paid prior to a hearing on the claims it asserted. Mr. Carignan notes that pursuant to Sections 503(b) and 503(b)(1)(A) of the Bankruptcy Code, MACtac is entitled to allowance and payment of an administrative priority claim because: (a) the sales of the Goods to the Reorganized Debtors constitute ordinary course business transactions and the Goods were provided to them pursuant to postpetition contracts, purchase orders, shipments and invoices; (b) MACtac incurred expenses in manufacturing and selling the Goods to the Debtors; and (c) the Reorganized Debtors received a benefit from postpetition sale transactions by utilizing the Goods in the usual operation of their businesses. Headquartered in Toledo, Ohio, Owens Corning (OTC: OWENQ.OB) -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The company filed for chapter 11 protection on Oct. 5, 2000 (Bankr. Del. Case. No. 00-03837). Norman L. Pernick, Esq., at Saul Ewing LLP, represents the Debtors. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Asbestos Creditors. James J. McMonagle serves as the Legal Representative for Future Claimants and is represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP. (Owens Corning Bankruptcy News, Issue No. 148; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). As reported in the Troubled Company Reporter on Oct. 9, 2006, the Honorable John P. Fullam, Sr., of the U.S. District Court for the Eastern District of Pennsylvania affirmed on Sept. 28, 2006, the order of the Honorable Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware, confirming Owens Corning's Sixth Amended Plan of Reorganization. The Plan took effect on Oct. 31, 2006, marking the company's emergence from Chapter 11. PERFORMANCE TRANSPORTATION: Can Expand FTI's Advisory Services -------------------------------------------------------------- The Honorable Michael J. Kaplan of the United States Bankruptcy Court for the Western District of New York authorized Performance Transportation Inc. and its debtor-affiliates to expand, nunc pro tunc to Nov. 8, 2006, the scope of FTI Consulting, Inc.'s financial advisory services to include services related to the placement of financing to exit bankruptcy. The Court's earlier order authorizing the employment of FTI as financial advisors to the Debtors remains in full force and effect, Judge Kaplan says. As reported in the Troubled Company Reporter on Dec. 14, 2006, Garry M. Graber, Esq., at Hodgson Russ LLP in Buffalo, New York, noted that FTI has already begun providing these additional services to the Debtors based on the Debtors' earnest desire to move forward with the bankruptcy restructuring. Pursuant to the terms of the Supplemental Engagement Letter, FTI has begun providing, and will provide, additional advisory services as the parties have deemed, and will deem, appropriate and feasible to advise the Debtors during the course of the Chapter 11 cases, including: (a) assisting the Debtors with information and analyses required pursuant to the Debtors' capital needs, including the placement of financing to exit bankruptcy; (b) assisting with the review and development of a long-range business plan and supporting analyses; (c) assisting the Debtors in negotiations with existing lenders and discussions with potential new lenders or investors for the purpose of refinancing and restructuring existing senior and junior debt securities including the preparation of materials and other analyses for the Debtors' use in refinancing and restructuring the debt; (d) assisting the Debtors in the analysis and negotiation of new or restructured financing agreements; (e) assisting in the preparation of materials, including business, financial information, and descriptive memoranda, to be provided to potential lenders of the placement of financing to exit bankruptcy; (f) directing and coordinating the due diligence process associated with the placement of financing to exit bankruptcy; and (g) assisting the Debtors and their advisors through the placement of financing to exit bankruptcy and the closing process. According to Mr. Graber, the Debtors have also agreed to pay a success fee to FTI for efforts expended in connection with the successful confirmation of a plan of reorganization in their Chapter 11 cases. The Success Fee will be fixed at $580,000, and is payable upon the effectiveness of the final Plan. FTI has agreed to offset any fees earned in assisting the Debtors in obtaining the placement of financing to exit bankruptcy against the final payment of the Success Fee. Many of the terms, conditions, and provisions contained in the Supplemental Engagement Letter incorporate the terms, conditions and provisions contained in the parties' Sept. 16, 2005, engagement letter, which was the approved by the Court, Mr. Graber further noted. Mr. Graber submits that FTI continues not to hold or represent an interest adverse to the Debtors' estates, and remains a "disinterested person." About Performance Transportation Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A. Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. David Neier, Esq., at Winston & Strawn LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/or 215/945-7000) PERKINELMER INC: Completes Euroscreen and Evotec Acquisitions ------------------------------------------------------------- PerkinElmer Inc. has successfully completed two reported acquisitions that will extend its portfolio of advanced tools for cellular analysis, and strengthen its leadership position in the rapidly growing area of High Content Screening. In the fourth quarter of 2006, the company disclosed its intent to acquire Euroscreen Products S.A., the Gosselies, Belgium-based developer of the innovative AequoScreen cellular assay platform, and Hamburg, Germany-based Evotec Technologies. PerkinElmer reported that the Euroscreen Products acquisition was finalized, and the Evotec Technologies transaction was completed at year-end 2006. "The addition of Euroscreen Products' advanced GPCR technology and Evotec Technologies' highly regarded HCS systems to PerkinElmer's current portfolio enables us to offer our biopharma customers a comprehensive solution in advanced cellular imaging, screening and analysis," Robert F. Friel, president, PerkinElmer Life and Analytical Sciences, said. Ongoing revenue of the combined entities was approximately $25 million in 2006, and both acquisitions are expected to be neutral to slightly accretive to the Company's 2007 earnings per share. PerkinElmer Inc. (NYSE: PKI) -- http://www.perkinelmer.com/-- is a global technology leader driving growth and innovation in Health Sciences and Photonics markets to improve the quality of life. PerkinElmer reported revenues of $1.5 billion in 2005, has 8,000 employees serving customers in more than 125 countries, and is a component of the S&P 500 Index. * * * PerkinElmer Inc.'s Long Term Subordinated Debt carry Moody's Investors Service's Ba1 rating. PILGRIM'S PRIDE: Names Wayne Lord as VP of Governmental Affairs --------------------------------------------------------------- A. Wayne Lord has been appointed vice president of governmental affairs of Pilgrim's Pride Corporation. In this newly created position, Mr. Lord will be responsible for the company's governmental affairs program and will represent Pilgrim's Pride nationally and at the state level in the company's Southeastern and Eastern operations. He will report to Clifford Butler, Pilgrim's Pride vice chairman. Mr. Lord, who is based in Atlanta, brings more than 28 years of experience in agriculture to this position. He had previously served as vice president of corporate relations for Gold Kist Inc. for nearly three years. "Wayne Lord is an experienced leader in Southeastern agriculture who will help ensure that our Company's position on critical business issues is well known at the state and national legislative levels," said Mr. Butler. Mr. Lord began his career in agriculture at Gold Kist in 1979, working in strategic planning, public relations, export management and, as a speaker of Russian, the development of business relations with the former Soviet Union. In the mid-1980s, he moved to Europe to establish and administer the American Peanut Council's commodity marketing program. He later returned to the United States and joined Southco Commodities Inc., serving as president for 12 years. Mr. Lord also has served as chairman of the board of directors of the American Peanut Council and was instrumental in creating a national foundation for scientific research in peanut production and processing. A native of Alabama, he attended Birmingham- Southern College and earned his master's and doctorate degrees at Georgetown University. He currently serves on the board of directors of the Georgia Chamber of Commerce and is a member of the Advisory Council of the University of Georgia College of Agricultural and Environmental Sciences. About Pilgrim's Pride Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corp. (NYSE: PPC) -- http://www.pilgrimspride.com/-- produces, distributes and markets poultry processed products through retailers, foodservice distributors and restaurants in the United States, Mexico and in Puerto Rico. Pilgrim's Pride employs approximately 40,000 people and has major operations in Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with other facilities in Arizona, Florida, Iowa, Mississippi and Utah. * * * Moody's Investors Service's held its Ba2 Corporate Family Rating for Pilgrim's Pride Corp. In addition, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on the company's note issues, including an LGD6 rating on its $100 million 9.25% Sr. Sub. Global Notes Due Nov. 15, 2013, suggesting noteholders will experience a 95% loss in the event of a default. As reported in the Troubled Company Reporter on Dec. 6, 2006, Standard & Poor's Ratings Services reported that its 'BB' corporate credit rating and other ratings on the second-largest U.S. poultry processor, Pilgrim's Pride Corp., remain on CreditWatch with negative implications, where they were originally placed Aug. 21, 2006. POWERCOLD CORP: Williams & Webster Resigns as Auditor ----------------------------------------------------- PowerCold Corporation, on Dec. 18, 2006, disclosed that Williams & Webster, P.S. Certified Public Accountants, terminated the auditor/client relationship with the company. The company has not yet engaged the services of an independent registered accountant for purposes of audit opinion that might be rendered on the company's financial statements nor has a firm been engaged to provide it with any written or oral advice relating to any accounting, auditing or financial issue. PowerCold Corporation -- http://www.powercold.com/-- designs, develops and markets unique HVAC products and systems for commercial use. The company derives its revenues from two principal product line applications. The first is a line of proprietary energy efficient products, including evaporative condensers and fluid coolers for the HVAC industry. The second is a proprietary four pipe integrated piping system for large commercial buildings that reduces power costs by up to 50% for air conditioning and refrigeration systems and provides a clean comfort air environment. Going Concern Doubt As reported in the Troubled Company Reporter on May 18, 2006, Williams & Webster, P.S., expressed substantial doubt about PowerCold Corporation's ability to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2005. The auditing firm pointed to the company's substantial operating losses and accumulated deficit. The auditing firm also noted that the company's intangible assets comprise a material portion of their assets. REFCO INC: RCM Trustee Withdraws Objection to PlusFunds' Claims --------------------------------------------------------------- In a stipulation approved by the U.S. Bankruptcy Court for the Southern District of New York, Marc S. Kirschner, Chapter 11 Trustee of Refco Capital Markets, Ltd., and Refco Inc. and its debtor-affiliates agree to withdraw their objections to PlusFunds Group, Inc.'s claims, with prejudice. PlusFunds filed amended proofs of claim on Dec. 1, 2006. The parties agree that the Amended Claims will supersede all Claims filed by PlusFunds in the Refco cases. In addition, allowance of the Amended Claims against all the Debtors and Refco LLC will, in the aggregate, be capped at $7,000,000. PlusFunds will be required to establish in further proceedings which Debtor, if any, is liable for the Amended Claim or Claims, and in what amount. The Debtors will establish reserves as appropriate for a potential $7,000,000 claim in the aggregate against all the Debtors and Refco LLC. The aggregate reserve will be used to pay any allowed Amended Claim against any of the Debtors and Refco LLC not exceeding $7,000,000. Any reserve taken by a Debtor in connection with the $7,000,000 cap will reduce, dollar-for-dollar, the reserve amount that must be taken by the other Debtors with respect to the Amended Claims. If and to the extent the Amended Claims should be adjudicated as a liability of RCM, the RCM Trustee will classify the Amended Claim as a Class 3 RCM FX/Unsecured Claim under the Plan. The parties reserve all rights with respect to the validity of the Amended Claims as against any Debtor or Refco LLC, or whether the same is subject to subordination. The Debtors and Refco LLC reserve the right to seek avoidance of any preferential payment to PlusFunds. PlusFunds reserves the right to assert all defenses to the same. On Dec. 7, 2006, PlusFunds cast ballots to reject the Plan in the full amount of its Amended Claims. Pursuant to the Stipulation, the Ballots cast will not be counted for purposes of numerosity, value or existence of the Amended Claims at any or all of the Debtors. However, any elections contained in any Ballot will be deemed valid to the extent the applicable Amended Claim is allowed. PlusFunds withdraws its Plan confirmation objection with prejudice and its request pursuant to Bankruptcy Rule 3018 seeking temporarily allowance of the Amended Claims for voting purposes. Prior to the stipulation, Marc S. Kirschner, Chapter 11 Trustee of Refco Capital Markets, Ltd., asks Judge Drain to disallow and expunge Claim No. 11289 filed by PlusFunds against RCM for approximately $532,000,000. The Claim asserts entitlement to an amount precisely equal to a $312,000,000 preference cash, plus PlusFunds' "enterprise value" of $220,000,000 and "unliquidated damages in an amount to be determined at trial" related to PlusFunds' lost management fees. Claim No. 11289 arose from the decline of PlusFunds' assets under management in the wake of a preference action commenced by the Official Committee of Unsecured Creditors against SPhinX Managed Futures Fund SPC. The SPhinX Preference Action sought to avoid a $312,000,000 cash transfer placed with RCM by SPhinX to segregated customer accounts at Refco, LLC. The Preference Cash was then transferred from Refco LLC outside of Refco entirely, to accounts at Lehman Brothers. Jared R. Clark, Esq., at Bingham McCutchen LLP, in New York, relates that on October 13, 2005, Refco, Inc., and its affiliates imposed a 15-day moratorium on withdrawals from RCM accounts because of insufficient liquidity within RCM. On December 16, Judge Drain entered a temporary restraining order freezing and attaching SPhinX's assets in an amount equal to the Preference Cash. To resolve the SPhinX Preference Action, the Creditors Committee and SPhinX entered into a settlement, subsequently approved by Judge Drain, providing for a $263,000,000 payment to RCM. The SPhinX Settlement is currently subject to appeal pending before the U.S. District Court for the Southern District of New York. Mr. Clark tells Judge Drain that Claim No. 11289 fails to articulate any facts that could serve as the basis for an alleged breach of a contractual obligation or common law duty by RCM. Mr. Clark argues that the unspecified charge of wrongdoing does not approach the level of particularity required for a fraud claim under Rule 9(b) of the Federal Rules of Civil Procedure. Specifically, he states, the Claim does not allege with particularity: (1) what statement or omission RCM made or failed to make; (2) scienter on the part of RCM; (3) how or whether PlusFunds replied; or (4) what specific injury resulted. Furthermore, Mr. Clark contends that PlusFunds' general allegations of breach of contract, breach of fiduciary duty, aiding, abetting, and conspiracy are similarly unsubstantiated. He notes that the Claim asserts breach of contract without specifying the nature of the contract with RCM that PFGI replies upon; duty without alleging a relationship; and conspiracy without naming the cabalists. "The Claim's general, innuendo-laden allegations themselves demonstrate that nothing lies back of it; it is prima facie invalid," Mr. Clark asserts. To the extent the Claim suggests the SPhinX Transfer itself started a chain of events leading to PlusFunds' collapse, PlusFunds was the catalyst, Mr. Clark points out. Therefore, he says, PlusFunds' subsequent wounds were self-inflicted. To the extent the Claim suggests that Refco's filing for bankruptcy caused PlusFunds to lose value, PlusFunds fails to state a cognizable claim, Mr. Clark maintains. About Refco Inc. Headquartered in New York City, Refco Inc. (OTC: RFXCQ) -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Albert Togut, the chapter 7 trustee, is represented by Togut, Segal & Segal LLP. On April 13, 2006, the Court appointed Marc S. Kirschner as Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is represented by Bingham McCutchen LLP. RCM is Refco's operating subsidiary based in Bermuda. Three more affiliates of Refco, Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case Nos. 06-11260 through 06-11262). Refco Commodity Management, Inc., formerly known as CIS Investments, Inc., a debtor-affiliate of Refco Inc., filed for chapter 11 protection on Oct. 16, 2006 (Bankr. S.D.N.Y. Case No. 06-12436). (Refco Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) Plan Update On Sept. 14, 2006, Refco, Inc., and 25 of its subsidiaries, along with Marc S. Kirschner, the Chapter 11 Trustee for the estate of Refco Capital Markets, Ltd., delivered a Chapter 11 plan of reorganization and accompanying Disclosure Statement to the Court. On Oct. 10, 2006, the Debtors filed an Amended Plan and Disclosure Statement and on Oct. 13, filed a Modified Amended Disclosure Statement. On Oct. 16, 2006, the Court gave its tentative approval on the Disclosure Statement and the Court Clerk entered an order on Oct. 20, 2006. On Dec. 15, the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its direct and indirect subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates LLC, was confirmed by the Court. That Plan became effective on Dec. 26, 2006. REFCO INC: Wants West Loop's Claims Reduced ------------------------------------------- Refco Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to reduce Claim Nos. 9884 and 9887 so that their maximum amount cannot exceed the statutory cap under Section 502(b)(6) of the Bankruptcy Code. Refco Group Ltd., LLC, and 550 Jackson Associates Limited Liability Company were parties to a lease dated April 24, 2001, for an office space located at 550 West Jackson Boulevard, in Chicago, Illinois. West Loop Associates, Inc., acquired title to the Premises, with an assignment of the Lease. RGL rejected the Lease, effective as of August 15, 2006. West Loop Claim Nos. 9884 and 9887 West Loop filed Claim Nos. 9884 and 9887 against RGL asserting damages equal to $67,482,808 caused by: (1) RGL's breach and rejection of the Lease; (2) acts of occupants of the Premises during the term of the Lease that caused the filing of mechanic's liens against the Building; (3) RGL's fraudulent transfer of approximately $1,325,000,000 to Refco Group Holdings, Inc., in connection with a leveraged recapitalization that left RGL undercapitalized and insolvent; and (4) RGL's fraud, including misrepresentations, omissions, and concealment of material facts with the intent to defraud West Loop. Specifically, West Loop asserted that: (i) assuming that payment of rent remains current under the Lease until August 15, the base rent owed from August 16, 2006, to March 31, 2015, will total $36,159,764; and (ii) an additional rent is owed under the Lease from August 16 to March 31, 2015, totaling approximately $27,484,008. Thus, according to West Loop, the Base Rent and Additional Rent from August 16 to the end of the Lease total $63,643,772. Furthermore, West Loop held that the total rent reserved under the Lease from the Petition Date until March 2015 is $69,041,563, of which 15% equals the $10,256,235 Rejection Claim Amount. West Loop also asserted that it will incur additional estimated damages for $3,002,217 in commissions, and $8,114,100 in tenant improvement costs in connection with re-letting the premises. The Debtors object to West Loop's calculation of the Rejection Claim Amount on the grounds that: (1) West Loop failed to include all of its claims relating to the rejection of the Lease that are subject to Section 502(b)(6) cap, including its fraud-related damage claims, and the cost of re-letting the Premises, including the commissions. (2) rejection damage calculation is incorrect; and (3) the Building is in Illinois and, under Illinois law, West Loop has a duty to mitigate its damages, and has the burden of proving its mitigation. In addition, the Debtors want West Loop's claim for reimbursement of attorneys' fees and costs denied because West Loop: -- did not provide documentation evidencing that it incurred no less than $366,491 in attorneys' fees and costs; and -- has not demonstrated that the fees and costs are reimbursable for the full amount sought. Moreover, the Debtors state that the attorneys' fees and costs are subject to cap under Section 502(b)(6) of the Bankruptcy Code. Sally McDonald Henry, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, tells the Court that there is no evidence that RGL was insolvent in September 2005. Since there was no default, there could be no false statement of material fact in the estoppel certificate. Ms. Henry argues that there is no evidence that the RGL estoppel certificate was issued to induce West Loop to act, or that RGL received any benefit from executing the certificate. Ms. Henry summons West Loop to demonstrate that its damages result from relying on RGL's purported false statements. The Debtors maintain that West Loop has not demonstrated that it is entitled to recover additional estimated damages equal to $3,002,217 in commissions and $8,114,100 in tenant improvement costs with reletting the Premises. The Debtors insist that even if the Lease allows West Loop to recover the Reletting Claims, the costs of reletting the Premises were caused by the rejection of the Lease, and, thus should be capped under Section 502(b)(6). West Loop Related Claims The Debtors further ask the Court to disallow and expunge: (a) a master proof of claim -- Claim No. 11560 -- filed by West Loop against RGL and its affiliates, except Refco Capital Markets, Ltd., Refco, Inc., and Refco, LLC; (b) Claim Nos. 9885 and 9886 filed by West Loop against Refco asserting damages caused by Refco's fraud; and (c) Claim Nos. 9882 and 9883 filed by West Loop against New Refco Group Ltd., LLC, asserting claims to the extent New RGL (x) had knowledge of, or was involved in, the fraudulent activities of RGL, Refco LLC, and (y) received any benefit on account of the breaches or fraudulent activities of entities, or is found responsible for the conduct of the entities. Ms. Henry insists that the Related Claims should be disallowed because: (i) West Loop has not demonstrated that a fraud claim lies against RGL; (ii) West Loop did not specifically assert that the RGL Affiliates made any misleading misrepresentations that were relied on by West Loop resulting in damages, nor has West Loop shown any other basis on which entities other than RGL could be liable; and (iii) West Loop's broad allegation that the RGL Affiliates are liable, to the extent that any or all of them had knowledge of or were involved in the fraudulent activities of Refco, Refco LLC, or RGL, received any benefit on account of the breaches or fraudulent activities of those entities or are found responsible for their conduct, does not satisfy Rule 9(b) of the Federal Rules of Civil Procedure. To the extent that the Related Claims are not disallowed and expunged in their entirety, the Debtors seek that they should be subject to the Section 502(b)(6) cap because West Loop's damages, if any, arise from RGL's rejection of the Lease. Debtors Seek Partial Summary Judgment The Debtors ask Judge Drain to enter an order granting partial summary judgment under Rule 7056 of the Federal Rules of Bankruptcy Procedure and Civil Rule 56, finding that any fraud- related damages asserted in the West Loop Claims are subject to statutory limitation on lease rejection claims pursuant to Section 502(b)(6). Ms. Henry states that West Loop's recharacterization of its lease termination damages claim to a fraud claim is irrelevant. There was a landlord-tenant relationship between West Loop and RGL. West Loop's fraud claim is a claim arising from the termination of a lease, she says. Ms. Henry maintains that even if the Court favors West Loop, the asserted fraud-related damages should be subject to Section 502(b)(6) limitation on lease termination damage claims. The Official Committee of Unsecured Creditors supports the Debtors' position. West Loop Responds A. Brent Truitt, Esq., at Hennigan, Bennett & Dorman LLP, in New York, argues that West Loop's fraud claim and the damages arising from that claim are factually and legally independent and distinct from any claims and damages that resulted from RGL's rejection of the Lease. Mr. Truitt notes that the Court has (i) previously rejected the very arguments now raised by the Debtors, and (ii) expressly held that Section 502(b)(6) does not apply to damages resulting from a sale of real property. Mr. Truitt reminds Judge Drain that the Bankruptcy Court for the Southern District of New York has recognized in Leslie Fay Cos., Inc. v. Corporate Property Associates 3 (In re The Leslie Fay Cos., Inc.), 166 B.R. 802 (Bankr. S.D.N.Y. 994), that "it is simply impossible to draw the inference which Leslie Fay says flows from the facts which it has pleaded, that the fair market value of the Premises is nothing more than the discounted rental stream." Rather, Mr. Truitt points out, the damages caused by West Loop's payment of a purchase price in excess of the Property's actual value is not simply lost cash flow, but is based on the higher capitalization rate that would have been applied by West Loop in October 2005 to calculate its purchase price, had it not been misled about RGL's solvency and financial condition. Mr. Truitt insists that the Section 502(b)(6) cap simply does not apply to West Loop's fraud-based claims, and, thus the Debtors' request should be denied. About Refco Inc. Headquartered in New York City, Refco Inc. (OTC: RFXCQ) -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Albert Togut, the chapter 7 trustee, is represented by Togut, Segal & Segal LLP. On April 13, 2006, the Court appointed Marc S. Kirschner as Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is represented by Bingham McCutchen LLP. RCM is Refco's operating subsidiary based in Bermuda. Three more affiliates of Refco, Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case Nos. 06-11260 through 06-11262). Refco Commodity Management, Inc., formerly known as CIS Investments, Inc., a debtor-affiliate of Refco Inc., filed for chapter 11 protection on Oct. 16, 2006 (Bankr. S.D.N.Y. Case No. 06-12436). (Refco Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) Plan Update On Sept. 14, 2006, Refco, Inc., and 25 of its subsidiaries, along with Marc S. Kirschner, the Chapter 11 Trustee for the estate of Refco Capital Markets, Ltd., delivered a Chapter 11 plan of reorganization and accompanying Disclosure Statement to the Court. On Oct. 10, 2006, the Debtors filed an Amended Plan and Disclosure Statement and on Oct. 13, filed a Modified Amended Disclosure Statement. On Oct. 16, 2006, the Court gave its tentative approval on the Disclosure Statement and the Court Clerk entered an order on Oct. 20, 2006. On Dec. 15, the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its direct and indirect subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates LLC, was confirmed by the Court. That Plan became effective on Dec. 26, 2006. RIGEL CORP: Chapter 7 Trustee Hires KPMG LLP as Tax Accountants --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Arizona gave Anthony H. Mason, the appointed chapter 7 trustee for Rigel Corp.'s bankruptcy case, permission to employ KPMG LLP, as his tax accountant. The firm is expected to assist the Trustee and The Cavanagh Law P.A., the trustee's special counsel, in litigation pending before the Arizona Tax Court. The firm will undertake this representation on a contingency fee basis. The contingency fee will be computed on a sliding scale: -- The base contingency fee for any recovery on the Refund Claims shall be 22% of the gross recovery before expenses. -- If an appeal to the Arizona Court of Appeals is filed by either party to the Tax Court Litigation, the contingency fee shall be 20% of the gross recovery before expenses. -- If a petition for review is filed in the Arizona Supreme Court by either party to the Tax Court Litigation, the contingency fee shall be 18% of the gross recovery before expenses. Michael J. Svoboda, a partner at the firm, assures the Court that the firm does not hold any interest adverse to the Debtor's estate and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Svoboda can be reached at: Michael J. Svoboda KPMG LLP Suite 1100, One Arizona Center 400 E Van Buren Street Phoenix AZ 85004-2207 Tel: (602) 253-2000 Fax: (602) 252-0011 http://www.kpmg.com/ Headquartered in Tempe, Arizona, Rigel Corporation, is a Krispy Kreme franchisee. The Company also operates Godfather's Pizza, KFC, and Bruegger's Bagels' franchises. The Company filed for chapter 11 protection on Aug. 9, 2006 (Bankr. D. Ariz. Case NO. 06-02480). Michael W. Carmel, Esq., at Michael W. Carmel, Ltd., represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. The Court converted the Debtor's chapter 11 case to a chapter 7 proceeding on Aug. 15, 2006. Anthony H. Mason is the Chapter 7 Trustee. RITE AID: Earns $1.1 Million in Third Quarter Ended Dec. 2 ---------------------------------------------------------- Rite Aid Corporation reported net income for the third quarter was $1.1 million. This was an improvement over last year's third quarter net loss of $5.2 million. The improvement was primarily due to a $19.5 million increase in adjusted EBITDA partially offset primarily by a $4.7 million increase in depreciation and amortization expense. Revenues for the third quarter ended Dec. 2, 2006, were $4.32 billion versus revenues of $4.15 billion in the prior year third quarter. Revenues increased 4.2%. Same store sales increased 3.4% during the third quarter as compared to the year-ago like period, consisting of a 4.3% increase in pharmacy same store sales and a 1.9% increase in front-end same store sales. The number of prescriptions filled in comparable drugstores increased 2.3%. Prescription sales accounted for 64.3% of total sales, and third party prescription sales represented 95.5% of pharmacy sales. Adjusted EBITDA was $160.8 million or 3.7% of revenues for the third quarter compared to $141.3 million or 3.4% of revenues for the like period last year. The $19.5 million increase was primarily the result of increased revenue and improvement in the ratio of expenses to revenue partially offset by a decrease in the gross margin rate. In the third quarter, the company opened 10 stores, relocated 13 stores, closed 3 stores and remodeled 4 stores. Stores in operation at the end of the quarter totaled 3,322. "We are pleased with our third quarter. A strong increase in pharmacy sales and continued prescription count growth showed once again that our emphasis on customer satisfaction and increased operational focus on pharmacy are delivering results. Our team also continued to do a good job of controlling expenses," said Mary Sammons, president and chief executive officer. "At the same time we continued to improve our existing business, we also made tremendous progress on our plans for the smooth integration of the Brooks and Eckerd drugstore chains into Rite Aid." On Aug. 24, 2006, Rite Aid announced that it had entered into a definitive agreement to acquire approximately 1,850 Brooks and Eckerd drugstores and six distribution centers, primarily on the East Coast and in the Mid-Atlantic states, from The Jean Coutu Group. The transaction, which is subject to review under the Hart-Scott Rodino Act, Rite Aid stockholder approval and other customary closing conditions, is expected to close shortly after the end of Rite Aid's fourth quarter, which ends Mar. 3, 2007. About Rite Aid Headquartered in Camp Hill, Pennsylvania, Rite Aid Corporation (NYSE, PCX: RAD) -- http://www.riteaid.com/-- runs a drugstore chain with fiscal 2006 revenues of $17.3 billion and 3,322 stores in operation in 27 states and the District of Columbia. * * * As reported in the Troubled Company Reporter on Oct. 25, 2006, Moody's Investors Service confirmed the ratings of Rite Aid Corporation's $300 million 2nd-lien secured notes due 2011 and $357 million 2nd-lien secured notes due 2011 at B2. ROBERT HEMMER: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Robert Alan Hemmer 14924 Cub Run Park Drive Centreville, VA 20120 Bankruptcy Case No.: 07-10026 Chapter 11 Petition Date: January 4, 2007 Court: Eastern District of Virginia (Alexandria) Judge: Stephen S. Mitchell Debtor's Counsel: Gregory H. Counts, Esq. Tyler, Bartl, Gorman & Ramsdell, PLC 700 South Washington St., Suite 216 Alexandria, VA 22314 Tel: (703) 549-7178 Fax: (703) 549-5011 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 ------ --------------- ------------ Resource Bank $106,000 8730 Stony Point Pkwy Suite 140 Chloe, WV 25235 Mason Dixon Funding $45,000 800 King Farm Blvd., Ste. 210 Rockville, MD 20850 FIA Card Services $23,398 P.O. Box 15726 Wilmington, DE 19886 BOA Visa $16,307 P.O. Box 60073 City Of Industry, CA 91716 Discover Card $12,422 P.O. Box 15251 Wilmington, DE 19886 Chase Visa $10,736 P.O. Box 15153 Wilmington, DE 19886 Lowe's $6,904 P.O. Box 530914 Atlanta, GA 30353 Bank of America Visa $5,825 P.O. Box 15726 Wilmington, DE 19886 Diners Club - Master Card $5,800 P.O. Box 173358 Denver, CO 80217 Hale, Carlson, Penn PLC Legal Fees $4,142 10511 Judicial Drive Fairfax, VA 22030 Crary Buchanan Legal Fees $3,156 P.O. Drawer 24 Stuart, FL 34995 Jabour & Randolph $2,750 Macy's $2,499 P.O. Box 183083 Columbus, OH 43218 Commerce Bank Line of Credit $1,743 1701 Route 70 East Cherry Hill, NJ 08034 JC Penney $1,119 P.O. Box 981131 El Paso, TX 79998 Exxon/Mobil $1,043 P.O. Box 530962 Atlanta, GA 30353 Chevy Chase Bank DDA $869 Account Check Support Operations 6200 Chevy Chase Drive Laurel, MD 20707 Geico $509 One Geico Plaza Bethesda, MD 20811 The Company Corporation $199 2711 Centreville Road Wilmington, DE 19808 TMobile $195 P.O. Box 742596 Cincinnati, OH 45274 RODNEY SUMLER: Case Summary & 15 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Rodney J. Sumler 3741 Coral Garden Lane Winston Salem, NC 27106 Bankruptcy Case No.: 07-50023 Type of Business: Rodney Sumler's wife, Ann Sumler, filed for bankruptcy protection on May 27, 2004 (Bankr. M.D. Tenn. Case No. 04-52009). Chapter 11 Petition Date: January 8, 2007 Court: Middle District of North Carolina (Winston-Salem) Judge: Catharine R. Carruthers Debtor's Counsel: Robert A. Lefkowitz, Esq. Fisher, Clinard and Cornwell, PLLC 101 S. Main Street, Suite 800 P.O. Box 1150 High Point, NC 27261 Tel: (336) 883-9156 Fax: (336) 886-8593 Total Assets: $1,758,200 Total Debts: $2,129,747 Debtor's 15 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ BB&T $10,000 110 S. Stratford Road Winston-Salem, NC 27104 Mechanics & Farmers Bank $10,000 770 Martin Luther King Blvd. Winston-Salem, NC 27101 Forsyth County Day School $3,000 5501 Shallowford Rd. Lewisville, NC 27023 Piedmont Natural Gas $1,657 Duke Power Company $1,525 Clinard Properties $1,225 Time Warner Cable $705 City of Winston-Salem $670 CW Myers Trading Post $500 Bell South $378 Windstream $219 SunCom Cell Phone $127 Cricket Cell Phone $79 City of Eden $39 Embarq $28 ROYAL CARIBBEAN: Moody's Rates New Euro Senior Notes at Ba1 ----------------------------------------------------------- Moody's Investors Service assigned Royal Caribbean Ltd.'s new benchmark size Euro senior unsecured notes Ba1, raised RCL's Speculative Grade Liquidity rating to SGL-2 from SGL-3 and affirmed all other existing ratings. The proceeds from the new note issuance will be used to prepay a portion of the outstandings under the Euro 701 million, 364-day bridge that funded the acquisition of Pullmantur. Moody's considers the new note issuance to be a credit positive because it reduces RCL's near-term debt maturity requirements. Additionally, the size of the note issuance is large enough to materially boost RCL's projected 12-month liquidity cushion and thereby change the SGL rating to SGL-2 from SGL-3. Ratings assigned * Benchmark size Euro senior unsecured notes due 2014 rated Ba1, LGD 4, 54% Ratings changed * Speculative Grade Liquidity to SGL-2 from SGL-3 All other existing ratings have been affirmed and the ratings outlook remains stable. Moody's last rating action on RCL occurred December 18, 2006 when the SGL rating was changed to SGL-3 from SGL-2 reflecting Moody's concerns that 12-month projected liquidity cushion had tightened due to scheduled 2007 debt maturities and the Euro 701 MM Pullmantur 364-day bridge loan that would come due in the fourth quarter of 2007. Royal Caribbean Cruises Ltd. is the world's second largest cruise company. RCL operates three brands, Royal Caribbean International, Celebrity Cruises, and Pullmantur Cruises and operates 34 cruise ships with more than 67,600 berths. The company currently has six ships on order with delivery dates that extend through 2010. Revenues for the twelve months ended September 30, 2006 were approximately $5.1 billion. RCL has two large shareholder groups- A. Wilhelmsen AS, and Cruise Associates - who each, as of May 2006, respectively own 20.4%, and 15.8% of the company's total outstanding shares. ROYAL & SUNALLIANCE: Pending Sale Cues A.M. Best to Review Ratings ------------------------------------------------------------------ A.M. Best Co. has withdrawn the financial strength rating of C++ (Marginal) and the issuer credit rating of "b" and assigned an NR- 5 (Not Formally Followed) to Guaranty National Insurance Company. Effective Dec. 28, 2006, Guaranty National was merged into Security Insurance Company of Hartford. Security is an indirect wholly owned subsidiary of Royal & SunAlliance USA, Inc., which is expected to be sold to Arrowpoint Capital Corp., a new company formed by R&SA's existing management team in 2006. All companies are domiciled in Delaware. R&SA's FSR of C++ (Marginal) and ICR of "b" are under review with developing implications pending the completion of the proposed sale to Arrowpoint Capital Corp. later in 2007. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. SCO GROUP: Denies Looming Bankruptcy Rumors from Novell ------------------------------------------------------- Contrary to court documents filed by Novell Inc. in the U.S. District of Utah, SCO Group Inc. spokesman Blake Stowell denies the company is in financial disaster, Jennifer Mears of LinuxWorld reports. "We will report our fourth quarter financials on Jan. 17, 2007 and give an update at that time," LinuxWorld quotes Mr. Stowell as saying. "We consider it irresponsible of Novell's lawyers to mischaracterize our financial well-being with these false statements." In a document filed with the District Court of Utah, Novell claims that The SCO Group Inc., a UNIX vendor that is suing IBM for alleged illegal incorporation of its proprietary Unix code into Linux, is on the verge of bankruptcy, Ms. Mears relates. "Contrary to SCO's assertion that a preliminary injunction should be denied because it may accelerate SCO's bankruptcy, SCO's imminent bankruptcy is a compelling reason to grant Novell's motion," Novell's attorneys write in the filing. "When SCO goes into bankruptcy, it will not be because of Novell's motion, but because of its own financial missteps. For SCO, bankruptcy is inevitable; it characterizes its assets as merely those 'remaining' and does not rebut Novell's arguments that its bankruptcy is imminent." In September last year, Novell demanded to recover a percentage of the revenue SCO earned from its UNIX licensing deals with Microsoft Corp. and Sun Microsystems Inc. Novell claims that it is entitled to 95% of all revenue derived from SCO's SVRX license agreements pursuant to a 1995 agreement governing SCO's purchase of UNIX from Novell. SCO, however, has refused to give up any money, claiming that the Microsoft and Sun licensing deals don't relate with any agreement signed in 1995. SCO also claims that such a move would harm its chances of winning its case against IBM, Ms. Mears reports. Utah District Court magistrate judge Brooke Wells in June dismissed 182 of SCO's claims against IBM and U.S. District Judge Dale Kimball upheld Judge Wells's ruling in a decision handed down November 29, InformationWeek reports. The company has filed a new motion claiming the November decision was procedurally and substantially flawed. About Novell Inc. Headquartered in Waltham, Massachusetts, Novell, Inc. -- http://www.novell.com/-- delivers Software for the Open Enterprise. With more than 50,000 customers in 43 countries, Novell helps customers manage, simplify, secure and integrate their technology environments by leveraging best-of-breed, open standards-based software. Novell has sales offices in Argentina, Brazil and Colombia. About SCO Group Headquartered in Lindon, Utah, The SCO Group Inc. (Nasdaq: SCOX) - - http://www.sco.com/-- provides software technology for distributed, embedded and network-based systems, offering SCO OpenServer for small to medium business and UnixWare for enterprise applications and digital network services. SECOND STREET: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Second Street Parkominium, L.P. 925 North 2nd Street Philadelphia, PA 19123 Bankruptcy Case No.: 07-10155 Type of Business: Chapter 11 Petition Date: January 8, 2007 Court: Eastern District of Pennsylvania (Philadelphia) Judge: Stephen Raslavich Debtor's Counsel: Andrew L. Unterlack, Esq. Lamm Rubenstone Lesavoy Butz & David LLC 3600 Horizon Boulevard, Suite 200 Trevose, PA 19053 Tel: (215) 638-9330 Fax: (215) 638-2867 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. SHAW COMMS: Earns $81.1 Million in First Quarter Ended Nov. 30 -------------------------------------------------------------- Shaw Communications Inc. disclosed its financial results for the first quarter ended Nov. 30, 2006. Consolidated service revenue of $671 million for the three-month period, increased 13.8% over the comparable quarter and total service operating income before amortization of $299.8 million improved by 17.4%. Funds flow from operations increased to $243.9 million for the quarter compared to $197.2 million. The company has net income of $81.1 million for the first quarter ended Nov. 30, 2006, compared to net income of $75.7 million for the same quarter last year. The current and comparable three- month period included non-operating items, which are more fully detailed in Management's Discussions and Analysis. These included a tax recovery related to reductions in enacted income tax rates in the comparable three-month period. Excluding the non-operating items, net income for the three-month period ended Nov. 30, 2006, would have been $81 million this quarter compared to net income of $38.8 million in the comparable period. Commenting on the results, Jim Shaw, Chief Executive Officer, noted: "We are off to a solid start in fiscal 2007. Both divisions reported strong revenue growth and improved service- operating income before amortization over last year. We continued the roll-out of Digital Phone with the service now available to approximately 2.3 million homes, representing approximately 70% of homes passed. We provide a facilities-based, competitive alternative to the traditional phone companies and offer the services and value our customers are looking for." Customer gains were posted this quarter across all products. Digital Phone lines increased 38,197 to 250,904 as at Nov. 30, 2006. Internet and Digital subscribers increased by 35,877 to 1,348,639 and 25,331 to 696,887, respectively. Basic subscribers were up 12,664 to 2,213,457 and DTH customers increased 2,426 to 871,634. Free cash flow for the quarter was $76.1 million compared to $32.1 million for the same period last year. The growth in free cash flow was primarily related to the increase in service operating income before amortization. "Shaw's continued customer growth and improved financial performance results from our focus on the customer, the commitment of our team, the capabilities of our network, and the strength of our product offering. The performance to date sets us on a clear path to meet Shaw's fiscal 2007 free cash flow guidance of $300 to $320 million as announced in October." said Jim Shaw. Cable service revenue for the quarter of $499.2 million was up 15.8% over the same period last year primarily as a result of customer growth and rate increases. Service operating income before amortization for the three month period increased 14.6% over the same quarter to $237.8 million driven by the growth in revenue. Satellite division quarterly service revenue of $171.8 million improved 8.4% over the same period last year primarily due to rate increases and customer growth. Service operating income before amortization for the quarter increased by 29.7% to $62 million. The improvement was largely due to growth in DTH revenues. In closing, Mr. Shaw summarized: "Throughout the remainder of this year we will continue to focus on our key priorities of customer service, the further expansion of the Digital Phone foot print, strengthening our video offering with new programming and HDTV services, and bundling strategies. We also plan to launch a business voice service. Our customer focus continues to differentiate us, strengthen our financial position, and build value for all shareholders." Alberta-based Shaw Communications Inc. (TSX: SJR.B) (NYSE: SJR) -- http://www.shaw.ca/-- is a diversified Canadian communications company whose core business is providing broadband cable television, Internet, Digital Phone, telecommunications services (through Big Pipe Inc.) and satellite direct-to-home services (through Star Choice Communications Inc.) to approximately 3 million customers. Shaw is a member of the S&P/TSX 60 index. * * * As reported in the Troubled Company Reporter on Nov. 15, 2006, Dominion Bond Rating Service confirmed the long-term rating of Shaw Communications Inc.'s Senior Notes at BB (high) Positive and maintained the Positive trend at that time. Moody's Investors Service rates Shaw Communications Inc.'s CDN$300 million senior unsecured debenture at Ba2. The outlook is stable. The CDN$300 million senior unsecured notes due 2016 also carry Standard & Poor's Ratings Services BB+ rating. S&P has also affirmed the Company's 'BB+' long-term corporate credit rating. The outlook is stable. SHREWSBURY STREET: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Shrewsbury Street Development Companies, Inc. 250 Commercial Street, Suite 415 Worcester, MA 01608 Bankruptcy Case No.: 07-40073 Type of Business: The Debtor develops real estate. The Debtor filed for chapter 11 protection on June 27, 2006 (Bankr. D. Mass. Case No. 06-41109). Chapter 11 Petition Date: January 9, 2007 Court: District of Massachusetts (Worcester) Judge: Joel B. Rosenthal Debtor's Counsel: Frank D. Kirby, Esq. Frank D. Kirby & Associates, P.C. 111 West 8th Street South Boston, MA 02127 Tel: (617) 269-5444 Fax: (860) 257-3398 Debtor's financial condition as of December 31, 2006: Total Assets: $10,850,000 Total Debts: $1,100,000 The Debtor did not file a list of its 20 largest unsecured creditors. SIX FLAGS: S&P Holds Negative Watch Despite Sale of Seven Parks --------------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings, including the 'B-' corporate credit rating, on Six Flags Inc. remain on CreditWatch with negative implications, where they were placed on Sept. 18, 2006. The CreditWatch update followed the company's announcement that it had reached an agreement to sell seven of its parks for $312 million. New York-based regional theme park owner and operator Six Flags had $2.5 billion of debt and preferred stock outstanding as of Sept. 30, 2006. The company stated that it will use the cash proceeds of the transaction, which is expected to be completed in March 2007, to reduce debt. "We remain concerned that debt reduction from the proceeds of the transaction will not reduce pro forma debt leverage, which we see as high," said Standard & Poor's credit analyst Hal F. Diamond. In resolving the CreditWatch listing, Standard & Poor's will reevaluate the company's business strategies, operating outlook, and liquidity in light of plans for debt reduction. SKYEPHARMA PLC: Lehman Europe Share Ownership Totals 10.12% ----------------------------------------------------------- SkyePharma PLC disclosed that Lehman Brothers International (Europe) had increased their holding in the company by 15,282,860 since their last filing. Lehman's revised holding amounts to 76,314,195 ordinary shares, representing 10.12% of the issued share capital of the company. As reported in the Troubled Company Reporter on Nov. 28, 2006, the company disclosed that Lehman's revised holding amounts to 54,670,736 ordinary shares, representing 7.25% of the issued share capital of the Company. Headquartered in London, SkyePharma PLC (Nasdaq: SKYE; LSE: SKP) -- http://www.skyepharma.com/-- develops pharmaceutical products benefiting from world-leading drug delivery technologies that provide easier-to-use and more effective drug formulations. There are now 12 approved products incorporating SkyePharma's technologies in the areas of oral, injectable, inhaled, and topical delivery supported by advanced solubilisation capabilities. Going Concern Doubt As reported in the Troubled Company Reporter on Aug. 1, 2006, PricewaterhouseCoopers LLP in London raised substantial doubt about Skyepharma PLC'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 uncertainty as to when Skyepharma's certain strategic initiatives may be concluded and their effect on the company's working capital requirements. SNOQUALMIE ENTERTAINMENT: S&P Rates Proposed $320 Mil. Notes at B ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to the Snoqualmie Entertainment Authority's proposed senior secured $200 million fixed-rate notes due 2015 and $120 million floating- rate notes due 2014. Proceeds of the notes, along with other debt securities issued by the Authority, will be used to fund the construction of the proposed Casino Snoqualmie. At the same time, Standard & Poor's assigned its 'B' issuer credit rating to the Authority, with a positive outlook. The Authority is an unincorporated instrumentality of the Seattle area-based Snoqualmie Indian Tribe. The ratings reflect the Authority's high debt levels, construction risks associated with the planned facility, its narrow business focus with only one casino operating in a single market, the existence of nearby competition, and the potential difficulties in driving mid-week volume. These factors are partly tempered by the casino's favorable location as the sole operator east of Seattle, its expected high quality amenities relative to competitors, a prefunded interest reserve account to cover the first four senior note interest payments, and the prohibition of per capita distributions to tribal members during the first two years of operations. The Tribe is federally recognized, and located in the Snoqualmie region of King County, Washington, about 26 miles east of metropolitan Seattle. The casino will offer 51,000 sq. ft. of gaming space, 1,400 video lottery terminals (with the ability to add 300 machines, subject to demand), 52 table games, a 15-table poker room, five restaurants and four bars including a cigar lounge and wine bar, and a 1,000-seat events center. SOVRAN SELF: Earns $9.5 Million in Third Quarter Ended Sept. 30 --------------------------------------------------------------- Sovran Self Storage Inc. reported $9.5 million net income on $44.8 million of revenues for the third quarter ended Sept. 30, 2006, compared with an $8.6 million net income on $36 million of revenues for the same period in 2005. Rental revenues increased $8.5 million, or 24.5%, when compared to rental revenues of $34.8 million in the quarter ended Sept. 30, 2005. Of this increase, $1.7 million is related to Locke Sovran I, $1.9 million resulted from a 5.6% increase in rental revenues at the 260 core properties considered in same store, and the remaining $4.9 million increase in rental revenues resulted from the acquisition of 41 stores during 2006 and from having the 2005 acquisitions included for a full quarter of operations. Other operating income increased $238,000 due to increased merchandise and insurance sales and the additional incidental revenue generated by truck rentals. Income from operations increased to $18.4 million from $15.2 million primarily due to the $8.8 million increase in revenues, partly offset by the $5.6 million increase in operating expenses Property operating and real estate tax expense increased $3.8 million, or 30.6%, in the third quarter of 2006 compared to the same period in 2005. Depreciation and amortization expense increased to $6.7 million in the third quarter of 2006 from $5.4 million in the same period in 2005, primarily as a result of additional depreciation taken on real estate assets acquired in 2006, a full quarter of depreciation on 2005 acquisitions, and the consolidation of Locke Sovran I, LLC. Interest expense increased from $5.3 million in the third quarter of 2005 to $8.4 million in the same period in 2006 as a result of higher interest rates, additional borrowings under the company's line of credit and term notes to purchase 41 stores in 2006, and the consolidation of Locke Sovran I, LLC as of Apr. 1, 2006. At Sept. 30, 2006, the company's balance sheet showed $1 billion in total assets, $567.4 million in total liabilities, and $411.2 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?186e Acquisitions During 2006, the company used operating cash flow, borrowings pursuant to a term note, and proceeds from its dividend reinvestment and stock purchase plan to acquire 41 properties in Alabama (3), Florida (3), Georgia (4), Louisiana (6), Missouri (7), New Hampshire (2), New York (1), Tennessee (1), and Texas (14) comprising 2.5 million square feet from unaffiliated storage operators for $161.5 million. Outstanding Debts At Sept. 30,2006, the company had $66 million outstanding on its line of credit and $350 million outstanding on its term notes. The company also had of $112.4 million at Sept. 30, 2006, a significant increase from the $49.1 million of mortgages payable at Dec. 31, 2005. About Sovran Self Storage Sovran Self Storage Inc. (NYSE: SSS) -- http://www.sovranss.com/ -- is a self-administered and self-managed equity real estate investmnet trust whose business is acquiring, developing and managing self-storage facilities. The company operates 327 stores under the "Uncle Bob's Self Storage"(R) trade name in 22 states. * * * Sovran Self Storage, Inc.'s preferred stock carries Moody's Investors Service's Ba1 rating. STALLION OILFIELD: S&P Rates $300 Million Senior Notes at B- ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to private oilfield services provider Stallion Oilfield Services Ltd. At the same time, S&P assigned its 'B-' rating to the company's $300 million senior unsecured notes due 2015 and our 'BB-' issue rating and '1' recovery rating to the company's proposed $125 million five-year revolving credit facility. The '1' recovery rating indicates our expectation of a high (over 100%) recovery of principal in the event of a payment default. Stallion will use the proceeds from the notes issuance to refinance existing indebtedness and for general corporate purposes. Stallion is currently 76% owned by the Carlyle/Riverstone Group. Pro forma for the notes offering, Houston, Texas-based Stallion will have about $305 million in total debt outstanding. "The ratings on Stallion are underpinned by an acquisitive growth strategy, a short operating track record, participation in the highly cyclical North American oilfield services market, and a highly leveraged financial risk profile," said Standard & Poor's credit analyst Jeffrey Morrison. "Weaknesses are not sufficiently mitigated by a broadening product/services offering, an enhanced geographic footprint, strengthening market position across the company's various product lines (largely the result of recent acquisitions), and an experienced management team," Mr. Morrison continued. The one-notch disparity between the corporate credit rating and the rating on the senior unsecured notes reflects Stallion's ability to incur secured indebtedness in excess of 15% of current assets. S&P notes that if Stallion were to increase its current revolver size without a corresponding increase in assets (whereby secured indebtedness exceeded 30% of assets), the notes could be subject to additional downward notching. The stable outlook is predicated on S&P's view that despite some recent volatility in domestic natural gas prices, Stallion should continue to benefit from favorable industry dynamics in the domestic oilfield services markets. In addition, we expect liquidity and near-term cash flows to be sufficient to allow Stallion to pursue planned growth initiatives and meet required fixed charges. STRATUS SERVICES: Gruber & Company LLC Raises Going Concern Doubt ----------------------------------------------------------------- Gruber & Company LLC, in Lake Saint Louis, Missouri, expressed substantial doubt about Stratus Services Group Inc.'s ability to continue as a going concern after auditing the company's financial statements for the years ended Sept. 30, 2006, and 2005. The auditing firm pointed to the company's recurring losses from operations and net capital deficiency. Stratus Services Group Inc. reported $1.4 million of net income on $5.1 million of revenues for the year ended Sept. 30, 2006, compared with a $368,561 net loss on $4.5 million of revenues for the year ended Sept. 30, 2005. The improvement in net earnings in fiscal 2006 is mainly due to the $2.2 million decrease in operating expenses, the $1.4 million decrease in interest expenses, the $1.7 million decrease in loss from discontinued operations, the $1.6 million increase in gain on sale of discontinued operations, and the $200,000 increase in gross profit, partly offset by the $5.2 million decrease in gain in change in value of warrants. The increase in revenues was primarily a result of an increase in billable hours. Gross profit increased 15.8% to $1.5 million for the year ended Sept. 30, 2006, from $1.3 million for the year ended Sept. 30, 2005, primarily as a result of increased revenues. Gross profit as a percentage of revenues increased to 29.7% for the year ended Sept. 30, 2006, from 29.2% for the year ended Sept. 30, 2005, primarily as a result of increased permanent placements. At Sept. 30, 2006, the company's balance sheet showed $2 million in total assets and $10.1 million in total liabilities, resulting in an $8.1 million total stockholders' deficit. The company's balance sheet at Sept. 30, 2006, also showed strained liquidity with $1.9 million in total current assets available to pay $9.2 million in total current liabilities. 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?185e About Stratus Services Group Headquartered in Manalapan, New Jersey, Stratus Services Group Inc. (OTCBB: SSVG.OB) -- http://www.stratusservices.com/-- provided a wide range of staffing and productivity consulting services nationally through a network of offices located throughout the United States until December 2005. The company plans on expanding its information technology staffing solutions business through its 50% owned consolidated joint venture, Stratus Technology Services LLC. STRUCTURED ASSET: Losses Prompts S&P's Negative CreditWatch ----------------------------------------------------------- Standard & Poor's Ratings Services placed its rating on the class B certificate from Structured Asset Securities Corp. Mortgage Loan Trust Series 2005-GEL4 on CreditWatch with negative implications. Concurrently, the ratings on the remaining classes from this transaction were affirmed. The CreditWatch Time Warner Inc. placement reflects realized losses that have outpaced excess spread. During the past three remittance periods, realized losses have outpaced excess interest by approximately 3.72x. The failure of excess spread to cover monthly losses has caused an overcollateralization deficiency of $1,787,950. As of the December 2006 distribution date, overcollateralization represented 1.03% of the original pool balance, which is below its target balance of 1.50% by approximately 30%. Serious delinquencies represent 11.82% of the current pool balance, and cumulative realized losses represent 0.81% of the original pool balance. Standard & Poor's will continue to monitor the performance of this transaction. If delinquencies continue to translate into realized losses that outpace excess interest, Standard & Poor's will likely take additional negative rating actions. Conversely, if excess interest grows to a point at which it is sufficient to cover monthly losses, and overcollateralization rebuilds toward its target balance, Standard & Poor's will affirm the rating and removed it from CreditWatch. The affirmations are based on current and projected credit support percentages that are sufficient to maintain the current ratings. The pool was initially composed of fixed- and adjustable-rate mortgage loans. The mortgage loans are secured mostly by first liens on one- to four-family residential properties. A small percentage of the mortgage pool includes mortgage loans that are secured by second liens. Rating Placed On Creditwatch Negative Structured Asset Securities Corp. Mortgage Loan Trust Series 2005-GEL4 Rating ------ Class To From ----- -- ---- B BB/Watch Neg BB Ratings Affirmed Structured Asset Securities Corp. Mortgage Loan Trust Series 2005-GEL4 Class Rating ----- ------ A, M1 AAA M2 AA+ M3 A+ M4 A- M5 BBB+ M6 BBB- STRUCTURED ASSET: S&P Junks Rating on Series 2005-S5 Debt --------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class B-3 from Structured Asset Securities Corp.'s series 2005-S5 to 'CCC' from 'B' and removed it from CreditWatch negative. At the same time, the 'BB+' rating on class B-2 from the same series was placed on CreditWatch negative. Concurrently, the rating on class B from series 2005-S4 was lowered to 'B' from 'BB' and remains on CreditWatch negative. In addition, the rating on class B from series 2004-S3 was lowered to 'CCC' from 'B' and removed from CreditWatch negative, while the rating on class M-9 remains on CreditWatch negative. Finally, the ratings on 20 other classes from these three series were affirmed. The downgrades and negative CreditWatch placements for all three transactions reflect realized losses that continue to outpace excess interest and deteriorate credit support. The ratings on classes B and M-9 from series 2004-S3 are lowered and remain on CreditWatch negative, respectively, due to losses that have depleted overcollateralization for the transaction to 0.46%, or $2.71 million, which is below its target of 0.50%, or $3.07 million. Severe delinquencies total $7.85 million, or 6.90% of the current pool balance, which has paid down to 18.53% of its original size. The ratings on classes B-3 and B-2 from series 2005-S5 are lowered and placed on CreditWatch negative, respectively, due to losses that are eroding credit support. Cumulative losses total $15.82 million, or 2.55% of the original pool balance, and severe delinquencies total $12.41 million, or 3.32% of the current pool balance. Delinquencies, along with high losses, have caused current credit support to fall below the amount necessary to maintain the previous rating level for class B-3. The rating on class B from series 2005-S4 is lowered and remains on CreditWatch negative due to losses that are eroding available credit support, which consists of O/C, excess spread, and subordination. Cumulative losses total $8.16 million, or 4.35% of the original pool balance, and severe delinquencies total $6.51 million, or 5.57% of the current pool balance. Standard & Poor's removed the ratings on two classes from series 2005-S5 and 2004-S3 from CreditWatch because the ratings were lowered to 'CCC'. According to Standard & Poor's surveillance practices, classes of certificates or notes from RMBS transactions with ratings of 'CCC+' or lower are no longer eligible to be on CreditWatch. The collateral for series 2005-S4, 2005-S5, and 2004-S3 consists of conventional, 30-year, fixed-rate, fully amortizing and balloon second-lien mortgage loans. Rating Lowered And Remaining On Creditwatch Negative Structured Asset Securities Corp. Rating ------ Series Class To From ------ ----- -- ---- 2005-S4 B B/Watch Neg BB/Watch Neg Ratings Lowered And Removed From Creditwatch Negative Structured Asset Securities Corp. Rating ------ Series Class To From ------ ----- -- ---- 2005-S5 B-3 CCC B/Watch Neg 2004-S3 B CCC B/Watch Neg Rating Placed On Creditwatch Negative Rating ------ Series Class To From ------ ----- -- ---- 2005-S5 B-2 BB+/Watch Neg BB+ Rating Remaining On Creditwatch Negative Series Class Rating ------ ----- ------ 2004-S3 M-9 B/Watch Neg Ratings Affirmed Structured Asset Securities Corp. Series Class Rating ------ ----- ------ 2005-S5 A1, A2 AAA 2005-S5 M-1 AA+ 2005-S5 M-2 AA 2005-S5 M-3 AA- 2005-S5 M-4 A 2005-S5 M-5 A- 2005-S5 M-6 BBB+ 2005-S5 M-7 BBB 2005-S5 M-8 BBB- 2005-S5 B-1 BB+ 2005-S4 A A- 2004-S3 M-1 AA+ 2004-S3 M-2 AA 2004-S3 M-3 AA- 2004-S3 M-4 A 2004-S3 M-5 A- 2004-S3 M-6 BBB+ 2004-S3 M-7 BBB 2004-S3 M-8 BBB- SWEETMAN RENTAL: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Sweetman Rental, LLC dba Sweetman Music fdba Sweetman Rental, Inc. 711 North Columbus Street Lancaster, OH 43130 Bankruptcy Case No.: 07-50116 Type of Business: The Debtor sells musical instruments in Central and Southeastern Ohio, and offers repair services on musical instruments. See http://www.sweetmanmusic.com/ Chapter 11 Petition Date: January 9, 2007 Court: Southern District of Ohio (Columbus) Judge: Charles M. Caldwell Debtor's Counsel: Matthew Fisher, Esq. Allen, Kuehnle, Stovall & Neuman LLP 21 West Broad Street, Suite 400 Columbus, OH 43215 Tel: (614) 221-8500 Fax: (614) 221-5988 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Jupiter Band Instruments Trade Debt $311,099 11310 Highway 290 West Austin, TX 78737 Landmark Financial Corp. Trade Debt $236,690 P.O. Box 5592 Denver, CO 80217-5592 Pentech Financial Services, Inc. Trade Debt $132,429 910 East Hamilton Avenue Suite 400 Campbell, CA 95008 Conn-Selmer, Inc. Trade Debt $113,311 P.O. Box 310 Elkhart, IN 46515 U.S. Bancorp Manifest Trade Debt $97,162 Funding Services 1450 Channel Parkway Marshall, MN 56258 Internal Revenue Service Tax Debt $87,571 Alliance Financial Group Trade Debt $71,270 Fairfield County Tax Debt $62,000 Puget Sound Leasing Co., Inc. Trade Debt $60,821 Lakeland Bank Equipment Trade Debt $58,504 Financial Pacific Leasing LLC Trade Debt $51,774 Leaf Funding Trade Debt $48,150 MD Capital Trade Debt $35,203 E.K. Blessing Co., Inc. Trade Debt $27,135 Alliance Funding Group Trade Debt $26,198 Ohio Department of Taxation Tax Debt $18,842 Pawnee Leasing Corp. Trade Debt $14,950 Entertainment Music Trade Debt $14,898 AEW Equipment LLC Trade Debt $12,665 St. Louis Music, Inc. Trade Debt $12,500 TERAYON COMM: Posts $3.1 Million Loss in Quarter Ended Sept. 30 --------------------------------------------------------------- Terayon Communication Systems Inc. reported its financial statements for the third quarter ended Sept. 30, 2006, with the Securities and Exchange Commission on Jan. 10, 2007. Terayon Communication Systems Inc. reported a $3.1 million net loss on $16.8 million of revenues for the quarter ended Sept. 30, 2006, compared with an $8.1 million net loss on $23.4 million of revenues for the same period in 2005. The overall decrease in revenues was primarily due to decreased sales of the company's home access solutions and cable modem termination systems products following discontinuation of both product lines. The decrease in net loss is primarily due to the increase in revenues from the sales of higher margin digital video solutions products and a decrease in revenues from lower margin HAS and CMTS products, the $725,000 decrease in operating expenses, and the $295,000 increase in interest income. This was partly offset by a $19,000 other expense in the current quarter, compared with a $1.2 million other income in 2005. At Sept. 30, 2006, the company's balance sheet showed $56.8 million in total assets, $32.4 million in total liabilities, and $24.4 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?1865 At Sept. 30, 2006, the company had $27.5 million in cash and cash equivalents and short-term investments compared to $101.3 million as of Dec. 31, 2005. The reduction in cash and cash equivalents and short-term investments of $73.8 million since Dec. 31, 2005, was primarily attributable to the repayment in March 2006 of $65.6 million in the aggregate principal amount of the 5% convertible subordinated notes, including all accrued and unpaid interest and related fees, and the funding of operating activities. About Terayon Headquartered in Santa Clara, California, Terayon Communication Systems Inc. (Other OTC: TERN.PK) -- http://www.terayon.com/ -- provides real-time digital video networking applications to cable, satellite and telecommunication service providers worldwide. * * * The company's long-term local and foreign issuer credits carry Standard & Poor's B- rating. TERRA CAPITAL: Launches Cash Offering on Senior Secured Notes ------------------------------------------------------------- Terra Capital Inc. has commenced a cash tender offer for any and all of its 12-7/8% Senior Secured Notes due 2008 and 11-1/2% Second Priority Senior Secured Notes due 2010. The two series of debt securities have combined principal amounts outstanding of $331,300,000. As part of this offer, Terra Capital is soliciting noteholders' consents to amend certain provisions of these notes and the related indentures. The tender offer and consent solicitation are being made pursuant to an Offer to Purchase and Consent Solicitation Statement dated Jan. 10, 2007, and a related Letter of Transmittal and Consent, which more fully set forth the terms and conditions of the tender offer and consent solicitation. For both offers, the deadline to receive the consent payment for the consent solicitation is 5:00 p.m. Eastern Standard Time (EST) on Jan. 24, 2007 and the expiration date is midnight EST, on Feb. 7, 2007. Holders may withdraw their tendered notes and related consents prior to 5:00 p.m. EST on Jan. 24, 2007. The tender offer and these dates may be extended by Terra Capital. The purchase prices for notes of each series will be determined at 2:00 p.m. EST on Jan. 25, 2007 in the manner described in the Offer to Purchase and Consent Solicitation Statement. The purchase price for the 12-7/8% Senior Secured Notes and 11-1/2% Second Priority Senior Secured Notes will be a "fixed spread" price. The fixed spread prices for each of the two series of notes will be calculated using a yield equal to a fixed spread of 50 basis points plus the yield to maturity of, in the case of the 12-7/8% Senior Secured Notes, the 3.125% U.S. Treasury Note due Oct. 15, 2008 and, in the case of the 11-1/2% Second Priority Senior Secured Notes, the 3.50% U.S. Treasury Note due May 31, 2007. The purchase price for notes of each series includes a consent payment that is equal to $20 per $1,000 principal amount of the notes. Holders of notes tendered after the deadline to receive the consent payment for the consent solicitation will not receive the consent payment. The proposed amendments to the indentures governing the notes would eliminate most of the indentures' principal restrictive covenants and certain events of default and would amend certain other provisions contained in the indentures. Adoption of the proposed amendments requires the consent of the holders of at least a majority of the aggregate principal amount of the Notes outstanding. Holders who tender their notes will be deemed to consent to the proposed amendments and holders may not deliver consents to the proposed amendments without tendering their notes in the tender offer. Terra Capital intends to fund the payment of the total consideration with debt financing. The tender offer is conditioned upon the receipt of debt financing sufficient to pay the total consideration and related fees and expenses. The tender offer is also conditioned upon, among other things, a minimum tender condition. Terra Capital has retained Citigroup Corporate and Investment Banking to serve as dealer manager for the tender offer and consent solicitation. Global Bondholder Services Corporation will serve as the depositary and information agent for the tender offer and consent solicitation. Based in Sioux City, Iowa, Terra Industries Inc. is a major North American producer of anhydrous ammonia, UAN solutions, and urea and a leading producer of ammonium nitrate in the U.S. and the U.K. For the trailing 12-month period ended June 30, 2006, Terra had revenue of $1.9 billion, EBITDA of approximately $117.9 million, and total debt with equity credit of $354.5 million. * * * As reported in Troubled Company Reporter in Sept. 25, 2006, Fitch Ratings upgraded the rating on Terra Capital, Inc.'s 11.5% second priority senior secured notes. In addition, Fitch affirms all other ratings of Terra Industries Inc.'s and its subsidiaries Terra Capital, Inc. and Terra Nitrogen, L.P. The Rating Outlook is Stable. TITANIUM METALS: Dr. Charles Entrekin Rejoins as President and COO ------------------------------------------------------------------ Dr. Charles H. Entrekin has rejoined Titanium Metals Corporation in the position of president and chief operating officer. Dr. Entrekin was formerly executive vice president - Commercial of TIMET until 2002. Since 2003, Dr. Entrekin has been a senior advisor for Safeguard International Fund, during which time he held various senior management positions with businesses owned or controlled by Safeguard. Recently, Dr. Entrekin served as president and chief Executive officer of Timminco, Ltd, which produces and markets specialty magnesium, silicon metal and specialty ferrosilicon, calcium and strontium alloys. Steven L. Watson, vice chairman and chief executive officer, said "I believe there are exceptional opportunities for our Company in the titanium metal industry. The management of TIMET is committed to pursue these opportunities and continue to grow and expand our business. Dr. Entrekin has the knowledge and experience necessary to help the Company fully realize its potential." Headquartered in Dallas, Texas, Titanium Metals Corporation (NYSE: TIE) -- http://www.timet.com/-- is a worldwide producer of titanium metal products. * * * Moody's Investors Services placed a Caa1 issuer rating and B3 LT Corp Family Rating on Titanium Metals. TRANSDIGM GROUP: Buying Aviation Tech. for $430 Million in Cash --------------------------------------------------------------- TransDigm Group Incorporated has signed a definitive agreement to purchase Aviation Technologies Inc. for a total enterprise value of approximately $430 million in cash. TransDigm expects to finance the acquisition primarily through a combination of senior and subordinated debt. ATI, which is based in Seattle, Wash., consists of two primary operating units that service the commercial and military aerospace markets -- Avtech and ADS/Transicoil. Avtech supplies flight deck and passenger audio systems, cabin lighting and power control products and related components. ADS/Transicoil supplies displays, clocks, brushless motors and related components and instruments. About 95% of ATI's revenue is generated from the global aerospace industry, with approximately 80% of such revenue coming from the commercial market and approximately 20% of such revenue coming from the military market. ATI employs approximately 600 people in its Seattle, Bellevue, Collegeville and Malaysian operations. "This is the first sizable acquisition opportunity that we have seen in several years that meets our stringent strategic, operational and value-creation criteria," stated W. Nicholas Howley, TransDigm's Chairman and Chief Executive Officer. "ATI fits well with our consistent focus on proprietary aerospace components with broad platform positions and significant aftermarket content. Approximately 90% of ATI's revenue comes from proprietary products and about 50% of ATI's revenue is related to the aftermarket. Additionally, this acquisition expands our existing positions in aerospace motors and electrical power applications and also opens up a new growth platform in flight deck and cabin electronics products." For the calendar year ending Dec. 31, 2006, ATI is expected to have approximately $105 million in revenues and approximately $35 million of EBITDA. The 2006 EBITDA is expected to include approximately $3 million of program development expenses for products that ATI will be providing on the Boeing 787, $3 million of ATI corporate overhead, and $1 million of one time relocation/severance charges. "These are well run businesses," continued Mr. Howley, "However, consistent with our past acquisition history, we expect to see margin improvements as we integrate the ATI businesses into our culture and management processes. We expect to realize cost savings relatively quickly in ATI's corporate overhead, and then to more gradually improve the margins as Boeing 787 development costs ramp down, our restructuring activities are concluded, and we implement TransDigm's value drivers throughout the organization. Excluding purchase price accounting adjustments, we anticipate this acquisition will be slightly accretive over the first twelve months of ownership and increasingly so thereafter." The acquisition, which is expected to close in the next sixty days, is subject to regulatory approvals and customary closing conditions. The transaction will be accounted for under purchase accounting rules. About TransDigm Group TransDigm Group Inc. (NYSE: TDG) -- http://www.transdigm.com/-- designs, produces and supplies highly engineered aircraft components for use on commercial and military aircraft. Major product offerings, substantially all of which are ultimately provided to end-users in the aerospace industry, include ignition systems and components, gear pumps, mechanical/electromechanical actuators and controls, NiCad batteries/chargers, power conditioning devices, hold-open rods and locking devices, engineered connectors, engineered latches and cockpit security devices, lavatory hardware and components, specialized AC/DC electric motors and specialized valving. TRANSDIGM INC: Fitch Puts Subor. Notes' B- Rating on Neg. Watch --------------------------------------------------------------- Fitch Ratings has placed TransDigm Inc.'s 'B-/RR5' senior subordinated notes on Rating Watch Negative. TransDigm Group, parent of TDI, has announced plans to acquire Aviation Technologies Inc. and plans to issue debt to fund most of the $430 million acquisition. Fitch does not expect these ratings to be affected by the acquisition and the debt issued to fund it: TransDigm Group -- Issuer Default Rating 'B'. TransDigm Inc. -- Issuer Default Rating 'B'; -- Senior secured bank debt 'BB-/RR2' The Rating Watch Negative is based on the likelihood of a decline in expected recovery in a distressed scenario for the senior subordinated notes. TDG management has indicated that it plans to issue a combination of senior and subordinated debt. Should a significant portion of the debt issued be senior secured, expected recovery of senior subordinated debt would decline, lowering its ratings. Any decrease is likely to be limited to one notch. Resolution of the Negative Rating Watch will be based upon how TDG funds the acquisition. TRANSDIGM INC: S&P Affirms B+ Corporate Credit Rating ----------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including the 'B+' corporate credit rating, on aerospace supplier TransDigm Inc. The outlook is stable. About $925 million of debt is outstanding. The action follows the announcement by TransDigm Group Inc. (not rated), the company's ultimate parent, of a definitive agreement to purchase Aviation Technologies Inc. for about $430 million in cash, to be financed through a combination of senior and subordinated debt. "Although the acquisition will weaken credit protection measures, including consolidated debt to EBITDA to a relatively high 5.7x from the current 4.5x, anticipated material debt reduction from free cash flow should restore an appropriate financial profile in the intermediate term," said Standard & Poor's credit analyst Roman Szuper. "Still, the ATI transaction, expected to close in the next 60 days, significantly limits flexibility for additional acquisitions." ATI, with 2006 revenues of $105 million and EBITDA of $35 million, is a leading supplier of flight deck and passenger audio systems, cabin lighting, and power control products to the commercial aerospace (80%) and military (20%) markets. ATI's business mix (about 90% of revenues comes from proprietary products and 50% is related to the aftermarket, with broad platform positions) is a good fit with TransDigm's existing operations. Similar to previous acquisitions, the ATI purchase offers an opportunity to cut costs and improve margins. The ratings on TransDigm reflect a highly leveraged balance sheet, the cyclical and competitive pressures of the commercial aerospace industry, an active acquisition program, and a relatively modest scale of operations (around $450 million revenues), but incorporate the firm's leading positions in niche markets and very strong profit margins. TransDigm is a well-established supplier of highly engineered aircraft components for nearly all commercial and military airplanes as well as engines. A sustained recovery in the commercial aerospace market, efforts to reduce costs, and the proven ability to maintain high margins should enable TransDigm to offset increased debt levels and improve its credit profile. The outlook could be revised to negative if leverage is not reduced meaningfully in the intermediate term. The outlook revision to positive is not likely, as the rating incorporates an expectation of strengthening in credit measures. UNITED SURGICAL: Merging with UNCN in $1.8 Billion Deal ------------------------------------------------------- United Surgical Partners International, Inc., has signed an agreement to merge with UNCN Acquisition Corp., an affiliate of Welsh, Carson, Anderson & Stowe. The transaction is valued at approximately $1.8 billion, including the assumption of certain debt obligations of USPI pursuant to the merger. Under the terms of the merger agreement, the holders of USPI common stock will receive $31.05 per share in cash for their shares, which represents a 13.4% premium above the Jan. 5, 2007 closing price of $27.39, a 21.2% premium above the closing price of $25.62 on Nov. 13, 2006 (the day prior to receipt of Welsh Carson's initial offer) and a premium of 18.8% above the average closing price of the USPI shares for the last three months of $26.13. USPI's Board of Directors approved the transaction following the unanimous recommendation of a Special Committee composed entirely of independent directors. Commenting on the announcement, Mr. Donald E. Steen, Chairman of USPI, stated, "Our Special Committee and our Board believe that this transaction is in the best interests of our stockholders, while positioning the Company more favorably to respond to changing market conditions. USPI will continue its intense focus on providing high-quality health services in partnership with its physician and non-profit health system partners. In addition, we expect to continue to pursue growth opportunities as they arise. We do not expect the transaction to result in any changes in USPI's management." "Welsh Carson was the founding stockholder of USPI," said Scott Mackesy, a General Partner of Welsh Carson. "We are enthusiastic about working again with management and putting our extensive experience and resources to work in helping USPI pursue its strategic objectives." The closing of the transaction is subject to approval by USPI's stockholders, requisite antitrust and other customary closing conditions. The transaction is expected to be completed in the second quarter of 2007, with the exact timing being dependent on the completion of SEC filings and clearance as well as other factors. The transaction is not subject to a financing condition. The merger agreement allows USPI until Feb. 17, 2007, to actively solicit other possible bidders and, thereafter, subject to certain conditions, to respond to unsolicited inquiries by other persons interested in acquiring the Company. Should a superior offer be received and accepted, USPI may, subject to certain conditions (including payment of a termination fee), terminate the merger agreement with the Welsh Carson affiliates. In connection with such termination, the Company must pay a fee of $42.5 million to an affiliate of Welsh Carson, unless such termination is in connection with a proposal received prior to the no-shop period start date, in which case the Company must pay a fee of $14.7 million to such Welsh Carson affiliate. USPI has been advised by JP Morgan Securities Inc., financial advisor to the Special Committee, and Simpson Thacher & Bartlett LLP, counsel to the Special Committee. Welsh Carson has been advised by Citigroup Corporate and Investment Banking and Lehman Brothers Inc., as M&A advisors, and Ropes & Gray LLP, as counsel. About Welsh Carson Welsh Carson, Anderson & Stowe is one of the largest private equity firms in the U.S. and the largest in the world focused exclusively on investments in the healthcare services, information and business services industries. Since its founding in 1979, Welsh Carson has organized 14 private investment partnerships with total capital of more than $16 billion and has completed over 200 management buyouts and initial investments. The firm currently invests out of Welsh, Carson, Anderson & Stowe X, L.P., a $3.5 billion equity fund and WCAS Capital Partners IV, L.P., a $1.3 billion dedicated subordinated debt fund. Welsh Carson was the founding investor of USPI in 1998. About USPI United Surgical Partners International, Inc. (NASDAQ:USPI) -- http://www.unitedsurgical.com/-- was founded in 1998 by Mr. Steen and Welsh Carson to own and manage short-stay surgical facilities. Today, USPI has ownership interests in or operates 141 surgical facilities. Of the Company's 138 domestic facilities, 78 are jointly owned with not-for-profit healthcare systems. The Company also operates three facilities in London, England. * * * As reported in the Troubled Company Reporter on Jan. 12, 2006 Standard & Poor's Ratings Services lowered its corporate credit rating on Addison, Texas-based surgical facilities owner and operator United Surgical Partners International Inc. to 'B+' from 'BB-'. At the same time, the rating was placed on CreditWatch with negative implications, after the report that the company has agreed to be acquired by UNCN Acquisition Corp., an affiliate of Welsh, Carson, Anderson & Stowe. USG CORP: Four Bankruptcy Professionals Want $2.5 Mil. Fees Paid ---------------------------------------------------------------- Four additional professionals retained in connection with the Reorganized USG Corporation and its debtor affiliates' Chapter 11 cases filed applications for final Court approval and allowance of fees and reimbursement of expenses amounting to a total of $2,564,093, pursuant to Sections 330 and 331 of the Bankruptcy Code. Professional Period Total Fees Expenses ------------ ------ ---------- -------- Weil, Gotshal 05/04/05-06/20/06 $2,474,888 $61,530 & Manges LLP Morris, Nichols, 06/21/06-11/30/06 11,401 1,756 Arsht & Tunnell LLP Loizides & 06/21/06-12/29/06 8,897 100 Associates Duane Morris LLP 06/21/06-10/31/06 4,091 1,430 Weil Gotshal and Morris Nichols served as counsel for the Statutory Committee of Equity Security Holders. Loizides served as special counsel to the Official Committee of Unsecured Creditors. Duane Morris also represented the Creditors Committee. Weil Gotshal also asks the Court to direct the Reorganized Debtors to pay (i) $77,463 in fees and $2,295 as reimbursement for expenses incurred from June 20, 2006, to Nov. 30, 2006, and (ii) an estimated $18,330 in fees and $3,000 in expenses incurred in December 2006. The Reorganized Debtors have already paid some of the professionals' interim fees. U.S. Trustee Objects to Fee Applications of Three Professionals Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, filed an omnibus objection to the final fee applications of Jones Day, Cooley Godward Kronish LLP, and Chilmark Partners LLC. David M. Clauder, Esq., in Wilmington, Delaware, asserts that the staffing used by both Jones Day and Cooley is unreasonable. Mr. Clauder says the Reorganized Debtors' complex Chapter 11 cases does not give Jones Day unlimited authority to employ a multitude of attorneys and paraprofessionals as this will only lead to duplication of effort, certain inefficiencies, and excessive billing. The U.S. Trustee contends that Chilmark's fees are unreasonable. The U.S. Trustee asserts that the time Chilmark spent on legislative matters was not beneficial to the estate. Jones Day & Cooley Respond Jones Day, Cooley, and Chilmark ask the Court to overrule the U.S. Trustee's objection to their fee applications. David G. Heiman, Esq., at Jones Day, in Cleveland, Ohio, points out that the U.S. Trustee has superficially aggregated the number of professionals employed by the firm during the entire five-year period of the Reorganized Debtors' cases without any attempt to relate the bare statistics to the circumstances of the cases, and the demands on Jones Day or the results achieved. Mr. Heiman also asserts that the U.S. Trustee's objection offers no facts or relevant case law to support her allegation. J. Michael Kelly, Esq., at Cooley Godward Kronish LLP, in San Francisco, California, tells the Court that Cooley's staffing was reasonable and necessary. He notes that the Reorganized Debtors fully support Cooley's Application. It would be inequitable to reduce Cooley's fees based on the U.S. Trustee's eleventh hour objection to the final fee application considering that the U.S. Trustee took no action on the firm's quarterly interim fee applications, Mr. Kelly says. Court Grants 46 Professionals' Fees The Court grants the final fee applications of 46 professionals, aggregating $143,250,726 in professional fees and $8,152,348 in expenses. The professionals include: Professional Fees Expenses Total ------------ ---- -------- ----- Cooley Godward, LLP $22,020,925 $1,214,612 $23,235,536 Jones Day 20,503,808 986,255 21,490,063 Chilmark Partners LLC 20,673,333 123,938 20,797,271 Leydig Voit & 11,186,178 2,345,382 13,531,559 Mayer, Ltd. Deloitte & Touche LLP 7,716,182 33,854 7,750,035 Kaye Scholer, LLP 6,692,136 405,024 7,097,160 Houlihan Lokey 5,611,667 29,483 5,641,150 Howard & Zukin L. Tersigni 4,642,930 30,860 4,673,791 Consulting P.C. PricewaterhouseCoopers 3,754,396 128,510 3,882,905 FTI Consulting, Inc. 3,395,052 31,561 3,426,613 Based in Chicago, Ill., USG Corporation -- http://www.usg.com/-- through its subsidiaries, manufactures and distributes building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). David G. Heiman, Esq., Gus Kallergis, Esq., Brad B. Erens, Esq., Michelle M. Harner, Esq., Mark A. Cody, Esq., and Daniel B. Prieto, Esq., at Jones Day represent the Debtors in their restructuring efforts. Lewis Kruger, Esq., Kenneth Pasquale, Esq., and Denise Wildes, Esq., represent the Official Committee of Unsecured Creditors. Elihu Inselbuch, Esq., and peter Van N. Lockwood, Esq., at Caplin & Drysdale, Chartered, represent the Official Committee of Asbestos Personal Injury Claimants. Martin J. Bienenstock, Esq., Judy G. Z. Liu, Esq., Ralph I. Miller, Esq., and David A. Hickerson, Esq., at Weil Gotshal & Manges LLP represent the Statutory Committee of Equity Security Holders. Dean M. Trafelet is the Future Claimants Representative. Michael J. Crames, Esq., and Andrew A. Kress, Esq., at Kaye Scholer, LLP, represent the Future Claimants Representative. Scott Baena, Esq., and Jay Sakalo, Esq., at Bilzen Sumberg Baena Price & Axelrod LLP, represent the Asbestos Property Damage Claimants Committee. When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. The Debtors emerged from bankruptcy protection on June 20, 2006. (USG Bankruptcy News, Issue No. 127; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). WACHOVIA BANK: Fitch Ups Rating on $6.7 Mil. Class M Certs. to BB ----------------------------------------------------------------- Fitch Ratings upgrades Wachovia Bank Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 2003-C4, as: -- $22.3 million class D to 'AAA' from 'AA'; -- $12.3 million class E to 'AAA' from 'AA-'; -- $12.3 million class F to 'AA' from 'A+'; -- $12.3 million class G to 'A+' from 'A'; -- $12.3 million class H to 'A' from 'A-'; -- $20.1 million class J to 'BBB+' from 'BBB'; -- $8.9 million class K to 'BBB' from 'BBB-'; -- $6.7 million class L to 'BBB-' from 'BB+'; -- $6.7 million class M to 'BB' from 'BB-'; -- $1.1 million class N to 'BB-' from 'B+'; -- $4.5 million class O to 'B+' from 'B'. In addition, Fitch affirms these classes: -- $37.6 million class A-1 at 'AAA'; -- $236.6 million class A-1A at 'AAA'; -- $374.1 million class A-2 at 'AAA'; -- Interest-only class X-C at 'AAA'; -- Interest-only class X-P at 'AAA'. -- $34.6 million class B at 'AAA'; -- $11.1 million class C at 'AAA'. Fitch does not rate the $22.3 million class P certificates. The rating upgrades are due to the transaction's stable performance combined with increases in credit enhancement resulting from paydown and defeasance. Eight loans (8.7%) have defeased, including three of the largest ten loans in the pool. In addition, as of the December 2006 distribution date, the pool has paid down 6.3% to $835.6 million from $891.8 million at issuance. As master servicer, Wachovia Securities collected second or third quarter 2006 financials for 76.8% of the transaction, excluding the eight loans that have defeased (6.6%). The year to date weighted average debt service coverage ratio (DSCR) was 1.65 times (x). There are currently no delinquent or specially serviced loans. W.R. GRACE: Court Okays $13 Million Settlement Pact with IRS ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware approve the $13,000,000 settlement agreement of W.R. Grace & Co. with the U.S. government resolving certain employee taxes and all related tax exposure with respect to 1993 to 1998 tax periods. The Honorable Judith K. Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware also expunged Claim No. 15361 and reduces Claim No. 835 relating to liability for corporate income tax to $129,000,000. CCHP, Inc., a wholly owned, indirect subsidiary of W.R. Grace & Co.-Conn., operated a nationwide, temporary staffing healthcare business supplying nurses and other healthcare professionals from 1991 to July 1996. CCHP and MRA Staffing Systems, Inc., formed Cross Country Staffing, a Delaware general partnership, in July 1996. CCHP contributed its temporary staffing business to CCS in exchange for a 64% partnership interest, and MRA provided its similar business for a 36% interest. At that time, MRA Staffing was owned indirectly by United Kingdom-based Nestor Healthcare Group PLC through a series of U.S. holding corporations. In conducting the Healthcare Staffing Business, the Healthcare Companies maintained a database of over 200,000 healthcare professionals interested in temporary assignments at client hospitals throughout the U.S. and the Virgin Islands. Over 2,000 professionals are typically placed in temporary assignments per day, with assignments lasting for approximately three months. For the 1993 to 1998 tax periods, there were in excess of 38,000 temporary assignments. In 1998, Nestor Healthcare and W.R. Grace & Co. decided to sell the Healthcare Staffing Business. To facilitate a third party sale, Grace International Holdings, Inc., a Grace-Conn. subsidiary, acquired in July 1999 Nestor Healthcare's interest in the business for approximately $56,000,000. Under the terms of the sale, Nestor Healthcare agreed to indemnify certain Grace- Conn. affiliates for 36% of any CCS tax liabilities incurred up to the sale's closing date. CCS also sold the Healthcare Staffing Business to Charterhouse Inc. for approximately $190,000,000. Following that sale, the Healthcare Companies ceased to conduct any form of healthcare staffing business. Per Diem and Lodging Plans In 1992, CCHP instituted a meal and incidental expense allowance plan for its employees in temporary assignments, providing per diem reimbursement in an amount provided by federal regulations. CCHP and CCS continued the reimbursement plans until the Healthcare Staffing Business sale in 1999. To be eligible for the per diem and lodging benefit, an employee was required to submit a completed Residence Information Questionnaire designed to provide the Healthcare Companies with sufficient information to determine the location of an employee's "tax home," as defined by law. James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub LLP, in Wilmington, Delaware, relates that if, based on its review of an employee's RIQ, the Healthcare Companies determined that the temporary assignment required the employee to travel away from his "tax home" overnight, the expense reimbursement was excluded from the employee's taxable compensation. If the temporary assignment did not involve an overnight stay, the reimbursement was included in the employee's taxable compensation, subject to liability for Federal Insurance Contribution Act taxes and federal income tax withholding taxes. IRS Assessments IRS, along with the Department of Justice, contend that the Healthcare Companies were required to treat all of the per diem and lodging payments as compensation subject to the Employment Taxes, based on several different legal and factual theories. Following the sale of the Healthcare Staffing Business, IRS' assessments for the 1993 to 1998 tax periods aggregate approximately $61,900,000, representing the Healthcare Companies' total exposure for the Employment Taxes, excluding possible interest and penalties. The IRS filed priority claims for the Employment Taxes and accrued interest during the stated tax periods aggregating approximately $79,200,000. Specifically, the IRS Claims that remain outstanding are: -- Claim No. 15361 filed against CC Partners, formerly CCS; and -- Claim No. 835 against CCHP. $13-Mil. IRS Claims Settlement The Debtors sought the Court's authority to enter into a settlement with the U.S. Government to resolve the Employee Taxes and all related tax exposure with respect to 1993 to 1998 tax periods. The Settlement requires the Debtors to: (a) make a lump sum payment of $13,000,000 to the Government, which payment would not be deductible; and (b) forgo any claim to deductions that arguably arise from treating previously non-deductible meal and incidental expense payments as additional compensation expense. If the $13,000,000 payment is not paid by the 181st day after the date the Settlement was accepted by the DOJ, the payment will bear interest at a statutory rate under Sections 6621(a)(2), 6621(c) and 6622 of the Internal Revenue Code. The Settlement further provides that, upon the $13,000,000 settlement payment: (i) Claim No. 15361 will be deemed fully satisfied and expunged; and (ii) all amounts stated in Claim No. 835 for the Employment Taxes will be deemed fully satisfied and Claim No. 835 will be reduced to $129,000,000, relating to liability for corporate income tax. The Debtors preserve their rights, however, to object to the remaining amount stated in Claim No. 835 on whatever grounds are appropriate. Mr. O'Neill relates that the Settlement is evidenced by: -- a settlement offer letter from CCHP and a corresponding acceptance letter from the DOJ for the tax case currently pending in the U.S. Court of Federal Claims; and -- four closing agreements between IRS and various parties with respect to tax periods between January 1, 1996, and July 28, 1999. Mr. O'Neill says that the DOJ Settlement Documents and the three closing agreements have been fully executed and are contingent solely on the Court's approval and execution of a multiparty closing agreement among the IRS, GN Holdings, Inc., Fresenius Medical Care Holdings, Inc., Sealed Air Corp., and Grace. Moreover, Nestor Healthcare has confirmed, in writing, to the Debtors that it will pay its proportionate share of approximately $2,700,000, thus reducing the Debtors' net cost for the Settlement to $10,300,000. Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan LLP represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Anderson Kill & Olick, P.C., represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Martin W. Dies, III, Esq., at Dies & Hile L.L.P., and C. Alan Runyan, Esq., at Speights & Runyan,to represent it. Lexecon, LLP, provided asbestos claims consulting services to the Official Committee of Equity Security Holders. (W.R. Grace Bankruptcy News, Issue No. 119; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * BOND PRICING: For the week of January 8 - January 12, 2006 ------------------------------------------------------------ Issuer Coupon Maturity Price ------ ------ -------- ----- Acme Metals Inc 10.875% 12/15/07 0 Adelphia Comm. 6.000% 02/15/06 0 Aetna Industries 11.875% 10/01/06 11 AHI-DFLT07/05 8.625% 10/01/07 70 Allegiance Tel. 11.750% 02/15/08 45 Allegiance Tel. 12.875% 05/15/08 46 Amer & Forgn Pwr 5.000% 03/01/30 66 Amer Color Graph 10.000% 06/15/10 73 Amer Tissue Inc 12.500% 07/15/06 1 Antigenics 5.250% 02/01/25 64 Archibald Candy 10.000% 11/01/07 0 At Home Corp 0.525% 12/28/18 1 At Home Corp 4.750% 12/15/06 1 Autocam Corp. 10.875% 06/15/14 26 Bank New England 8.750% 04/01/99 8 Bank New England 9.500% 02/15/96 17 Bank New England 9.875% 09/15/99 8 BBN Corp 6.000% 04/01/12 0 Burlington North 3.200% 01/01/45 57 Calpine Corp 4.000% 12/26/06 64 Cell Therapeutic 5.750% 06/15/08 69 Cell Therapeutic 5.750% 06/15/08 74 Cell Genesys Inc 3.125% 11/01/11 74 CHS Electronics 9.875% 04/15/05 2 Clark Material 10.750% 11/15/06 0 Collins & Aikman 10.750% 12/31/11 4 Color Tile Inc 10.750% 12/15/01 0 Comcast Corp 2.000% 10/15/29 40 Conseco Inc 8.500% 10/15/02 0 Dal-Dflt09/05 9.000% 05/15/16 71 Dana Corp 5.850% 01/15/15 71 Dana Corp 6.500% 03/15/08 75 Dana Corp 7.000% 03/15/28 73 Dana Corp 7.000% 03/01/29 73 Dana Corp 9.000% 08/15/11 73 Dana Corp 10.125% 03/15/10 74 Decode Genetics 3.500% 04/15/11 70 Delco Remy Intl 9.375% 04/15/12 36 Delco Remy Intl 11.000% 05/01/09 43 Delta Air Lines 2.875% 02/18/24 66 Delta Air Lines 7.700% 12/15/05 68 Delta Air Lines 7.900% 12/15/09 68 Delta Air Lines 8.000% 06/03/23 69 Delta Air Lines 8.300% 12/15/29 69 Delta Air Lines 9.250% 12/27/07 67 Delta Air Lines 9.250% 03/15/22 71 Delta Air Lines 9.750% 05/15/21 71 Delta Air Lines 10.000% 08/15/08 71 Delta Air Lines 10.125% 05/15/10 69 Delta Air Lines 10.375% 02/01/11 66 Delta Air Lines 10.375% 12/15/22 66 Delta Mills Inc 9.625% 09/01/07 14 Deutsche Bank NY 8.500% 11/15/16 71 Dov Pharmaceutic 2.500% 01/15/25 48 Dura Operating 8.625% 04/15/12 34 Dura Operating 9.000% 05/01/09 6 E.Spire Comm Inc 13.750% 07/15/07 0 Eagle Food Center 11.000% 04/15/05 2 Encysive Pharmacy 2.500% 03/15/12 70 Exodus Comm Inc 10.750% 12/15/09 0 Exodus Comm Inc 11.250% 07/01/08 0 Exodus Comm Inc 11.625% 07/15/10 0 Falcon Products 11.375% 06/15/09 1 Family Golf Ctrs 5.750% 10/15/04 0 Fedders North AM 9.875% 03/01/14 73 Federal-Mogul Co. 7.500% 01/15/09 58 Federal-Mogul Co. 8.250% 03/03/05 67 Federal-Mogul Co. 8.330% 11/15/01 68 Federal-Mogul Co. 8.370% 11/15/01 63 Finova Group 7.500% 11/15/09 30 Ford Motor Co 6.625% 02/15/28 72 Ford Motor Co 7.400% 11/01/46 74 Ford Motor Co 7.700% 05/15/97 74 GB Property Fndg 11.000% 09/29/05 57 Golden Books Pub 10.750% 12/31/04 0 Gulf Mobile Ohio 5.000% 12/01/56 75 Gulf States Stl 13.500% 04/15/03 0 HNG Internorth 9.625% 03/15/06 37 Home Prod Intl 9.625% 05/15/08 45 Insight Health 9.875% 11/01/11 29 Insilco Hldg Co 14.000% 08/15/08 0 Iridium LLC/CAP 10.875% 07/15/05 31 Iridium LLC/CAP 11.250% 07/15/05 32 Iridium LLC/CAP 13.000% 07/15/05 31 Iridium LLC/CAP 14.000% 07/15/05 32 Isolagen Inc. 3.500% 11/01/24 74 JTS Corp 5.250% 04/29/02 0 Kaiser Aluminum 9.875% 02/15/02 30 Kaiser Aluminum 12.750% 02/01/03 11 Kellstrom Inds 5.750% 10/15/02 0 Key3Media Group 11.250% 06/15/11 0 Kmart Corp 8.990% 07/05/10 6 Kmart Corp 9.350% 01/02/20 12 Kmart Funding 8.800% 07/01/10 30 Kmart Funding 9.440% 07/01/18 20 Lehman Bros Hldg 10.000% 10/30/13 75 Liberty Media 3.750% 02/15/30 62 Liberty Media 4.000% 11/15/29 65 Lifecare Holding 9.250% 08/15/13 63 Macsaver Financl 7.400% 02/15/02 0 Macsaver Financl 7.600% 08/01/07 5 Macsaver Financl 7.875% 08/01/03 0 Merisant Co 9.500% 07/15/13 67 MRS Fields 9.000% 03/15/11 68 New Orl Grt N RR 5.000% 07/01/32 70 Northern Pacific RY 3.000% 01/01/47 56 Northern Pacific RY 3.000% 01/01/47 56 NorthPoint Comm 12.875% 02/15/10 0 Northwest Airlines 9.152% 04/01/10 7 Northwest Airlines 9.179% 04/01/10 31 Northwst Stl&Wir 9.500% 06/15/01 0 NTK Holdings Inc 10.750% 03/01/14 74 Nutritional Src 10.125% 08/01/09 63 Oakwood Homes 7.875% 03/01/04 11 Oakwood Homes 8.125% 03/01/09 6 Oscient Pharm 3.500% 04/15/11 67 Global Health Sc 11.000% 05/01/08 5 National Steel Corp 8.375% 08/01/06 0 National Steel Corp 9.875% 03/01/09 0 Outboard Marine 7.000% 07/01/02 0 Outboard Marine 9.125% 04/15/17 4 Outboard Marine 10.750% 06/01/08 6 Pac-West-Tender 13.500% 02/01/09 29 PCA LLC/PCA Fin 11.875% 08/01/09 19 Pegasus Satellite 12.375% 08/01/08 9 Pegasus Satellite 12.500% 08/01/07 9 Pegasus Satellite 13.500% 03/01/07 0 Phar-mor Inc 11.720% 09/11/02 0 Piedmont Aviat 10.250% 01/15/49 0 Piedmont Aviat 10.250% 01/15/49 8 Pixelworks Inc 1.750% 05/15/24 74 Pliant Corp 13.000% 07/15/10 52 Polaroid Corp 6.750% 01/15/02 0 Polaroid Corp 7.250% 01/15/07 0 Primus Telecom 3.750% 09/15/10 36 Primus Telecom 8.000% 01/15/14 61 Primus Telecom 12.750% 10/15/09 70 PSINET Inc 10.000% 02/15/05 0 PSINET Inc 10.500% 12/01/06 0 Radnor Holdings 11.000% 03/15/10 1 Railworks Corp 11.500% 04/15/09 1 Renco Metals Inc 11.500% 07/01/03 0 RJ Tower Corp. 12.000% 06/01/13 13 S3 Inc 5.750% 10/01/03 0 Tom's Foods Inc 10.500% 11/01/04 9 Transtexas Gas 15.000% 03/15/05 0 Tribune Co 2.000% 05/15/29 69 United Air Lines 7.270% 01/30/13 56 United Air Lines 9.020% 04/19/12 56 United Air Lines 9.200% 03/22/08 49 United Air Lines 9.210% 01/21/17 9 United Air Lines 9.300% 03/22/08 49 United Air Lines 9.350% 04/07/16 35 United Air Lines 9.560% 10/19/18 57 United Air Lines 9.760% 12/31/49 4 United Air Lines 10.020% 03/22/14 45 United Air Lines 10.110% 02/19/49 48 United Air Lines 10.850% 02/19/15 47 United Homes Inc 11.000% 03/15/05 0 US Air Inc. 7.500% 04/15/08 0 US Air Inc. 10.250% 01/15/49 1 US Air Inc. 10.250% 01/15/49 6 US Air Inc. 10.300% 07/15/49 1 US Air Inc. 10.550% 01/15/49 0 US Air Inc. 10.750% 01/01/49 0 US Air Inc. 10.800% 01/01/49 10 US Air Inc. 10.900% 01/01/49 0 US Air Inc. 10.900% 01/01/49 0 USAutos Trust 2.212% 03/03/11 8 Universal Stand 8.250% 02/01/06 0 Venture Holdings 11.000% 06/01/07 0 Venture Holdings 12.000% 06/01/09 0 Vesta Insurance Group 8.750% 07/15/25 6 Werner Holdings 10.000% 11/15/07 10 Westpoint Steven 7.875% 06/15/08 0 Wheeling-Pitt St 5.000% 08/01/11 75 Winstar Comm 14.000% 10/15/05 0 Winstar Comm Inc 12.500% 04/15/08 0 Winstar Comm Inc 12.750% 04/15/10 0 World Access Inc 13.250% 01/15/08 5 Xerox Corp 0.570% 04/21/18 42 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Marie Therese V. Profetana, Robert Max Victor M. Quiblat II, Shimero R. Jainga, Joel Anthony G. Lopez, Melvin C. Tabao, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, Ronald C. Sy, Jason A. Nieva, Lucilo M. Pinili, Jr., Tara Marie A. Martin, and Peter A. Chapman, Editors. Copyright 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 ***