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/raid1/www/Hosts/bankrupt/TCR_Public/070131.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, January 31, 2007, Vol. 11, No. 26 Headlines ABITIBI-CONSOLIDATED CO: Bowater Merger Cues DBRS' Ratings Review ABITIBI-CONSOLIDATED INC: DBRS Puts Sr. Debt Rating Under Review ADVANCED MARKETING: Marc E. Ravitz Joins Board of Directors ADVANCED MARKETING: Wants to Sell PGW Distribution Agreements AGERE SYSTEMS: Earns $16 Million in First Quarter Ended Dec. 31 AJAY SPORTS: Selects Jeffery Meek as Special Counsel ALEXIS NIHON: Cominar Real Increases Purchase Bid to $138.75 Mil. AMERICA CAPITAL: Obtains Open-Ended Exclusive Solicitation Period AMERICAN CAMSHAFT: Panel Gets Nod to Employ Schafer as Counsel BANC OF AMERICA: Fitch Affirms Low-B Ratings on 13 Cert. Classes BCE INC: Shareholders Approve Bell Canada's Plan of Arrangement BIOVEST INTERNATIONAL: Closes Amended & Restated Loan Transaction BOWATER CANADIAN: Abitibi Merger Deal Cues DBRS to Review Ratings BOWATER INC: DBRS Puts BB (low) Issuer Rating Under Review CALFRAC HOLDINGS: Moody's Rates Proposed $125 Mil. Sr. Notes at B1 CALFRAC WELL: Moody's Places Corporate Family Rating at Ba3 CALFRAC HOLDINGS: S&P Rates $125 Million Eight-Year Notes at B CALPINE CORP: Court Extends Deadline for Submission of Bids CHASE MORTGAGE: Fitch Assigns Low-B Ratings to $1.2 Million Debt CITIMORTGAGE ALTERNATIVE: Fitch Rates Class B-5 Certificates at B COLLINS & AIKMAN: Disclosure Statement on First Amended Plan OK'd COLLINS & AIKMAN: Discloses Composition of Possible Allowed Claims COLLINS & AIKMAN: Liquidation Analysis Under First Amended Plan COMMUNICATIONS CORP: Wants Plan-Filing Period Extended to April 30 CONNECTICUT VALLEY: Moody's Removes Ba2 Rating on $10 Mil. Notes CSP INC: Receives Notice of Delisting From Nasdaq CYBERONICS INC: Posts $8.5 Mil. Net Loss in Quarter Ended July 28 DELTA AIR: Secures $2.5 Billion Exit Financing Facility DOLE FOOD: Weak Performance Prompts Moody's to Junk Ratings DOV PHARMA: Commences Exchange Offer for $70 Million Debentures DURA AUTOMOTIVE: Judge Carey Approves CFO Employment Agreement EDUCATE INC: Investor Acquisition Deal Cues Moody's Ratings Review ELEPHANT & CASTLE: Inks Definitive Agreement With Repechage GEO GROUP: Closes Acquisition of CentraCore Properties for $427.6M GRANITE BROADCASTING: U.S. Trustee Unable to Form Official Panel HEALTH MANAGEMENT: Will Give $10 Per Share Special Cash Dividend INTERSTATE BAKERIES: Wants DIP Financing Extended to Feb. 9, 2008 INTERSTATE BAKERIES: Names Craig Jung as Chief Executive Officer JARDEN CORP: Proposed $400 Mil. Sub. Notes Rated B3 by Moody's JPMORGAN AUTO: Moody's Rates Unclassified Certificates at Ba2 JPMORGAN AUTO: S&P Assigns BB Rating to Unclassified Certificates KANSAS CITY SOUTHERN: S&P Puts Ratings on Negative CreditWatch KEYSTONE TRUCK: Organizational Meeting Scheduled on February 13 LEVITZ HOME: Court Approves Travelers and Resurgence Agreements MESABA AVIATION: Treatment of Claims Under Reorganization Plan MESABA AVIATION: Disclosure Statement Hearing Set for February 27 NATIONAL CINEMEDIA: S&P Assigns 'B+' Corporate Credit Rating NELLSON NUTRACEUTICAL: Wants Until Feb. 14 to File Chapter 11 Plan NEW ENGLAND COLLEGE: Moody's Upgrades B1 Rating to Ba3 NVIDIA CORP: Agrees To Buy Acceleware Corp. for $2.9 Million ORECK CORP: Moody's Cuts Corporate Family Rating to B2 From B1 PAETEC COMMS: Moody's Holds B2 Corp. Family Rating & Will Remove PAETEC HOLDING: S&P Holds B Rating on Proposed $800 Mil. Sr. Loan PARMALAT SPA: Opens Door to Settlement Negotiations PARMALAT SPA: Court Moves Permanent Injunction Hearing to Feb. 27 POINT NORTH: Receives Various Proposals for Different Assets PORT TOWNSEND: Bankruptcy Filing Cues S&P's Default Rating PT HOLDINGS: Files for Chapter 11 Protection in Washington PT HOLDINGS: Case Summary & 20 Largest Unsecured Creditors QUEBECOR MEDIA: DBRS Affirms B (high) Senior Notes Rating RECKSON ASSOC: Moody's Reviews Ba1 Ratings for Possible Downgrade SELECT MEDICAL: HealthSouth Deal Prompts Moody's Ratings Review SHERWOOD III: Moody's Rates $7 Million Class C Notes at Ba2 STRUCTURED ADJUSTABLE: Fitch Holds Low-B Ratings on Six Classes STRUCTURED ASSET: Fitch Holds Junk Rating on Class B5 Certificates SUN MEDIA: DBRS Holds Senior Unsecured Notes' Rating at BB SUPERIOR WHOLESALE: S&P Rates $16.1 Million Class D Notes at BB TESORO CORP: Moody's Affirms Corporate Family Rating at Ba1 THORNBURG MORTGAGE: Fitch Affirms Ratings on B4 & B5 Cert. Classes U.S. ENERGY: Countryside's Lender Okays $99 Mil. USEB Settlement U.S. STEEL: Earns $297 Million in 2006 Fourth Quarter U.S. STEEL: Completes Tender Offer for 10-3/4% Senior Notes UNIFI INC: Second Fiscal Quarter Net Loss Increases to $16.5 Mil. US AIRWAYS: Has Until April 30 to Object to Claims VICTORY MEMORIAL: Hires Donlin Recano as Claims & Noticing Agent VIDEOTRON LTEE: DBRS Holds BB Rating on Senior Unsecured Notes VILLAJE DEL RIO: Confirmation Hearing Moved to February 8 W.R. GRACE: Dec. 31 Balance Sheet Upside-Down by $568.7 Million W.R. GRACE: District Court Affirms Exclusive Period Extension WELLS FARGO: Fitch Assigns Low-B Ratings on $2.1 Mil. Debentures XEROX CORP: Improved Leverage Prompts S&P's Positive Outlook * CLOSE BROTHERS: Awarded "Restructuring Adviser of the Year 2007" * Donlin Recano Retained by Victory Memorial * R. Morawetz Joins Alvarez & Marsal Canada as Managing Director * Richard B. Myrus Joins Proskauer Rose in Boston as Sr. Counsel * Superior Capital to Invest in Underperforming Businesses * Upcoming Meetings, Conferences and Seminars ********* ABITIBI-CONSOLIDATED CO: Bowater Merger Cues DBRS' Ratings Review ----------------------------------------------------------------- Dominion Bond Rating Service placed the ratings of Abitibi- Consolidated Inc., Abitibi-Consolidated Company of Canada, Bowater Inc., and Bowater Canadian Forest Products Inc. under Review with Positive Implications following the announcement that Abitibi and Bowater will join in an all-stock merger of equals. Rating assigned: Abitibi-Consolidated Company of Canada -- Notes Under Review - Positive BB (low) Abitibi-Consolidated Inc. -- Senior Unsecured Debt Under Review - Positive BB (low) Bowater Canadian Forest Products Inc. -- Senior Debentures Under Review - Positive BB (low) Bowater Inc. -- Issuer Rating Under Review - Positive BB (low) The new company, AbitibiBowater Inc., will be the largest newsprint producer in the world, with a significant market share in North America. DBRS views the transaction, which is expected to close in third quarter 2007, as positive for Abitibi and Bowater. The Under Review with Positive Implications status reflects the expectation that the transaction will be completed on time, as well as the uncertainty regarding the operating strategy and financial structure of the new company. In the event that the transaction is delayed or does not close, there would be negative implications for the rating. The creation of AbitibiBowater will provide a broad base of assets available for rationalization and capacity reduction. The structural decline in newsprint demand, largely from electronic substitution and declining circulation, has been widely reported and is expected to continue. As such, the consolidation of commodity producers has become necessary to remain competitive in today's increasingly challenging marketplace. The increased scale of the new company contributes to an improvement in its business risk profile relative to that of Abitibi and Bowater on a standalone basis. The financial risk profile of AbitibiBowater is expected to remain relatively high. On a pro forma basis, credit metrics are generally in line with standalone Abitibi and Bowater, with debt- to-EBITDA of 6.7 and cash flow coverage of 0.05. However, planned asset sales, including previously announced timberland and hydroelectric-generating facilities, will provide funds to be used toward debt reduction in 2007, which will improve AbitibiBowater's financial profile. In addition, expected acquisition synergies of $250 million annually will increase earnings and cash flows in two years. Furthermore, combined available borrowings on credit facilities amounted to $860 million at September 30, 2006, which will be more than sufficient to fund capital requirements in the near term. DBRS will continue to monitor developments with respect to the transaction, along with prevailing market conditions, and will determine the appropriate rating action prior to the closing of the transaction. ABITIBI-CONSOLIDATED INC: DBRS Puts Sr. Debt Rating Under Review ---------------------------------------------------------------- Dominion Bond Rating Service placed the ratings of Abitibi- Consolidated Inc., Abitibi-Consolidated Company of Canada, Bowater Inc., and Bowater Canadian Forest Products Inc. under Review with Positive Implications following the announcement that Abitibi and Bowater will join in an all-stock merger of equals. Rating assigned: Abitibi-Consolidated Company of Canada -- Notes Under Review - Positive BB (low) Abitibi-Consolidated Inc. -- Senior Unsecured Debt Under Review - Positive BB (low) Bowater Canadian Forest Products Inc. -- Senior Debentures Under Review - Positive BB (low) Bowater Inc. -- Issuer Rating Under Review - Positive BB (low) The new company, AbitibiBowater Inc., will be the largest newsprint producer in the world, with a significant market share in North America. DBRS views the transaction, which is expected to close in third quarter 2007, as positive for Abitibi and Bowater. The Under Review with Positive Implications status reflects the expectation that the transaction will be completed on time, as well as the uncertainty regarding the operating strategy and financial structure of the new company. In the event that the transaction is delayed or does not close, there would be negative implications for the rating. The creation of AbitibiBowater will provide a broad base of assets available for rationalization and capacity reduction. The structural decline in newsprint demand, largely from electronic substitution and declining circulation, has been widely reported and is expected to continue. As such, the consolidation of commodity producers has become necessary to remain competitive in today's increasingly challenging marketplace. The increased scale of the new company contributes to an improvement in its business risk profile relative to that of Abitibi and Bowater on a standalone basis. The financial risk profile of AbitibiBowater is expected to remain relatively high. On a pro forma basis, credit metrics are generally in line with standalone Abitibi and Bowater, with debt- to-EBITDA of 6.7 and cash flow coverage of 0.05. However, planned asset sales, including previously announced timberland and hydroelectric-generating facilities, will provide funds to be used toward debt reduction in 2007, which will improve AbitibiBowater's financial profile. In addition, expected acquisition synergies of $250 million annually will increase earnings and cash flows in two years. Furthermore, combined available borrowings on credit facilities amounted to $860 million at September 30, 2006, which will be more than sufficient to fund capital requirements in the near term. DBRS will continue to monitor developments with respect to the transaction, along with prevailing market conditions, and will determine the appropriate rating action prior to the closing of the transaction. ADVANCED MARKETING: Marc E. Ravitz Joins Board of Directors ----------------------------------------------------------- The Board of Directors of Advanced Marketing Services Inc. has appointed Marc E. Ravitz, CFA, as a director of the company. Mr. Ravitz is executive vice president of Grace & White Inc., an investment advisory firm, which, together with other affiliated entities and persons, controls approximately 12% of the company's common stock. "Marc's firm has been a stockholder for many years. We're pleased that he has joined the Board, and we look forward to his contributions," said Robert F. Bartlett, the Chairman of the Board. "I look forward to working with the other members of the Board and management to chart a positive course for the company," Mr. Ravitz stated. The company's meeting of stockholders, scheduled on Jan. 24, 2007, was adjourned to Feb. 23, 2007, 8:00 a.m. Pacific Standard Time, at the company's offices in San Diego, California. The meeting was adjourned because less than a majority of the company's shares outstanding and entitled to vote were represented at the meeting. The record date for the meeting remains Dec. 26, 2006, and only stockholders of record as of the close of business on that date will be entitled to vote at the meeting. 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). Chun I. Jang, Esq., Mark D. Collins, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. The Debtors' exclusive period to file a Chapter 11 Plan will expire on Apr. 28, 2007. ADVANCED MARKETING: Wants to Sell PGW Distribution Agreements ------------------------------------------------------------- Advanced Marketing Services Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for authority to sell Publishers Group West Incorporated's rights under its distribution agreements with various publishers to Perseus Books, L.L.C., and Client Distribution Services, Inc. The Debtors also ask the Court to authorize PGW to assume and assign the Distribution Agreements, and sell certain other assets related to its distribution business to Perseus Books. The Debtors will continue to seek higher and better offers for the PGW Assets. However, given the exigencies surrounding PGW's business, the Debtors do not intend to auction or adopt other formal procedures to test the adequacy of the proposed transaction. The Debtors believe that any extended sale process could severely impact the value of the PGW estate or jeopardize the financial well-being of PGW's publishers. The Debtors also explain that they had been exploring various strategic alternatives for months prior to the Petition Date and have continued those efforts postpetition. The Debtors believe that the terms of the Purchase Agreement and the PGW Sale contemplated are fair and reasonable, and that the PGW Sale will maximize the value of the PGW estate for the benefit of the Debtors' creditors, stakeholders and other parties-in-interest. Bankruptcy has prevented the Debtors from making payments with respect to the relatively higher volume of products purchased and sold by PGW during the busy holiday season, Paul N. Heath, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, relates. Although PGW has been paying substantially all PGW Publishers weekly since the Petition Date, according to Mr. Heath, failure to make payments relating to the holiday season is leading to drastic consequences for many, if not all of the PGW Publishers. In some cases, Mr. Heath says, the financial difficulties have placed the PGW Publishers in extreme distress, threatening a possible "domino effect" of insolvencies if PGW does not soon reach a solution where these claims may be satisfied. PGW Publishers may also demand for an expedited assumption or rejection of the Distribution Agreements. The Debtors, nonetheless, reserve the right to take appropriate measures to pursue an alternative bid should the Debtors receive any viable and superior offer before the Court considers the sale to Perseus Books. Should they pursue and accept an alternative transaction, the Debtors seek the Court's permission to pay a $500,000 breakup fee to Perseus Books. AMS, through PGW, provides a full range of book marketing and distribution services to smaller publishers under exclusive contractual arrangements. PGW stores the books at its distribution centers and ships them to customers based on customer requirements, primarily on a fully returnable basis. PGW also provides smaller publisher clients with a range of related services, including marketing and publicity; customer service; warehousing and distribution; billing and collections; and sales and inventory reporting. PGW's fees for its distribution and marketing services are calculated as a percentage of net sales proceeds. In the event a product becomes old or unmarketable, PGW will, for a fee, return any books in its possession to the PGW Publisher or destroy the books. PGW is under no obligation to purchase the books held in its warehouses if it receives no orders for books from third party retailers. Founded in 1997, Perseus Books provides services to more than 150 independent publishers. Perseus Books operates through CDS and Consortium Book Sales & Distribution, Inc. In fiscal year 2006, CDS and Consortium shipped more than $330,000,000 of books at wholesale value to more than 10,000 retailers and wholesalers in the United States and Canada. Purchase & Related Agreements Pursuant to a Purchase Agreement dated January 18, 2007, PGW will assign to CDS all of PGW's rights under each Distribution Agreement with a Publisher that executes a publisher agreement with Perseus Books. CDS will purchase and assume on a prospective basis all of PGW's obligations under each Distribution Agreement with a Consenting Publisher. PGW will also provide CDS with administrative, technical and support services pursuant to a Transition Services Agreement. Under the Publisher Agreements, Perseus Books will pay Consenting Publishers representing at least 65% of PGW's best good faith estimate of the maximum amount of the Prepetition Claims of all Publishers, 70% of their claims against PGW in exchange for a complete assignment to Perseus Books of the Prepetition Claims. With respect to Consenting Publishers representing the remaining 35%, Perseus Books may -- but is not required to -- pay the Consenting Publishers less than 70% of their Prepetition Claims. PGW and Perseus Books agree that the Maximum Prepetition Claims estimate will not exceed in the aggregate $28,950,193. Perseus Books will release the estate from the paid portion of the Claims. Perseus Books will retain against the PGW estate an administrative claim for the amount of the assigned Prepetition Claim that is not released. Perseus Books' administrative claim may be increased on a dollar- for-dollar basis if the Net Amount paid by Perseus Books exceeds a sliding scale keyed off a "purchase price" -- that is, the amount paid by Perseus Books to Consenting Publishers net of its retained administrative claim -- of $12,500,000 for all Distribution Agreements. CDS will purchase from PGW all returns of Consenting Publishers' books received on or after the Petition Date, provided that with respect to no more than 50% of the returns, CDS may pay for the returns with a reduction in the amount of Perseus Books' administrative claim against the estate. PGW will transfer all items of each Consenting Publisher's inventory to CDS, free and clear of all liens, claims and interests of PGW's creditors, including Wells Fargo Foothill and the DIP Lenders. As a condition to closing, Publishers holding Claims aggregating at least 65% of the Maximum Prepetition Claims against PGW must execute the Publisher Agreements. Perseus Books and CDS may terminate the Purchase Agreement if the closing has not occurred, or in Perseus Books' good faith judgment is not likely to occur, by March 15, 2007. AMS and PGW retain the right to terminate the deal if, in their good faith judgment, PGW no longer has the financial wherewithal and capacity to (y) perform under the Purchase Agreement or the Transition Services Agreement or (z) operate in the ordinary course as established postpetition. A full-text copy of the Purchase Agreement with Perseus Books is available at no charge at http://ResearchArchives.com/t/s?193d PGW to Abandon Unassigned Contracts The Debtors also seek the Court's nod to walk away from those Distribution Agreements that will not be assigned, to avoid burdening their estates with continuing obligations, if any, associated with the Non-Assigned Contracts. The Debtors may provide a written rejection notice by facsimile, first-class mail or overnight courier to each Publisher to any Non-Assigned Contract. The applicable Non-Assigned Contract will be deemed rejected effective upon the expiration of five days after receipt of a Rejection Notice. 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., Alexandra B. Feldman, Esq., O'Melveny & Myers, LLP, represent the Debtors as Lead Counsel. Chun I. Jang, Esq., Mark D. Collins, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A., represent the Debtors as 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. AGERE SYSTEMS: Earns $16 Million in First Quarter Ended Dec. 31 --------------------------------------------------------------- Agere Systems reported a net income of $16 million on revenues of $372 million for the first quarter of fiscal 2007 ended Dec. 31, 2006, compared with a net loss of $19 million on revenues of $403 million in the same quarter last year. Richard Clemmer, president and chief executive officer of Agere, said, "Agere turned in solid bottom-line performance in the first quarter of fiscal 2007, reflecting a major turnaround from a year ago. During my fifteen months as CEO, Agere has made tremendous strides as we executed on our three-phase turnaround plan. In phase one, we energized our three businesses through new leadership and developed a corporate vision and strategy. In phase two, we narrowed our investment areas, focused our resources on the markets where we have the technology and customers to win, and implemented and executed on a process to reduce costs throughout our business. As a result, we have improved profitability and have a solid baseline of products and design wins to generate future revenue growth for phase three and beyond, beginning in the June quarter." LSI-Agere Merger As reported in the Troubled Company Reporter on Dec. 5, 2006, LSI Logic Corporations and Agere Systems Inc. have entered into definitive merger agreement under which the companies will be combined in an all-stock transaction with an equity value of approximately $4 billion. Under the terms of the agreement, Agere shareholders will receive 2.16 shares of LSI for each share of Agere they own. The combined company, to be called LSI Logic Corporation, will offer a comprehensive set of building block solutions including semiconductors, systems and related software for storage, networking and consumer electronics products About Agere Systems Agere Systems (NYSE: AGR) -- http://www.agere.com/-- provides semiconductors and software solutions for storage, mobility and networking markets. The company's products enable a broad range of services and capabilities, from cell phones, PCs and hard disk drives to the world's most sophisticated wireless and wireline networks. * * * As reported in the Troubled Company Reporter on Dec. 6, 2006, Moody's Investors Service affirmed the B1 Corporate Family Rating of Agere Systems Inc. AJAY SPORTS: Selects Jeffery Meek as Special Counsel ---------------------------------------------------- Ajay Sports Inc. and its debtor-affiliates ask the U.S Bankruptcy Court for the Eastern District of Michigan for permission to employ Jeffery D. Meek & Associates as their special counsel. For their services, the firm's professionals bill: Designation Hourly Rate ----------- ----------- Principal Attorney $225 Associate Attorney $130 Paraprofessionals $80 Jeffery D. Meek, Esq., a principal at the firm, assures the Court that his firm does not hold any interest adverse to the Debtors' estate and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Meek can be reached at: Jeffery D. Meek, Esq. Jeffery D. Meek & Associates Suite 400 38705 West Seven Mile Road Livonia, Michigan 48152 Tel: (734) 953-0200 Fax: (734) 953-0013 http://www.jmeekandassociates.com/ Headquartered in Farmington, Mich., Ajay Sports Inc. operates the franchise segment of its business through Pro Golf International, a 97% owned subsidiary, which was formed during 1999 and owns 100% of the outstanding stock of Pro Golf of America, and 80% of the stock of ProGolf.com, which sells golf equipment and other golf- related and sporting goods products and services over the Internet. The company and its affiliates filed for chapter 11 protection on Dec. 27, 2006 (Bankr. E.D. Mich. Case Nos. 06-529289 through 06-529292). Arnold S. Schafer, Esq., and Howard M. Borin, Esq., at Schafer and Weiner, PLLC, represent the Debtor in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets less than $10,000 and debts between $1 million to $100 million. ALEXIS NIHON: Cominar Real Increases Purchase Bid to $138.75 Mil. ----------------------------------------------------------------- Alexis Nihon Real Estate Investment Trust amended a combination agreement with Cominar Real Estate Investment Trust, to provide for an increase in the consideration under the cash component of Cominar's offer from $17.00 to $18.50 per Alexis Nihon unit tendered. Under the amended offer, the maximum amount of cash available would be increased to $138.75 million, from $127.5 million, subject to pro-ration. The other material terms of the proposed transaction, including the exchange ratio of 0.77 of a Cominar unit per Alexis Nihon unit available under the exchange, on a tax-deferred basis, remain unchanged. In addition, the Cominar cash offer expiry time has been extended to 5:00 p.m. ET on Feb. 22, 2007. At the request of Alexis Nihon and taking into account significant recent unit acquisitions, Cominar has also agreed to waive certain conditions under the Combination Agreement enabling Alexis Nihon to grant access to material non-public information to Summit Real Estate Investment Trust and Homburg Invest Inc. "We are pleased with the increased cash consideration under the Cominar offer," said Gerard A. Limoges, Chairman of the Transaction Committee of the Board of Trustees of Alexis Nihon. "The Board of Trustees and the Transaction Committee remain committed to maximizing value for Alexis Nihon unitholders." The Board of Trustees of Alexis Nihon has unanimously approved the amendments to the combination agreement and has determined that the amended offer and the exchange are fair to the Alexis Nihon unitholders and reiterated its recommendation that all Alexis Nihon unitholders vote in favour of the combination. The Board of Trustees of Alexis Nihon has received an opinion from CIBC World Markets Inc., its financial advisor, that the revised consideration offered under the transaction is fair from a financial point of view to the unitholders of Alexis Nihon. Robert A. Nihon, Executive Chairman of Alexis Nihon, abstained from the vote. Alexis Nihon has cancelled its special meeting of unitholders scheduled for Jan. 29, 2007 at 10:00 a.m. ET and has called a new special meeting of unitholders to be held on Feb. 22, 2007 at 10:00 a.m. ET at Centre Sheraton, 1201, Rene-Levesque Blvd., West, Montreal. A new record date to determine those Alexis Nihon unitholders entitled to vote at the special meeting was set at Jan. 25, 2007. Update on Unitholder Rights Plan Alexis Nihon was informed on Jan. 24, 2007, that because the unitholder rights plan adopted on Jan. 14, 2007 is a short- duration rights plan and is in response to a threatened or anticipated bid, the Toronto Stock Exchange has deferred acceptance of the notice of the Plan until such time as it is satisfied that the Autorite des marches financiers will not intervene under applicable securities regulatory requirements. About Alexis Nihon REIT Based in Montreal, Quebec, Alexis Nihon Real Estate Investment Trust (TSX: AN.UN) -- http://www.alexisnihon.com/-- owns interests in 65 office, retail, and industrial properties, including a 426-unit multi-family residential property, located in the greater Montreal area and the National Capital Region. The REIT's portfolio has an aggregate of 9.1 million square feet of leasable area, of which 0.4 million square feet is co-owned. * * * As reported in the Troubled Company Reporter on Dec. 6, 2006, Dominion Bond Rating Service placed the company's debt rating at BB and stability rating at STA-4, with Positive Implications following the announcement that Cominar Real Estate Investment Trust will acquire all of the company's issued and outstanding shares. The transaction represents approximately $952 million, including assumed debt and convertible debentures. AMERICA CAPITAL: Obtains Open-Ended Exclusive Solicitation Period ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida extended the exclusive period within which America Capital Corporation can solicit acceptances to its pending chapter 11 plan of liquidation through and including 60 days after the date the Court vacates its abatement order. The abatement order requires the Debtor to maintain and preserve the status quo as to the Court's judgment against the United States government. U.S. Government Judgment The principal asset of the Debtor is its equity interest in a judgment, which Transcapital Financial Corporation holds against the United States government in the amount of $109.309 million, which judgment was on appeal as of the Debtor's bankruptcy filing. The judgment was subsequently reduced to $33.166 million in damages, and is subject to either party's request for consideration en banc. The Debtor is the majority shareholder of Transcapital Financial Corporation, a debtor and debtor-in-possession with its own Chapter 11 case pending before the U.S. Bankruptcy Court for the Southern District of Florida under Case No. 06-12644. The Debtor filed its Plan of Liquidation on June 29, 2006. Because the outcome of the Debtor's case and TFC's companion chapter 11 case is dependent solely on TFC's success in the appeal and any subsequent proceedings involving the judgment, the Court entered an order abating the Chapter 11 proceeding on July 25, 2006. In light of the abatement order, the case is not substantively progressing forward. The Debtor does not have the authority to move forward with creditor negotiations in order to solicit plan acceptances. The Debtor does not believe that it is bound by the time constraints stated in Section 1121 of the Bankruptcy Code to seek to obtain acceptances to its Plan of Liquidation, however, it filed the request out of an abundance of caution. The Debtor assures the Court that the extension will not harm its creditors or other parties-in-interest. The extension is without prejudice to the Debtor's rights to seek an additional extension of the exclusive solicitation period. About America Capital Corp. Based in Miami, Florida, America Capital Corp. holds a 65.19% interest in TransCapital Financial Corporation. TransCapital Financial is a holding and management company that conducted substantially all of its operations through its wholly owned subsidiary, Transohio Savings Bank, FSB. Transohio Savings' key activities as a savings and loans institution were banking and lending and its primary lending activity was the originating and purchasing of loans secured by mortgages on residential properties. Transohio Savings also endeavored to generate residential loan originations through branch personnel and real estate brokers. Mobile home and home improvement loans were generated through dealers and contractors and additionally, Transohio Savings made construction loans generated by contractors that usually extended to not more than one year in length. America Capital filed for chapter 11 protection on June 19, 2006 (Bankr. S.D. Fla. Case No. 06-12645). Mindy A. Mora, Esq., at Bilzin Sumberg Baena Price & Axelrod LLP, represents the Debtor. When the Debtor filed for protection from its creditors, it listed total assets of $52,005,000 and total debts of $207,170,268. TransCapital Financial Corporation also filed for chapter 11 protection on June 19, 2006 (Bankr. S.D. Fla. Case No, 06-12644) and is represented by Paul J. Battista, Esq., at Genovese Joblove & Battista, P.A. AMERICAN CAMSHAFT: Panel Gets Nod to Employ Schafer as Counsel -------------------------------------------------------------- The Official Committee of Unsecured Creditors in American Camshaft Specialties Inc. and its debtor-affiliates' bankruptcy cases obtained authority from the United States Bankruptcy Court for the Eastern District of Michigan to employ Schafer and Weiner PLLC as counsel, nunc pro tunc to Jan. 4, 2007. Schafer and Weiner PLLC will: a) consult with the Debtors concerning the administration of the cases, b) investigate the acts, conduct, assets, liabilities and financial condition of the Debtors, the operation of Debtor's businesses, the desirability of the continuance of such businesses, and any other matter relevant to the case, c) participate in the formulation of a plan, and d) perform other services that are in the best interest of unsecured creditors. Mr. Daniel J. Weiner, Esq., a partner at Schafer and Weiner PLLC, told the court that the firm's professionals bill: Professional Hourly Rate ------------ ----------- Arnold Schafer, Esq. $405 Daniel J. Weiner, Esq. $375 Michael E. Baum, Esq. $370 Howard M. Borin, Esq. $280 Jason W. Bank, Esq. $260 Joseph K. Grekin, Esq. $240 Michael R. Wernette, Esq. $240 Ryan D. Heilman, Esq. $220 Daniel V. Smith, Esq. $210 Leon N. Mayer, Esq. $175 Kenneth R. Beams, Esq. $170 Kim K. Hillary, Esq. $145 Todd M. Schafer, Esq. $130 Tracey L. Porter, Esq. $130 Legal Assistant $105 In addition to the hourly rates, the firm will also charge the Debtors for all other expenses incurred in connection with the bankruptcy case. Mr. Weiner assures the Court that the firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Weiner can be reached at: Danier J. Weiner, Esq. Schafer and Weiner PLLC 40950 Woodward Avenue, Suite 100 Bloomfield Hills, Michigan 48304 Tel: (248) 540-3340 Fax: (248) 642-2127 http://www.schaferandweiner.com/ 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. BANC OF AMERICA: Fitch Affirms Low-B Ratings on 13 Cert. Classes ---------------------------------------------------------------- Fitch has affirmed the rating on Banc of America Funding Corporation's, Mortgage Pass-Through Certificates: Series 2004-2 Group 1 -- Class CB affirmed at 'AAA'; -- Class 1-B-2 affirmed at 'A'; and, -- Class 1-B-3 affirmed at 'BBB'. Series 2004-2 Group 2 -- Class A affirmed at 'AAA'; -- Class 2-B-1 affirmed at 'AA; -- Class 2-B-2 affirmed at 'A'; -- Class 2-B-3 affirmed at 'BBB'; -- Class 2-B-4 affirmed at 'BB'; and, -- Class 2-B-5 affirmed at 'B'. Series 2004-2 Group 3 -- Class A affirmed at 'AAA'. Series 2004-3 Group 1 -- Class A affirmed at 'AAA'. Series 2004-3 Group 2 -- Class A affirmed at 'AAA'. Series 2004-4 Group 1 -- Class A affirmed at 'AAA'. Series 2004-4 Group 2 -- Class A affirmed at 'AAA'; -- Class 15-B-1 affirmed at 'AA; -- Class 15-B-2 affirmed at 'A'; -- Class 15-B-3 affirmed at 'BBB'; -- Class 15-B-4 affirmed at 'BB'; and, -- Class 15-B-5 affirmed at 'B'. Series 2004-5 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-3 affirmed at 'BBB'; and, -- Class B-4 affirmed at 'BB'. Series 2004-A -- Class A affirmed at 'AAA'. Series 2004-B Groups 1 & 2 -- Class A affirmed at 'AAA'; -- Class CB-3 affirmed at 'BBB'; and, -- Class CB-4 affirmed at 'BB'. Series 2004-B Groups 3, 4 & 5 -- Class A affirmed at 'AAA'. Series 2005-6 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; and, -- Class B-5 affirmed at 'B'. Series 2005-7 Groups 1, 3, & 4 -- Class A affirmed at 'AAA'; -- Class X-B-1 affirmed at 'AA; -- Class X-B-2 affirmed at 'A'; -- Class X-B-3 affirmed at 'BBB'; -- Class X-B-4 affirmed at 'BB'; and, -- Class X-B-5 affirmed at 'B'. Series 2005-7 Group2 -- Class A affirmed at 'AAA'; Series 2005-8 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Series 2005-G -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; and, -- Class B-4 affirmed at 'BB'. Series 2005-H Groups 1, 2, 3, 4, 5 & 6 -- Class A affirmed at 'AAA'; -- Class CB-1 affirmed at 'AA'; -- Class CB-2 affirmed at 'A'; and, -- Class CB-3 affirmed at 'BBB'. Series 2005-H Groups 7, 8, & 9 -- Class A affirmed at 'AAA'; BAFC, a special purpose corporation, purchased the mortgage loans from various entities and deposited the loans into the trusts. The above transactions comprise conventional, 15 to 30 year fixed and adjustable-rate mortgage loans extended to prime and 'Alternative A' borrowers that are secured by first liens on one to four family residential properties. The loans classified as 'Alternative A' were originated using underwriting standards that are different from and in certain respects, less stringent than general prime underwriting standards of the respective originators. The affirmations on the above transactions reflect consistent relationships of credit enhancement to future loss expectations and affect approximately $3.91 billion in outstanding certificates. The trusts are seasoned 12 to 28 months and the pool factors range from approximately 48% to 95% outstanding. The aforementioned series are serviced by numerous entities. BCE INC: Shareholders Approve Bell Canada's Plan of Arrangement --------------------------------------------------------------- BCE Inc. discloses that the Bell Canada plan of arrangement providing for the exchange of Bell Canada preferred shares for BCE preferred shares has received final approval from Bell Canada's common and preferred shareholders and the Quebec Superior Court. The arrangement is part of the company's corporate simplification initiative. The share exchange and declaration of a one-time special dividend of $0.20 per Bell Canada preferred share outstanding is expected to be effective on Jan. 31, 2007 for holders of Bell Canada preferred shares of record at the close of business on that date. The payment of the one-time special dividend will be made within seven days of Jan. 31, 2007. Bell Canada preferred shareholders must tender their preferred share certificates along with a completed letter of transmittal and other requested material in order to receive the new share certificates. The new BCE preferred shares are expected to begin trading on the Toronto Stock Exchange on Feb. 1, 2007. Provided that the arrangement becomes effective and that the Bell Canada preferred shares are exchanged for BCE preferred shares, dividends otherwise payable on the Bell Canada preferred shares on Feb. 1, 2007 and Feb. 12, 2007 will not be paid by Bell Canada. However, the initial dividend payable on the new BCE preferred shares on Feb. 1, 2007 and Feb. 12, 2007 will be in the same amount as if it had been paid by Bell Canada on those dates. About BCE Inc. Headquartered in Montreal, Canada, Bell Canada International Inc. (TSX, NYSE: BCE) (NEX:BI.H) -- http://www.bci.ca/-- provides a suite of communication services to residential and business customers in Canada. Under the Bell brand, the company's services include local, long distance and wireless phone services, high- speed and wireless Internet access, IP-broadband services, information and communications technology services and direct-to- home satellite and VDSL television services. Other BCE businesses include Canada's premier media company, Bell Globemedia, and Telesat Canada, a pioneer and world leader in satellite operations and systems management. The company is operating under a Plan of Arrangement approved by the Ontario Superior Court of Justice, pursuant to which BCI intends to monetize its assets in an orderly fashion and resolve outstanding claims against it in an expeditious manner with the ultimate objective of distributing the net proceeds to its shareholders and dissolving the company. BIOVEST INTERNATIONAL: Closes Amended & Restated Loan Transaction ----------------------------------------------------------------- Biovest International, Inc., disclosed in a regulatory filing with the U.S. Securities and Exchange Commission on Jan. 16, 2007, that it closed an amended and restated loan transaction with Pulaski Bank and Trust Company of St. Louis, Missouri, which amended the Loan Agreement dated Sept, 5, 2006 pursuant to which Pulaski agreed to loan up to of $1 million to the company pursuant to an unsecured Promissory Note. The material terms of the Transaction include: * The Note will become due and payable on July 5, 2007. The Note can be prepaid by the Company at any time without penalty. * The outstanding principal amount of the Note will bear interest at the rate of the prime rate minus .05% (7.75% per annum initially). Monthly payments of accrued interest only shall be due and payable monthly on the 5th day of each month commencing on Feb, 5, 2007. * The Note is an unsecured obligation of the Company and is subordinated to the Company's outstanding loan to Laurus Master Fund, Ltd. * The Note is guaranteed by entities and individuals affiliated with the Company or Accentia Biopharmaceuticals, Inc., the majority stockholder of the Company. The Company has entered into Indemnification Agreements with each of the guarantors. * The company issued to the guarantors warrants to purchase an aggregate total of 1,388,636 shares of the company's Common Stock, par value $0.01 per share, at an exercise price of $1.10 per share. The Warrants will expire on Jan. 15, 2012. Under the terms of the Warrants, the guarantors shall have piggy-back registration rights for the shares underlying the Warrants. The Warrants were issued by the company in a transaction that was exempt from registration under the Securities Act of 1933, as amended, by virtue of Section 4(2) of the Securities Act and by virtue of Rule 506 of Regulation D under the Securities Act. The sale and issuance did not involve any public offering, was made without general solicitation or advertising, and the guarantors are accredited investors with access to all relevant information necessary to evaluate the investment and represented to us that the Warrants was being acquired for investment. Biovest International Inc. (OTC BB: BVTI.OB) -- http://www.biovest.com/-- develops advanced individualized immunotherapies for life-threatening cancers of the blood system. In addition, Biovest develops, manufactures and markets patented cell culture systems, including the innovative AutovaxID(TM), which is being developed as an automated vaccine manufacturing instrument and for production of cell-based materials and therapeutics. Biovest's therapy for follicular non-Hodgkin's lymphoma is currently in a Phase 3 pivotal clinical trial at more than 20 major centers in the U.S., and is being conducted under a Cooperative Research and Development Agreement (CRADA) with the National Cancer Institute. Biovest is a majority-owned subsidiary of Accentia Biopharmaceuticals Inc. Going Concern Doubt Aidman Piser & Company P.A., in Tampa, Florida, expressed substantial doubt about Biovest International's ability to continue as a going concern after auditing the company's financial statements for the year ended Sept. 30, 2006. The auditing firm cited that the company incurred significant losses and used cash in operating activities during the years ended Sept. 30, 2006 and 2005, and had working capital and shareholders' deficits at Sept. 30, 2006. BOWATER CANADIAN: Abitibi Merger Deal Cues DBRS to Review Ratings ----------------------------------------------------------------- Dominion Bond Rating Service placed the ratings of Abitibi- Consolidated Inc. and Abitibi-Consolidated Company of Canada, Bowater Inc. and Bowater Canadian Forest Products Inc. under review with Positive Implications following the announcement that Abitibi and Bowater will join in an all-stock merger of equals. Rating assigned: Abitibi-Consolidated Company of Canada -- Notes Under Review - Positive BB (low) Abitibi-Consolidated Inc. -- Senior Unsecured Debt Under Review - Positive BB (low) Bowater Canadian Forest Products Inc. -- Senior Debentures Under Review - Positive BB (low) Bowater Inc. -- Issuer Rating Under Review - Positive BB (low) The new company, AbitibiBowater Inc., will be the largest newsprint producer in the world, with a significant market share in North America. DBRS views the transaction, which is expected to close in third quarter 2007, as positive for Abitibi and Bowater. The Under Review with Positive Implications status reflects the expectation that the transaction will be completed on time, as well as the uncertainty regarding the operating strategy and financial structure of the new company. In the event that the transaction is delayed or does not close, there would be negative implications for the rating. The creation of AbitibiBowater will provide a broad base of assets available for rationalization and capacity reduction. The structural decline in newsprint demand, largely from electronic substitution and declining circulation, has been widely reported and is expected to continue. As such, the consolidation of commodity producers has become necessary to remain competitive in today's increasingly challenging marketplace. The increased scale of the new company contributes to an improvement in its business risk profile relative to that of Abitibi and Bowater on a standalone basis. The financial risk profile of AbitibiBowater is expected to remain relatively high. On a pro forma basis, credit metrics are generally in line with standalone Abitibi and Bowater, with debt- to-EBITDA of 6.7 and cash flow coverage of 0.05. However, planned asset sales, including previously announced timberland and hydroelectric-generating facilities, will provide funds to be used toward debt reduction in 2007, which will improve AbitibiBowater's financial profile. In addition, expected acquisition synergies of $250 million annually will increase earnings and cash flows in two years. Furthermore, combined available borrowings on credit facilities amounted to $860 million at Sept. 30, 2006, which will be more than sufficient to fund capital requirements in the near term. DBRS will continue to monitor developments with respect to the transaction, along with prevailing market conditions, and will determine the appropriate rating action prior to the closing of the transaction. BOWATER INC: DBRS Puts BB (low) Issuer Rating Under Review ---------------------------------------------------------- Dominion Bond Rating Service placed the ratings of Abitibi- Consolidated Inc., Abitibi-Consolidated Company of Canada, Bowater Inc., and Bowater Canadian Forest Products Inc. under review with Positive Implications following the announcement that Abitibi and Bowater will join in an all-stock merger of equals. Rating assigned: Abitibi-Consolidated Company of Canada -- Notes Under Review - Positive BB (low) Abitibi-Consolidated Inc. -- Senior Unsecured Debt Under Review - Positive BB (low) Bowater Canadian Forest Products Inc. -- Senior Debentures Under Review - Positive BB (low) Bowater Inc. -- Issuer Rating Under Review - Positive BB (low) The new company, AbitibiBowater Inc., will be the largest newsprint producer in the world, with a significant market share in North America. DBRS views the transaction, which is expected to close in third quarter 2007, as positive for Abitibi and Bowater. The Under Review with Positive Implications status reflects the expectation that the transaction will be completed on time, as well as the uncertainty regarding the operating strategy and financial structure of the new company. In the event that the transaction is delayed or does not close, there would be negative implications for the rating. The creation of AbitibiBowater will provide a broad base of assets available for rationalization and capacity reduction. The structural decline in newsprint demand, largely from electronic substitution and declining circulation, has been widely reported and is expected to continue. As such, the consolidation of commodity producers has become necessary to remain competitive in today's increasingly challenging marketplace. The increased scale of the new company contributes to an improvement in its business risk profile relative to that of Abitibi and Bowater on a standalone basis. The financial risk profile of AbitibiBowater is expected to remain relatively high. On a pro forma basis, credit metrics are generally in line with standalone Abitibi and Bowater, with debt- to-EBITDA of 6.7 and cash flow coverage of 0.05. However, planned asset sales, including previously announced timberland and hydroelectric-generating facilities, will provide funds to be used toward debt reduction in 2007, which will improve AbitibiBowater's financial profile. In addition, expected acquisition synergies of $250 million annually will increase earnings and cash flows in two years. Furthermore, combined available borrowings on credit facilities amounted to $860 million at September 30, 2006, which will be more than sufficient to fund capital requirements in the near term. DBRS will continue to monitor developments with respect to the transaction, along with prevailing market conditions, and will determine the appropriate rating action prior to the closing of the transaction. CALFRAC HOLDINGS: Moody's Rates Proposed $125 Mil. Sr. Notes at B1 ------------------------------------------------------------------ Moody's Investors Service assigned a Ba3 corporate family rating, a Ba3 probability of default rating and a SGL-2 speculative grade liquidity rating to Calfrac Well Services Ltd. Moody's also assigned a B1, LGD4, 68% rating to Calfrac Holdings LP's proposed offering of $125 million senior unsecured notes due 2015. Calfrac Holdings LP is a wholly owned subsidiary of Calfrac and the notes will be guaranteed by Calfrac on a senior unsecured basis. The outlook is stable. Proceeds from the notes will be used to repay amounts currently outstanding under the senior secured credit facility, with the remaining proceeds used to fund planned 2007 growth capital expenditures and for general corporate purposes. Upon closing of the notes offering, Calfrac will amend its senior secured credit facility to decrease the revolver capacity from CDN$150 million to CDN$90 million. "Calfrac's Ba3 rating is based on our expectation that management maintains low financial leverage and continues its focused organic growth strategy underpinned with long-term contracts. Despite the considerable uplift to the rating provided by the company's conservative financial policies, Calfrac's rating was constrained to Ba3 to reflect the considerable risks from its small size, customer concentration and focus on fracturing services that are tied to natural gas drilling activity, particularly in Western Canada and the Rocky Mountains," Pete Speer, Moody's Vice- President/Senior Analyst commented. The SGL-2 liquidity rating indicates good liquidity over the next four quarters from a combination of operating cash flow, available borrowing capacity under the senior secured credit facility, substantial pre-funding of 2007 capital expenditures from the notes issuance and good debt covenant coverage; tempered by lower natural gas prices and the potential for reduced natural gas drilling activity, which could result in pricing weakness and rapid declines in earnings and cash flows. Pro forma for the notes issuance, Calfrac will have low leverage with Debt/Capitalization of 37% at Sept. 30, 2006 and five-year average Debt/LTM EBITDA of 1.0x. Even with the elevated leverage from the offering, current interest coverage will remain in excess of 15x. The company's focus on fracturing, coiled tubing and cementing services and organic growth has resulted in strong margins and returns as measured by EBIT/Assets consistently in excess of 17%, including the weaker market conditions of 2001- 2002. These leverage and return metrics are comparable to investment grade oilfield service companies. The ratings are further supported by the company's experienced management team that includes three of Calfrac's founders who own approximately 35% of the company's shares and have extended a contractual commitment to hold at least 80% of their stake through March 2009, which provides support for senior management to continue its long- term strategy and conservative financial policies by mitigating potential shareholder pressure. Calfrac's small size, customer concentration and limited product line and geographical diversification entail significant credit risks that are more consistent with single-B rated oilfield services companies. In addition, the company plans to invest CDN$96 million in new equipment in 2007 in the face of what could be weaker market conditions. Pro forma for the notes offering, total assets were approximately CDN$500 million at Sept. 30, 2006, which is smaller than its Ba3-rated peers and substantially smaller than the dominant global players in pressure pumping services; Schlumberger, Halliburton and BJ Services. The company's customer base is relatively concentrated with EnCana accounting for approximately 20% of revenues and the top five customers in Canada and the US providing approximately 40% and 60% of revenues, respectively. Approximately 87% of Calfrac's revenues are generated from fracturing services, which has been tied to the growth of natural gas drilling in Canada and the U.S. Rocky Mountain region. The company is expanding its other pressure pumping service offerings and has established a foothold in the Fayetteville Shale and Russia, but these other services lines are still relatively small and the Russian operations have yet to achieve profitability. Moderating natural gas prices have already resulted in announced reduction in natural gas development activity in Canada, particularly in unconventional plays like coal-bed methane. Moody's believes that some E&P companies' unconventional natural gas developments in the Rocky Mountains and Fayetteville Shale have economics that require $5 - $5.50 natural gas prices to reach minimum investment return thresholds; therefore these activities are especially vulnerable to declines in natural gas prices. Any moderation or significant downturn in activity combined with additional pressure pumping assets being brought on in 2007 by Calfrac and its competitors could result in price reductions and decreased utilization which would rapidly reduce the company's EBITDA. These more difficult market conditions could test the durability of Calfrac's market position against its larger competition. These risks are somewhat reduced by the majority of Calfrac's Canadian revenues being tied to conventional shallow gas fracturing services with only 10% of current total revenues tied to Canadian CBM, and by its long-term contracts with certain key customers that provides some revenue visibility into 2007. The stable outlook is supported by Moody's expectation that market conditions will remain supportive but no longer as buoyant as the past two years. The recent decline in natural gas prices may reduce the growth in E&P activity or even result in a moderate decline from recent levels, which could materially reduce Calfrac's EBITDA from current upcycle levels. The stable outlook also reflects Moody's expectation that Calfrac maintains its current strategy and conservative financial policies, including no significant share buybacks in the near to medium term. A positive outlook is possible if Calfrac were to materially increase its scale and strengthen the durability of its business through increased geographic diversification. If this growth were achieved through acquisition, Moody's would expect that the strategic fit, valuation and incremental leverage would be consistent with management's disciplined historical standards and that any large acquisition would have substantial equity funding. Ratings could be pressured if Calfrac were to materially increase its present leverage through more aggressive growth capital expenditures or debt funded acquisitions. Debt/EBITDA and debt/capitalization greater than 2x and 40% in upcycle conditions could result in a negative outlook or ratings downgrade. Also, a loss of a major customer or a significant or prolonged deterioration in E&P activity would test the strength of Calfrac's market position and could decrease the company's EBITDA and cash flows more rapidly and deeply than expected, which could result in a negative outlook or ratings downgrade. Calfrac Well Services Ltd., headquartered in Calgary, Alberta, Canada, is a provider of pressure pumping services to E&P companies in Western Canada, the United States and Russia. CALFRAC WELL: Moody's Places Corporate Family Rating at Ba3 ----------------------------------------------------------- Moody's Investors Service assigned a Ba3 corporate family rating, a Ba3 probability of default rating and a SGL-2 speculative grade liquidity rating to Calfrac Well Services Ltd. Moody's also assigned a B1, LGD4, 68% rating to Calfrac Holdings LP's proposed offering of $125 million senior unsecured notes due 2015. Calfrac Holdings LP is a wholly owned subsidiary of Calfrac and the notes will be guaranteed by Calfrac on a senior unsecured basis. The outlook is stable. Proceeds from the notes will be used to repay amounts currently outstanding under the senior secured credit facility, with the remaining proceeds used to fund planned 2007 growth capital expenditures and for general corporate purposes. Upon closing of the notes offering, Calfrac will amend its senior secured credit facility to decrease the revolver capacity from CDN$150 million to CDN$90 million. "Calfrac's Ba3 rating is based on our expectation that management maintains low financial leverage and continues its focused organic growth strategy underpinned with long-term contracts. Despite the considerable uplift to the rating provided by the company's conservative financial policies, Calfrac's rating was constrained to Ba3 to reflect the considerable risks from its small size, customer concentration and focus on fracturing services that are tied to natural gas drilling activity, particularly in Western Canada and the Rocky Mountains," Pete Speer, Moody's vice- president/senior analyst commented. The SGL-2 liquidity rating indicates good liquidity over the next four quarters from a combination of operating cash flow, available borrowing capacity under the senior secured credit facility, substantial pre-funding of 2007 capital expenditures from the notes issuance and good debt covenant coverage; tempered by lower natural gas prices and the potential for reduced natural gas drilling activity, which could result in pricing weakness and rapid declines in earnings and cash flows. Pro forma for the notes issuance, Calfrac will have low leverage with Debt/Capitalization of 37% at Sept. 30, 2006, and five-year average Debt/LTM EBITDA of 1.0x. Even with the elevated leverage from the offering, current interest coverage will remain in excess of 15x. The company's focus on fracturing, coiled tubing and cementing services and organic growth has resulted in strong margins and returns as measured by EBIT/Assets consistently in excess of 17%, including the weaker market conditions of 2001- 2002. These leverage and return metrics are comparable to investment grade oilfield service companies. The ratings are further supported by the company's experienced management team that includes three of Calfrac's founders who own approximately 35% of the company's shares and have extended a contractual commitment to hold at least 80% of their stake through March 2009, which provides support for senior management to continue its long- term strategy and conservative financial policies by mitigating potential shareholder pressure. Calfrac's small size, customer concentration and limited product line and geographical diversification entail significant credit risks that are more consistent with single-B rated oilfield services companies. In addition, the company plans to invest CDN$96 million in new equipment in 2007 in the face of what could be weaker market conditions. Pro forma for the notes offering, total assets were approximately CDN$500 million at Sept. 30, 2006, which is smaller than its Ba3-rated peers and substantially smaller than the dominant global players in pressure pumping services; Schlumberger, Halliburton and BJ Services. The company's customer base is relatively concentrated with EnCana accounting for approximately 20% of revenues and the top five customers in Canada and the US providing approximately 40% and 60% of revenues, respectively. Approximately 87% of Calfrac's revenues are generated from fracturing services, which has been tied to the growth of natural gas drilling in Canada and the U.S. Rocky Mountain region. The company is expanding its other pressure pumping service offerings and has established a foothold in the Fayetteville Shale and Russia, but these other services lines are still relatively small and the Russian operations have yet to achieve profitability. Moderating natural gas prices have already resulted in announced reduction in natural gas development activity in Canada, particularly in unconventional plays like coal-bed methane. Moody's believes that some E&P companies' unconventional natural gas developments in the Rocky Mountains and Fayetteville Shale have economics that require $5 - $5.50 natural gas prices to reach minimum investment return thresholds; therefore these activities are especially vulnerable to declines in natural gas prices. Any moderation or significant downturn in activity combined with additional pressure pumping assets being brought on in 2007 by Calfrac and its competitors could result in price reductions and decreased utilization which would rapidly reduce the company's EBITDA. These more difficult market conditions could test the durability of Calfrac's market position against its larger competition. These risks are somewhat reduced by the majority of Calfrac's Canadian revenues being tied to conventional shallow gas fracturing services with only 10% of current total revenues tied to Canadian CBM, and by its long-term contracts with certain key customers that provides some revenue visibility into 2007. The stable outlook is supported by Moody's expectation that market conditions will remain supportive but no longer as buoyant as the past two years. The recent decline in natural gas prices may reduce the growth in E&P activity or even result in a moderate decline from recent levels, which could materially reduce Calfrac's EBITDA from current upcycle levels. The stable outlook also reflects Moody's expectation that Calfrac maintains its current strategy and conservative financial policies, including no significant share buybacks in the near to medium term. A positive outlook is possible if Calfrac were to materially increase its scale and strengthen the durability of its business through increased geographic diversification. If this growth were achieved through acquisition, Moody's would expect that the strategic fit, valuation and incremental leverage would be consistent with management's disciplined historical standards and that any large acquisition would have substantial equity funding. Ratings could be pressured if Calfrac were to materially increase its present leverage through more aggressive growth capital expenditures or debt funded acquisitions. Debt/EBITDA and debt/capitalization greater than 2x and 40% in upcycle conditions could result in a negative outlook or ratings downgrade. Also, a loss of a major customer and/or a significant or prolonged deterioration in E&P activity would test the strength of Calfrac's market position and could decrease the company's EBITDA and cash flows more rapidly and deeply than expected, which could result in a negative outlook or ratings downgrade. Calfrac Well Services Ltd., headquartered in Calgary, Alberta, Canada, is a provider of pressure pumping services to E&P companies in Western Canada, the United States and Russia. CALFRAC HOLDINGS: S&P Rates $125 Million Eight-Year Notes at B -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' long-term corporate credit rating to Calgary, Alberta-based Calfrac Well Services Ltd. and its 'B' senior unsecured debt rating to the proposed $125 million eight-year notes to be issued by Calfrac Holdings L.P., a wholly owned by subsidiary of Calfrac. The debt is fully guaranteed by the company and certain wholly owned subsidiaries. The proposed debt issue is rated one notch below the corporate credit rating, as the priority debt of the company, ranking ahead of the $125 million, accounts for more than 15% of Calfrac's asset base. The outlook is stable. "The ratings on Calfrac reflect its participation in the cyclical oil and natural gas well servicing sector, the high level of competition in a fragmented market, and its current negative free cash flow, which is expected to persist as the company plans to expand its business," said Standard & Poor's credit analyst Jamie Koutsoukis. "Although these factors hamper the rating, Calfrac's conservative balance sheet and its track record of consistent and strong EBITDA margins since its inception help offset these weaknesses. Furthermore, the company has a portion of revenue contracted with large exploration and production companies, which provides a level of cash flow certainty, that we assess as a strength to the company's credit profile," Ms Koutsoukis added. Calfrac is an oilfield services provider to exploration and production companies in western Canada, the Rocky Mountain region, and Arkansas in the U.S., and Russia. It provides fracturing and well stimulation services to the oil and gas industry, which are designed to increase the production of hydrocarbons from wells. It provides both conventional hydraulic fracturing and hydraulic fracturing to produce natural gas found in coal, also known as coal bed methane fracturing. Other well services offered by Calfrac include stimulation, coiled tubing, acidizing, nitrogen, and cementing services. The stable outlook reflects Standard & Poor's expectation that Calfrac will continue to execute and fund its planned growth initiatives largely through the use of internally generated cash flows, while maintaining its current financial profile. An outlook revision to positive could occur if Calfrac is able to realize its growth expectations and increase its diversity, while improving its debt to cash flow metrics. Conversely, although not likely in the near-to-medium term, a negative rating action could occur if the company's financial profile, relative to that of its peer group, were to weaken as a result of a market slowdown or industry overbuild. CALPINE CORP: Court Extends Deadline for Submission of Bids ----------------------------------------------------------- The Board of Trustees of Calpine Commercial Trust, on behalf of Calpine Power Income Fund, has disclosed that the Honorable B.E.C. Romaine of the Court of Queen's Bench of Alberta in Calgary granted a short extension of the deadline for the submission of bids in the court-ordered auction process for a 30% subordinated ownership interest in Calpine Power, L.P., and for the management agreements of the Fund. The 30% interest, also called the "B" units, is currently owned by Calpine Canada Power Ltd., which is also the manager of the Fund. The Court had ordered that: -- the bids be submitted by noon, Jan. 25, 2007; -- a monitor's report be issued on Jan. 26, 2007 that compares the bids; and -- a court hearing would be on Jan. 30, 2007, to consider any bids. The short extension followed the adjournment until Jan. 26, 2007, of an application by a unit of Harbinger Capital Partners for an extension of the bid deadline until today. The Fund had consented to the extension. The Debtor and the Monitor have indicated to the Court that they will be opposing any further extension. The Board of Trustees continues to unanimously recommend that unitholders reject the inadequate Harbinger takeover bid for the Fund at $12.25 per unit. About Calpine Power Income Fund Calpine Power Income Fund (TSX: CF.UN) -- http://www.calpinepif.com/-- is an unincorporated open-ended trust that invests in electrical power assets. The Fund indirectly owns interests in power generating facilities in British Columbia, Alberta and California. In addition, the Fund owns a participating loan interest in a power plant in Ontario and has made a loan to Calpine Canada Power Ltd. The Fund is managed by Calpine Canada Power Ltd., which is headquartered in Calgary, Alberta. The Fund has 61,742,288 Trust Units outstanding. About Calpine Corp. Headquartered in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The company previously produced a portion of its fuel consumption requirements from its own natural gas reserves. However, in July 2005, the company sold substantially all of its remaining domestic oil and gas assets to Rosetta Resources Inc. The company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. CHASE MORTGAGE: Fitch Assigns Low-B Ratings to $1.2 Million Debt ---------------------------------------------------------------- Chase Mortgage Finance Trust, series 2007-S1 is rated by Fitch as: -- $409,839,967 classes A-1 through A-13, A-X, A-P, and A-R 'AAA'; -- $7,529,800 class A-M, 'AA+'; -- $6,884,500 class M-1, 'AA'; -- $2,366,500 class B-1, 'A'; -- $1,506,000 class B-2, 'BBB'; -- $860,500 privately offered B-3, 'BB'; and, -- $430,300 privately offered B-4, 'B'. The 'AAA' rating on the senior classes reflects the 4.75% subordination provided by the 1.75% class A-M, the 1.60% class M-1, the 0.55% class B-1, the 0.35% class B-2, the 0.2% privately offered class B-3, the 0.10% privately offered class B-4 and the 0.2% privately offered and not rated class B-5 certificates. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures, and the primary servicing capabilities of JPMorgan Chase Bank, N.A. This transaction contains certain classes designated as exchangeable certificates and others as regular certificates. Class A-7 and A-13 are exchangeable certificates. Classes A-1 through A-6, A-8 through A-12, A-X, A-P, A-R, A-M, M-1, and B-1 through B-5 are regular certificates. The holder of the Exchangeable Initial Certificates in any Exchangeable Combination may exchange all or part of each class of such Exchangeable Initial Certificates for a proportionate interest in the related Exchangeable Certificates. The holder of any class of Exchangeable Certificates may exchange all or part of such class for a proportionate interest in each such class of Exchangeable Initial Certificates or for other Exchangeable Certificates in the related Exchangeable Combination. The classes of Exchangeable Initial Certificates and Exchangeable Certificates that are outstanding on any date and the outstanding principal balances of any such classes will depend upon the aggregate distributions of principal made to such classes, as well as any exchanges that may have occurred on or prior to such date. For the purposes of the exchanges and the calculation of the principal balance of any class of Exchangeable Initial Certificates, to the extent that exchanges of Exchangeable Initial Certificates for Exchangeable Certificates occur, the aggregate principal balance of the Exchangeable Initial Certificates will be deemed to include the principal balance of such Exchangeable Certificates issued in the exchange, and the principal balance of such Exchangeable Certificates will be deemed to be zero. Exchangeable Initial Certificates in any Exchangeable Combination and the related Exchangeable Certificates may be exchanged only in the specified proportion that the original principal balances of such certificates bear to one another. Any holders of Exchangeable Certificates will be the beneficial owners of an interest in the Exchangeable Initial Certificates in the related Exchangeable Combination and will receive a proportionate share, in the aggregate, of the aggregate distributions on those certificates. With respect to any Distribution Date, the aggregate amount of principal and interest distributable to any classes of Exchangeable Certificates and the Exchangeable Initial Certificates in the related Exchangeable Combination then outstanding on such Distribution Date will be equal to the aggregate amount of principal and interest otherwise distributable to all of the Exchangeable Initial Certificates in the related Exchangeable Combination on such Distribution Date as if no Exchangeable Certificates were then outstanding. The trust consists of 703 first-lien residential mortgage loans with stated maturity of not more than 30 years with an aggregate principal balance of $430,278,182 as of the cut-off date, Jan. 1, 2007. The mortgage pool has a weighted average original loan-to-value ratio of 73.21% with a weighted average mortgage rate of 6.528%. The weighted-average FICO score of the loans is 744. The average loan balance is $612,060 and the loans are primarily concentrated in California, New York and Florida. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. The Bank of New York Trust Company, N.A will serve as trustee. Chase Mortgage Finance Corporation, a special purpose corporation, deposited the loans in the trust which issued the certificates. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. CITIMORTGAGE ALTERNATIVE: Fitch Rates Class B-5 Certificates at B ----------------------------------------------------------------- CitiMortgage Alternative Loan Trust, Series 2007-A1 REMIC Pass-Through Certificates are rated by Fitch Ratings as: -- $600,546,136 classes IA-1 through IA-12, IA-PO, IA-IO, IIA-1, IIA-PO and IIA-IO certificates 'AAA'; -- $14,516,000 class B-1 'AA'; -- $5,365,000 class B-2 'A'; -- $3,787,000 class B-3 'BBB'; -- $2,840,000 class B-4 'BB'; and, -- $2,209,000 class B-5 'B'. The $1,894,433 class B-6 is not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 4.85% subordination provided by the 2.30% Class B-1, the 0.85% Class B-2, the 0.60% Class B-3, the 0.45% privately offered Class B-4, the 0.35% privately offered Class B-5, and the 0.30% privately offered Class B-6. In addition, the ratings reflect the quality of the mortgage collateral, strength of the legal and financial structures, and CitiMortgage, Inc.'s servicing capabilities as primary servicer. As of the cut-off date, Jan. 1, 2007, the mortgage pool consists of 2,198 conventional, fully amortizing, 10-30 year fixed-rate mortgage loans secured by first liens on one- to four-family residential properties with an aggregate principal balance of approximately $631,157,570, located primarily in California, New York and Florida. The weighted average current loan to value ratio of the mortgage loans is 71.39%. Approximately 62.85% of the loans were originated under a reduced documentation program. Condo and co-op properties account for 7.44% of the total pool. Cash-out refinance loans and investor properties represent 46.99% and 11.16% of the pool, respectively. The average balance of the mortgage loans in the pool is approximately $287,151. The weighted average coupon of the loans is 6.609% and the weighted average remaining term is 352 months. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. The mortgage loans were originated or acquired by CMI and in turn sold to CMSI. A special purpose corporation, CMSI, deposited the loans into the trust, which then issued the certificates. U.S. Bank National Association will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. COLLINS & AIKMAN: Disclosure Statement on First Amended Plan OK'd ------------------------------------------------------------------ Collins & Aikman Corp. and its debtor-affiliates filed with the U.S. Bankruptcy Court for the Eastern District of Michigan a modified First Amended Joint Plan and Disclosure Statement on Jan. 24, 2007. The Debtors advised the Court that they have reached an agreement in principle with the Official Committee of Unsecured Creditors and the Unofficial Steering Committee for their senior, secured prepetition lenders regarding the terms of the Amended Plan. "We have recently come to an agreement on the allocation of litigation trust distributions and funding of the Litigation Trust, which clears the way for a consensual plan," said John Boken, Collins & Aikman's Chief Restructuring Officer. "We are pleased to have reached another major milestone in these cases now that we have the support of our most significant creditor constituencies and our major customers regarding the terms of our plan." Collins & Aikman Corp. modified the Amended Plan to reflect the agreement. Certain provisions of the Amended Plan were also modified to address the objections filed by governmental agencies, insurers and other parties-in-interest. The Honorable Steven W. Rhodes approves the Disclosure Statement to the modified First Amended Plan and set the hearing to consider confirmation of that Plan to April 19, 2007. A copy of the Court-approved Disclosure Statement is available for free at http://ResearchArchives.com/t/s?192e A copy of the modified First Amended Plan is available for free at http://ResearchArchives.com/t/s?192f Disclosure Statement Objections (1) State of Michigan and IRS The State of Michigan, Department of Labor & Economic Growth and Unemployment Insurance Agency, and The United States of America, on behalf of the Internal Revenue Service, assert postpetition tax claims arising from the Debtors' business activities, and requested that the claims be paid at, or before, the confirmation of the Plan. Michigan filed a $10,937 administrative tax claim on March 15, 2006, involving the Debtors' subsidiary New Baltimore Holdings, LLC. The third and fourth quarter 2005 tax reports were not filed, and the unemployment tax amount owed is an estimate. Roland Hwang, assistant attorney general, complained that the First Amended Plan and Disclosure Statement had no indication that all postpetition unemployment taxes have been paid and fail to provide for payment of postpetition unemployment tax obligations for the Debtors' subsidiary, New Baltimore Holdings LLC. John W. Stevens, special assistant U.S. attorney, stated that the Debtors owe liabilities to the federal government for Form 941, Employer's Quarterly Federal Tax Return taxes. Based on the lack of records, the IRS has not yet filed an administrative claim for the taxes. The IRS filed a $24,590,752 claim on Aug. 2, 2006, with $22,471,909 as priority amount and $2,118,843 as unsecured general amount for various taxes. Pursuant to Article III.I.(a) of the Plan, payments on administrative claims will be made either before or after the Effective Date. However, there is no defined date when administrative claims will be paid, Mr. Stevens pointed out. (2) New Hampshire; Farmington; and MDEQ The State of New Hampshire Department of Environmental Services complained that the Debtors failed to disclose their intention with respect to their responsibility for and the disposition of certain environmentally contaminated sites in New Hampshire. Farmington, holder of a claim for prepetition unpaid real estate taxes, and other two claims arise from environmental conditions on and emanating from real estate owned by the Debtor, said that the Disclosure Statement needs to be clarified so as to provide: (a) whether a manufacturing plant in Farmington, which is subject to a certain Sarah GreenField Agreement with the Debtors, and other environmentally contaminated properties like the Cardinal Landfill, are covered by the sale process contemplated under the Plan; and (b) whether the Post-Consummation Trust will pay for clean up costs on and after the Effective Date. The State of Michigan, Department of Environmental Quality, filed claims relating to oversight or remediation of the contamination in a Debtor-owned property in Mancelona, Antrim County, Michigan. MDEQ pointed out that it is not clear whether the Post- Consummation Trust and the Litigation Trust contemplated under the First Amended Plan would address the environmental claims. Celeste R. Gill, assistant attorney general, Environment, Natural Resources, and Agriculture Division, asserted that, to the extent the Plan is an attempt to abandon the property of the bankruptcy estate in violation of the environmental laws of Michigan, it is unconfirmable. (3) Various Insurers Various insurers issued policies to the Debtors for real and personal property, international coverage and excess liability, including directors and officers' liability: -- ACE American Insurance Co., Westchester Fire Insurance Co. and other members of the ACE group of companies; -- certain insurers including Century Indemnity Co., Continental Insurance Co., Continental Casualty Co., St. Paul Surplus Lines Insurance Co., and the Travelers Indemnity Co.; and -- Fireman's Fund Insurance Co., National Surety Co., and other related insurance companies. David A. Lerner, Esq., at Plunkett & Cooney, P.C., in Bloomfield Hills, Michigan, separately representing ACE and Certain Insurers, claimed that the Disclosure Statement does not provide critical information on how potentially insured claims will be handled and whether the handling accords with the insurers' contractual rights, or how the insurance claims against the Debtors will be treated. The Disclosure Statement fails to indicate whether the Debtors will be assuming or rejecting any insurance policies or whether the Post-Consummation Trust will be performing the Debtors' obligations under the policies, but the Disclosure Statement indicates that the Plan will be using insurance policies to satisfy certain claims, Mr. Lerner pointed out. Moreover, the Disclosure Statement preserves the Debtors' rights of setoff, but does not specifically address the rights of setoffs and recoupment belonging to other parties. The Debtors may seek to bar the rights under the injunctive or other provisions in the proposed Plan, Mr. Lerner averred. It is also unclear how the Debtors intend to honor the Insurers' contractual rights to defend, settle, or litigate potentially covered claims on a post-confirmation basis, Mr. Lerner noted. FFIC, represented by Kelly A. Myers, Esq., at Myers & Allmand, PLLC, in Brighton, Michigan, may also be party to certain agreements, which are executory contracts under Section 365 of the Bankruptcy Code, relating to the policies. Mr. Myers said that the Disclosure Statement fails to disclose meaningful information regarding the procedures to be utilized by Debtors, Litigation Trust administrator and Plan Administrator in liquidating and paying Claims. The value of the Claims is also not provided, he added. Even when the Debtors finally identify which executory contracts to assume, assign, or reject, Mr. Myers pointed out, the purported treatment of the contract is rendered meaningless by the retention of the rights by the Debtors and Post-Consummation Trust to amend or supplement the list of the executory contracts to be assumed, at any time after 90 days after the Effective Date. The Plan also purports to make FFIC potentially liable to provide the full amount of insurance coverage while extinguishing its ability to enforce its reciprocal contractual rights, Mr. Myers contended. Additionally, the Plan may provide for the assignment of the FFIC Agreements without requiring the Post-Consummation Trust to assume the Debtors' reciprocal Contractual Obligations. The allowance of the possible assignment of the FFIC Agreements would vitiate any coverage otherwise available under the FFIC Agreements, he said. (4) RLI Insurance Company RLI Insurance Company issued three outstanding bonds aggregating $2,800,000, on behalf of the Debtors. The Bonds were issued primarily to cover obligations arising from self-insurance programs covering workers' compensation liabilities. Chase Manhattan USA, N.A., now known as JPMorgan Chase Bank, through the issuance of a letter of credit, is obligated to pay any obligations owed to RLI arising under or related to the Bonds. In addition to the Letter of Credit, RLI has direct claims against the Debtors, through commercial indemnity agreements, and subrogation rights through beneficiaries of the Bonds. Kay Standridge Kress, Esq., at Pepper Hamilton LLP, in Detroit, Michigan, notes that there is no information regarding how the Bonds and the Letter of Credit will be treated. The Disclosure Statement should also clearly advise RLI about the ultimate disposition of the Bonds and whether the releases effected under the Plan are intended to deprive RLI of its rights under the Letter of Credit, he asserts. (5) Hallmark, et al. Hallmark Technologies, Inc., doing business as Hallmark Tools; Phillips Tool & Mould; Tri-Way Mfg., Inc., doing business as Tri- Way Mold and Engineering each have fabricated certain molds pursuant to the Michigan Mold Lien Act, MCL 445.611 et seq. Tri- Way has also fabricated certain tools for the Debtors. Dennis W. Loughlin, Esq., at Strobl & Sharp, P.C., in Bloomfield Hills, Michigan, representing the three claimants, complained that the Disclosure Statement fails to provide adequate information concerning the treatment of the many tool and mold suppliers of the Debtors, and their potential tool and mold- related lien claims under the Act. The Disclosure Statement provides for a release and discharge of liens on estate assets. Hallmark, PTM, and Tri-Way object to the discharge of any tool or mold-related lien unless their lien claims are satisfied in full. The Disclosure Statement fails to recognize the statutory lien on the Molds and to provide payment to satisfy the liens on the Molds, Mr. Loughlin asserted. (6) SEI and PIC The PIC Group Inc. provided certain quality control-related services for the Debtors. At the time of the filing of the bankruptcy petitions, Debtor C&A Plastics, Inc., was a party defendant in a pending lawsuit brought by Sales Engineering, Inc., before the Oakland County Circuit Court, Case No 99-014804-CK. SEI had obtained, in the lawsuit, a default judgment against C&A Plastics in an amount in excess of $4,100,000. The Debtor appealed the default judgment and, pursuant to a consent order entered into by the parties, procured for SEI's benefit, as security, a letter of credit amounting to $5,400,000, issued by JPMorgan. Robert A. Peurach, Esq., at Fitzgerald & Dakmak, P.C., in Detroit, Michigan, stated that the Disclosure Statement is devoid of any mention of the Oakland lawsuit, much less whether the stay will be lifted to bring the lawsuit to a conclusion, and fails to address the treatment of claims that are supported by a letter of credit. The injunctive and release provisions contained in the Disclosure Statement and Plan are unclear whether SEI and other similarly situated creditors will be deemed, upon confirmation, to have released JPMorgan from any liability under the letter of credit, or whether SEI would be enjoined from enforcing the letter of credit, Mr. Peurach pointed out. Furthermore, according to Mr. Peurach, knowledge of the Effective Date is important because it triggers the running of a number of debtor obligations under the Plan, including the deadline for the Debtors to file objections to claims. The Effective Date should either contain a definitive date, or the Debtor should provide public notice of the date, he argued. (7) H.P. Pelzer H.P. Pelzer Automotive System Inc. maintained that it has set-off and recoupment rights. The Disclosure Statement is unclear on the treatment of H.P. Pelzer's set-off rights and similarly situated creditors, Charles D. Bullock, at Stevenson & Bullock, P.L.C., in Southfield, Michigan, tells the Court. The Debtors may seek to bar the rights under the injunctive or other provisions of the proposed Plan, he pointed out. The Disclosure Statement indicates that the Plan provides only for the Debtors and the Liquidation Trust to object to and to settle claims, Mr. Bullock noted. Moreover, it also indicates that the Plan will enjoin certain claims against the Debtors, certain other parties, and the Debtors' assets. (8) MacKay Shields LLC Before the Petition Date, MacKay Shields LLC purchased certain debt securities of one of the Debtors, specifically the 10-3/4% Senior Notes due 2011 and the 12-7/8% Senior Subordinated Notes due 2012, on behalf of its investment advisory clients. Michael S. Etkin, Esq., at Lowenstein Sandler PC, in Roseland, New Jersey, noted that the Plan treats members of the same class differently without any explanation or justification. With respect to Classes 5 to 7, the Plan provides that only those who vote in favor of the Plan are entitled to receive a distribution of Litigation Recovery Interests. The discriminatory treatment is not permitted by the bankruptcy Code, he asserts. Pursuant to the Plan, third-party claims against certain non- Debtors, including current or potential parties against whom creditors may have valid claims, are released, waived and discharged regardless of whether the holder of a Claim or Equity Interest votes in favor of the Plan, against the Plan, or not vote at all. Although non-released parties, potential defendants of any retained causes of action, are purportedly not being released from third-party claims, the release is ambiguous, Mr. Etkin argued. The Debtors fail to provide any factual basis to establish the required "unusual circumstances" which justify confirmation of a plan containing such extraordinary relief, Mr. Etkin told the Court. Mr. Etkin maintained that third-party releases, the related injunctions, and the requirement that a creditor vote in favor of the Plan in order to be entitled to receive a distribution must be eliminated or at least sufficiently justified. Debtors Addressed Objections The Debtors informed Judge Rhodes that Michigan's Agency's tax- related objection has been resolved. The Debtors will file a specific governmental form as soon as practical, and agree that Michigan reserves the right to pursue collection of unpaid taxes and to require the filing of the form. IRS has confirmed that its objection does not relate to the adequacy of the Disclosure Statement and that it is not objecting to the approval thereof. The Amended Disclosure Statement states the Debtors will supply the relevant local, state and federal environmental agencies with any additional information that exists regarding the Debtors' plans on the disposition of the properties no later than 18 calendar days before the voting deadline and the deadline to object to the confirmation hearing. The alternatives for disposition under the Plan are: (a) Owned properties; * sale or transfer to entities that will assume responsibility for environmental investigation and cleanup; * if sale or transfer is not possible before the Effective Date, transfer to a residual trust with details of any trust agreement, including a budget as it relates to environmental matters, to be supplied to the relevant agencies no later than 12 calendar days before the voting deadline and deadline to object to confirmation hearing; or * abandonment, if found by the Court after notice and hearing to be permissible under the law; (b) Rejection of applicable leases for any leased properties; and (c) Some other potential resolution under applicable law as to owned or leased properties. Additionally, the Debtors and the relevant environmental agencies are continuing efforts to seek the most beneficial outcome of concerns regarding the disposition of the properties, therefore, the Plan does not specify the ultimate disposition. The Customer Agreement does not waive any claims for environmental remediation or other environmental claims the Debtors may have against other parties to the Customer Agreement. If any of the Debtors' properties located in Michigan, which are the subject of ongoing environmental investigation or remediation activities are sold, any environmental responsibility language in agreements documenting the sales should be subject to the approval of the MDEQ, and the Debtors reserve all of their rights with respect thereto. If any of the Debtors' properties located in Michigan, which are the subject of ongoing environmental investigation or remediation activities are abandoned, Michigan should be named as beneficiaries to any insurance proceeds or pending insurance claims related to the properties, and the Debtors reserve all of their rights with respect thereto. ACE and FFIC reserve all of their rights, claims and defenses, if any, under the ACE policies or FFIC Agreements, including their rights to deny coverage. ACE reserves its rights to object to confirmation of the Plan and to seek declaratory relief that the improper treatment of the ACE Policies under the proposed Plan relieves them of any further obligation to provide insurance coverage. FFIC has indicated that it may object to confirmation of the Plan and seek declaratory relief that the treatment of the FFIC Agreement under the Plan relieves it of any further obligation to provide coverage. The Debtors reserve all rights and defenses with respect to the FFIC issues. The Debtors relate that no party to the claims handling agreement has served any notice of termination, so the claims handling agreement remains in effect as of Jan. 24, 2007. Discussions are in progress with counsel for certain of the insurers on whether the Debtors will assume the claims handling agreement. The Debtors are optimistic that they will agree to a resolution, which will include modifying and assuming the claims handling agreement. If no resolution can be reached, the Debtors may reject the claims handling agreement. The Debtors will advise RLI of their intentions with respect to the RLI bonds on or before the Effective Date. SEI's Oakwood lawsuit is currently stayed as a result of the Debtors' Chapter 11 cases. The Debtors inform the Court that SEI's letter of credit remains in place. Notwithstanding anything contrary in the Plan, the third party releases and exculpation in Articles XII.C, D, and E, or any other provisions of the Plan, are not intended to and do not limit the rights, if any, of RLI and SEI to seek and receive a distribution from the letters of credit issued by JPMorgan. As mentioned in the Debtors' Amended Disclosure Statement to the Joint Plan dated Jan. 24, 2007, the Debtors will provide a full discharge and release to each of the OEMs and the Debtor Releases, and the OEMs in turn will provide a full discharge and release to each of the Debtors, except as otherwise set forth in the Customer Agreement and the OEM excluded claims, on the Effective Date and effective as of the Effective Date. Nothing in Article IV.K of the Plan will operate as a release of any statutory lien on tooling until the lien is satisfied pursuant to the Plan, and the lien will remain in full force and effect in the same priority and to the same extent and validity as existed immediately before the Effective Date until the lien is satisfied pursuant to the Plan. The Debtors will provide notice of the Effective Date to PIC within 15 business days after the Effective Date. With respect to H.P. Pelzer's objection, the Debtors agreed to negotiate a stipulation regarding the setoff claim. The Debtors dispute McKay's position and believe that the releases and injunctions are valid. The parties reserve their rights with respect to the issue for the confirmation hearing. The Trusts The First Amended Plan provides for the creation of two trusts, a Post-Consummation Trust and a Litigation Trust, to liquidate the Debtors' businesses and causes of action after the effective date of the Plan. The Disclosure Statement provides that the Debtors' assets, including Causes of Action, will be transferred to the Post-Consummation Trust, and the Litigation Trust will use the assets to make distributions to allowed claims. The modified First Amended Plan provides that the Litigation Trust Allocation Exhibit will govern the allocation of the litigation recovery interests among the holders of the allowed general unsecured claims in Class 5, the holders of allowed senior note claims and allowed Pension Benefit Guaranty Corp. claims in Class 6, and holders of allowed senior subordinated note claims in Class 7. Under the Allocation, the Litigation Recovery Interests are delineated into (i) the Tranche A Litigation Recovery Interests equal to 75% of the beneficial interest in the proceeds of the Litigation Trust assets recovered from the effective date until the Tranche A termination date, when the prepetition facility claims in Class 3 is fully paid; and (iii) the Tranche B Litigation Recovery Interests, equal to the remaining 25% of the beneficial interest in the proceeds and 100% after the Trance A termination date. The modified First Amended Plan provides that the releasing parties include each holder of a claim that votes in favor of the Debtors' Joint Plan and, to the fullest extent permissible under applicable law, each person that has held, holds or may hold a Claim or at any time was a Holder of a Claim and that does not vote on the Plan. The original equipment manufacturers or the Holders of equity interests in Class 8 are excluded from the Releasing Parties. The exculpation clause provides that Article XII.D of the Plan will have no effect on the liability of the Post-Consummation Trust that results from any acts or omissions in connection with the customer agreement of the postpetition OEM contracts. The OEMs are included in the exculpated parties. Notwithstanding anything contrary to the Plan, no claims, obligations, suits judgments, damages, demands, debts, rights, causes of action or liabilities against any entity other than the Debtors, the Litigation Trust or the Post-Consummation Trust with respect to the pension plan, will be released, exculpated, discharged, enjoined or otherwise affected by the Plan. On the Effective Date, the Debtors will deposit $3,000,000 with the Litigation Trust to cover the reasonable costs of investigating, prosecuting, resolving and reconciling Claims. The Litigation Trust will have no obligation to and will not repay the $3,000,000 to the Debtors or the Post-Consummation Trust. Any cash in the Litigation Trust will be applied, first, to the fees, costs, expenses and liabilities of the Litigation Trust Administrator and the members of the Litigation Trust Committee and, second, to the distributions provided for pursuant to the Plan. The Post-Consummation Trust will maintain customary insurance coverage for the protection of persons serving as administrators and overseers of the Post-Consummation Trust on and after the effective date. The Bankruptcy Court, upon motion by a party-in-interest, may extend the term of the Post-Consummation Trust for a finite period if an extension is necessary to liquidate the Post- Consummation Trust Assets or to complete any distribution required under the Plan. Multiple extensions may be obtained so long as Bankruptcy Court approval is obtained at least six months before the expiration of each term. The Debtors will have the authority to establish the residual trust in accordance with the Residual Trust agreement to pay or otherwise resolve any Residual Trust claims. The sole right to recover on account of the Residual Trust Claims will be limited to the Residual Trust Assets. Upon satisfaction of the Residual Trust Claims, any residual assets remaining in the Residual Trust will be distributed to the Post-Consummation Trust. The postpetition OEM contracts will remain in full force and effect without modification by the Plan and, on and after the Effective Date, will be performed by the Post-Consummation Trust in the ordinary course of its business. Nothing in the Plan is intended to, nor will it, discharge, release or enjoin the enforcement of any unmatured, unliquidated or contingent claim of any OEM under any postpetition OEM Contract, provided that no claim will give rise to an administrative claim, except otherwise provided in the Customer Agreement. Nothing in the Customer Agreement is intended to modify, amend or supersede the agreement regarding Lambda program dated as of April 24, 2006, between the "Supplier" and General Motors Corp., which terms and conditions remain in full force and effect. A copy of the Customer Agreement along with a list of the plastics & convertibles plants, including the unsold plants, is available for free at http://ResearchArchives.com/t/s?172a Other Provisions in Plan The Debtors relate that with respect to the stipulation with the Securities & Exchange Commission, SEC had an extension until Jan. 15, 2007, to file a proof of claim in the Debtors' Chapter 11 cases. The SEC has not filed a proof of claim and no further extension has been negotiated. As of Jan. 24, the Debtors and Textron Financial Corp. are attempting to negotiate mutually acceptable treatment of Textron's claims and rights with respect to the Textron equipment agreement. The Debtors anticipate that a consensual agreement will be reached with Textron with respect to the Textron Equipment Agreement and all parties continue to reserve their respective rights, claims, and defenses. As part of the sale process, the Debtors believe the Collins & Aikman Pension Plan will be terminated. The Pension Plan may only be terminated in accordance with Title IV of Employee Retirement Income Security Act in an involuntary termination by the Pension Benefit Guaranty Corp., or a voluntary termination by the Debtors that is approved by the PBGC. The PBGC is currently investigation whether the Pension Plan meets the criteria for an involuntary termination. Retained Causes of Action The Debtors filed with the Court a list of over 20,000 potential parties to the Debtors' pending causes of action, which includes actions for payments, deposits, holdbacks, reserves or other amounts owed by any creditor, lessor, utility, supplier, vendor, insurer, surety, factor, lender, bondholder, lessor or other party. A list of the categories of the retained causes of action, including the potential non-released parties is available for free at http://ResearchArchives.com/t/s?1930 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. 50; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) COLLINS & AIKMAN: Discloses Composition of Possible Allowed Claims ------------------------------------------------------------------ In Collins & Aikman Corp. and its debtor-affiliates' modified First Amended Joint Plan and Disclosure Statement, the Debtors disclosed that, as of Jan. 24, 2007, their claims agent received around 9,246 claims, comprising of: -- 1,037 secured claims amounting to $3,176,773,827; -- 44 administrative claims totaling $2,380,409; -- 910 priority claims aggregating $7,887,323,690; and -- 7,255 unsecured claims amounting to $42,756,485,600. The Debtors are in the process of objecting to invalid, untimely, duplicative and overstated claims. Through withdrawal and disallowance of claims, a total of 556 claims totaling $4,4414,393,899 have been expunged. The Debtors estimate that at the conclusion of the Claims objection, reconciliation and resolution process, the aggregate amount of allowed claims will be: -- Administrative Claims, $74,000,000; -- Secured Claims, $827,000,000; -- Priority Claims, $12,000,000; -- Senior Note Claims, $521,000,000; -- Senior Subordinated Note Claims, $428,000,000; -- PBGC Claims, $110,000,000 to $208,000,000; and -- General Unsecured Claims, $539,000,000. The Administrative Claim estimate does not include the $26,000,000 of original equipment manufacturers' administrative debtor-in-possession claims payment, and the Allowed Secured Claims estimate does not include the $82,500,000 OEM Subordinated DIP loan payment, which are expected to be waived pursuant the Customer Agreement and in exchange for a release in the Amended Joint Plan. The Debtors and the Pension Benefit Guaranty Corporation are currently in discussions regarding the treatment of the PBGC 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. 50; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) COLLINS & AIKMAN: Liquidation Analysis Under First Amended Plan --------------------------------------------------------------- Collins & Aikman Corp. and its debtor-affiliates filed on Jan. 16, 2007, a liquidation analysis in connection with the Disclosure Statement to their First Amended Joint Plan filed on Dec. 22, 2006. The U.S. Trustee, however, complained that there were serious and substantial discrepancies between the values listed in the Liquidation Analysis and the numbers reflected in the Debtors' balance sheet submitted to the U.S. Bankruptcy Court for the Eastern District of Michigan. The Debtors' November 2006 balance sheet indicated a total value for all assets of approximately $5,051,000,000, while the Liquidation Analysis places a value of $230,000,000, apparently on the same assets, the U.S. Trustee pointed out. The Liquidation Analysis also valued Investment in Subsidiaries at $58,000,000 to $70,000,000, while the most recent financial report values the assets at $2,479,000,000. In its objection to the Disclosure Statement, the U.S Trustee asked the Debtors to fully explain the huge discrepancy between the values. The Debtors re-filed their liquidation analysis together with their modified First Amended Plan and Disclosure Statement on Jan. 24, 2007. In response to the U.S. Trustee's concerns, the Debtors note that the Liquidation Analysis presents the liquidation of the Debtors on a consolidated basis. Proceeds realized from each Debtor are aggregated in a common distribution source. For purposes of distribution, each and every asserted Claim against, and Equity Interest in, any Debtor is entitled to a distribution from the aggregated proceeds. Any Claim against a Debtor, any guarantee executed by any other Debtor and any joint or several liability of any of the Debtors are deemed one right to a distribution from the aggregated proceeds. Value estimates were derived from a combination of actual balances as of Nov. 30, 2006, the date of the Customer Agreement; Dec. 31, 2006; and expected balances as of March 31, 2007, the assumed effective date. The financial information filed in the Debtors' Monthly Operating Reports represents aggregate book value of the each of the Debtors assets on a non-consolidated basis. In the November 2006 MOR, the aggregate assets were approximately $5,000,000,000. According to the Debtors, this is not an accurate indicator of liquidation value of the Debtors' assets for two main reasons: (a) It does not reflect the Debtors' balance sheet on a consolidated basis; and The Debtors equity interests in subsidiaries have no liquidation value. (b) It reflects book value, not liquidation or fair market value. Historical values were adjusted in accordance with certain accounting rules. The projected range of cash balances reflects cash that is assumed to be available to the Debtors in a liquidation scenario as of March 31, 2007. In each of the high and low value cases, the estimated balance is derived from the actual balance of $86,000,000, as reported in the November 2006 MOR, plus December activity and also includes estimates of settlements and wind-down proceeds expected to be realized before the Assumed Effective Date. The balance is net of the assumed pay down of the DIP Facility Claims as well as estimated wind-down costs through the Assumed Effective Date. The balance includes restricted cash of approximately $21,000,000 relating to incurred or anticipated professional fees. In the MOR, the Debtors reported a balance of $268,000,000. The Debtors' estimated recovery on accounts receivable reflects updated information through December 2006 and projected proceeds from future collections of the accounts receivable. Additionally, the analysis considers the prepetition and postpetition status of the balances. The Debtors estimate the net liquidation proceeds available for distribution at a high of $169,200,000, and a low of $106,000,000. Liquidation Analysis Estimated Liquidation Proceeds (Amounts in 000's) Estimated Liquidation Value High Low ------------------------- Statement of Assets Cash $138,300 $118,300 Fabrics 0 0 A/R, Top OEMs, Production & Other 0 0 A/R, Other OEMs, Production & Other 0 0 A/R, Non OEMs, Production & Other 0 0 A/R, Top OEMS, Tooling 8,800 7,000 A/R, Other OEMS, Tooling 400 300 A/R, Non OEMs, Tooling 500 400 Inventory 0 0 Prepaid Tooling & Molding, Current 0 0 Investments in Subsidiaries 0 0 InterCo Receivable - Canada 10,000 0 InterCo Receivable - Mexico 3,000 0 InterCo Receivable - European 39,000 27,000 Prepaid and Miscellaneous Assets 0 0 Other Long Term Assets 0 0 Goodwill 0 0 Deferred Tax Assets 0 0 Property Plant & Equipment 30,000 12,500 ------------------------- Gross Liquidation Proceeds 230,000 165,500 Costs of Liquidation Chapter 7 Expenses $18,900 $18,900 Chapter 7 Wind Down Costs 15,700 15,700 Chapter 11 Prof. Fee Holdback 21,000 21,000 Chapter 7 Trustee Fees 5,200 3,300 ------------------------- Total Costs of Liquidation 60,800 58,900 ------------------------- Net Liquidation Proceeds for Dist. $169,200 $106,600 ========================= Estimated Liquidation Recovery High Low ------------------------- Net Liquidation Proceeds for Dist. $169,200 $106,600 Less: Purchase Money Security Interests 25,900 25,900 Less: Secured Lien Claims 9,700 7,700 Less: Secured Claims Prepetition Facility Claims 133,600 73,000 OEM Jr. Secured Loan & Related Int. 0 0 OEM Launch Cost Funding 0 0 Less: Ch. 11 Administrative & Priority Claims Headquarter Lease Rejection 0 0 Other Chapter 11 Lease Rejection 0 0 OEM Administrative Loan 0 0 Environmental Claims 0 0 Chapter 11 Priority Claims 0 0 Less: Unsecured Claims General Unsecured Claims 0 0 Real Estate Lease Rejection Claims 0 0 Equipment Lease Rejection Claims 0 0 Prep. OEM Damage & Cancel. Claims 0 0 10.75% Senior Notes due 2011 0 0 12.875% Sr. Sub. Notes due 2012 0 0 ------------------------- $0 $0 ========================= A copy of the Liquidation Analysis is available for free at http://ResearchArchives.com/t/s?1932 http://bankrupt.com/misc/CollinsAmendedLiquidationAnalysis.pdf 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. 50; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) COMMUNICATIONS CORP: Wants Plan-Filing Period Extended to April 30 ------------------------------------------------------------------ Communications Corporation of America, and its debtor-affiliates and White Knight Holdings, Inc., and its debtor-affiliates, ask the U.S. Bankruptcy Court for the Western District of Louisiana to extend their exclusive periods to: a) file a plan of reorganization until April 30, 2007; and b) solicit acceptances on that plan for 90 days after the termination of the plan-filing period or July 29, 2007. The Debtors' exlusive period to file a plan will expire today, Jan. 31, 2007. This is the Debtors' second motion to extend the exclusive periods. The Debtors tell the Court that on Jan. 9, 2007, GE Capital, as agent on behalf of the senior lenders, advised the Debtors that they rejected the Debtors' settlement proposal, dated Nov. 30, 2006. The Debtors relate that the senior lenders' action puts the Debtors in the position of developing and filing a plan that has no support from them. The Debtors also recount that the sales process for its television station assets has just commenced. But due to its start at the end of the year, the interruption of the holidays and the need to conclude workable bid procedures, more time is needed to bring the process to a conclusion. About White Knight Headquartered in Lafayette, Louisiana, White Knight Holdings, Inc., is a media, television and broadcasting company. White Knight entered into commercial inventory agreements, joint sales agreements, and shared services agreements with Communications Corporation of America. However, both entities are independent companies and are not affiliates of each other. Along with Communications Corp., White Knight operates around 23 TV stations. White Knight and five of its affiliates filed for chapter 11 protection on June 7, 2006 (Bankr. W.D. La. Case Nos. 06-50422 through 06-50427). R. Patrick Vance, Esq., and Matthew T. Brown, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, LLP, represents White Knight and its debtor-affiliates in their restructuring efforts. White Knight and its debtor-affiliates' chapter 11 cases are jointly administered under Communication Corporation of America's chapter 11 case. When the Debtors filed for protection from their creditor, they estimated less than $50,000 in assets and estimated debts between $100,000 and $500,000. About Communications Corp. of America Headquartered in Lafayette, Louisiana, Communications Corporation of America, is a media and broadcasting company. Along with media company White Knight Holdings, Inc., it owns and operates around 23 TV stations in Indiana, Texas and Louisiana. Communications Corporation and 10 of its affiliates filed for bankruptcy protection on June 7, 2006 (Bankr. W.D. La. Case Nos. 06-50410 through 06-50421). Douglas S. Draper, Esq., William H. Patrick III, Esq., and Tristan Manthey, Esq., at Heller, Draper, Hayden, Patrick & Horn, LLC, represents Communications Corporation and its debtor-affiliates. Taylor, Porter, Brooks & Phillips LLP serves as counsel to the Official Committee of Unsecured Creditors. When Communications Corporation and its debtor-affiliates filed for protection from their creditors, they estimated assets and debts of more than $100 million. CONNECTICUT VALLEY: Moody's Removes Ba2 Rating on $10 Mil. Notes ---------------------------------------------------------------- Moody's Investors Service placed these notes issued by Connecticut Valley Structured Credit CDO, Ltd. on watch for possible upgrade: (1) The $17,000,000 Class B-1 Floating Rate Notes Due 2016 -- Prior Rating: A3 -- Current Rating: A3 and on watch for possible upgrade (2) The $3,000,000 Class B-2 Fixed Rate Notes Due 2016 -- Prior Rating: A3 -- Current Rating: A3 and on watch for possible upgrade (3) The $13,000,000 Class C-1 Floating Rate Notes Due 2016 -- Prior Rating: Baa2 -- Current Rating: Baa2 and on watch for possible upgrade (4) The $39,000,000 Class C-2 Fixed Rate Notes Due 2016 -- Prior Rating: Baa2 -- Current Rating: Baa2 and on watch for possible upgrade Ratings withdrawn: (1) The $10,000,000 Composite Securities Due 2016 -- Prior Rating: Ba2 -- Current Rating: WR According to Moody's, the rating actions are the result of the CDO's consistent strong performance. The deal has not failed any of its collateral quality triggers to date. The Composite Notes were reregistered back into their component parts and are no longer outstanding. CSP INC: Receives Notice of Delisting From Nasdaq ------------------------------------------------- CSP Inc. received on Jan. 17, 2007, a notice of delisting from the Nasdaq Stock Market notifying that it failed to file its annual report on Form 10-K for its fiscal year ended Sept. 30, 2006, for failing to comply with Marketplace Rule 4310(c)(14). The company currently expects to file its annual report by Feb. 2, 2007. Based in Billerica, Mass., and founded in 1968, CSP Inc. (NASDAQ:CSPI) -- http://www.cspi.com/-- and its subsidiaries develop and market best-of-breed IT solutions, systems integration services, and high-performance computer systems. CSP's Systems segment includes the MultiComputer Division, which supplies high- performance Linux cluster systems for a broad array of defense applications, including radar, sonar and surveillance signal processing. The company's MODCOMP Inc. -- http://www.modcomp.com/ -- subsidiary, is part of its Service and Systems Integration segment. It was founded in 1970 and includes the fiscal 2003 acquisition of Technisource. MODCOMP is a provider of IT solutions and systems integration services. MODCOMP works with third parties to develop customized solutions in the global IT markets and has offices in the U.S., U.K., and Germany. CYBERONICS INC: Posts $8.5 Mil. Net Loss in Quarter Ended July 28 ----------------------------------------------------------------- Cyberonics Inc. reported an $8.5 million net loss on $33.7 million of net sales for the first quarter ended July 28, 2006, compared with a $19.4 million net loss on $27 million of net sales for the same period ended July 29, 2005. The decrease in the consolidated net loss is a result of higher gross profit due to higher sales and higher gross margins and lower operating expenses due to lower sales and marketing expenses. U.S. net sales increased by $5.9 million in the quarter ended July 28, 2006, compared to same period ended July 29, 2005, primarily as a result of an increase in unit sales volumes and sales price increases. International sales increased by $800,000 due to an increase in unit sales volume and an increase in average system prices, which in turn was largely due to a favorable currency impact and changes in country and product mix. At July 28, 2006, the company's balance sheet showed $152.9 million in total assets, $149.8 million in total liabilities, and $3 million in total stockholders' equity. The company's balance sheet at July 28, 2006, also showed strained liquidity with $138.2 million in total current assets available to pay $148.6 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended July 28, 2006, are available for free at http://researcharchives.com/t/s?192a Net Cash Used in Operating Activities Net cash used in operating activities during the quarter ended July 28, 2006, was $1.2 million as compared to net cash used in operating activities of $19.5 million during the same period of the previous fiscal year. The primary reason for the decrease in cash used in operating activities is a reduction in sales and marketing expenses related to the depression launch, partially offset by higher legal and accounting fees of $1.7 million applicable to the stock options investigation. Notice of Default On July 31, 2006, the company received a notice of default and demand letter dated July 28, 2006, from Wells Fargo Bank, National Association, pursuant to which the Wells Fargo asserted that the company was in default of its obligations under the indenture dated Sept. 27, 2005, between the company, as issuer, and Wells Fargo Bank, as trustee, as a result of the company's failure to timely file with the SEC its Form 10-K by July 12, 2006, and to deliver a copy of this 2006 Form 10-K to the trustee by July 27, 2006. On Oct. 2, 2006, the company received a notice of acceleration and demand letter dated Sept. 27, 2006, from the trustee informing it that, pursuant to the indenture, the trustee has declared the notes due and payable at their principal amount together with accrued and unpaid interest, and fees and expenses, and it demands that all such principal, interest, fees and expenses under the notes be paid to the trustee immediately. As such, although the notes mature in 2012, the company has included them as a current liability in its consolidated balance sheet as of April 28, 2006 and July 28, 2006. To clarify its rights and responsibilities under the indenture, the company filed a declaratory judgment action on Oct. 3, 2006, styled Cyberonics Inc. v. Wells Fargo Bank, N.A., as Trustee Under Indenture, No. 06-63284, in the 165th District Court of Harris County, Texas. In the lawsuit, the company seeks a declaration that no event of default has occurred under the indenture and request attorney fees under the Declaratory Judgment Act. In January 2007, the Trustee removed this lawsuit to federal district court in Houston, Texas and asserted a counterclaim alleging that the company breached the indenture. The company is also a defendant in an action styled Wells Fargo Bank N.A. v. Cyberonics, Inc., No. 06-CV-15272, pending in the United States District Court for the Southern District of New York, alleging that the company has breached the indenture. In January 2007, the Trustee voluntarily dismissed this lawsuit. Going Concern Doubt As reported in the Troubled Company Reporter on Jan. 10, 2007, KPMG LLP in Houston, Texas, raised substantial doubt about Cyberonics Inc.'s ability to continue as a going concern after auditing the company's financial statements for the fiscal years ended April 28, 2006, and April 29, 2005. The auditing firm pointed to the company's recurring losses from operations, the receipt of a notice of default and demand letter and notice of acceleration for a $125 million senior subordinated convertible notes, and incurrence of a potential default of a $40 million line of credit. About Cyberonics Headquartered in Houston, Texas, Cyberonics Inc. (NASDAQ: CYBX) -- http://cyberonics.com/-- markets the VNS Therapy system in selected markets worldwide. The VNS Therapy System uses a surgically implanted medical device that delivers electrical pulsed signals to the vagus nerve in the left side of the neck. This therapy has proven effective in significantly reducing the number and/or intensity of seizures in many people suffering from epilepsy and has the potential for use in the treatment of other inadequately treated, chronic disorders. On July 15, 2005, VNS Therapy was approved by the FDA as a long- term adjunctive treatment for treatment-resistant depression. It is also at various levels of study as a potential treatment for other chronic disorders, including anxiety, Alzheimer's, bulimia, and migraine headaches. DELTA AIR: Secures $2.5 Billion Exit Financing Facility ------------------------------------------------------- Delta Air Lines, Inc., has obtained commitments for a $2.5 billion exit financing facility, marking a significant step forward for the company's plan to exit bankruptcy in Spring 2007 as a strong, well-capitalized standalone carrier. The exit facility will be co-led by six financial institutions -- JPMorgan, Goldman Sachs & Co., Merrill Lynch, Lehman Brothers, UBS, and Barclays Capital -- and will consist of a $1 billion first-lien revolving credit facility, a $500 million first-lien Term Loan A, and a $1 billion second-lien Term Loan B. The facility will be secured by substantially all of the first- priority collateral in the existing debtor-in-possession facilities. "This is an important milestone in the successful implementation of our restructuring plan," Edward H. Bastian, Delta's executive vice president and chief financial officer, said. "The competitive terms and unique structure of this financing package reflect our considerable progress and the soundness of Delta's standalone plan of reorganization. We appreciate the confidence the financial markets are showing by making this commitment in support of Delta's standalone plan. We look forward to partnering with our lenders through the exit process and into the future." As co-lead arrangers of the exit facility, the financial institutions made these statements in support of the proposed transaction: * "JPMorgan is pleased to partner with our long-time client Delta in leading their benchmark financing. We are looking forward to aiding Delta in their successful reorganization and standalone exit from bankruptcy." * "Goldman Sachs appreciates the opportunity to take a leadership role in Delta's landmark exit financing and believes Delta is well positioned to emerge from bankruptcy. Goldman Sachs has had a long-standing relationship with Delta and looks forward to helping Delta pursue its strategic plan." * "We are pleased to help lead Delta's exit financing. Merrill Lynch looks forward to continuing to work with Delta Air Lines as the company executes its standalone strategic plan." * "Lehman Brothers is delighted to play a leading role in this important financing for Delta, and to support the company as it emerges from bankruptcy as a strong global carrier." * "UBS is excited to be involved in Delta's exit financing and helping Delta emerge on a standalone basis." * "Delta Air Lines is an icon in the airline industry and Barclays Capital is honored to play a key role in the remarkable turnaround of the last 16 months. We look forward to contributing to the next chapters of this impressive story." Proceeds from the facility will be used by Delta to repay its $2.1 billion debtor-in-possession credit facilities led by GE Capital and American Express, to make other payments required upon exit from bankruptcy, and to increase its already strong cash balance. "Delta has made enormous progress over the past 16 months in transforming the airline into a strong, healthy, and vibrant competitor," Mr. Bastian continued. "While many companies use the bankruptcy process simply to shore up their balance sheet and reduce debt, our company undertook a top-to-bottom re-engineering that touched every aspect of how we do business. We are using the bankruptcy process to improve and strengthen our airline." Delta's accomplishments have included: * Reduced costs and improved unit revenues, positioning the airline to emerge from Chapter 11 with the lowest unit costs of any network carrier. Delta has improved productivity and eliminated approximately $2 billion in annual costs. * A stronger, more balanced network as a result of rapid expansion of international routes with the highest profit potential. In the past year Delta has undertaken the largest international expansion in its history, and is a leader across the Atlantic with flights to 31 trans-Atlantic destinations. * Significantly reduced net debt from $17 billion to an anticipated $7.5 billion by the end of 2007. * Improved liquidity position, totaling $2.6 billion in unrestricted cash, cash equivalents and short-term investments as of Dec. 31, 2006. * An expected consolidated equity value upon exiting Chapter 11 estimated by The Blackstone Group to be between $9.4 billion and $12 billion. Importantly, customer service standards and operational performance were improved as Delta achieved these gains, with the prestigious J.D. Power and Associates customer satisfaction survey for 2006 ranking Delta as one of the top two domestic network airlines. 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. DOLE FOOD: Weak Performance Prompts Moody's to Junk Ratings ----------------------------------------------------------- Moody's Investors Service downgraded the corporate family rating of Dole Food Company, Inc. to B2 from B1, its probability of default rating to B2 from B1, its senior secured bank credit facilities to Ba3 from Ba2, its senior unsecured notes to Caa1 from B3, and its various shelf registrations to Caa1 from B3. The outlook is stable. The downgrade reflects Dole's weaker than expected operating performance, continuing competitive pressures in its key European banana markets, and debt protection measures which are much weaker than those consistent with its prior rating category. The company's ratings reflect its high earnings and cash flow volatility, its high leverage and very weak debt protection measures, its exposure to commodity markets as well as such uncontrollable factors as weather or political regulations on key product markets such as bananas. These challenges are partially offset by Dole's strong brand and market position, its good product diversification, and its solid geographic diversification of raw material supply. The stable outlook reflects Moody's expectation that Dole's operating performance will stabilize, that the company will work to reduce debt and leverage over the next few years, and that the company will manage its acquisition activity and financial policy in such a way that will maintain its debt protection measures at levels consistent with its rating. Ratings downgraded: * Dole Food Company, Inc. -- Corporate family rating to B2 from B1; -- Probability of Default rating to B2 from B1; -- $225 million senior secured 7-year term loan to Ba3, LGD2, 23% from Ba2, LGD2, 20%; -- Senior secured 7-year pre-funded letter of credit facility to Ba3, LGD2, 23% from Ba2, LGD2, 20%; -- Senior unsecured notes to Caa1, LGD5, 78% from B3, LGD5, 77%; -- Senior unsecured shelf to Caa1, LGD6, 97% from B3, LGD6, 97%; -- Senior subordinated shelf to Caa1, LGD6, 97% from B3, LGD6, 97%; and, -- Junior subordinated shelf to Caa1, LGD6, 97% from B3, LGD6, 97% * Solvest, Ltd. -- $750 million senior secured 7-year term loan to Ba3, LGD2, 23% from Ba2, LGD2, 20% Dole Food Company, Inc., headquartered in Westlake Village, Calif., has revenues of about $6 billion. DOV PHARMA: Commences Exchange Offer for $70 Million Debentures --------------------------------------------------------------- DOV Pharmaceutical Inc. commenced an exchange offer on Jan. 29, 2007, for all of its 2.50% Convertible Subordinated Debentures due 2025. DOV is offering to exchange the Debentures for shares of convertible preferred stock and a cash payment. Holders of approximately 88% of the Debentures have committed to tender their Debentures in the Exchange Offer. Under the terms of the Exchange Offer, DOV will issue in exchange for each $1,000 in principal amount of Debentures properly tendered and accepted for exchange, a cash payment of $212.50 plus 8 shares of a new series C convertible preferred stock, par value $1.00 per share and a liquidation preference of $100 per share. The new series C preferred stock will be convertible by the holders into shares of common stock following stockholder approval and filing of an amendment to DOV's charter increasing the number of shares of authorized common stock as necessary to accommodate such conversion and also will automatically convert 30 days following the filing of the amendment to DOV's charter or earlier in certain circumstances. Generally, the preferred stock will vote with the common stock as a single class on an as-converted basis, and will entitle the holders of a majority of the new series C convertible preferred stock to initially appoint a majority of DOV's Board of Directors. As an alternative to the 8 shares of new series C convertible preferred stock, DOV will offer holders of Debentures the ability to elect to receive 8 shares of an alternative new series D convertible preferred stock, par value $1.00 per share. For any holder who elects to receive this new series D convertible preferred stock in the Exchange Offer instead of the series C convertible preferred stock, DOV will issue in exchange for each $1,000 in principal amount of Debentures properly tendered and accepted for exchange, the cash payment of $212.50 plus 8 shares of the alternative new series D convertible preferred stock. Unlike the new series C convertible preferred stock, the alternative series D convertible preferred stock will have no voting rights except as required by law, will not have any initial stated liquidation preference, will not mandatorily convert into common stock and will restrict a holder's ability to convert if such holder would beneficially own in excess of 9.9% of the Company's capital stock entitled to vote generally. The company currently has 26,743,657 common shares outstanding. On an as converted basis if all Debentures are tendered in the Exchange Offer, the bondholders would hold 106,974,628 shares of common stock of the Company or approximately 80% of the equity of DOV without giving effect to any warrants and existing and future equity incentive plans of the company. In connection with the Exchange Offer, it is anticipated that holders of DOV's outstanding common stock will receive approximately one and one-tenths warrants for each share of common stock outstanding totaling approximately 30,000,000 warrants. The exercise price for the warrants will be $0.523 per share and the warrants will become exercisable on July 1, 2007 and will expire Dec. 31, 2009. Assuming all Debentures are tendered in the Exchange Offer and all the new convertible preferred stock issued in the Exchange Offer were converted into common stock following completion of the Exchange Offer, existing common stockholders would own approximately 20% of the equity of DOV without giving effect to any warrants and existing and future equity incentive plans of the company. Assuming all Debentures are tendered in the Exchange Offer, all the new convertible preferred stock issued in the Exchange Offer were converted into common stock following completion of the Exchange Offer and all warrants issued in connection with the Exchange Offer are exercised, existing common stockholders would own approximately 34.7% of the equity of DOV without giving effect to existing and future equity incentive plans of the company. The Exchange Offer will expire at 5:00 p.m., New York City time, on Monday, March 5, 2007, unless extended by DOV with the consent of the holders of a majority in outstanding principal amount of the Debentures. The Exchange Offer is conditioned upon the valid tender of at least 99% of the aggregate principal amount of the outstanding Debentures. This condition may be modified by DOV with the consent of the holders of a majority in outstanding principal amount of the Debentures. The Exchange Offer is also conditioned on several other conditions. DOV will not be required, but will reserve the right, to accept for exchange any existing Debentures tendered (or, alternatively, DOV may terminate the Exchange Offer) if any of the conditions of the Exchange Offer remain unsatisfied, subject to the requirement that the company obtains the consent of holders of a majority in outstanding principal amount of the Debentures in order to modify the 99% minimum tender condition. An Offer to Exchange and a related Letter of Transmittal are being distributed to holders of the Debentures today in which the terms of the Exchange Offer are described in detail. If DOV is unable to restructure its obligations under the Debentures, it may be forced to seek protection under the U.S. bankruptcy laws. About DOV Pharmaceutical Somerset, New Jersey-based DOV Pharmaceutical Inc. (PS: DOVP.PK) -- http://www.dovpharm.com/-- is a biopharmaceutical company focused on the discovery, acquisition, and development of novel drug candidates for central nervous system disorders. The company's product candidates address some of the largest pharmaceutical markets in the world including depression, pain and insomnia. At Sept. 30, 2006, the company's balance sheet showed $54.528 million in total assets and $105.504 million in total liabilities, resulting in a $50.975 million stockholders' deficit. The company had a $19.301 million deficit at Dec. 31, 2005. DURA AUTOMOTIVE: Judge Carey Approves CFO Employment Agreement -------------------------------------------------------------- The Honorable Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware approves the Debtors' employment agreement dated Dec. 20, 2006, with David L. Harbert, as chief financial officer of Dura Automotive Systems Inc., and a related service agreement with Mr. Harbert's firm, Tatum, LLC, for payment of a placement fee and the provision of certain resources and support in connection with Mr. Harbert's employment. Judge Carey, however, did not approve the indemnification provisions stated in the Employment Agreement. Judge Carey rules that Mr. Harbert will be entitled to receive indemnification from the Debtors to the extent and in a manner as the Debtors' other current officers and directors. Judge Carey did not approve the early termination fee and states that it should not be paid unless approved by a separate Court order. Every payment and distribution obligation of the Debtors under the Employment Agreement and Tatum Agreement will be treated as an administrative expense pursuant to Section 503(b)(1)(A) of the Bankruptcy Code, Judge Carey says. The terms of the agreement, as published in the Troubled Company Reporter on Jan. 15, 2007, 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. About DURA Automotive Systems Inc. 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). EDUCATE INC: Investor Acquisition Deal Cues Moody's Ratings Review ------------------------------------------------------------------ Moody's Investors Service continues to review the ratings of Educate Inc. after the company's report that it has entered into a definitive agreement to be acquired by a group of investors that includes Sterling Capital Partners, Citigroup Private Equity and members of management. The transaction values the company at about $535 million, or about 13x Moody's estimates of 2006 EBITDA, to be paid as a combination of debt and equity. Moody's placed the long-term debt ratings of Educate, Inc. and the ratings on the senior secured credit facilities of Educate Operating Company, LLC on review for a possible downgrade on Oct. 27, 2006. The primary basis for Moody's rating review is the company's declining cash flow and earnings, operational concerns with respect to the company's corporate-owned learning centers, and the potential loss of operational focus as the company considers the proposed buyout. Moody's expects the transaction to close in the second quarter of 2007. If the existing debt is repaid as part of the transaction, Moody's will confirm and then withdraw the existing ratings. If the existing debt is assumed, Moody's will assess the effects on the existing debt caused by changes in the company's capital structure. These ratings are affected: * Educate, Inc. -- The B1 rated Corporate Family Rating. * Educate Operating Company, LLC -- The Ba3, LGD2, 24% $30 million senior secured revolving credit facility due 2009; -- The Ba3, LGD2, 24% $159 million senior secured term loan B due 2012. The ratings are under review for a possible downgrade. Educate Operating Company, LLC, is the operating subsidiary of Educate Inc. The company is headquartered in Baltimore, Maryland. It is a leading education services company for students ranging from pre-kindergarten through high school. Its portfolio of brands includes Sylvan Learning Centers, which provides customized supplemental, remedial and enrichment programs in reading, writing and mathematics; Hooked on Phonics, which delivers early reading, math and study skills programs; and Catapult Learning, a leading provider of educational services to public and non-public schools. Educate had revenue of $327 million for the 12 months ended Sept. 30, 2006. ELEPHANT & CASTLE: Inks Definitive Agreement With Repechage ----------------------------------------------------------- Elephant & Castle Group Inc. has entered into a definitive agreement with Repechage Investments Ltd. and its wholly owned subsidiary, Repechage Restaurant Group Ltd., with respect to the previously announced acquisition by Repechage of all outstanding securities of the company. The transaction will result in a purchase price of $0.7982 per common share and $2.3946 per preferred share of the company and will be implemented by way of a court-approved plan of arrangement under the Business Corporations Act. Pursuant to the terms of the Arrangement, Repechage will also acquire all outstanding share purchase warrants of the company at a price equal to the amount by which the per share consideration under the Arrangement exceeds the exercise price of such warrants, and all principal and interest due to holders of the company's senior debt will be repaid in full. The board of directors of the company has received a fairness opinion from Capital West Partners with respect to the acquisition consideration and has recommended approval of the acquisition by the company's shareholders. The parties anticipate closing the Arrangement in the first calendar quarter of 2007. The Arrangement is conditional upon, among other customary closing conditions, the approval by the company's common shareholders and the company's creditors, as well as approval of the Arrangement by the British Columbia Supreme Court. The company will apply to the British Columbia Supreme Court for an interim order calling a special meeting of its common shareholders and creditors to be held in March 2007. The Arrangement Agreement includes a commitment by the company not to solicit alternate transactions to the Arrangement. In addition, the company has granted a right to Repechage to match an unsolicited competing offer. Repechage has also entered into agreements with each of GE Investment Private Placement Partners II, Crown Life Insurance Company, Rick Bryant, CEO of the company, Roger Sexton, CFO Peter Laurie, COO of the company, holders of approximately 92% of the company's outstanding share capital on a fully-diluted basis, pursuant to which each of such holders have agreed to support the Arrangement. About Repechage Investments Based in Halifax, Nova Scotia, Repechage Investments is an investment company formed under the laws of Newfoundland and Labrador that holds investments in the transportation, service and real estate sectors. The company is closely held, with a majority of its shares being held by David L. Dobbin and members of his family. About Elephant & Castle Based in Vancouver, British Columbia, Elephant & Castle Group Inc. (OTCBB: PUBSF) -- http://www.elephantcastle.com/-- is the premier operator and franchisor of authentic British-style pubs with 24 locations throughout North America. * * * In its interim financial statements for the third quarter ended Sept. 24, 2006, Elephant & Castle's balance sheet indicated $14,805,000 in total assets, $22,105,000 in total liabilities, and $7,300,000 in stockholders' deficit. The company also had an accumulated deficit of $20,866,000 for the three-month period ended Sept. 24, 2006. GEO GROUP: Closes Acquisition of CentraCore Properties for $427.6M ------------------------------------------------------------------ The GEO Group Inc. closed its acquisition of CentraCore Properties Trust for approximately $427.6 million. GEO paid $32.58 per common share of CPT, inclusive of the repayment of $40 million in CPT debt and the payment of $20 million in transaction related fees and expenses. The acquisition was financed through the use of $365 million in new term loan borrowings and $62.6 million cash on hand. The amended senior secured credit facility consists of the 7-year term loan and a $150 million, 5-year revolving credit facility. It was underwritten by BNP Paribas. "We are pleased with the acquisition of CentraCore Properties Trust," George C. Zoley, Chairman and Chief Executive Officer of GEO, said. "The acquisition allows our company to ensure the long-term ownership, control, and utilization of these facilities, while reducing our exposure to escalating use costs in the future. We can now move forward toward enhancing the value of these important new company assets." Lehman Brothers acted as GEO's financial adviser in connection with this transaction. Akerman Senterfitt served as GEO's legal advisor. About CentraCore Properties Based in Palm Beach Gardens, Florida, CentraCore Properties Trust (NYSE:CPV) -- http://www.correctionalpropertiestrust.com/-- is a correctional real estate investment trust. CPT owns 13 correctional facilities totaling 8,671 beds, of which 11 facilities totaling 7,545 beds are currently leased to GEO under sale-lease back agreements. About GEO Group Headquartered in Boca Raton, Florida, The GEO Group, Inc. (NYSE: GEO) -- http://www.thegeogroupinc.com/-- delivers correctional, detention and residential treatment services to federal, state and local government agencies around the globe. It has government clients in the USA, Australia, South Africa, Canada and the United Kingdom. Its operations include 62 correctional and residential treatment facilities, with a total design capacity of 52,000 beds. * * * As reported in the Troubled Company Reporter on Jan. 23, 2007, Standard & Poor's Ratings Services assigned a BB rating to its $515 million senior secured credit facility, with a recovery rating of 1, indicating a high expectation for full recovery of principal in the event of a payment default. S&P has affirmed its BB- corporate credit rating on GEO and revised the rating outlook to negative from stable. Also, the rating on GEO's senior unsecured debt rating was lowered to B from B+, reflecting unsecured lenders' less favorable recovery position than the senior secured lenders under the company's pro forma capital structure. S&P has also lowered its preliminary senior unsecured shelf debt rating to B from B+. GRANITE BROADCASTING: U.S. Trustee Unable to Form Official Panel ---------------------------------------------------------------- Diana G. Adams, the Acting United States Trustee for Region 2, advises the United States Bankruptcy Court for the Southern District of New York that she has been unable to appoint an official committee of unsecured creditors in Granite Broadcasting's Chapter 11 case. The U.S. Trustee contacted the 20 largest unsecured creditors listed in the Debtor's petition in an attempt to form an official committee, Trial Attorney Lisa L. Lambert, Esq., relates on Ms. Adam's behalf. However, an insufficient number of eligible creditors indicated a willingness to serve on the committee, Ms. Lambert says. Under Section 1102(a) of the Bankruptcy Code, the U.S. Trustee may appoint a committee of creditors holding unsecured claims. The U.S. Trustee may also appoint additional committees of creditors or of equity security holders as it deems appropriate. An official committee ordinarily consists of the persons, willing to serve, that hold (i) the seven largest claims against the debtor, in the case of a creditors panel, or (ii) the seven largest amounts of equity securities of the debtor, in the case of an equity panel. A party-in-interest may request for appointment of additional committees of creditors or of equity security holders if necessary to assure adequate representation of creditors or equityholders. The U.S. Trustee will appoint any such committee. A committee is empowered under Section 1103 to, among others, investigate acts, conduct, assets, liabilities and financial condition of a debtor; the operation of the debtor's business; and the desirability of the continuance of that business. The committee may also participate in the formulation of a plan. Granite Broadcasting's largest unsecured creditors include: -- D.B. Zwirn Specialist Opportunities Fund, L.P., which holds guaranty claim for $30,000,000; -- Katz Media, which holds a trade claim for $35,514; -- the Delaware Secretary of State, which holds a $33,000 claim; -- Music Express East, Inc., which holds a trade claim for $13,718; -- Ameren CILCO, which holds a trade claim for $11,930; -- New Revenue Solutions, which holds a trade claim for $10,823; and -- Qwest Communications, which holds a trade claim for $9,619. Headquartered in New York, Granite Broadcasting Corp. (OTC Bulletin Board: GBTVQ) -- http://www.granitetv.com/-- owns and operates, or provides programming, sales and other services to 23 channels in 11 markets: San Francisco, California; Detroit, Michigan; Buffalo, New York; Fresno, California; Syracuse, New York; Fort Wayne, Indiana; Peoria, Illinois; Duluth, Minnesota- Superior, Wisconsin; Binghamton, New York; Utica, New York and Elmira, New York. The company's channel group includes affiliates of NBC, CBS, ABC, CW and My Network TV, and reaches approximately 6% of all U.S. television households. The company and five of its debtor-affiliates filed for chapter 11 protection on Dec. 11, 2006 (Bankr. S.D.N.Y. Case No. 06-12984). Ira S. Dizengoff, Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, it estimated assets of $443,563,020 and debts of $641,100,000. HEALTH MANAGEMENT: Will Give $10 Per Share Special Cash Dividend ---------------------------------------------------------------- Health Management Associates Inc. has disclosed a recapitalization of its balance sheet designed to deliver immediate value to its shareholders while enabling them to participate in the company's future growth. The recapitalization will reduce HMA's overall cost of capital, enabling the company to achieve a more optimal capital structure intended to enhance its enterprise value. As part of the recapitalization, HMA will return approximately $2.4 billion to shareholders through a $10.00 per share one-time special cash dividend. The special dividend is payable on March 1, 2007, to shareholders of record on Feb. 27, 2007, and HMA's common stock will start trading on the ex-dividend basis beginning on March 2, 2007, the date after the payment date, in accordance with NYSE listing rules. Shareholders who sell their shares prior to or on the payment date of March 1, 2007, will also be selling their right to receive the special cash dividend. Shareholders are advised to contact their financial advisor before selling their shares. Joseph V. Vumbacco, Chief Executive Officer and Vice Chairman, said, "The recapitalization we are initiating today enables HMA to deliver value to shareholders, while continuing to fulfill our commitment to invest in our hospitals to ensure their ability to provide the highest quality of care to patients and service to our physicians and communities. "We are capitalizing on current capital market conditions, which present attractive debt financing options for strong, well-managed companies. We believe our plan represents a prudent and efficient use of our balance sheet capacity that will enable HMA to continue generating sustainable free cash flow to meet our capital needs and growth objectives." HMA will recapitalize its balance sheet through $3.25 billion of new senior secured credit facilities, including the refinancing of amounts outstanding under the company's current revolving line of credit. The $3.25 billion senior secured credit facilities, which are pre-payable without penalty, consist of a seven-year $2.75 billion term loan and a $500 million six-year revolving credit facility (expected to be unfunded at closing), which will be secured by a portion of the Company's assets. HMA's $400 million of 6.125% senior notes and $588 million of convertible subordinated notes will remain outstanding. However, the 6.125% Senior Notes will be secured pari passu with the senior credit facility. Banc of America Securities LLC is acting as financial advisor to HMA in this transaction, and has committed to provide the new senior secured credit facilities, with such commitment being subject to customary closing conditions. William J. Schoen, Chairman of the Board, said, "Our Board of Directors and executive leadership have been engaged in a thoughtful, strategic process to explore a number of alternatives designed to consider the current realities of the capital marketplace and to determine how best to deliver value to our shareholders while best positioning our hospitals and our company for future success -- clinically, operationally, and financially. We ultimately reached three central conclusions: (1) We will shift our sources of capital away from equity and toward debt, because the debt capital markets currently comprise a more attractive source. (2) We will reinforce and strengthen our ability to meet all existing commitments and known future opportunities to invest capital in our hospitals and communities; this will ensure that we continue to provide the best possible care to patients, service to our physicians, and growth for our organization. (3) We will issue a one-time dividend as our means of returning excess capital to the shareholders; this will give our existing shareholders the opportunity to continue participating in the company's future performance and growth. We believe the transaction we have chosen will best support these central conclusions and thus best benefit our patients, our physicians, and the communities we serve, as well as our shareholders and employees." HMA also announced that in the fourth quarter of 2006, it will record $200 million, or approximately $0.50 per diluted share, of bad debt expense as additional reserve for self-pay receivables. In June 2005, HMA modified its reserve policy to fully reserve self-pay receivables after 120 days, instead of 150 days, based upon cash collections at the time. The industry and HMA have experienced continued growth in self-pay patients. Based upon a recently completed analysis of cash collections commenced approximately one year following the policy change in June 2005, HMA will now begin reserving a significant portion of self-pay accounts as of the date of service consistent with emerging industry practice in the first quarter of 2007. The company said its new reserve policy should be viewed in conjunction with its recent settlement of existing class action litigation challenging the amounts its hospitals charged for medical services to uninsured patients. Under the settlement agreement, and in the interest of increased transparency, beginning in January 2007 HMA will discount the gross billing charge to uninsured patients by 40 to 60 percent. HMA does not expect the result of this uninsured policy change to significantly affect the company's operating income, as it expects reduced revenues from uninsured patients will be offset by anticipated reduced bad debt expense. About HMA Health Management Associates, Inc. (NYSE: HMA) -- http://www.hma- corp.com/ -- owns and operates general acute care hospitals in non-urban communities located throughout the United States. Upon completion of the pending transaction to sell the 125-bed Southwest Regional Medical Center, the 103-bed Summit Medical Center, and the 76-bed Williamson Memorial Hospital, HMA will operate 57 hospitals in 14 states with approximately 8,300 licensed beds. * * * As reported in the Troubled Company Reporter on Jan. 19, 2007, Moody's Investors Service assigned a Ba2 rating to the proposed senior secured credit facilities of Health Management Associates, Inc. Moody's also assigned HMA a Corporate Family Rating of Ba3. The outlook for the ratings is stable. INTERSTATE BAKERIES: Wants DIP Financing Extended to Feb. 9, 2008 ----------------------------------------------------------------- Interstate Bakeries Corporation has filed a motion with the U.S. Bankruptcy Court for the Western District of Missouri seeking approval of, among other things, an extension of the maturity date of its post-petition debtor-in-possession financing facility to Feb. 9, 2008. The DIP financing facility is currently set to expire on June 2, 2007. The hearing on the amendment is scheduled for Feb. 16, 2007 in conjunction with the hearing to approve the employment agreement of Craig D. Jung as the company's new chief executive officer and a member of the company's newly reconstituted Board of Directors. To date, IBC has not borrowed under its $200 million DIP financing facility, although it has issued letters of credit under the facility in the amount of $109.1 million, primarily in support of the company's insurance programs. Availability under the DIP facility is currently $69.3 million. J.P. Morgan Chase Bank, agent for the DIP financing facility during the bankruptcy cases, will continue to act as agent and syndicate the extended financing facility. IBC said that it is optimistic that it will receive the support of the lenders that are party to the DIP financing facility to extend the facility through Feb. 9, 2008, as well as the consent of the prepetition lenders to such transactions; however, there can be no assurances that such lenders will agree to the extended DIP financing facility on the terms and conditions currently contemplated by the proposed amendment or that alternative lenders or sources of financing will be available in the event no agreement to extend is reached with such lenders. A full-text copy of the Ninth Amendment to the DIP Financing Facility Agreement with J.P. Morgan Chase is available for free at http://ResearchArchives.com/t/s?193b Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due Aug. 15, 2014, on Aug. 12, 2004) in total debts. INTERSTATE BAKERIES: Names Craig Jung as Chief Executive Officer ---------------------------------------------------------------- Interstate Bakeries Corporation named Craig D. Jung, 53, as its new chief executive officer and a member of the company's newly reconstituted Board of Directors. Mr. Jung's employment and appointment to the Board are subject to approval by U.S. Bankruptcy Court for the Western District of Missouri. The company filed a motion on Jan. 30, 2007, with the Court requesting authorization to enter into an employment agreement with Mr. Jung. The motion is scheduled to be heard Feb. 16, 2007, and, if approved, would become effective immediately. Mr. Jung will replace Tony Alvarez II, co-founder and co-chief executive of Alvarez & Marsal (A&M), the corporate advisory and turnaround management services firm. Mr. Alvarez has served as chief executive officer of IBC since the Company filed Chapter 11 in September 2004. "Craig Jung is the right choice to lead the company going forward," Michael Anderson, a long-time member of IBC's Board of Directors, who was elected Board Chairman on Jan. 24, 2007, said. "He is a highly respected executive with prior CEO and COO experience and a proven track record in leading performance turnarounds." Mr. Anderson thanked Tony Alvarez for his stewardship of the company. "Tony Alvarez's leadership contributions have been invaluable in bringing IBC to this critical point, and the Board is extremely appreciative of his efforts." Mr. Jung previously served as CEO of Panamerican Beverages, formerly the third-largest Coca-Cola bottler in the world with $2.6 billion of revenues. In May 2003, Mr. Jung led the sale of Panamco, Panamerican Beverages' successor, to Coca-Cola FEMSA, S.A. de C.V. in a transaction valued at $3.6 billion. Mr. Jung also served as founding chief operating officer of Pepsi Bottling Group, helping take that firm public in a $5 billion IPO in 1999. In 11 years at PepsiCo, Mr. Jung served in a variety of senior executive assignments in general management, marketing and sales. His assignments at PepsiCo included successfully turning around revenue and profit performances at Frito-Lay's Canadian operations, and leading a successful turnaround of Pepsi-Cola's South American operations. Mr. Jung graduated in 1975 from West Point and received his master's degree in public administration from Harvard University in 2004. Under terms of a three-year employment agreement, Mr. Jung will receive an annual base salary of $900,000 and a signing bonus of $1.2 million. Beginning with the 2009 fiscal year, he will be eligible to participate in the company's annual performance bonus plan. In the event company performance objectives are met, he will be entitled to receive an annual bonus equal to 100% of his base salary. Mr. Jung will be entitled to receive additional cash awards for enterprise value created during the bankruptcy period, as well as equity once the company emerges from Chapter 11. During the term of his employment, Mr. Jung will participate in all employee and executive benefit programs. Resignation of a Director IBC said that David Weinstein, a member of its Board of Directors who had been serving as lead director, has resigned effective immediately. No timetable has been established for filling the vacancy created as a result of Mr. Weinstein's resignation. About Interstate Bakeries Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due Aug. 15, 2014, on Aug. 12, 2004) in total debts. JARDEN CORP: Proposed $400 Mil. Sub. Notes Rated B3 by Moody's -------------------------------------------------------------- Moody's Investors Service affirmed its corporate family and probability of default ratings of B1 for Jarden Corporation and assigned a B3 rating and LGD5, 86% loss given default assessment to the company's proposed $400 million subordinated note issue. The ratings and assessments assigned to the proposed subordinated note issue are subject to review of final documentation, with no material change to the terms and conditions of the notes and the transaction as presented to Moody's. The rating outlook, which was negative, was revised to positive. The positive rating outlook reflects the progress that Jarden has made in its integration of its 2005 acquisitions of Holmes Group and AHI as well as the 2006 acquisition of the Pine Mountain log business. The successful integration of these acquisitions has improved the company's scale, with sales for the period ending Dec. 31, 2006, reaching an estimated $3.85 billion. In addition, these acquisitions have broadened Jarden's portfolio of brands across multiple product segments with brands that have No. 1 or No. 2 positions in the majority of the company's segments. Jarden's financial metrics have shown improvement as the company has improved margins and cash flow, as well as the benefit of the share offer concluded in November 2006 which resulted in proceeds of $145 million which were used to reduce debt. Proceeds from the new subordinated note issue will be used to fund prepayment in full of the company's outstanding $180 million 9 3/4% senior subordinated notes with the balance used to fund a prepayment of the company's secured term debt. Moody's expects to withdraw ratings on the existing subordinated notes upon repayment in full. These ratings were affirmed and amended: -- Corporate Family Rating at B1 -- Probability of Default Rating at B1 -- Senior Secured Bank Loan Rating at Ba3, LGD3, 34%, previously LGD3, 41% Assigned: -- $400 million Senior Subordinated Notes at B3, LGD5, 86% Jarden Corporation is a leading manufacturer and distributor of niche consumer products used in and around the home. The company's primary segment include Consumer Solutions, Branded Consumables, and Outdoor. Headquarted in Rye, New York the company reported consolidated net sales of approximately $3.85 billion for the 12 month period ending Dec. 31, 2006. JPMORGAN AUTO: Moody's Rates Unclassified Certificates at Ba2 ------------------------------------------------------------- Moody's Investors Service has assigned provisional ratings to the JPMorgan Auto Receivables Trust 2007-A transaction. These are the rating actions: * JPMorgan Auto Receivables Trust 2007-A -- Class A-1 Asset-Backed Notes, rated Prime-1 -- Class A-2 Asset-Backed Notes, rated Aaa -- Class A-3 Asset-Backed Notes, rated Aaa -- Class A-4 Asset-Backed Notes, rated Aaa -- Class B Asset-Backed Notes, rated Aa3 -- Class C Asset-Backed Notes, rated Baa1 -- Certificates, rated Ba2 JPMORGAN AUTO: S&P Assigns BB Rating to Unclassified Certificates ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to JPMorgan Auto Receivables Trust 2007-A's $449.4 million asset-backed notes. The preliminary ratings are based on information as of Jan. 29, 2007. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The characteristics of the pool being securitized; -- Credit enhancement in the form of subordination, overcollateralization, and excess spread; -- Timely interest and principal payments made under stressed cash flow modeling scenarios appropriate to the rating category; and, -- A sound legal structure. Preliminary Ratings Assigned JPMorgan Auto Receivables Trust 2007-A Class Rating Amount ----- ------ ------ A-1 (senior) A-1+ $132,000,000 A-2 (senior) AAA $154,000,000 A-3 (senior) AAA $84,000,000 A-4 (senior) AAA $53,900,000 B (subordinated) A $11,280,000 C (subordinated) BBB $11,280,000 Certificates (subordinated) BB $2,940,000 *The actual size of these tranches will be determined on the pricing date. KANSAS CITY SOUTHERN: S&P Puts Ratings on Negative CreditWatch -------------------------------------------------------------- Standard & Poor's Ratings Services placed most of its ratings on Kansas City Southern, including the 'B' corporate credit rating, on CreditWatch with negative implications. The 'D' rating on the preferred stock is not on CreditWatch. The CreditWatch placement follows the railroad company's disclosure that it is seeking consents to amend certain definitions in the indentures related to its 9 �% notes due 2008 and its 7 �% notes due 2009 and to waive defaults which may have arisen in conjunction with a covenant violation. The consent solicitation expires on Feb. 9, 2007, but the company is offering special incentives for consents to be delivered by 5 p.m. on Feb. 5, 2007. "If Kansas City Southern fails to get the consent solicitations needed to resolve the defaults, ratings could be lowered," said Standard & Poor's credit analyst Lisa Jenkins. Standard & Poor's believes that the company is also in default under its bank agreement as a result of this situation. While we do not expect the banks or bondholders to demand immediate repayment of their loans, Kansas City Southern will likely be precluded from borrowing additional amounts until the matter is resolved. Standard & Poor's will continue to monitor the situation and take rating actions as required. If Kansas City Southern cures its defaults, ratings will be removed from CreditWatch. Kansas City Southern is a U.S.-based freight railroad company that also has extensive operations in Mexico. KEYSTONE TRUCK: Organizational Meeting Scheduled on February 13 --------------------------------------------------------------- Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, will hold an organizational meeting to appoint an official committee of unsecured creditors in Keystone Truck Equipment, Inc. and Keystone Truck Equipment and Sales, Inc.'s chapter 11 case at 2 p.m., on Feb. 13, 2007, at 833 Chestnut Street, Suite 501, Chapter 11, 341(a) Meeting Room, in Philadelphia, Pennsylvania. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. The meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. However, a representative of the Debtors will attend and provide background information regarding the cases. Creditors interested in serving on a Committee should complete and return to the U.S. Trustee a statement indicating their willingness to serve on an official committee. Official creditors' committees, constituted under Section 1102 of the Bankruptcy Code, ordinarily consist of the seven largest creditors who are willing to serve on a committee. In some Chapter 11 cases, the U.S. Trustee is persuaded to appoint multiple creditors' committees. Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes that the reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Based in New Britain, Pennsylvania, Keystone Truck Equipment, Inc. and its debtor-affiliate, Keystone Truck Equipment Sales & Service, Inc. -- http://www.keystonetruck.com/-- sell truck equipment parts and accessories. The companies filed for chapter 11 protection on December 22, 2006 (Bankr. E.D. Pa. Case Nos. 06- 16067 and 06-16069). Douglas J. Smillie, Esq., at Fitzpatrick Lentz and Bubba P.C., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, Keystone Truck Equipment listed estimated assets of $1 million to $100 million and estimated debts of $100,000 to $1 million, while Keystone Truck Equipment Sales & Service listed estimated assets and debts of $100,000 to $1 million. LEVITZ HOME: Court Approves Travelers and Resurgence Agreements --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved a claims services agreement between Levitz Home Furnishings Inc., its debtor-affiliates and Travelers Indemnity Company. The Court also approved an Exchange and Reimbursement Agreement between the Debtors and Resurgence Asset Management, LLC. Prior to the Debtors' bankruptcy filing, Travelers issued various insurance policies to the Debtors. Both parties also entered into certain claims services agreements by which Travelers administered certain of the Debtors' self-insured programs. In exchange for the insurance coverage, the Debtors, pursuant to an insurance program, were obligated to (a) pay Travelers certain premiums, and (b) reimburse Travelers certain amounts set forth in corresponding agreements. The Debtors initially paid an estimated premium amount and then made payments based on actual losses and expenses, subject to contractual obligations. As required under the Insurance Program, Travelers was the beneficiary of six irrevocable letters of credit. This includes the L/C issued by ABN-AMRO Bank, N.V., for $5,068,640. The Debtors and PLVTZ affirm that: * LHFI is the account party to the ABN-AMRO L/C; * the ABN-AMRO L/C was cash collateralized by PLVTZ; and * the ABN-AMRO L/C has been drawn in full by Travelers. PLVTZ represents that it has satisfied in full all ABN-AMRO reimbursement obligations. The L/Cs back the Debtors' Obligations, and Travelers has drawn the full amount of the L/Cs, or $17,550,000. Under the Insurance Program, any excess L/C proceeds are returned to the issuer of the L/C. Travelers also holds a $211,691 cash deposit that also backs the Debtor' Obligations. The Parties sought to agree on the amount of the Debtors' Obligations to Travelers; to remit the Deposit and certain L/Cs proceeds to PLVTZ as purchaser of the cash proceeds of the L/Cs; and to exchange releases in connection with all claims. Resurgence L/Cs Levitz Furniture LLC and Resurgence Asset Management, LLC established various letters of credit securing workers' compensation and other potential obligations for the benefit of Travelers and its related entities. M.D. Sass Corporate Resurgence Partners III, LP and Resurgence Asset Management, a former equity partner of the Debtors, were obligated to assist the Debtors in obtaining the Travelers L/C pursuant to an exchange and reimbursement agreement dated Nov. 9, 2004, between certain of the Debtors and certain of Resurgence's affiliates. Pursuant to the Exchange and Reimbursement Agreement, Resurgence established: * a letter of credit for $1,700,000 when Levitz Furniture and TIAA-Cref or its predecessor-in-interest entered into a lease for non-residential real property located in Mira Loma, California; and * a letter of credit for $3,350,000 when Seaman Furniture Company, Inc., and Matrix/PR I, LLC or its predecessor-in- interest entered into a lease for non-residential real property located in Robbinsville, New Jersey. When the Robbinsville Lease was rejected on June 6, 2006, PLVTZ provided Matrix with a new letter of credit for $1,500,000 and paid Matrix $1,875,000 in cash in satisfaction of Matrix's rejection damages. The Robbinsville L/C funds for $3,350,000 are presently held in escrow by Matrix's counsel pending resolution of the dispute between Seaman, PLVTC and Resurgence regarding ownership of the proceeds of the L/Cs. Resurgence has contended, and PLVTZ has denied, that Resurgence is entitled to any and all proceeds or funds of the Travelers L/C, the Mira Loma L/C, and the Robbinsville L/C. To avoid the cost and expense of a litigation regarding the ownership of the L/Cs and the entitlement to the proceeds and funds of the L/Cs, Levitz, Seaman, PLVTZ and Resurgence have entered into a settlement agreement. Similarly, to further avoid the cost and expense of a litigation regarding the amount of Travelers' claims, the ownership of the Travelers L/C, and the entitlement to the excess proceeds and funds the L/Cs would entail, Levitz, PLVTZ and Travelers have entered into a stipulated agreement. The salient terms of the Resurgence Settlement Agreement are: * On or before Jan. 30, 2007, PLVTZ will pay to Resurgence, by wire transfer of immediately available funds, $2,000,000 in settlement of the disputes. The Settlement payment will be the sole ownership of Resurgence; * PLVTZ will: -- pay to Resurgence the fees and expenses necessary to maintain the Mira Loma L/C until it is terminated by Resurgence; and -- at its own cost and expense, replace the Mira Loma L/C with a new letter of credit for the benefit of TIAA- Cref, in an amount to be negotiated by and between PLVTZ and TIAA-Cref. Upon establishment of the New Mira Loma L/C, Resurgence may terminate the Mira Loma L/C. Upon the performance of the obligations set forth in the Resurgence Settlement Agreement, the proceeds of the Mira Loma L/C will be remitted to PLVTZ and the Mira Loma proceeds constitute the sole and lawful property of PLVTZ; * Matrix's counsel will remit the escrowed funds to PLVTZ immediately upon timely payment of the Settlement Payment by PLVTZ to Resurgence and upon receipt of joint wire instructions from Matrix and PLVTZ; * The excess Travelers Funds, the Mira Loma Proceeds and the Escrowed Funds will be the sole and lawful property of PLVTZ; and * The obligations of the parties to the Resurgence Settlement Agreement are expressly contingent upon: -- Payment by Travelers to PLVTZ of the proceeds of the Travelers Stipulation, provided that if PLVTZ does not pay the Settlement Payment to Resurgence by Feb. 14, 2007, Resurgence will have the right to terminate the Settlement Agreement after three days prior notice had been given to the parties; and -- Reciprocal releases of PLVTZ, the Debtors and Resurgence. The Stipulation Under the Court-approved stipulation, Levitz, PLVTZ and Travelers agree that: * Travelers is allowed a general unsecured claim for $14,362,000, which will be satisfied by Travelers' retention of proceeds of the L/Cs in the allowed amount; * Travelers will retain the proceeds of all L/Cs other than a portion of the ABN-AMRO L/C, and the proceeds of the ABN-AMRO L/C will be remitted to Levitz for $3,188,000; * Travelers will retain $1,880,331 of the ABN-AMRO L/C; * Travelers will remit the cash deposit for $211,691 to Levitz Furniture; * Immediately upon receipt of the L/C Payment and Deposit, Levitz will remit the L/C Payment and Deposit to PLVTZ; and * Levitz, PLVTZ, and Travelers exchange mutual releases. Upon PLVTZ's receipt of the funds contemplated by the Resurgence Settlement Agreement and the Travelers Stipulation, PLVTZ will: * reduce its DIP claim by $3,400,000; and * pay $100,000 to the General Unsecured Creditors Trust, for the benefit of general unsecured creditors. About Levitz Home Furnishings Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc. -- http://www.levitz.com/-- retails furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. The Company and its 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq., at Jones Day, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $245 million in assets and $456 million in debts. Jay R. Indyke, Esq., at Kronish Lieb Weiner & Hellman LLP represents the Official Committee of Unsecured Creditors. Levitz sold substantially all of its assets to Prentice Capital on Dec. 19, 2005. (Levitz Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) MESABA AVIATION: Treatment of Claims Under Reorganization Plan -------------------------------------------------------------- Mesaba Aviation Inc. delivered a Disclosure Statement explaining its Plan of Reorganization to the U.S. Bankruptcy Court for the District of Minnesota on Jan. 24, 2007. In the Disclosure Statement, John G. Spanjers, Mesaba's president and chief operating officer, relates that the Reorganized Debtor will be responsible for the payment of accrued trade payables, employee compensation and benefits, certain taxes and other obligations incurred in the ordinary course of Mesaba's business since the filing of its Chapter 11 case, which have accrued but are not yet payable as of the date of closing of the transaction. The Liquidating Trust, on the other hand, will be responsible for payments to holders of Unsecured Priority Tax Claims and Allowed Claims and Equity Interests in Classes 1 through 4, and a portion of Administrative Claims not satisfied by the Reorganized Debtor or Northwest Airlines, Inc. The remainder of the proceeds of the sale will be paid to the holder of the Allowed Class 5 Equity Interest. Treatment of Unclassified Claims Under the Plan, Administrative Claims and Professional Fees that are (a) Closing Items will be paid by the Reorganized Debtor from the Administrative Expense Reserve, (b) neither Closing Items nor Preserved Ordinary Course Administrative Claims, will be paid by the Liquidating Trustee from Trust Cash. Preserved Ordinary Course Administrative Claims will be paid by the Reorganized Debtor in accordance with either the terms and conditions under which the Claim arose, or in the ordinary course of the Reorganized Debtor's business. Allowed Priority Unsecured Tax Claim will be paid in full by the Trust from the Priority/Secured Claim Reserve. All Allowed Reclamation Claims will be paid by the Trust from Trust Cash. On or before the effective date of the Plan, all of the Debtor's outstanding obligations to the DIP Lender pursuant to the DIP Financing Order will be fully and finally satisfied in accordance with their terms using the Debtor's Cash. Upon full payment of the obligations, the Liens securing the DIP Facility will be released and extinguished. All fees owing to the U.S. Trustee will be paid by the Debtor as the fees may become due up to and including, the Closing Date. Claim Replacement Bonus and EIP According to Mr. Spanjers, the Claim Replacement Bonus is to partially compensate certain management employees who have worked for Mesaba throughout the reorganization for their extra effort and for the compensation reduction they have taken. The Claim Replacement bonus will be paid to up to 272 employees and will total no more than $911,210. Employees must remain employed on the Effective Date of the Plan to be eligible to receive payment. The Claim Replacement Bonus will be paid from the Administrative Expense Reserve as an Administrative Claim. To the extent there are insufficient funds in the Administrative Expense Reserve to pay the Claim Replacement Bonus, the Liquidating Trustee will pay the Bonus from Trust Cash. The Exit Incentive Plan is to compensate the Debtor's officers for their efforts in completing the successful reorganization of the Debtor. The maximum aggregate total of the EIP is $1,088,790 if all conditions to payment are reached. The amounts due under the EIP will be paid from the Administrative Expense Reserve provided that to the extent the Reserve is insufficient to fully satisfy the EIP, the remaining balance of the EIP will be paid by the Liquidating Trustee from Trust Cash according to this schedule: (a) 20% of the total EIP Balance upon the Distribution of Trust Assets to holders of Class 4 General Unsecured Claims satisfying 25% of each Class 4 General Unsecured Claim, whether through a single Distribution or several Distributions; (b) 25% of the total EIP Balance upon the Distribution of Trust Assets to holders of Class 4 General Unsecured Claims satisfying 50% of each Class 4 General Unsecured Claim, whether through a single Distribution or several Distributions; (c) 30% of the total EIP Balance upon the Distribution of Trust Assets to holders of Class 4 General Unsecured Claims satisfying 75% of each Class 4 General Unsecured Claim, whether through a single Distribution or several Distributions; and (d) The remainder of the total EIP Balance upon the Distribution of Trust Assets to holders of Class 4 General Unsecured Claims satisfying in full all Class 4 General Unsecured Claims, including applicable interest. Treatment of Classified Claims Class 1 Claims will be paid by the Trust from the Priority Unsecured Claim Reserve. Class 2 Claims will be satisfied in full by the payment, in Cash or in kind, from the Trust Assets. The Claims may also be satisfied by an agreement between the claimholder and the Liquidating Trustee. If the holder of a Class 2 Claim has an Unsecured Deficiency Claim, the Deficiency Claim will be treated under the Plan as a Class 4 General Unsecured Claim or Priority Unsecured Tax Claim, as determined by the Bankruptcy Court. Class 3 Claims will be satisfied by the transfer to the claimholder of any Trust Asset that solely constitutes the Cash Collateral of the holder. The Claims may also be satisfied by an agreement between the claimholder and the Liquidating Trustee. If the holder of a Class 3 Claim has an Unsecured Deficiency Claim, the deficiency claim will be treated under the Plan as a General Unsecured Claim. Class 4 Claims will be treated in accordance with the terms of the Trust Agreement. Specifically: (a) Class 4 Beneficial Interests in the Trust will be allocated to holders of Allowed Claims in Class 4; (b) Interest will accrue on the unpaid balance of Allowed Claims in Class 4 at the applicable Unsecured Interest Rate or the applicable Contractual Default Rate in accordance with the Trust Agreement from the later of the Petition Date or, if the Claim is for future damages, the date to which the present value of the Claim is discounted; and (c) Holders of Allowed Claims in Class 4 will receive Distributions of Available Cash on account of their Class 4 Beneficial Interest in the Trust. Class 5 Claims will be canceled and extinguished on the Effective Date, and treated in accordance with the terms of the Trust Agreement: (a) Class 5 Beneficial Interests in the Trust will be allocated to the holder of the Allowed Class 5 Equity Interest; and (b) The holder of the Allowed Class 5 Equity Interest will receive Distributions of Available Cash on account of its Class 5 Beneficial Interest in the Trust. Oversight Committee The Oversight Committee will consist of three members, two of which will be appointed by the Official Committee of Unsecured Creditors, and the other one appointed by MAIR Holdings, Inc. On or before the Confirmation Hearing, the Committee and MAIR will nominate their candidates by filing a notice with the Bankruptcy Court and serving the notice upon each other and upon the Debtor and the U.S. States Trustee. The candidates will be approved as members of the Oversight Committee at the Confirmation Hearing. The members will not have assumed any fiduciary duties to the Creditors, the Trust, Liquidating Trustee or any other parties-in-interest in the Debtor's case. Members of the Oversight Committee will not be compensated for their services, but they will be reimbursed for all reasonable out-of-pocket expenses, other than fees and expenses of counsel to the individual members of the Committee. Releases On the Effective Date, the Debtor will be deemed to have released (i) MAIR and its officers, directors, employees, and professionals from any and all claims, causes of action, and other liabilities of whatever kind or nature arising before the Effective Date, including the Litigation Claims, provided that the release will not affect or impair any right of set-off or defense as to the amount of the MAIR Claim, and (ii) the Debtor's current and prior directors and officers from any claims or causes of action the Debtor may have against the parties, unless the claims or causes of action arise out of acts or omissions by the parties constituting willful misconduct or gross negligence. Within three business days after the Effective Date, the parties to the Adversary Proceeding No. 06-03431 filed by MAIR against the Debtor and the Creditors Committee will submit to the Bankruptcy Court an order dismissing the complaint with prejudice. Alternatives to Plan Filing Mr. Spanjers notes that if the Plan is not timely confirmed, an alternative is a Chapter 7 liquidation proceeding in which a liquidation trustee would be appointed by the Bankruptcy Court to oversee the liquidation of the Debtor's assets. The trustee would be entitled to: (a) retain a new set of professionals, including lawyers and accountants, to review and analyze all of the Claims and the Debtor's assets; and (b) request a fee equal to 3% of all distributions made to the Creditors. The Debtor believes that the conversion to a Chapter 7 liquidation proceeding and the appointment of a new trustee and new estate professionals would increase professional fees and result in further delays and a reduction in distributions to the Creditors. Another alternative is that the Debtor could continue in a Chapter 11 proceeding while its assets are being liquidated and distributed. The Debtor's assets would be sold subject to higher and better bids under Bankruptcy Court supervision, and the Debtor's Litigation Claims would be pursued. However, the professionals would continue to be retained and their services would be necessary in preparing the requests and applications and advising the Debtor and the Creditors Committee. Additionally, every action of the Debtor would be subject to the same level of scrutiny and the objections of the various parties-in-interest. "Obviously, this would further delay the receipt of any distributions by the Creditors since the Bankruptcy Court's approval would need to be obtained prior to the sale of any assets, and the professional fees incurred in the Chapter 11 proceeding would drain the Debtor of the cash that would otherwise be paid to the Creditors," Mr. Spanjers says. Furthermore, another alternative plan could be pursued by other parties-in-interest to the extent that they are allowed by the Bankruptcy Court and the Bankruptcy Code. These plans could be pursued with permission of the Bankruptcy Court or after the Debtor has failed to gain acceptance of the Plan. Mr. Spanjers notes that pursuit of multiple plans would be expensive, since the professionals would need to evaluate the competing plans and file objections to the plans. He explains that this would incur a substantial amount of professional fees, which would ultimately reduce the funds available to repay the Creditors of the Debtor. After exploring various alternative scenarios, the Debtor and its professional advisors conclude that the Plan enables the holders of Claims and Equity Interests to realize the maximum recovery under the circumstances. A full-text copy of Mesaba's Disclosure Statement is available at no charge at http://ResearchArchives.com/t/s?192b About Mesaba Aviation Headquartered in Eagan, Minn., Mesaba Aviation Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) MESABA AVIATION: Disclosure Statement Hearing Set for February 27 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Minnesota set a hearing at 1:30 p.m., on Feb. 27, 2007, to consider approval of the Disclosure Statement explaining Mesaba Aviation Inc.'s Plan of Reorganization. Deadline for filing objections to the Disclosure Statement is February 22. The Plan Proponents assure the Court that the Disclosure Statement contains adequate information that will allow creditors to make an informed judgment about the Plan. Headquartered in Eagan, Minn., Mesaba Aviation Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) NATIONAL CINEMEDIA: S&P Assigns 'B+' Corporate Credit Rating ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating and stable outlook to National CineMedia Inc. and its operating subsidiary, National CineMedia LLC, which are rated on a consolidated basis. At the same time, Standard & Poor's assigned bank loan and recovery ratings to National CineMedia LLC's proposed $805 million senior secured bank credit facility. The 'B+' bank loan rating, at the same level as the corporate credit rating, and recovery rating of '3' indicate a meaningful recovery of principal in a payment default scenario. National CineMedia LLC is the operating company, which generates all the operating cash flow, and the borrower of the proposed facility. National CineMedia LLC will be jointly owned by its founding members and National CineMedia Inc., which is the minority holding company with voting control. The company will use proceeds from the bank loan facilities to redeem the preferred equity units held by the founding members, to repay existing indebtedness, and to partially compensate the founding members for modifying their contracts with National CineMedia LLC. The founding members will also receive proceeds from an expected IPO of National CineMedia Inc. in exchange for modifying their contracts with National CineMedia LLC. At closing, the company is expected to have $735 million in debt outstanding. "The ratings reflect National CineMedia's limited operating history, some revenue and EBITDA sensitivity to theater attendance trends, high leverage, and aggressive dividend policy," said Standard & Poor's credit analyst Tulip Lim. "These factors are partially offset by the company's good market position in the growing cinema advertising niche market, high barriers to entry provided by long-term contracts with exhibitors, and strong EBITDA margins." The company sells, distributes, produces, and develops on-screen cinema advertising through its network of screens, and provides promotional services to advertisers in theater lobbies. National CineMedia is one of the leading in-theater networks in North America, with 30-year contracts with the three largest national movie exhibitors in the U.S.: Regal, AMC, and Cinemark. NELLSON NUTRACEUTICAL: Wants Until Feb. 14 to File Chapter 11 Plan ------------------------------------------------------------------ Nellson Nutraceutical Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend, until Feb. 14, 2007, their exclusive period to file a chapter 11 plan. The Debtors also want their exclusive period to solicit acceptances of that plan extended until April 15, 2007. The Debtors' exclusive period to file a plan expired on Jan. 15, 2007. This is the Debtors' fourth motion to extend the exclusive periods. On Dec. 14, 2006, the Court concluded a three-month trial to determine the Debtors' enterprise value. By the request of some parties to the Valuation Trial, the Court has not issued a valuation opinion. Currently, the Debtors, Fremont Investors VII, LLC, UBS AG, Stamford Branch, and other lenders are engaged in settlement negotiations regarding a consensual restructuring of the Debtors. The Debtors tell the Court that given the ongoing settlement discussions between the parties, the Debtors believe that an extension of the exclusivity periods is necessary. Headquartered in Irwindale, California, Nellson Nutraceutical, Inc., formulates, makes and sells bars and powders for the nutrition supplement industry. The Debtors filed for chapter 11 protection on Jan. 28, 2006 (Bankr. D. Del. Case No. 06-10072). Laura Davis Jones, Esq., Rachel Lowy Werkheiser, Esq., Richard M. Pachulski, Esq., Brad R. Godshall, Esq., and Maxim B. Litvak, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C. represent the Debtors in their restructuring efforts. Lawyers at Young, Conaway, Stargatt & Taylor, LLP, represent an informal committee of which General Electric Capital Corporation and Barclays Bank PLC are members. In its Schedules of Assets and Liabilities filed with the Court, Nellson Nutraceutical reports $312,334,898 in total assets and $345,227,725 in total liabilities when it filed for bankruptcy. NEW ENGLAND COLLEGE: Moody's Upgrades B1 Rating to Ba3 ------------------------------------------------------ Moody's Investors Service has upgraded the rating on New England College to Ba3 from B1. The rating outlook is stable at the higher rating level and applies to $4.8 million of Series 1999 bonds issued through the New Hampshire Higher Educational and Health Facilities Authority. Legal security: General obligation of College secured by gross receipts subject to prior lien of HUD on revenues generated by certain dormitory facilities; mortgage interest in certain campus facilities; 1.25x debt service covenant; MADS to Revenues of 0.15x covenant Interest rate derivatives: None. Strengths: * Growing enrollment in both traditional undergraduate programs and expanded graduate programs, leading to fairly rapid net tuition revenue growth; * Operating performance continues to be positive, stemming from healthy enrollment trends and improved management oversight of budget; * Liquidity, while still weak, has improved including a significant boost from the sale of privately held stock; CHALLENGES * Small revenue and financial resource base leaves College vulnerable to unexpected shifts in demand or financial performance. * Despite reportedly doubling unrestricted cash since the end of FY2006 with the sale of privately held stock, the College's liquidity remains very weak; in addition, a significant portion of the College's restricted funds are pledged as collateral to a bank line of credit, and broad liquidity measures are still very thin. * Market remains vulnerable, with much of recent enrollment growth experienced in competitive graduate training on location at corporations throughout state and region. Recent developments: Favorably, New England College continues to experience modest enrollment growth with healthy rates of net tuition revenue increases driven in part by growth in graduate enrollment in various cohort programs offered directly at corporate locations. The College has begun marketing online programs through an agreement with an online education provider. While Moody's believes these cohort and online programs can be more volatile, we take comfort with management's use of part-time faculty to staff the programs and improved budgetary oversight by management. This improved budgetary oversight has led to debt service coverage in excess of 2.5x for the past four years. The College's liquidity profile is also expected to show further improvement in FY2007. At the end of FY2006, the College held approximately $7.3 million of total cash and investments, of which just over $1.2 million was unrestricted. During the current fiscal year, the College liquidated a privately held stock holding for $1.5 million compared to a value of $308,000 recorded at the end of FY2006. The College borrowed $1.5 million through a revenue anticipation note in FY2006, which was privately placed with a local bank. The note will need to be reissued annually and presents some risk should the College not be able to find a buyer for the bonds. Future capital plans are limited, although the College is in the early stages of considering the construction of a residence hall which would likely be funded with a combination of gifts and debt. The project would not be expected to exceed $2 to $3 million. Outlook: The stable outlook is driven by Moody's comfort with improved management oversight of the budget and a trend of growing net tuition revenue that should help to sustain adequate debt service coverage and modest improvements in liquidity over time. However, the College remains highly vulnerable to unexpected downturns in enrollment or investment performance. What could change the rating -- up Significant increases in liquidity, with demonstrated stability of enrollment trends. What could change the rating -- down Failure to generate balanced operating performance or significant increase in leverage. Key data and ratios: -- Total Enrollment: 1,189 full time equivalent students -- Total Direct Debt: $7.9 million -- Expendable Resources to Debt: 0.03x -- Expendable Resources to Operations: 0.01x -- Three-Year Average Operating Margin: 2.3 % -- Operating Cash Flow Margin: 11.6% NVIDIA CORP: Agrees To Buy Acceleware Corp. for $2.9 Million ------------------------------------------------------------ Acceleware Corp. has signed an agreement to complete a non-brokered private placement of 4,500,000 units to NVIDIA Corp. at a price of $0.65 per Unit for aggregate gross proceeds of $2,925,000. The price per Unit represents a 20% discount from Market Price on Jan. 11, 2007, which was reserved with the TSX Venture Exchange on Jan. 12, 2007. Each Unit consists of one common share and one- half of one common share-purchase warrant. Each whole Warrant is exercisable into one Common Share at a price of $1.29 per Common Share for a period of 24 months from the issuance of the Warrants. The completion of the private placement is subject to TSX Venture Exchange approval. The net proceeds from the Offering will be used for the marketing, sales, and ongoing development of acceleration products for electromagnetic simulation and seismic data processing markets, as well as capital equipment, facilities, and working capital. "We're delighted to make this strategic investment in Acceleware. The investment reflects our ongoing commitment and enthusiasm toward the ecosystem of high performance computing based on GPU technologies," said Jeff Herbst, Vice President of Business Development at NVIDIA. "We have the highest regard for Acceleware and its management team, and believe they will quickly emerge as leaders in the GPU Computing revolution." "We've been collaborating with NVIDIA for over two years on the deployment of GPUs to accelerate non-graphics software applications such as cell-phone design, seismic data processing, printed circuit board design, drug discovery, nanophotonic communications device design, reservoir simulation, lithography mask design, and others," said Sean Krakiwsky, CEO of Acceleware. "NVIDIA's investment in Acceleware is an endorsement of these efforts and provides us with significant additional funding to execute our business plan and to capitalize on the rapidly growing demand for GPU-based computing products." About Acceleware Corp. Acceleware Corp. (TSX VENTURE: AXE) -- http://www.acceleware.com/ -- develops and markets performance-optimized acceleration products that significantly reduce the run-times of high- performance computing applications such as cell-phone design and seismic data processing. By leveraging the base processing power of graphics processing units with proprietary acceleration software, compute-intensive applications can achieve unparalleled performance and speed. Acceleware is developing and selling products for the electromagnetic, energy, biomedical, pharmaceuticals, industrial and military markets. About NVIDIA Corp. Based in Santa Clara, California, NVIDIA Corporation -- http://www.nvidia.com/-- is a manufacturer of programmable graphics processor technologies. The company creates innovative, industry-changing products for computing, consumer electronics and mobile devices. NVIDIA has annual revenues of over $2.5 billion. * * * As reported in the Troubled Company Reporter on Dec. 8, 2006, Standard & Poor's Ratings Services removed its ratings on Santa Clara, California-based Nvidia Corp. from CreditWatch, where they were placed with negative implications on Aug. 15, 2006. The corporate credit rating was affirmed at 'BB-'. The outlook is stable. ORECK CORP: Moody's Cuts Corporate Family Rating to B2 From B1 -------------------------------------------------------------- Moody's Investors Service lowered Oreck Corporation's corporate family rating from B1 to B2 as well as its Probability of Default Rating from B2 to B3. The ratings remain under review for a possible further downgrade. The rating downgrade reflects the adverse financial impact to Oreck of recent operational challenges arising from ongoing disruptions to the company's manufacturing, distribution and call center operations and weaker response to recent direct marketing efforts. The company's headquarters and manufacturing facilities were in areas significantly affected by Hurricane Katrina and while the company was able to promptly restore operations and resolve insurance claims, ongoing operational challenges have proved more complicated and costly than initially anticipated. The rating remains under review for a possible further downgrade, as recent weaker than anticipated performance may result in the company being in breach of financial covenants, and if there is a breach and adequate arrangements are not taken to preserve liquidity, the ratings could be lowered further. In the event the company is able to maintain its liquidity in a satisfactory manner, and there are no other adverse developments, Moody's would expect to confirm the B2 corporate family rating with a stable outlook. These ratings were downgraded: -- Corporate Family Rating lowered to B2 from B1 -- Probability of Default Rating lowered to B3 from B2. -- 1st lien Bank Facility: lowered to B2 from B1, LGD3, 31% from LGD2, 29% Oreck Corporation, based in New Orleans, is a leading manufacturer and marketer of premium priced vacuum cleaners and air purifiers. PAETEC COMMS: Moody's Holds B2 Corp. Family Rating & Will Remove ---------------------------------------------------------------- Moody's Investors Service has affirmed PAETEC Holding Corp's B2 corporate family rating following the changes in the proposed financing which PAETEC. PAETEC plans to upsize its 1st lien term loan facility by $175 million to $800 million to replace the previously contemplated $175 million 2nd lien term loan facility. As a result, Moody's has downgraded PAETEC's proposed $50 million revolving credit facility and $800 million 1st lien secured term loan to B2, and has withdrawn the prospective Caa1 rating of the $175 million second lien secured term loan. The 1st lien debt will represent the single class of debt in capital structure, and is therefore not notched with respect to the corporate family rating. On Jan. 16, 2007, Moody's had assigned a B1 rating to the company's proposed 1st lien facilities and a Caa1 rating to the 2nd lien term loan. Moody's has taken these rating actions: * PAETEC Holding Corp. -- Corporate Family Rating, Affirmed B2 -- Probability of Default Rating, Downgraded to B3 from B2 -- Senior Secured Revolving Credit Facility, Downgraded to B2, LGD3, 34%, from B1, LGD3, 40% -- 1st Lien Senior Secured Term Loan, Downgraded to B2, LGD3, 34%, from B1, LGD3, 40% -- 2nd Lien Senior Secured Term Loan, Ratings withdrawn The outlook is stable * Paetec Communications, Inc. -- Corporate Family Rating -- Affirmed B2 to be withdrawn -- Senior Secured Revolving Credit Facility, Affirmed B1 to be withdrawn -- 1st Lien Senior Secured Term Loan, Affirmed B1 to be withdrawn -- 2nd Lien Senior Secured Term Loan, Affirmed Caa1 to be withdrawn * US LEC Corp. -- Corporate Family Rating Affirmed Caa1 to be withdrawn -- 2nd Lien Senior Secured Notes Affirmed B3 to be withdrawn Paetec Communications, headquartered in Fairport, New York, is a CLEC and generated revenues of $509 million in 2005. US LEC, headquartered in Charlotte, North Carolina, is a CLEC and generated revenues of $388 million in 2005. PAETEC HOLDING: S&P Holds B Rating on Proposed $800 Mil. Sr. Loan ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' bank loan rating and '5' recovery rating on PAETEC Holding Corp.'s proposed $800 million senior secured first-lien term loan, which was increased from $625 million, and its $50 million senior secured first-lien revolving credit. "The 'CCC+' bank loan rating and '5' recovery rating on the company's $175 million senior secured second-lien term loan were withdrawn because the loan is being removed from PAETEC's proposed financing plans," said Standard & Poor's credit analyst Allyn Arden. All other ratings, including the 'B' corporate credit rating on Fairport, New York-based PAETEC Holding, were affirmed; the outlook is stable. As part of the transaction, which is expected to close imminently, debt at the merging entities Paetec Corp. and US LEC Corp. will be fully repaid and ratings on these entities will be withdrawn at that time. The '5' recovery rating for the senior secured first-lien term loan and revolver indicates negligible recovery of principal in the event of payment default or bankruptcy. PAETEC Holding's debt will be about $875 million on an operating lease-adjusted basis. Total bank proceeds of $800 million, combined with $25.2 million of available cash and $373.6 million in new equity will be used to refinance $522.4 million of existing Paetec Corp. and US LEC debt, pay down $268.4 million of US LEC's preferred stock, finance the $373.6 million equity purchase price, and pay related fees and expenses. The ratings on PAETEC Holding reflect a vulnerable business risk profile stemming from significant competition from larger, better- capitalized regional Bell operating companies and other competitive local exchange carriers, integration risks, the lack of any sustainable competitive advantages, low barriers to entry, and a highly leveraged financial profile. PAETEC competes with Verizon Communications Inc. and AT&T Inc. for midsize and large business customers. These customers generate average monthly recurring revenue of about $1,800 to $1,900 each, considerably higher than other rated CLECs. Additionally, PAETEC will be challenged to successfully integrate the two companies while maintaining its customer base as competition increases in its markets. Tempering factors include reasonable prospects for solid discretionary cash flow generation, the potential for meaningful operating and capital expenditure synergies as a result of the merger, long average contract durations and low churn, and geographic diversity. PARMALAT SPA: Opens Door to Settlement Negotiations --------------------------------------------------- Parmalat S.p.A. disclosed that, in relation to the press release published on Nov. 22, 2006, concerning the stay of discovery through Dec. 31, 2006, for all Parmalat related proceedings before Hon. Lewis A. Kaplan of the U.S. Southern District of New York, the company has not requested an extension of the stay and it has no knowledge that any parties involved in Multi District Litigation have sought a further stay. Discovery resumed as of Jan. 1, 2007. In any case, Parmalat proceeds with actions for settlement negotiations. About Parmalat Based in Milan, Italy, Parmalat S.p.A. -- http://www.parmalat.net/ -- sells nameplate milk products that can be stored at room temperature for months. It also has 40-some brand product line, which includes yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The company's U.S. operations filed for chapter 11 protection on Feb. 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. Parmalat S.p.A. and its Italian affiliates filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on Dec. 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. The Parma Court has declared the units insolvent. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. Parmalat has three financing arms: Parmalat Capital Finance Ltd., Dairy Holdings, Ltd., and Food Holdings, Ltd. Dairy Holdings and Food Holdings are Cayman Island special-purpose vehicles established by Parmalat SpA. The Finance Companies are under separate winding up petitions before the Grand Court of the Cayman Islands. Gordon I. MacRae and James Cleaver of Kroll (Cayman) Ltd. serve as Joint Provisional Liquidators in the cases. On Jan. 20, 2004, the Liquidators filed Sec. 304 petition, Case No. 04-10362, in the United States Bankruptcy Court for the Southern District of New York. In May 2006, the Cayman Island Court appointed Messrs. MacRae and Cleaver as Joint Official Liquidators. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph, represent the Finance Companies in the Sec. 304 case. The Honorable Robert D. Drain presides over the Parmalat Debtors' U.S. cases. (Parmalat Bankruptcy News, Issue No. 84; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). PARMALAT SPA: Court Moves Permanent Injunction Hearing to Feb. 27 ----------------------------------------------------------------- The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York adjourned the hearing to consider entry of a permanent injunction in the Foreign Debtors' Section 304 cases until Feb. 27, 2007. In the interim, the preliminary injunction is extended until March 2, 2007. All persons subject to the jurisdiction of the U.S. court are enjoined and restrained from engaging in any action against the Foreign Debtors without obtaining permission from the Bankruptcy Court. The Civil and Criminal Court of Parma, in Italy, will continue to have exclusive jurisdiction to hear and determine any suit, action, claim or proceeding, other than an enforcement action initiated by the U.S. Securities and Exchange Commission, and to settle all disputes, which may arise out of -- the construction or interpretations of the Foreign Debtors' restructuring plan approved by the Italian Court; or -- any action taken or omitted to be taken by any person or entity in connection with the administration of the Italian Plan. In a TCR-Europe report on Sept. 8, 2006, five creditors and parties-in-interest filed with the U.S. Court their objections to Dr. Enrico Bondi's request for a permanent injunction order in Parmalat's ancillary proceedings. Dr. Bondi is the authorized foreign representative of Parmalat Finanziaria S.p.A. and certain of its affiliates. In his request, Dr. Bondi filed with the Court a proposed permanent injunction order pursuant to Section 304 of the Bankruptcy Code. Dr. Bondi also submitted with the Court a memorandum of law supporting his permanent injunction request. A full-text copy of the proposed Permanent Injunction Order is available for free at http://researcharchives.com/t/s?e22 Creditors BankBoston, N.A., FleetBoston Financial, Bank of America Corp., Bank of America National Trust & Savings Association, Banc of America Securities, LLC, and Bank of America, N.A., told the Court that the proposed Permanent Injunction Order cannot be approved because it would constitute an inappropriate anti-foreign suit injunction. BofA, et al. also argued that the Foreign Debtors' request for extra-territorial application of the Permanent Injunction would unduly limit the ability of domestic and foreign creditors to pursue all appropriate remedies outside of the United States in accordance with applicable foreign law. The Pension Benefit Guaranty Corp., which provides termination insurance for all of the Debtors' Pension Plans, said the proposed Permanent Injunction Order contains illegal discharges, releases, exculpations and injunctions. The PBGC said it was willing to withdraw its objections if the proposed Permanent Injunction Order clarifies that: -- no provisions of or proceeding within the Foreign Debtors' reorganization cases in Italy and the Section 304 cases before the U.S. Bankruptcy Court will in any way be construed as discharging, releasing, limiting or relieving the Foreign Debtors, or any other party from any liability with respect to the Pension Plans or any other defined benefit pension plan; and -- the PBGC and the Pension Plans will not be enjoined or precluded from enforcing liability resulting from any of the provisions of the Foreign Debtors' restructuring plan approved by the Italian court, or the entry of a Permanent Injunction Order. Grant Thornton International does not want the Permanent Injunction to apply to it in any manner in the conduct of: -- a securities fraud class action pending before the U.S. District Court for the Southern District of New York; -- three actions initiated by Dr. Bondi against banks and accounting firms; and -- actions commenced by the trustees of the U.S. Debtors and two liquidators of Parmalat SpA's Cayman Islands affiliates. Grant Thornton is a defendant in those actions. On behalf of Israel Discount Bank of New York, Bruce S. Nathan, Esq., at Lowenstein Sandler PC, in New York, argued that in seeking entry of a permanent injunction order, the Foreign Debtors must demonstrate that claimholders in the Italian proceedings are receiving "just treatment" and not experiencing "prejudice and inconvenience" in the claims administration process. The Foreign Debtors cannot meet this burden as to IDB, Mr. Nathan says. IDB's claims arise from promissory notes totaling US$6,000,000 in principal plus interest, guaranteed by Parmalat S.p.A. Hermes Focus Asset Management Europe, Ltd.; Cattolica Partecipazioni, S.p.A.; Capital & Finance Asset Management S.A.; Societe Monderne des Terrassements Parisiens; and Solarat -- the lead plaintiffs in a securities class action -- want the proposed Permanent Injunction Order modified to clarify that it does not impact their rights to pursue claims against Reorganized Parmalat. About Parmalat Based in Milan, Italy, Parmalat S.p.A. -- http://www.parmalat.net/ -- sells nameplate milk products that can be stored at room temperature for months. It also has 40-some brand product line, which includes yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The company's U.S. operations filed for chapter 11 protection on Feb. 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. Parmalat S.p.A. and its Italian affiliates filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on Dec. 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. The Parma Court has declared the units insolvent. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. Parmalat has three financing arms: Parmalat Capital Finance Ltd., Dairy Holdings, Ltd., and Food Holdings, Ltd. Dairy Holdings and Food Holdings are Cayman Island special-purpose vehicles established by Parmalat S.p.A. The Finance Companies are under separate winding up petitions before the Grand Court of the Cayman Islands. Gordon I. MacRae and James Cleaver of Kroll (Cayman) Ltd. serve as Joint Provisional Liquidators in the cases. On Jan. 20, 2004, the Liquidators filed Sec. 304 petition, Case No. 04-10362, in the United States Bankruptcy Court for the Southern District of New York. In May 2006, the Cayman Island Court appointed Messrs. MacRae and Cleaver as Joint Official Liquidators. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph, represent the Finance Companies in the Sec. 304 case. The Honorable Robert D. Drain presides over the Parmalat Debtors' U.S. cases. (Parmalat Bankruptcy News, Issue No. 84; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). POINT NORTH: Receives Various Proposals for Different Assets ------------------------------------------------------------ Point North Energy Ltd. has provided an update as to the status of its Companies' Creditors Arrangement Act process. As of Jan. 26, 2007, as the result of a lengthy and comprehensive marketing process, the company has received offers on all of its properties including Ft. Liard, Northwest Territories. The company was unable to find a purchaser for the entire asset base, and consequently, offers have been accepted on various parcels of assets. These potential purchases are at different stages in the sales process. At this time, subject to monitor, regulatory and court approval, the company has offers totaling approximately $4.5 million for its producing and non-producing assets. The company has also received a $2.4 million offer, subject to monitor, regulatory and court approval, to take over its office lease. Creditors are cautioned that the majority of the funds recovered from the company's potential asset sales are subject to significant contingencies, including Court approval. The remaining assets of Point North, including the corporate shell and frontier seismic data library, are unlikely to generate the funds required to pay in full the outstanding claims against the company under the CCAA process. The company presently anticipates that any plan of restructuring or liquidation will result in no return for holders of common shares of the company. Accordingly, the company urges that the appropriate caution be exercised with respect to existing and future investments in these securities as their value and prospects are highly speculative. As of Jan. 26, 2007, Point North received claims totaling $34 million under the CCAA process. The company has accepted $15.4 million and is currently reviewing an additional $12.6 million in claims. Efforts are being made to resolve these disputed claims in a timely and fair manner. About Point North Point North Energy Limited (TSX: PNY) is a major participant in the exploration and development of the natural gas potential of the Fort Liard, Northwest Territories. Point North is the successor company to Purcell Energy Ltd. It was created as the result of a Plan of Arrangement that closed on Nov. 2, 2005. On Sept. 27, 2006, the Court of Queen's Bench of Alberta granted an initial order to Point North under the Companies' Creditors Arrangement Act. PORT TOWNSEND: Bankruptcy Filing Cues S&P's Default Rating ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior secured ratings on Port Townsend, Washington-based Port Townsend Paper Corp. to 'D' from 'CCC'. "The rating action followed Port Townsend's announcement that PT Holdings Co. Inc., the parent company of Port Townsend, and its U.S. affiliates filed for voluntary protection under Chapter 11 of the U.S. Bankruptcy Code," said Standard & Poor's credit analyst Pamela Rice. The company, which manufactures packaging products, has experienced higher costs of sales from both increased energy and fiber prices, as well as a series of operational problems at its U.S. mill that substantially affected EBITDA--which was negative for the quarter--and cash flows. Port Townsend had about $150 million of debt at Sept. 30, 2006. PT HOLDINGS: Files for Chapter 11 Protection in Washington ---------------------------------------------------------- PT Holdings Company, Inc., the parent company of Port Townsend Paper Corporation, and its U.S. affiliates have filed for protection under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the Western District of Washington. The company's Canadian subsidiaries are not part of the filing. Through the Chapter 11 cases, the company will seek to implement an agreement in principle it has reached with members of an ad hoc committee holding more than 70% in principal amount of the Company's 11% Senior Secured Notes due 2011 on the terms of a consensual chapter 11 plan of reorganization. The agreement in principle is reflected in a term sheet filed with the Bankruptcy Court in connection with the Chapter 11 cases. The Term Sheet provides that holders of the Senior Secured Notes would receive, on a pro rata basis, in exchange for their allowed secured claims against the company (inclusive of principal and interest accrued through the petition date of the Chapter 11 cases): (i) newly issued notes in a principal amount not to exceed $75 million and (ii) 100% of the newly issued shares of common stock of reorganized PTPC, subject to dilution on account of the Management Equity Plan and warrants provided to existing holders of common equity to purchase 5.25% of the new common stock with a strike price equivalent to a $170 million total enterprise value. Upon emergence from Chapter 11, in accordance with the Term Sheet, the company anticipates that it will have less than $100 million of funded indebtedness, representing a reduction of at least $50 million from 2006 year-end. Additional terms and conditions of the reorganization will be outlined in a disclosure statement which will be sent to holders entitled to vote on the plan of reorganization after it is approved by the Bankruptcy Court. "The balance sheet restructuring will significantly enhance our financial strength and operational flexibility, which will benefit all of our stakeholders," Port Townsend Paper Corporation President and Chief Executive Officer John Begley stated. "We expect to improve our short- and long-term liquidity, allowing us to better serve our customers, to meet our debt service and working capital requirements and to fund capital expenditures for new programs." About PT Holdings PT Holdings Company, Inc., through its wholly owned subsidiary Port Townsend Paper Corporation -- http://www.ptpc.com/-- produces fiber-based lightweight containerboard in the U.S. and corrugated products in western Canada. The Port Townsend Paper family of companies employs approximately 800 people and annually produces more than 320,000 tons of unbleached Kraft pulp, paper and linerboard at its mill in Port Townsend, Washington. The company also operates three Crown Packaging Plants, two BoxMaster Plants, and the Crown Creative Group, located in British Columbia and Alberta. PT HOLDINGS: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: PT Holdings Company, Inc. aka PTPC Acquisition Co., Inc. 100 Paper Mill Hill Road P.O. Box 3170 Port Townsend, WA 98368 Bankruptcy Case No.: 07-10340 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- PTPC Packaging Co. Inc. 07-10341 Port Townsend Paper Corporation 07-10342 Type of Business: The Debtors manufactures unbleached Kraft pulp, Kraft paper, lightweight linerboard, gumming Kraft, laminating kraft, and counter rolls. See http://www.ptpc.com/ Chapter 11 Petition Date: January 29, 2007 Court: Western District of Washington (Seattle) Judge: Thomas T. Glover Debtors' Counsel: Gayle E. Bush, Esq. Katriana L. Samiljan, Esq. Bush Strout & Kornfeld 601 Union St., Suite 5500 Seattle, WA 98101-2373 Tel: (206) 292-2110 Estimated Assets: More than $100 Million Estimated Debts: More than $100 Million Port Townsend Paper Corporation's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Merrill & Ring Inc. Trade Debt $833,705 P.O. Box 1058 Port Angeles, WA 98362 Tel: (360) 452-2367 Fax: (360) 452-2015 Contact: Rod Quesnel Allen Logging Trade Debt $747,787 176462 Hwy. 101 Forks, WA 98332 Tel: (360) 374-6000 Fax: (360) 374-9256 Contact: Lloyd Allen Metro Waste Paper Recovery Trade Debt $697,402 Inc. 66 Shorncliffe Road Toronto, ON M8Z 5K1 Canada Tel: (604) 580-3070 Fax: (604) 522-6714 Contact: Ken Rasmussen Mary's River Cedar Trade Debt $549,700 P.O. Box 569 Montesano, WA 98563 Tel: (360) 249-5907 Fax: (360) 249-2227 Contact: Gary Westerkamp PriceWaterHouseCoopers LLP Auditor $415,271 1420 Fifth Avenue, Ste. 1900 Seattle, WA 98101 Tel: (206) 398-3151 Fax: (206) 398-3100 Contact: Kevin Bouchillon Portac, Inc. Trade Debt $383,277 4215 SR 509 N Frontage Road Tacoma, WA 98421 Tel: (253) 922-9900 Fax: (253) 587-6065 Contact: Gary Takahashi Gear Tech Mechanical, LLC Trade Debt $373,426 1121 Columbia Blvd. Longview, WA 98632 Tel: (360) 577-9178 Fax: (360) 577-8642 Contact: Jim Rhodes Waste Mgmt./Recycle America Trade Debt $354,024 P.O. Box 73356 Chicago, IL 60673 Tel: (206) 505-9030 Fax: (206) 767-0271 Contact: Heidi Zimmerman Kemira Chemicals, Inc. Trade Debt $303,206 2801 SE Columbia Way Suite 130 Vancouver, WA 98661 Tel: (800) 727-2215 Fax: (360) 694-9830 Contact: Carol Lambrecht Dunlap Towing Co. Trade Debt $300,825 P.O. Box 593 Laconner, WA 98257 Tel: (360) 466-6007 Fax: (360) 466-3116 NPE Inc. Freight $295,784 P.O. Box 4500 Unit 34 Portland, OR 97208 ConocoPhillips Company Trade Debt $279,204 1495 NW Gilman Blvd. Issaquah, WA 98027 Tel: (425) 369-2072 Fax: (425) 369-8897 Contact: Doug Lennon Evergreen Fiber, Inc. Trade Debt $246,615 Tolko Industries Ltd/Nicola Trade Debt $231,056 Valley Parrish Trucking Inc. Freight $216,267 Greencrow Trade Debt $212,646 Hermann Brothers Logging Trade Debt $212,539 Swift Transportation Co Inc. Freight $202,478 EQUA-CHLOR Trade Debt $199,320 Pacific Terminals Freight $181,883 QUEBECOR MEDIA: DBRS Affirms B (high) Senior Notes Rating --------------------------------------------------------- Dominion Bond Rating Service confirmed the ratings of Quebecor Media Inc. at BB (low) and B (high) for its secured bank debt and senior notes, respectively. The trends are Stable. DBRS also confirmed the ratings of Videotron Ltee at BB, and changed the trend to Positive from Stable, and Sun Media Corporation at BB with a Stable trend. QMI's ratings continue to be supported by its major operating subsidiaries, Videotron and Sun Media, which continue to perform solidly. DBRS notes that while Sun Media has generally been the major source of income for QMI in the past, Videotron now consistently pays a dividend that is more in-line with its proportion of QMI's consolidated cash flow from operations. DBRS does note that the dividend from Videotron, in addition to its higher capex levels, has put Videotron into a negative free cash flow position. This, in addition to higher capex levels expected in 2007, is expected to require higher debt levels at Videotron. However, this should be mitigated in 2008 as capex levels are reduced and as Videotron continues to benefit from strong EBITDA growth as it further increases the penetration of its cable, Internet and telephone services. DBRS notes that the dividends from Videotron and Sun Media continue to support QMI's cash requirements that DBRS has estimated total roughly $250 million on an annual basis. While QMI has more than doubled its dividend to its parents over the past three years to $100 million for 2006, DBRS expects dividend growth to moderate going forward with growth more in-line with the group's cash flow from operations. Furthermore, DBRS does not expect the recent suspension of the Quebecor World Inc. dividend to indirectly impact QMI as Quebecor World Inc.'s dividend is expected to remain stable and relatively modest at roughly $12 million per year. DBRS notes that QMI also continues to have good liquidity with $100 million in an undrawn revolver, and a manageable debt maturity schedule with no principal maturities and only modest repayments of its credit facilities over the next three years. Furthermore, the Company has benefited from its refinancing in early 2006 that significantly reduced its average interest costs Overall, DBRS believes that QMI can maintain its ratings based on the ongoing support of its strong and well-diversified operating subsidiaries. However, DBRS does caution that should competition intensify and cause pressure on Videotron and Sun Media's operations, this would likely indirectly cause pressure on QMI's credit profile and, therefore, its ratings. RECKSON ASSOC: Moody's Reviews Ba1 Ratings for Possible Downgrade ----------------------------------------------------------------- Moody's Investors Service downgraded Reckson's ratings to Ba1 from Baa3. This rating action comes after the acquisition completion by SL Green Realty Corp. of Reckson Associates Realty Corp. The ratings remain under review for possible downgrade. Moody's said Reckson's bondholders are in a weaker position post- closing because the transaction results in greater leverage and asset concentration. Moody's does not expect near-term changes in SL Green's current capital strategy which utilizes high levels of secured debt, total effective leverage and joint venture funding. Reckson's ratings were downgraded as a result of the geographic, asset and tenant concentrations within the combined portfolio. Moody's continued review reflects our need to evaluate the quality of the unencumbered assets and cash flow left supporting the bonds once a final legal structure of the combined entity and its long- term strategic capital structure are known. A conclusion of the review and return to stable outlook would be based on the Reckson L.P. being folded into SL Green with the combined entity's secured debt less than 25% and total effective leverage less than 55%. Should the Reckson L.P. become a wholly owned subsidiary, resulting in structural subordination of the Reckson bonds, the ratings could be further downgraded. These ratings were downgraded: * Reckson Operating Partnership, L.P. -- Senior unsecured debt to Ba1 from Baa3. These ratings were downgraded and withdrawn: * Reckson Associates Realty Corporation -- Preferred stock shelf to Ba2 from Ba1; * Reckson Operating Partnership, L.P. -- senior debt shelf to Ba1 from Baa3. SL Green Realty Corporation is a real estate investment trust that predominately acquires, owns, repositions and manages a portfolio of Manhattan office properties. As of Sept. 30, 2006, the REIT owned 27 office properties totaling 18.4 million square feet. SELECT MEDICAL: HealthSouth Deal Prompts Moody's Ratings Review --------------------------------------------------------------- Moody's placed the ratings of Select Medical Holdings Corp. including the B1 Corporate Family Rating, on review for possible downgrade following the disclosure that the company would acquire the outpatient rehabilitation business of HealthSouth Corporation for $245 million. Moody's review will focus on the extent to which an increase in debt reduces Select Medical's financial flexibility in a period in which the company is still absorbing changes in its long-term acute care hospital business. The proposed transaction would reduce the company's reliance on LTACH Medicare reimbursement; however, Moody's will consider whether that diversification will be able to offset declines in the LTACH business. The growth of Select Medical's LTACH business has slowed considerably and margins have deteriorated due to significant changes in Medicare reimbursement for those services. The company is also in the midst of transitions to be in compliance with the LTACH admission criteria that limit referrals from host hospitals. Reimbursement for the LTACH sector is also poised for additional cuts, although not as drastic as last year, based on the recently released proposal for the 2008 rate year. These ratings have been placed under review for possible downgrade: * Select Medical Holdings Corporation -- Senior unsecured floating rate notes due 2015, B3, LGD6, 90% -- Corporate Family Rating, B1 -- Probability of Default Rating, B1 -- Speculative Grade Liquidity Rating, SGL-2 * Select Medical Corporation -- Senior secured revolving credit facility, Ba1, LGD2, 19% -- Senior secured term loan, Ba1, LGD2, 19% -- 7.625% Senior subordinated notes due 2015, B2, LGD4, 67% HealthSouth's outpatient rehabilitation division is a network of approximately 600 facilities, located in 35 states and the District of Columbia, that provide high quality rehabilitative care for general orthopedic and sports injuries and conditions, as well as work-related injuries. Select Medical is a leading operator of specialty hospitals and outpatient rehabilitation in the United States. Select Medical had revenue of approximately $1.8 billion for the twelve months ended Sept. 30, 2006. SHERWOOD III: Moody's Rates $7 Million Class C Notes at Ba2 ----------------------------------------------------------- Moody's Investors Service assigned these ratings to Notes issued by Sherwood III ABS CDO, Ltd.: -- Aaa to $273,000,000 Class A1SA Variable Funding Senior Secured Floating Rate Notes Due 2047; -- Aaa to $50,000,000 Class A1SB Variable Funding Senior Secured Floating Rate Notes Due 2047; -- Aaa to $59,000,000 Class A1J Senior Secured Floating Rate Notes Due 2047; -- Aa2 to $51,000,000 Class A2 Senior Secured Floating Rate Notes Due 2047; -- A2 to $18,000,000 Class A3 Secured Deferrable Interest Floating Rate Notes Due 2047; -- Baa2 to $24,000,000 Class B Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2047 and -- Ba2 to $7,000,000 Class C Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2047. The Moody's ratings of the Notes address the ultimate cash receipt of all required interest and principal payments, as provided by the Notes' governing documents, and are based on the expected loss posed to Noteholders, relative to the promise of receiving the present value of such payments. The ratings reflect the risks due to the diminishment of cash flow from the underlying portfolio consisting of RMBS Securities, CMBS Securities and Other Asset-Backed Securities and Synthetic Securities due to defaults, the transaction's legal structure and the characteristics of the underlying assets. Church Tavern Advisors, LLC will manage the selection, acquisition and disposition of collateral on behalf of the Issuer. STRUCTURED ADJUSTABLE: Fitch Holds Low-B Ratings on Six Classes --------------------------------------------------------------- Fitch Ratings has upgraded 6 and affirmed 26 classes of Structured Adjustable Rate Mortgage Loan Trust residential mortgage-backed certificates, as: Series 2004-8 -- Class A affirmed at 'AAA'. Series 2004-13 -- Class A affirmed at 'AAA'; -- Class B1 upgraded to 'AAA' from 'AA+'; -- Class B2 upgraded to 'AA-' from 'A+'; -- Classes B3, BX affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; and, -- Class B5 affirmed at 'B'. Series 2004-17 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AA+'; -- Class B2 affirmed at 'AA'; -- Class B3 upgraded to 'AA-' from 'A+'; -- Class B4 upgraded to 'A+' from 'A'; -- Classes B5, BX upgraded to 'BBB+' from 'BBB'; -- Class B6 affirmed at 'BB'; and, -- Class B7 affirmed at 'B'. Series 2005-22 Group 1 -- Classes 1A, 2A, 3A affirmed at 'AAA'; -- Class B4-1 affirmed at 'BBB'; -- Class B5-1 affirmed at 'BBB-'; and, -- Class B6-1 affirmed at 'BB'. Series 2005-22 Group 2 -- Classes 4A, 5A affirmed at 'AAA'; -- Class B3-2 affirmed at 'BBB'; -- Class B4-2 affirmed at 'BBB-'; and, -- Class B5-2 affirmed at 'BB'. Series 2005-23 Group 1 -- Classes 1A, 2A affirmed at 'AAA'. Series 2005-23 Group 2 -- Classes 3A, 4A affirmed at 'AAA'. The affirmations reflect credit enhancement consistent with future loss expectations and affect $2.83 billion of outstanding certificates. The affirmed classes detailed above have experienced small to moderate growth in CE since closing. The upgrades reflect an improvement in the relationship of CE to future loss expectations and affect $15.10 million of outstanding certificates. The CE level for the upgraded classes have grown 2 to 3x their original CE level since closing. The pools are seasoned from a range of only 12 to 30 months. The pool factors range from 18% to 89%. The mortgage loans were originated by various banks and other mortgage lending institutions. The largest percentage of originations were those made by Aurora Loan Services Inc. The mortgage loans were acquired by Lehman Brothers Holdings Inc. The transactions consists of adjustable rate, conventional, fully amortizing mortgage loans, substantially all of which have original terms to stated maturity of 30 years, except for series 2004-8 which consists of fixed interest rate for the first 3, 5, or 7 years from the date of origination, after which the rate adjusts semi-annually or annually. The mortgage loans are master serviced by Aurora Loan Services, Inc., which is rated 'RMS1-' by Fitch. STRUCTURED ASSET: Fitch Holds Junk Rating on Class B5 Certificates ------------------------------------------------------------------ Fitch Ratings has affirmed 38 and downgraded one class of Structured Asset Securities Corp. residential mortgage-backed certificates, as: Series 2003-7H -- Class A affirmed at 'AAA'; -- Classes B1-F, B1-III affirmed at 'AA'; -- Classes B2-F, B2-III affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 downgraded to 'B' from 'BB'; and, -- Class B5 remains at 'CC/DR5'. Series 2003-23H -- Class A affirmed at 'AAA'; -- Classes 1B1, 2B1 affirmed at 'AA'; -- Classes 1B2, 2B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; and, -- Class B5 affirmed at 'B'. Series 2003-33H -- Class A affirmed at 'AAA'; -- Classes 1B1, 2B1 affirmed at 'AA'; -- Classes 1B2, 2B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; and, -- Class B5 affirmed at 'B'. Series 2004-5H -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; and, -- Class B5 affirmed at 'B'. Series 2004-12H -- Class A affirmed at 'AAA'; -- Classes 1B1, 2B1 affirmed at 'AA'; -- Classes 1B2, 2B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; and, -- Class B5 affirmed at 'B'. Series 2004-18H -- Class A affirmed at 'AAA'. Series 2004-20 -- Class A affirmed at 'AAA'. The affirmations on the above classes reflect adequate relationships of credit enhancement to future loss expectations and affect approximately $1.10 billion of certificates. The negative rating action taken on series 2003-7H class B4 affects $299,296 of outstanding certificates and is the result of cumulative pool losses and high delinquency levels. Jan. 25, 2007 remittance information indicates that 2.28% of the pool is currently over 90 days delinquent and cumulative losses are 0.07% of the original pool balance. Realized losses have averaged $12,450 a month over the past six months. Class B4 currently has 0.31% of credit support remaining. Even though the CE has increased as a percentage of the original pool balance, class B4 only has $234,195 of remaining CE. The pools are seasoned from a range of 27 to 47 months. The pool factors range from approximately 22% to 70%. The collateral consists of fixed-rate, conventional, fully amortizing first lien residential mortgage loans. The mortgage loans for series designated with an 'H' have a weighted average original loan to value ratio in excess of 101% and generally are partially covered by primary mortgage insurance polices issued by either United Guaranty Corporation or Mortgage Guaranty Insurance Corporation. The mortgage loans are master serviced by Aurora Loan Services, Inc., which is rated 'RMS1-' by Fitch. Series 2004-20 mortgage loans were originated or acquired by various originators or their correspondents in accordance with such originator's respective underwriting standards and guidelines. The mortgage loans are master serviced by CitiMortgage, Inc., which is rated 'RMS1' by Fitch. SUN MEDIA: DBRS Holds Senior Unsecured Notes' Rating at BB ---------------------------------------------------------- Dominion Bond Rating Service confirmed the rating of Sun Media Corporation's Senior Unsecured Notes at BB. The trend is Stable. DBRS also confirmed the ratings of Videotron Ltee at BB, and changed the trend to Positive from Stable, and the parent of both companies, Quebecor Media Inc., at BB (low)/B (high). The trends on QMI are Stable. DBRS notes that Sun Media has experienced EBITDA pressure in 2006 as a result of advertising and circulation revenue weakness at some of its daily urban newspapers and resulting from its launch of free dailies into more markets. However, DBRS expects that these pressures will subside in 2007 and along with the completion of new printing presses in Toronto and Montreal will result in stabilized EBITDA in 2007, albeit below historical levels. DBRS believes that the Company has alleviated the impacts of competitive-driven circulation erosion at The Toronto Sun and Le Journal de Montreal. Furthermore, with the expected completion of the upgrade of its printing plants in these locations Sun Media will be able to operate its production lines more efficiently in addition to giving it the ability to increase its advertising rates as a result of expanded printing capabilities. Overall, DBRS notes that Sun Media continues to benefit from increased advertising rates in the majority of its urban markets which more than offset the ongoing impact of subscriber erosion. Additionally, the company's papers in its western markets continue to experience strong advertising growth due to robust economies in western Canada, particularly in Alberta. As a result of all of these factors, DBRS expects EBITDA in 2008 to approach more normal levels of around $220 million. Sun Media's financial risk profile remains reasonable with debt levels expected to end 2006 roughly flat in the $630 million to $640 million range with good free cash flow generation of more than $100 million. While DBRS notes that Sun Media continues to pay a sizable dividend to its parent, QMI, the recent refinancing at QMI has moderately reduced QMI's funding needs, which should indirectly reduce the pressure on Sun Media, Videotron and other QMI operating companies. Additionally, assuming that dividends are held stable at current levels of roughly $150 million, Sun Media is expected to continue to generate a free cash flow deficit of between $50 million and $60 million in both 2006 and 2007. DBRS expects the company to continue to fund these deficits with cash tax savings that it continues to derive from tax loss sharing arrangements with QMI. While the company's key credit ratios are expected to experience further modest pressure in 2006, DBRS expects that these ratios will stabilize in 2007 and continue to remain reasonable for its rating. Overall, DBRS believes that Sun Media can maintain its rating while it stabilizes its operations in Toronto and Montreal and maintains a stable financial risk profile. However, should this pressure on its operations remain ongoing and dividends increase significantly causing further pressure on Sun Media's overall risk profile, DBRS would consider negative rating action. SUPERIOR WHOLESALE: S&P Rates $16.1 Million Class D Notes at BB --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Superior Wholesale Inventory Financing Trust 2007-AE-1's $1.401 billion floating-rate asset-backed term notes series 2007-A. The preliminary ratings are based on information as of Jan. 29, 2007. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The credit enhancement that is available to absorb losses at the assigned rating levels; -- The transaction structure, which incorporates certain amortization events, interest and principal allocation waterfalls, and portfolio concentration thresholds that help mitigate investor exposure to losses; -- The basis swaps, which mitigate basis risk and maintain a set amount of excess spread in the deal; -- The underwriting and servicing capabilities of GMAC LLC; and, -- The sound legal structure. The preliminary ratings address the timely payment of interest and the ultimate payment of principal by the legal final payment date, but do not address the likelihood that the notes will be repaid on the expected final payment date (January 2010). Preliminary Ratings Assigned Superior Wholesale Inventory Financing Trust 2007-AE-1 Class Rating Amount (mil.) ----- ------ ------------- A AAA $823.6 A-RN AAA $400.0 B A $112.7 C BBB $48.3 D BB $16.1 Certificates NR $209.3 NR -- Not rated TESORO CORP: Moody's Affirms Corporate Family Rating at Ba1 ----------------------------------------------------------- Moody's Investors Service affirmed Tesoro Corporation's Ba1 Corporate Family rating, Ba1, LGD4, 57% senior unsecured note ratings, Baa1, LGD2, 10% senior secured bank revolver rating, and Ba1 Probability of Default rating. Moody's has changed the rating outlook from stable to positive. These actions follow the company's report of $2.1 billion of acquisitions, including Shell Oil's very high complexity 100,000 barrels per day Wilmington, California Refinery, approximately 250 of Shell's southern California retail sites, and 140 retail sites in California, Nevada, and the Southwest from private USA Petroleum. TSO plans to fund the acquisition with at least $700 million of its substantial cash on hand, with the remainder funded with a suitable mix of secured bank revolver debt and senior unsecured notes. The change to a positive rating outlook reflects the acquisitions' likely resolution of the main operating risk that has been restraining TSO's ratings and the potential for an upgrade within 12 to 18 months. While TSO had de-levered substantially and carries high cash balances after the 2003 through 2007 refining up-cycle, the dominant ratings restraint has been risk concentration in its refining portfolio. While Tesoro holds 6 refineries, its largest refinery generates well over 50% of EBITDA and its two largest refineries generate over 75% of EBITDA. Golden Eagle experienced significant unscheduled downtime over the years though this has been improving. As well, four of Tesoro's refineries are well below 100,000 barrels of daily capacity, are of low complexity, and face varying degrees of inherent eventual risk of potential niche erosion. The acquisition's price per throughput barrel and per complexity barrel of the acquisition price should consider the additional substantial regulatory capital spending and spending on process optimization that had been delayed. While Moody's believes TSO paid a fair price for the refinery, it does appear to be a full price. Additionally, TSO now needs to demonstrate the sustained run time, light products yield, and unit cost performance it factored into its acquisition economics. Nevertheless, the Wilmington refinery acquisition is likely to move the refining portfolio into the scale, downtime risk diversification, and process diversification range deemed supportive of an investment grade rating once TSO demonstrates sound post-acquisition performance, 2007 margins prove to be supportive, leverage is reduced substantially and appears likely to remain at ranges compatible with a higher rating. At that time, Moody's would also consider the ratings impact of TSO's ongoing acquisition and funding strategies, the sector outlook at the time, TSO's record at avoiding unscheduled downtime, project cost and completion timing for the important coker conversion project at Golden Eagle, and expected capital spending burden, stock buyback activity, and scale of ongoing dividends. Moody's notes that the acquisition of the high complexity Wilmington coking refinery moves TSO's consolidated Nelson Complexity Index up to 9.65 from 8.4 . Moody's also recognizes that TSO's smaller low complexity refineries have been sufficiently configured over the years to perform well on the available crude oil feedstock choices and refined product requirements of the markets in which they operate. TSO's Golden Eagle and Wilmington refineries have very large deep conversion capacity to exploit wide cost differentials between heavy sour and light sweet crude oil. Additionally, Golden Eagle will be able to send its low-end intermediate streams that it has insufficient capacity upgrade, while the other five refineries are relatively dependent on more expensive light sweet crude oil. The Wilmington refinery provides greater exposure to high margin California gasoline economics and strong Los Angeles Basin margins. Overall, Moody's will monitor Tesoro's ratings over the next 12-18 months to see if a move to investment-grade is plausible. A ratings upgrade would require lower leverage, sustained conservative leverage policies, successful integration and operation of the Wilmington refinery, and on-budget on-time completion of the important Golden Eagle delayed coker project. Should free cash flow from operations prove to be insufficient to reduce debt to levels compatible with a higher rating, it would likely take a significant equity offering within the monitoring period to attain an upgrade. Moody's notes that, given the cyclicality and capital intensity of the sector, leverage would need to be compatible with expected cyclical margins. Tesoro Corporation is headquartered in San Antonio, Texas. THORNBURG MORTGAGE: Fitch Affirms Ratings on B4 & B5 Cert. Classes ------------------------------------------------------------------ Fitch Ratings has affirmed six classes of Thornburg Mortgage Securities residential mortgage-backed certificates, series 2004-3: -- Class A affirmed at 'AAA' -- Class B1 affirmed at 'AA' -- Class B2 affirmed at 'A' -- Class B3 affirmed at 'BBB' -- Class B4 affirmed at 'BB' -- Class B5 affirmed at 'B' These affirmations reflect credit enhancement consistent with future loss expectations and affect approximately $648 million of outstanding certificates. The classes detailed above have experienced small to moderate growth in CE since closing and there have been minimal collateral losses to date. The pool is seasoned 28 months and the pool factor is approximately 52% outstanding. The mortgage pool consists of conventional, hybrid and adjustable- rate, first lien mortgage loans on one- to four-family residential properties. Wells Fargo Bank, N.A., rated 'RMS1' by Fitch, is the master servicer. U.S. ENERGY: Countryside's Lender Okays $99 Mil. USEB Settlement ---------------------------------------------------------------- Countryside Power Income Fund discloses that its lending syndicate has approved the previously disclosed settlement agreement among the Fund's subsidiary, Countryside Canada Power Inc., and U.S. Energy Biogas Corp. and its parent, U.S. Energy Systems, Inc. The USEB Settlement Agreement, reached on Jan. 13, 2007, provides, among other things, for the Lender to have an allowed secured claim of $99,000,000 in the bankruptcy proceedings of USEB and its subsidiaries. The USEB Settlement Agreement has been approved by the respective company boards and remains subject to the approval of the U.S. Bankruptcy Court in the Southern District of New York overseeing USEB's Chapter 11 reorganization case, scheduled for Feb. 1, 2007. As of Jan. 25, 2007, the Fund's lending syndicate approved both the terms of the USEB Settlement Agreement and an extension of the prior waiver of the cross-default provisions of the credit agreement to May 31, 2007. The cross-default provisions were triggered by both USEB's filing for reorganization and its non- payment of debt service on Nov. 29, 2006. The terms of the current waiver extension and amendment will primarily grant the Fund immediate access to its credit facility commitment and permits the Fund, at its sole discretion, to make monthly distribution payments to unitholders during the waiver period. In consideration for the waiver extension and amendment, the Lender will pledge, among other things, its direct ownership interests and secured note held in Countryside U.S. Holding Corp., which is the primary holding company of the Fund's California cogeneration assets (Ripon Cogeneration LLC). The closing of the waiver extension and amendment to the Fund's credit agreement is expected to occur on or before Jan. 30, 2007. During the extended waiver period, the Fund will seek a long-term financing arrangement that reflects the expected monetization of the USEB secured claim under the USEB Settlement Agreement and provides the Fund with sufficient credit capacity to meet its growth commitments, including the full funding of construction of the new London cogeneration facility scheduled to be completed in 2008. About U.S. Energy Based in Avon, Connecticut, U.S. Energy Biogas Corp., a subsidiary of U.S. Energy Systems Corp. (NasdaqCM:USEY) -- http://www.usenergysystems.com/-- develops landfill gas projects in the United States. Formerly known as Zahren Alternative Power Corporation or ZAPCO, the company was formed in May 2001 after ZAPCO's acquisition by U.S. Energy Systems, Inc. Currently, the Debtor owns and operates 23 LFG to energy projects with 52 megawatts of generating capacity. The Debtor and 31 of its affiliates filed separate voluntary chapter 11 petitions on Nov. 29, 2006 (Bankr. S.D.N.Y. Case Nos. 06-12827 through 06- 12857). Joseph J. Saltarelli, Esq., at Hunton & Williams represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. About the Fund Based in London, Ontario, Countryside Power Income Fund (TSX: COU.UN) -- http://www.countrysidepowerfund.com/-- has investments in two district energy systems in Canada, with a combined thermal and electric generation capacity of approximately 122 megawatts, and two gas-fired cogeneration plants in California with a combined power generation capacity of 94 megawatts. In addition, the Fund has an indirect investment in 22 renewable power and energy projects located in the United States, which currently have approximately 51 megawatts of electric generation capacity and sold approximately 710,000 MMBtus of boiler fuel in 2005. The Fund's investment in the projects consists of loans to, and a convertible royalty interest in, U.S. Energy Biogas Corp. * * * As reported in the Troubled Company Reporter on Dec. 11, 2006, U.S. Energy Biogas Corp.'s delinquent reporting of its financial statements and its subsequent bankruptcy filing constituted a default under Countryside Power Income Fund's CDN102 million Credit Facility with USEB. Prior to USEB's filing for bankruptcy, the Fund had suggested a reorganization of USEB's Credit Facility. USEB, however, chose to file for chapter 11 protection, asserting, among other things, that its business is "operationally healthy" and that the "flawed" Loan impairs its current capital structure. The Fund is seeking to secure payment of all amounts pursuant to the agreements governing the USEB Loan. The Loan default, if not waived, could prevent the Fund from making distributions to its unitholders, in whole or in part. U.S. STEEL: Earns $297 Million in 2006 Fourth Quarter ----------------------------------------------------- United States Steel Corp. reported fourth quarter 2006 net income of $297 million, compared to third quarter 2006 net income of $417 million and fourth quarter 2005 net income of $109 million. For full-year 2006, U.S. Steel reported net income of $1,374 million compared to 2005 net income of $910 million. Commenting on results, U. S. Steel Chairman and CEO John P. Surma said, "Our performance in 2006 resulted in another outstanding year, with record sales, operating income and net earnings. During the year, our strong cash flow generation enabled us to reduce our debt by almost $600 million, to repurchase common shares for $442 million, to make voluntary cash contributions of $190 million to our domestic benefit plans, to make significant capital investments and to double our common dividend rate to 20 cents per share. "Our safety performance also improved substantially from last year thanks to the continuing efforts of our employees. All in all, 2006 will go down as one of the best years in our long history." The company reported fourth quarter 2006 income from operations of $341 million, compared with income from operations of $561 million in the third quarter of 2006 and $222 million in the fourth quarter of 2005. For the year 2006, income from operations was $1,785 million versus income from operations of $1,439 million for the year 2005. In the fourth quarter of 2006, net interest and other financial costs included a $32 million pre-tax charge related to the early redemption of most of its 10-3/4% Senior Notes. This item and other items not allocated to segments decreased net income by $33 million. Other items not allocated to segments in the third quarter of 2006 reduced net income by $21 million. An income tax charge and other items not allocated to segments reduced fourth quarter 2005 net income by $39 million. The annual effective tax rate for 2006 was lower than previously expected and the company reduced its fourth quarter income tax provision by $58 million in order to adjust tax expense previously recorded. This adjustment primarily reflected a higher than anticipated percentage of total pre-tax earnings generated by its European operations and the impact of accounting rules on remeasuring the status of our main defined benefit pension plan at year end. Outlook Commenting on U. S. Steel's outlook, Surma said, "We expect first quarter results to decline from the fourth quarter, but flat- rolled demand is firming and we have restarted several domestic blast furnaces to bring our production in line with improving order rates." For Flat-rolled, first quarter 2007 shipments are expected to improve compared to the fourth quarter of 2006, and average realized prices should remain at about the fourth quarter level as contract price improvements offset lower spot prices. For U.S. Steel Europe, first quarter shipments are expected to increase from the fourth quarter, and average realized prices are expected to be slightly lower as the result of increased import product availability on the European market. Shipments and average realized prices for the Tubular segment in the first quarter of 2007 are expected to decrease from the fourth quarter as import levels and customer inventories remain high. First quarter costs for all of our reportable segments are expected to be in line with the fourth quarter. First quarter 2007 results for Other Businesses are expected to be consistent with historical first quarter results, but will decline substantially from the fourth quarter due primarily to normal seasonal effects at our iron ore operations in Minnesota and the non-recurrence of the fourth quarter land sales. Capital expenditures for 2007 are expected to total approximately $750 million, reflecting domestic spending of approximately $545 million and European spending of approximately $205 million. Pensions and Other Benefits At year-end 2006, its defined benefit pension plans were overfunded by $210 million on a projected benefit obligation basis. The combined effects of reversing previously recorded additional minimum liabilities and the adoption of Statement of Financial Accounting Standards No. 158 for pensions and other benefits resulted in a net charge to equity of $186 million in the fourth quarter. Total costs for pension plans and other postretirement benefits are expected to be approximately $237 million in 2007, compared with $312 million in 2006. Common Stock Repurchase Program The company repurchased over 700,000 shares of U.S. Steel common stock for $46 million during the fourth quarter, bringing total repurchases to 13.1 million shares for $696 million since the repurchase program was originally authorized in July 2005. As of Dec. 31, 2006, 7.7 million shares remained authorized for repurchase under the company's stock repurchase program. About U.S. Steel Headquartered in Pittsburgh, Pa., United States Steel Corporation, (NYSE: X) -- http://www.ussteel.com/-- manufactures a wide variety of steel sheet, tubular and tin products; coke, and taconite pellets; and has a worldwide annual raw steel capability of 26.8 million net tons. U. S. Steel's domestic primary steel operations are: Gary Works in Gary, Ind.; Great Lakes Works in Ecorse and River Rouge, Mich.; Mon Valley Works, which includes the Edgar Thomson and Irvin plants, near Pittsburgh and Fairless Works near Philadelphia, Pa.; Granite City Works in Granite City, Ill.; Fairfield Works near Birmingham, Ala.; Midwest Plant in Portage, Ind.; and East Chicago Tin in East Chicago, Ind. The company also operates two seamless tubular mills, Lorain Tubular Operations in Lorain, Ohio; and Fairfield Tubular Operations near Birmingham, Ala. U. S. Steel produces coke at Clairton Works near Pittsburgh, at Gary Works and Granite City Works. On Northern Minnesota's Mesabi Iron Range, U. S. Steel's iron ore mining and taconite pellet operations, Minnesota Taconite (Minntac) and Keewatin Taconite (Keetac), support the steelmaking effort, and its subsidiary ProCoil Company provides steel distribution and processing services. Internationally, U.S. Steel has steelmaking subsidiaries in Kosice, Slovakia (U.S. Steel Kosice, s.r.o.), and in Sabac and Smederevo, Serbia (U.S. Steel Serbia, d.o.). In addition to primary steel operations, U. S. Steel participates in several joint ventures: USS-POSCO Industries, Pittsburg, Ca.; PRO-TEC Coating Company, Leipsic, Ohio; Worthington Specialty Processing, Jackson, Mich.; Double Eagle Steel Coating Company, Dearborn, Mich.; Double G Coating Company, Jackson, Miss.; and Acero Prime, San Luis Potosi, Mexico. U. S. Steel is also involved in a number of other businesses, among them transportation (Transtar, Inc.), real estate development, and leasing and financial services. * * * As reported in the Troubled Company Reporter on Jan. 19, 2007, Standard & Poor's Ratings Service raised its corporate credit rating on Pittsburgh, Pennsylvania-based United States Steel Corp to 'BB+' from 'BB' and removed all ratings from CreditWatch, where they had been placed with positive implications on July 27, 2006. At the same time, Standard & Poor's raised its rating on the company's senior unsecured debt to 'BB+' from 'BB'. The outlook is stable. U.S. STEEL: Completes Tender Offer for 10-3/4% Senior Notes ----------------------------------------------------------- United States Steel Corp. successfully completed on Dec. 28, 2006, its cash tender offer and consent solicitation for its 10-3/4% Senior Notes due Aug. 1, 2008. A total of $328 million in aggregate principal amount, or approximately 94% of the Notes outstanding had been tendered and not withdrawn as of midnight Eastern Time Dec. 27, 2006. On Dec. 28, 2006, the company accepted for purchase and paid for all Notes tendered pursuant to the Offer. The company also disclosed the completion of the consent solicitation relating to the Notes. On Dec. 13, 2006, the company and The Bank of New York executed a third supplemental indenture upon receipt of the requisite consents to the proposed amendments to the indenture governing the Notes. The amendments, which eliminate or modify substantially all of the restrictive covenants in the indenture, became operative upon acceptance of the Notes for purchase. The company will record a fourth quarter 2006 pre-tax charge of approximately $32 million for the premium, unamortized issuance and discount costs and transaction fees. UBS Investment Bank served as Dealer Manager and Solicitation Agent in connection with the Offer. Georgeson Inc. was the Information Agent. About U.S. Steel Headquartered in Pittsburgh, Pa., United States Steel Corporation, (NYSE: X) -- http://www.ussteel.com/-- manufactures a wide variety of steel sheet, tubular and tin products; coke, and taconite pellets; and has a worldwide annual raw steel capability of 26.8 million net tons. U. S. Steel's domestic primary steel operations are: Gary Works in Gary, Ind.; Great Lakes Works in Ecorse and River Rouge, Mich.; Mon Valley Works, which includes the Edgar Thomson and Irvin plants, near Pittsburgh and Fairless Works near Philadelphia, Pa.; Granite City Works in Granite City, Ill.; Fairfield Works near Birmingham, Ala.; Midwest Plant in Portage, Ind.; and East Chicago Tin in East Chicago, Ind. The company also operates two seamless tubular mills, Lorain Tubular Operations in Lorain, Ohio; and Fairfield Tubular Operations near Birmingham, Ala. U. S. Steel produces coke at Clairton Works near Pittsburgh, at Gary Works and Granite City Works. On Northern Minnesota's Mesabi Iron Range, U. S. Steel's iron ore mining and taconite pellet operations, Minnesota Taconite (Minntac) and Keewatin Taconite (Keetac), support the steelmaking effort, and its subsidiary ProCoil Company provides steel distribution and processing services. Internationally, U.S. Steel has steelmaking subsidiaries in Kosice, Slovakia (U.S. Steel Kosice, s.r.o.), and in Sabac and Smederevo, Serbia (U.S. Steel Serbia, d.o.). In addition to primary steel operations, U. S. Steel participates in several joint ventures: USS-POSCO Industries, Pittsburg, Ca.; PRO-TEC Coating Company, Leipsic, Ohio; Worthington Specialty Processing, Jackson, Mich.; Double Eagle Steel Coating Company, Dearborn, Mich.; Double G Coating Company, Jackson, Miss.; and Acero Prime, San Luis Potosi, Mexico. U. S. Steel is also involved in a number of other businesses, among them transportation (Transtar, Inc.), real estate development, and leasing and financial services. * * * As reported in the Troubled Company Reporter on Jan. 19, 2007, Standard & Poor's Ratings Service raised its corporate credit rating on Pittsburgh, Pennsylvania-based United States Steel Corp to 'BB+' from 'BB' and removed all ratings from CreditWatch, where they had been placed with positive implications on July 27, 2006. At the same time, Standard & Poor's raised its rating on the company's senior unsecured debt to 'BB+' from 'BB'. The outlook is stable. UNIFI INC: Second Fiscal Quarter Net Loss Increases to $16.5 Mil. ----------------------------------------------------------------- Unifi Inc. has released operating results for its second quarter ended Dec. 24, 2006. Net income for the current quarter, including discontinued operations, was a net loss of $16.5 million compared with a net loss of $3.8 million for the prior December quarter. Net income from continuing operations for the current quarter was a net loss of $16.4 million compared with a net loss of $3.4 million for the prior December quarter. Net sales from continuing operations for the current December quarter of $156.9 million were down $34.2 million or 17.9% compared with net sales of $191.1 million for the prior year December quarter. Relatively stable sales of the company's nylon and textured, dyed and value-added polyester yarns in the quarter were offset by significant declines in partially oriented yarn, or POY, which were a result of the supply chain working through existing inventories. Bill Lowe, chief operating officer and chief financial officer for Unifi, said, "As we announced on Dec. 7, 2006, earnings were negatively impacted by the lingering effect of higher priced POY inventory and a significant decline in POY volume during the quarter. "The inventory adjustments that took place throughout the supply chain during the December quarter appear largely complete, and our POY and texturing plants are now running at expected capacities. "We anticipate operating at these higher run rates and also expect to achieve mix related benefits as well during the March quarter. The transition of the Dillon manufacturing facility occurred on Jan. 1, 2007, and appeared seamless to our customers. "The facility is running at expected capacities, and we are now looking forward to improving our combined operations during this calendar year." Net income for the first half of the company's fiscal year 2007, including discontinued operations, was a net loss of $27.6 million compared with a net loss of $6.9 million for the prior year first half. Net income from continuing operations for the first half of fiscal 2007 was a net loss of $27.4 million compared with a net loss of $8.2 million for the prior year first half. Net sales for the first half of fiscal year 2007 of $326.8 million were down $47.4 million or 12.7% compared with net sales of $374.2 million for the first half of fiscal year 2006. Total debt at the end of the current quarter was $206.1 million, which is a reduction of $58.0 million over the $264.1 million in debt at the end of the prior year December quarter, as a result of the company's refinancing activity in May 2006. Cash on hand at the end of the current December quarter was $35.6 million, which is up slightly from the September 2006 quarter of $29.5 million. Brian Parke, chairman and chief executive officer for Unifi said, "We continue to make excellent progress with our operations in China. We have many products now being sampled by critical new customers and larger scale trials are being requested. "On the cost side, we have made changes that will reduce our operating costs approximately $2 million in the coming year, which will help us reach our goals. The momentum is building from the market side, and downstream opportunities are beginning to turn into solid orders." At Dec. 24, 2006, the company's balance sheet showed $693.6 million in total assets, $335.4 million in total liabilities, and $358.2 million in total stockholders' equity. Unifi Inc. (NYSE: UFI) -- http://www.unifi.com/-- is a diversified producer and processor of multi-filament polyester and nylon textured yarns and related raw materials. Key Unifi brands include, but are not limited to: aio(R) - all-in-one performance yarns, Sorbtek(R), A.M.Y.(R), Mynx(R) UV, Repreve(R), Reflexx(R), MicroVista(R), and Satura(R). Unifi's yarns and brands are readily found in home furnishings, apparel, legwear, and sewing thread, as well as industrial, automotive, military, and medical applications. * * * As reported in the Troubled Company Reporter on Sept. 27, 2006, Moody's Investors Service confirmed Unifi Inc.'s B3 Corporate Family Rating and its Caa1 rating on the company's $190 million senior secured notes due 2014 in connection with the rating agency's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology. US AIRWAYS: Has Until April 30 to Object to Claims -------------------------------------------------- Pursuant to Reorganized US Airways Inc. and its affiliates' confirmed Plan of Reorganization and with the consent of the Post- Effective Date Committee, the Hon. Stephen S. Mitchell of the U.S. Bankruptcy Court for the Eastern District of Virginia extends the deadline for the Reorganized Debtors to object to claims to April 30, 2007. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on Sept. 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. The Debtors' chapter 11 plan for its second bankruptcy filing became effective on Sept. 27, 2005. The Debtors completed their merger with America West on the same date. As reported in the Troubled Company Reporter on Jan. 11, 2007, Standard & Poor's Ratings Services stated that its ratings on US Airways Group, including the 'B-' corporate credit ratings on US Airways Group and its major operating subsidiaries America West Holdings Corp., America West Airlines Inc., and US Airways Inc., remain on CreditWatch with developing implications, where they were initially placed on Nov. 15, 2006. VICTORY MEMORIAL: Hires Donlin Recano as Claims & Noticing Agent ---------------------------------------------------------------- Donlin Recano and Company, Inc. has been retained to provide bankruptcy administration services to Victory Memorial Hospital. Donlin Recano was chosen by Victory Memorial Hospital and its subsidiaries, Victory Memorial Ambulance Services Inc. and Victory Memorial Pharmacy Inc., because of the firm's ability to guide and organize the Chapter 11 process by providing its advanced technology infrastructure as well as its wealth of expertise administering complex healthcare bankruptcy cases. Scott Y. Stuart, Esq., Donlin Recano Vice President, commented, "It is imperative to streamline complexity and minimize costs associated with bankruptcy filings, Donlin Recano's technology- advanced web based services will play an important role in facilitating access to information and updates to Victory Memorial's case-specific data and help them proactively manage all administrative proceedings." Victory Memorial joins a long list of Donlin Recano clients in the healthcare industry including Accuhealth, Inc., New York United Hospital Medical Center and Allegheny Health, Education & Research Foundation. The law firm was brought on to serve as a claims and noticing agent on behalf of the company, and provide web-based technology to facilitate the data-sharing process among debtors' advisors and creditors. About Donlin Recano Based in New York City, Donlin Recano -- http://www.donlinrecano.com/-- is a claims management company that has served over 200 national clients across a broad range of industries and business sectors. Working with counsel, turnaround advisors and the affected company, Donlin Recano helps organize and guide Chapter 11 clients through administrative bankruptcy tasks, including provision of Web site-accessible information, formation of professional call centers, management of claims, balloting, distribution and other administrative services. The company also provides Web based information services for creditors committees as required by The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. About Victory Memorial Based in Brooklyn, New York, Victory Memorial Hospital is a non- profit, full service acute care voluntary hospital with approximately 241 beds and a skilled nursing unit with 150 beds. Victory Hospital provides a full range of medical services with a focus on community care and a program of community outreach to the Brooklyn community. Victory Ambulance Services, Inc. a for-profit subsidiary, provides Victory Hospital with ambulance services. Victory Pharmacy, Inc., a for-profit subsidiary, does not have any employees or assets. The company and its two-subsidiaries filed for chapter 11 protection on Nov. 15, 2006 (Bankr. S.D.N.Y. Case Nos. 06-44387 through 06-44389). Timothy W. Walsh, Esq., and Jeremy R. Johnson, Esq., at DLA Piper US LLP, represent the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts between $1 million and $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on Mar. 15, 2007. VIDEOTRON LTEE: DBRS Holds BB Rating on Senior Unsecured Notes -------------------------------------------------------------- Dominion Bond Rating Service confirmed the rating of Videotron Ltee's Senior Unsecured Notes at BB and changed the trend to Positive from Stable. DBRS has also confirmed the ratings for both Sun Media Corp. at BB, and the parent of both companies, Quebecor Media Inc., at BB (low)/B (high). The trends are Stable. The trend change reflects Videotron's strong EBITDA growth driven by improving Internet and cable telephony penetration rates and strengthening financial ratios. However, DBRS notes the company's rating continues to be constrained by ongoing support provided to QMI. DBRS expects Vid,otron to continue to support QMI through dividends and intercompany loans, which will continue to suppress Vid,otron's credit rating. DBRS notes that Videotron has experienced significant improvements in both its Internet and cable telephony segments due to subscriber additions and price increases. Additionally, growth in cable telephony subscribers has exceeded DBRS expectations over the year, and continues to help drive EBITDA growth, with penetration rates of over 22% of basic subscribers for the latest period. The company's quadruple play offering of video, broadband, telephony and a newly added wireless product continues to drive average revenue per unit and reduce customer turnover. Nevertheless, DBRS notes EBITDA margins remain slightly below that of the company's peers due to expenditures related to the deployment of telephony services, and price discounting to attract subscribers. In addition, while Videotron's aggressive pricing strategy appears to have been successful in increasing penetration, DBRS notes increased competition with incumbent telco operators is likely going forward, as recent regulatory decisions are expected to lead to improved flexibility of pricing, bundling and "winback" strategies for the incumbent telcos. Despite continued EBITDA growth, DBRS expects the company's free cash flow deficits to persist through 2007 as capital expenditures are expected to remain above historic levels, and as the company is expected to continue to distribute a sizable dividend to QMI. However, recent refinancing at QMI has moderately reduced QMI's funding needs, which should indirectly reduce the pressure on Videotron, Sun Media and other operating companies to support QMI's funding requirements. Assuming dividends are held stable at current levels of approximately $120 million, DBRS expects Videotron to generate a free cash flow deficit of roughly $100 million in 2007. DBRS expects the Company to continue to fund the deficit through debt and with cash tax savings that it continues to derive from tax loss sharing arrangements with QMI. The Positive trend also reflects DBRS's expectations of continued improvement in Videotron's key credit metrics through 2007, despite modestly higher debt levels, as EBITDA growth is expected to outpace increases in debt. However, should debt levels increase beyond DBRS's expectations or QMI's cash requirements increase causing pressure on Videotron's risk profile, DBRS would consider removing the Positive trend. VILLAJE DEL RIO: Confirmation Hearing Moved to February 8 --------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Texas rescheduled to 9:00 a.m., on Feb. 8, 2007, the hearing to consider confirmation of Villaje Del Rio Ltd.'s Third Amended Chapter 11 Plan. Implementation of the Plan As reported in the Troubled Company Reporter on Sept. 19, 2006, all cash necessary for the Debtor to make payments pursuant to the Plan will be obtained from the sale of its real property and the pursuit of litigation claims. As the Debtor's representative, George Geis, Esq., at Hohmann, Taube & Summers, LLP will guarantee payment of fees and expenses for the prosecution of the Litigation Claims. Fees and expenses for pursuing the Litigation Claims is expected to exceed $200,000. Treatment of Claims Under the Amended Plan, each holder of an Allowed Class II Priority Non Tax Claim will be paid in full pursuant to an agreement between the Debtor and the claimant on the effective date of the Plan. Holders of Class III Priority Tax Claims will be paid in full, through equal monthly payments of principal and interest of the Allowed Claim over a period of five years, plus statutory interest. Holders of Allowed Convenience Claims will receive the lesser of their Allowed Claim or $1,000 in full satisfaction of their Allowed Claim within 60 days from the effective date. Holders of Allowed General Unsecured Claim will have the right to elect treatment as an Allowed Convenience Claim by making their election for the treatment on their timely filed Ballot. Otherwise, they will receive their pro rate share of proceeds from the Litigation Claims. The Allowed Claim of George Geis, totaling $1.5 million, will be paid with the excess cash flow, if any, from the Debtor after all senior classes are paid in full. Equity Interests Holders will not receive any distribution on account of the interests until all senior allowed claims are paid in full. All Allowed Lease Cure Claims, equal to the monetary amount necessary to fully cure any lease or executory contract of the Debtor assumed under the Plan, will be paid pursuant to Section 6.6 of the Plan. A full-text copy of the Debtor's Third Amended Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=060918223118 Headquartered in San Antonio, Texas, Villaje Del Rio Ltd. is a real estate developer. The company filed for chapter 11 protection on May 1, 2006 (Bankr. W.D. Tex. Case No. 06-50797). Eric J. Taube, Esq., and Mark Curtis Taylor, Esq., at Hohmann, Taube & Summers, L.L.P., represents the Debtor. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it estimated assets of less the $50,000 and estimated debts between $10 million and $50 million. W.R. GRACE: Dec. 31 Balance Sheet Upside-Down by $568.7 Million --------------------------------------------------------------- W.R. Grace & Co. disclosed financial results for the fourth quarter and full year ended December 31, 2006. At Dec. 31, 2006, the W.R. Grace's balance sheet showed $3,620,400,000 in total assets and $4,189,100,000 in total debts resulting in a shareholders' deficit of $568,700,000. At Dec. 31, 2005, the deficit stood at $595,300,000. Fourth Quarter Results Sales for the fourth quarter were $697.4 million compared with $636.4 million in the prior year quarter, a 9.6% increase (7.0% before the effects of currency translation). The increase was attributable primarily to added sales volume in most geographic regions and higher selling prices in response to cost inflation. Sales increased 8.6% for the Grace Davison operating segment and 10.7% for the Grace Performance Chemicals operating segment. Net income for the fourth quarter was $5.0 million compared with a net loss of $600,000, in the prior year quarter. The 2006 and 2005 fourth quarters were unfavorably affected by costs of Chapter 11, litigation and other matters not related to core operations. Excluding such costs and after tax effects, net income would have been $22.4 million for the fourth quarter of 2006 compared with $20.3 million calculated on the same basis for the fourth quarter of 2005, a 10.3% increase. Year-End Results Sales for the year ended Dec. 31, 2006, were $2,826.5 million compared with $2,569.5 million for the prior year, a 10.0% increase (9.9% before the effects of currency translation). Net income for 2006 was $18.3 million compared with net income in 2005 of $67.3 million. The lower net income in 2006 was principally caused by a $32.7 million increase in defense costs for the criminal proceeding related to Grace's former vermiculite mining operations in Montana, and a $19.0 million increase in Chapter 11- related expenses. Excluding non-core and Chapter 11-related costs and income, net income would have been $113.7 million for the year ended December 31, 2006, compared with $96.4 million calculated on the same basis for 2005, an 18.0% increase. Pre-tax income from core operations was $240.2 million for the year, a 19.2% increase over 2005, primarily attributable to higher sales volume in all geographic regions, higher selling prices to offset cost inflation, and lower overall pension costs. "I am very pleased with our fourth quarter results," said Grace's President and Chief Executive Officer Fred Festa. "We finished 2006 with consistently good performance from our core operations. Our business teams continued to grow our sales base despite a downturn in U.S. residential construction and also achieved our high cash return targets. We are well positioned to continue our growth into 2007." Chapter 11 Proceedings On April 2, 2001, Grace and 61 of its United States subsidiaries and affiliates, including its primary U.S. operating subsidiary W. R. Grace & Co.-Conn., filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware in order to resolve Grace's asbestos-related liabilities. In January 2005, Grace filed an amended plan of reorganization and related documents with the Bankruptcy Court. As part of determining the confirmability of the Plan, the Bankruptcy Court has approved a process and timeline, which extends into mid-2007, for estimating the cost to resolve asbestos-related property damage and personal injury claims. Expenses related to Grace's Chapter 11 proceedings were $17.7 million in the fourth quarter and $49.9 million for the year, compared with $11.0 million and $30.9 million for the fourth quarter and full year in 2005, respectively, reflecting a higher level of activity in the bankruptcy proceeding related to claims adjudication and estimation. Most of Grace's non-core liabilities and contingencies are subject to compromise under the Chapter 11 process. The Chapter 11 proceedings, including related litigation and the claims valuation process, could result in allowable claims that differ materially from recorded amounts. Grace will adjust its estimates of allowable claims as facts come to light during the Chapter 11 process that justify a change, and as Chapter 11 proceedings establish court-accepted measures of Grace's non-core liabilities. About W.R. Grace Headquartered in Columbia, Md., 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. The Debtors' exclusive period to file a chapter 11 plan expires on July 23, 2007. (W.R. Grace Bankruptcy News, Issue No. 123; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). W.R. GRACE: District Court Affirms Exclusive Period Extension ------------------------------------------------------------- The Hon. Ronald Buckwalter of the U.S. District Court for the District of Delaware finds that the U.S. Bankruptcy Court for the District of Delaware did not abuse its discretion in finding that the Debtors have established cause for further extension of their exclusive right to file a Chapter 11 plan of reorganization until July 23, 2007, and solicit acceptances of that plan until September 21, 2007. For the Debtors to file a plan, estimation and valuation of their asbestos liability must first be decided, Judge Buckwalter contends, and having competing plans would not advance that determination. Judge Buckwalter holds that the complexity of the case as well as the history of litigation, including the assignment and reassignment of judges, support the Bankruptcy Court's finding of cause for granting further extension of exclusivity. The extension is not open ended, Judge Buckwalter says. Among other things, an estimation hearing is scheduled for June 2007 and the issue of exclusivity extension may be revisited at the July 2007 omnibus hearing. Accordingly, Judge Buckwalter affirms the Bankruptcy Court's decision to further extend the Debtors' exclusivity periods. Bankruptcy Court's Ruling The Hon. Judith Fitzgerald extended the Debtors' exclusive period to file a plan of reorganization until the conclusion of the July 2007 omnibus hearing. At the hearing on the Debtors' request, Judge Fitzgerald held that the major issues of estimation and valuation must be considered by all parties prior to any plan being confirmed by the Court. "This is really not an easy decision for this Court because this case has been on slow burn from time to time," Judge Fitzgerald said. Judge Fitzgerald, however, explained that the length of the case is not the only factor that the Court has to consider, especially given the complexities of the case; the very different ideas of how to resolve the case that have been articulated by different parties; the uncertainties that have arisen postpetition including the criminal indictment, the New Jersey environmental claim that is a decade old or longer; and the other matters that have added layers of complexity beyond those that have existed in some of the other asbestos bankruptcies. The Debtors have filed a plan of reorganization that has the support of the unsecured creditors and old equity holders. The asbestos constituencies in the Debtors' cases have agreed in principle to a competing plan that proposes to wipe out old equity in Grace. The asbestos committee's plan allocates 85% of the Debtors' assets to personal injury claimants and 15% to property damage claimants, after payment of administrative expenses. "At this point in this case, it is more important for all parties to focus their efforts on resolving the outstanding issues than in creating additional fees and expenses for the estate by requiring the filing or redoing or doing of competing plans," Judge Fitzgerald said. The Court will commence estimation of Grace's asbestos liabilities on June 13, 2007. Appeal to Bankruptcy Court's Ruling David T. Austern, the court-appointed legal representative for future asbestos claimants; the Official Committee of Asbestos Personal Injury Claimants; and the Official Committee of Asbestos Property Damage Claimants took an appeal from Judge Fitzgerald's order extending the Debtors' exclusive periods until July 2007, to the U.S. District Court for the District of Delaware. The parties asked the District Court to find: 1. whether the Bankruptcy Court erred as a matter of law in holding that "cause" existed to extend the Debtors' exclusive periods; 2. whether the Bankruptcy Court's findings of fact, if any, in support of its holding that "cause" existed for the extension of the Debtors' exclusive periods are clearly erroneous; and 3. if the Bankruptcy Court was correct in holding that "cause" existed to extend the Debtors' exclusive periods, whether the Bankruptcy Court abuse its discretion by extending the exclusive periods. About W.R. Grace Headquartered in Columbia, Md., 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. The Debtors' exclusive period to file a chapter 11 plan expires on July 23, 2007. (W.R. Grace Bankruptcy News, Issue No. 123; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). WELLS FARGO: Fitch Assigns Low-B Ratings on $2.1 Mil. Debentures ---------------------------------------------------------------- Wells Fargo mortgage pass-through certificates, series 2007-1, are rated by Fitch Ratings as: -- $575,449,428 classes A-1 to A-10, A-PO, and A-R 'AAA'; -- $17,128,000 class B-1 'AA'; -- $3,606,000 class B-2 'A'; -- $1,803,000 class B-3 'BBB'; -- $1,202,000 class B-4 'BB'; and, -- $901,000 class B-5 'B'. The 'AAA' ratings on the senior certificates reflect the 4.25% subordination provided by the 2.85% class B-1, 0.6% class B-2, 0.3% class B-3, 0.2% privately offered class B-4, 0.15% privately offered class B-5, and 0.15% privately offered class B-6. The ratings on the class B-1, B-2, B-3, B-4, and B-5 certificates are based on their respective subordination. Class B-6 is not rated by Fitch. Fitch believes the amount of credit enhancement available will be sufficient to cover credit losses. The ratings also reflect the high quality of the underlying collateral, the integrity of the legal and financial structures, and the primary servicing capabilities of Wells Fargo Bank, N.A. The transaction consists of one group of 1,231 fully amortizing, fixed interest rate, first lien mortgage loans, with an original weighted average term to maturity of approximately 30 years. The aggregate unpaid principal balance of the pool is $600,991,641 as of Jan. 1, 2007, and the average principal balance is $488,214. The weighted average original loan-to-value ratio of the loan pool is approximately 72.89%; 2.55% of the loans have an OLTV greater than 80%. The weighted average coupon of the mortgage loans is 6.377%, and the weighted average FICO score is 740. The states that represent the largest geographic concentration are California, Maryland, New York, and Virginia. All other states represent less than 5% of the outstanding balance of the pool. None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. All of the mortgage loans were generally originated in conformity with underwriting standards of WFB. WFB sold the loans to Wells Fargo Asset Securities Corporation, a special purpose corporation, who deposited the loans into the trust. The trust issued the certificates in exchange for the mortgage loans. WFB will act as servicer and custodian, and HSBC Bank USA, National Association will act as trustee. Elections will be made to treat the trust as two separate real estate mortgage investment conduits for federal income tax purposes. XEROX CORP: Improved Leverage Prompts S&P's Positive Outlook ------------------------------------------------------------ Standard & Poor's Ratings Services revised its rating outlook on Stamford, Connecticut-based Xerox Corp. to positive from stable. Ratings on the company, including the 'BB+' long-term and 'B-1' short-term corporate credit ratings, were affirmed. "The outlook revision reflects an improved leverage profile and a strengthening revenue mix," explained Standard & Poor's credit analyst Molly Toll-Reed. "The ratings reflect mature and highly competitive industry conditions and a short, recent record of total revenue growth." These factors are partially offset by the company's good position in its core document management business, stable nonfinancing operating profitability, and moderate leverage. Xerox reported total revenues of $4.4 billion in the fourth quarter ended Dec. 31, 2006, up 3% from the prior-year period. Although equipment sales were down 1% in the quarter, post-sale revenues grew 6% from the prior-year period. Demonstrating sustainable long-term revenue growth is the primary challenge for Xerox. Ongoing competitive pricing pressures have dampened total equipment sales growth. Although revenues from color equipment and color after-market sales continue to increase as a percentage of total revenues, growth in color equipment revenues in 2006 has been offset by pricing pressure in the black & white equipment revenue base. However, growth in total post-sale revenues turned positive in 2006, and continued to strengthen during the year. Strong growth in the installed equipment base of key products, along with the moderating impact of declining light lens revenues, is expected to drive continued growth in post-sales revenues, which represent more than 70% of total revenues. * CLOSE BROTHERS: Awarded "Restructuring Adviser of the Year 2007" ------------------------------------------------------------------ Close Brothers received recognition for its dominance in the restructuring advisory space throughout 2006. The "Restructuring Adviser of the Year" was awarded to Close Brothers at the Acquisitions Monthly 2007 Awards, in acknowledgement of the large range of advisory mandates it undertook in 2006, both company-side and creditor-side; for the innovative, groundbreaking deals it implemented for its clients; and for the fact Close Brothers advised on restructurings in all major European jurisdictions throughout 2006. This is the fourth consecutive year that Close Brothers has been recognised for its pre-eminent restructuring capabilities. Since 2004, the Close Brothers restructuring team has advised on more than 50 transactions, with total liabilities exceeding $110 billion. These have ranged from advising companies such as Parmalat on its $21 billion restructuring, to situations such as advising the Senior Mezzanine of Le Meridian on the hotel chain's $1.5 billion restructuring. Most recently Close Brothers advised Polestar on its o1.1 billion restructuring in what was one of the biggest European private equity restructurings of recent years. Based in London, England, Close Brothers -- http://www.cbcf.com/ -- part of Close Brothers Group, is a European corporate finance adviser. The firm advises a wide spectrum of organisations, from corporates and private equity houses to financial institutions and hedge funds. Its advice focuses on four areas: mergers and acquisitions, structuring and raising debt, corporate restructuring, and advising private equity groups. * Donlin Recano Retained by Victory Memorial -------------------------------------------- Donlin Recano and Company, Inc. has been retained to provide bankruptcy administration services to Victory Memorial Hospital. Donlin Recano was chosen by Victory Memorial Hospital and its subsidiaries, Victory Memorial Ambulance Services Inc. and Victory Memorial Pharmacy Inc., because of the firm's ability to guide and organize the Chapter 11 process by providing its advanced technology infrastructure as well as its wealth of expertise administering complex healthcare bankruptcy cases. Scott Y. Stuart, Esq., Donlin Recano Vice President, commented, "It is imperative to streamline complexity and minimize costs associated with bankruptcy filings, Donlin Recano's technology- advanced web based services will play an important role in facilitating access to information and updates to Victory Memorial's case-specific data and help them proactively manage all administrative proceedings." Victory Memorial joins a long list of Donlin Recano clients in the healthcare industry including Accuhealth, Inc., New York United Hospital Medical Center and Allegheny Health, Education & Research Foundation. The law firm was brought on to serve as a claims and noticing agent on behalf of the company, and provide web-based technology to facilitate the data-sharing process among debtors' advisors and creditors. About Victory Memorial Based in Brooklyn, New York, Victory Memorial Hospital is a non- profit, full service acute care voluntary hospital with approximately 241 beds and a skilled nursing unit with 150 beds. Victory Hospital provides a full range of medical services with a focus on community care and a program of community outreach to the Brooklyn community. Victory Ambulance Services, Inc. a for-profit subsidiary, provides Victory Hospital with ambulance services. Victory Pharmacy, Inc., a for-profit subsidiary, does not have any employees or assets. The company and its two-subsidiaries filed for chapter 11 protection on Nov. 15, 2006 (Bankr. S.D.N.Y. Case Nos. 06-44387 through 06-44389). Timothy W. Walsh, Esq., and Jeremy R. Johnson, Esq., at DLA Piper US LLP, represent the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts between $1 million and $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on Mar. 15, 2007. About Donlin Recano Based in New York City, Donlin Recano -- http://www.donlinrecano.com/-- is a claims management company that has served over 200 national clients across a broad range of industries and business sectors. Working with counsel, turnaround advisors and the affected company, Donlin Recano helps organize and guide Chapter 11 clients through administrative bankruptcy tasks, including provision of Web site-accessible information, formation of professional call centers, management of claims, balloting, distribution and other administrative services. The company also provides Web based information services for creditors committees as required by The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. * R. Morawetz Joins Alvarez & Marsal Canada as Managing Director ---------------------------------------------------------------- Richard Morawetz, an established leader in the Canadian restructuring industry, has joined Alvarez & Marsal Canada ULC as a managing director. Based in Toronto, he joins Douglas R. McIntosh, who recently joined the firm to establish operations in Canada. "Richard is a veteran professional with deep experience handling cross-border restructurings and other complex situations", said Bryan Marsal, co-chief executive officer and managing director of Alvarez & Marsal. "As the firm continues to strategically expand its crisis and interim management, restructuring and insolvency, performance improvement and other advisory service offerings in North America and globally, he is a tremendous asset to the team." Prior to joining Alvarez & Marsal, Mr. Morawetz was a senior partner with a major international accounting firm in Toronto, and brings more than 25 years of turnaround and restructuring experience. Over the course of his career, he has acted on behalf of numerous private and public companies in multiple industries, as well as on behalf of financial institutions and government agencies. Mr. Morawetz has significant interim and crisis management experience, having operated and sold several businesses as going concerns pursuant to court or privately-appointed receiverships. He has also conducted numerous fraud investigations in connection with bankruptcy and receivership proceedings. Mr. Morawetz holds a bachelor of commerce degree from the University of Toronto. He is an active member of The Insolvency Institute of Canada and the Turnaround Management Association, a member of the board of directors of the Canadian Association of Insolvency and Restructuring Practitioners and a member of the American Bankruptcy Institute. A frequent speaker on restructuring and insolvency matters, he is a chartered accountant, chartered insolvency and restructuring practitioner and a Canadian trustee in bankruptcy. Alvarez & Marsal Canada ULC For 20 years, Alvarez & Marsal -- http://www.alvarezandmarsal.com/ -- has set the standard for working with organizations to tackle complex issues, boost performance and maximize value for stakeholders. Serving clients ranging from international enterprises to middle market companies to public sector entities, the firm draws on a deep operational heritage and hands-on approach to deliver comprehensive performance improvement, turnaround management and corporate advisory services. With a team of seasoned professionals based in North America, Europe, Asia and Latin America, the firm provides Turnaround Management services, including Performance Improvement; Turnaround and Restructuring Advisory; Crisis & Interim Management; Risk Management Advisory; Creditor Advisory and Claims Management. A&M's services also include: Business Consulting; Real Estate Advisory; Dispute Analysis & Forensics; Corporate Finance; Tax Advisory and Transaction Advisory. Alvarez & Marsal received the Turnaround Management Association's "Turnaround of the Year" award in 2003 for its work with the Warnaco Group, Inc. and again in 2005 for its work with Spiegel, Inc. The firm has also been recognized for its work with AMERCO (parent of U-Haul) and German drug store chain Ihr Platz, the country's first U.S.-style restructuring. * Richard B. Myrus Joins Proskauer Rose in Boston as Sr. Counsel ---------------------------------------------------------------- Richard B. Myrus has joined Proskauer Rose LLP as senior counsel. He is the latest addition to Proskauer's rapidly expanding Boston office, which was recently named by Boston Business Journal as the fastest-growing law firm in Massachusetts for the second consecutive year. "We're very happy to finally be able to bring Rich to the Firm," Steven Bauer, head of Proskauer's Boston office and a partner in its Litigation and Dispute Resolution Group, said. "We worked together with Rich when we were at Testa, Hurwitz, and we welcome him 'home' now. He is a highly-accomplished litigator with a broad and varied base of expertise and he will be a significant addition to our complex litigation practice." Proskauer's Boston-based Intellectual Property Litigation Group was ranked as one of the top IP practices in Boston by Chambers USA in both 2005 and 2006 and is fully integrated into the Firm's international IP platform. Mr. Myrus's addition brings the Boston-based group to over 30 attorneys dedicated solely to handling complex technology-related matters, including disputes relating to patents, trade secrets, copyrights, trademarks, and technology-based licenses. Its attorneys have a wealth and diversity of experience in litigation, patent office practice, and alternative dispute resolution procedures in courts and patent offices worldwide. Mr. Myrus joins Proskauer from the Boston office of Goodwin Procter, where he was a litigation partner responsible for running all aspects of complex civil litigation matters including patent infringement and trade secret cases. Over the course of his career, Mr. Myrus has participated in a range of litigation matters, including patent infringement trials, licensing disputes, government investigations, securities class actions, and white collar defense. Before joining Goodwin, Mr. Myrus had been elected to partnership in the Litigation Department of Testa, Hurwitz & Thibeault; was a Special Assistant District Attorney in Middlesex County, Massachusetts; and served as a law clerk to Judge William C. Conner in the United States District Court for the Southern District of New York. Before beginning his legal career, Mr. Myrus was a Lieutenant in the United States Navy where, as a naval aviator, he received the United Nations Humanitarian Service Medal for the rescue of Vietnamese refugees in the South China Sea and the National Defense Service Medal. He received his J.D. from Fordham University School of Law, his M.A. from the University of California, San Diego, and his B.A. from Columbia University. Mr. Myrus joins a number of other significant lateral additions who moved to Proskauer's Boston office from Boston-based firms in the last year including Ian Blumenstein, (corporate finance and high-yield debt), Peter Antoszyk (finance, junior capital and bankruptcy), and Michael Harrington (private equity and corporate transactions). About Proskauer Rose Founded in 1875, Proskauer Rose LLP -- http://www.proskauer.com/ -- provides a wide variety of legal services to clients throughout the United States and around the world from offices in New York, Los Angeles, Washington, D.C., Boston, Boca Raton, Newark, New Orleans and Paris. In addition to Boston-based intellectual property, litigation, corporate finance, labor and employment, and corporate governance and transactional practices, Proskauer's Boston office is home to one of the world's top private equity and finance practices, representing over 300 funds, lenders and institutional investors worldwide. The Firm has wide experience in all areas of practice important to businesses and individuals, including corporate finance, mergers and acquisitions, general commercial litigation, private equity and fund formation, patent and intellectual property litigation and prosecution, labor and employment law, real estate transactions, internal corporate investigations, white collar criminal defense, bankruptcy and reorganizations, trusts and estates, and taxation. Its clients span industries including chemicals, entertainment, financial services, health care, hospitality, information technology, insurance, Internet, manufacturing, media and communications, pharmaceuticals, real estate investment, sports, and transportation. * Superior Capital to Invest in Underperforming Businesses ---------------------------------------------------------- Superior Capital Partners LLC has formed The Superior Fund Limited Partnership and has appointed Mark Carroll as its Managing Partner. This Detroit-based private equity investment fund is dedicated to the acquisition of companies in need of capital and operational improvement. The Superior Fund has approximately $50 million of committed capital and is targeting $75 million of capital by later this year. "We are delighted to add The Superior Fund as the seventh fund in our extended family of lower middle market private capital funds which collectively manage well in excess of $1 billion," William Campbell, Chairman, commenting on the establishment of the fund, said. "We believe that companies are currently carrying too much debt and as the economy inevitably slows, there will be opportunities to invest in them at attractive valuations. We welcome Mark Carroll as our Managing Partner with the day-to-day responsibility of leading The Superior Fund's investment activities. Mark is uniquely qualified for this role with a broad business background which includes hands-on operational experience in the lower middle-market as well as positions with prestigious companies in the fields of investment banking and private equity investing." "I'm very excited about the opportunity to lead Superior," Mr. Carroll commented. "I'm confident that there will be ample opportunities to acquire companies whose performance can be greatly improved through the combination of a necessary capital infusion and an increased focus on operational performance." The strategy of Superior Capital Partners is to combine its capital, transaction experience and turnaround expertise with proven management teams who have the vision, capability and commitment to successfully improve and grow their businesses. Together, the firm seeks to acquire or recapitalize niche manufacturers, value-added distributors and specialty service companies. Generally, these companies will have annual revenues of up to $200 million, hold strong market positions and have identifiable growth opportunities. The businesses in which the firm invests will generally be in transition, experiencing performance challenges or will be in need of balance sheet restructuring. The firm will invest up to $20 million of equity per transaction to facilitate management buyouts, corporate spin-offs, recapitalizations, family successions, acquisitions out of bankruptcy and debt purchases. Transactions will be customized to meet each company's liquidity, diversification and tax objectives. The firm work quickly and confidentially to avoid disruption to the business. Superior Capital Partners LLC, an investment management company located in Detroit's Guardian Building comprised of seasoned investment professionals, manages the fund. Members of the firm include William Campbell, William McKinley, Scott Reilly, Brian Demkowicz and Mark Carroll. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- January 31 to February 1, 2007 EUROMONEY INSTITUTIONAL INVESTOR Asia M&A Forum Island Shangi-La, Hong Kong Contact: http://www.euromoneyplc.com/ February 2007 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium San Juan, Puerto Rico Contact: 1-703-739-0800 or http://www.abiworld.org/ February 5, 2007 STRATEGIC RESEARCH INSTITUTE 3rd Annual Tranche B & 2nd Lien Financing Summit Scottsdale, AZ Contact: http://www.euromoneyplc.com/ February 6-7, 2007 INSTITUTIONAL INVESTOR EVENTS Turnaround Management & Distressed Investing Forum New York, NY Contact: http://www.iievents.com/ February 7, 2007 TURNAROUND MANAGEMENT ASSOCIATION Member Appreciation FREE Happy Hour Rooney's Irish Pub, Jupiter, FL Contact: 561-882-1331 or http://www.turnaround.org/ February 7, 2007 TURNAROUND MANAGEMENT ASSOCIATION Comedy Night at Governors, Levittown, NY Contact: 631-251-6296 or http://www.turnaround.org/ February 7-9, 2007 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS VALCON: Hedge Funds, Distressed Debt, Risk and Restructurings Red Rock Casino, Resort and Spa, Las Vegas, NV Contact: http://www.airacira.org/ February 8, 2007 INSTITUTIONAL INVESTOR EVENTS Corporate Restructuring & Investing in Post-Crisis Latin America Forum New York, NY Contact: http://www.iievents.com/ February 8-9, 2007 EUROMONEY CONFERENCES 2nd Philippine Investment Conference Cebu Convention Center, Cebu, Philippines Contact: http://www.euromoneyplc.com/ February 8-9, 2007 EUROMONEY Leverage Finance Asia JW Marriott Hong Kong Contact: http://www.euromoneyplc.com/ February 8-11, 2007 TURNAROUND MANAGEMENT ASSOCIATION Certified Turnaround Professional (CTP) Training NY/NJ Contact: http://www.turnaround.org/ February 12, 2007 TURNAROUND MANAGEMENT ASSOCIATION 9th Annual TMA Symposium Four Seasons Hotel, Toronto, ON Contact: http://www.turnaround.org/ February 14, 2007 TURNAROUND MANAGEMENT ASSOCIATION Marketing Strategies available to the Turnaround Practitioner Sydney, Australia Contact: http://www.turnaround.org/ February 15, 2007 TURNAROUND MANAGEMENT ASSOCIATION 3rd Annual Martini Networking Event Gibson's Steakhouse, Chicago, IL Contact: 815-469-2935 or http://www.turnaround.org/ February 15, 2007 TURNAROUND MANAGEMENT ASSOCIATION Valuation Outlook - What's in Store for 2007 University Club, Portland, OR Contact: http://www.turnaround.org/ February 15, 2007 TURNAROUND MANAGEMENT ASSOCIATION Window of Opportunity: Maximizing Value in a Retail Bankruptcy Denver Athletic Club, Denver, CO Contact: http://www.turnaround.org/ February 15, 2007 TURNAROUND MANAGEMENT ASSOCIATION Men's College Basketball & Networking Wachovia Center, Philadelphia, PA Contact: 215-657-5551 or http://www.turnaround.org/ February 16, 2007 TURNAROUND MANAGEMENT ASSOCIATION Wharton Restructuring Conference The Wharton School Philadelphia, PA Contact: http://www.turnaround.org/ February 20, 2007 TURNAROUND MANAGEMENT ASSOCIATION Professional Development Brisbane, Australia Contact: http://www.turnaround.org/ February 21, 2007 TURNAROUND MANAGEMENT ASSOCIATION Member Appreciation FREE Happy Hour Gordon Biersch Brewery Restaurant, Miami, FL Contact: 561-882-1331 or http://www.turnaround.org/ February 21-22, 2007 EUROMONEY Euromoney Pakistan Conference Perceptions & Realities Marriott Hotel, Islamabad, Pakistan Contact: http://www.euromoneyplc.com/ February 22, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA-NOW Networking & Panel: Discussing Women's Networking Issues PBI, Philadelphia, PA Contact: 215-657-5551 or http://www.turnaround.org/ February 22, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA PowerPlay - Atlanta Thrashers Philips Arena, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ February 22, 2007 EUROMONEY 2nd Annual Euromoney Japan Forex Forum Mandarin Oriental, Tokyo, Japan Contact: http://www.euromoneyplc.com/ February 25-26, 2007 NORTON INSTITUTES Norton Bankruptcy Litigation Institute Marriott Park City, UT Contact: http://www2.nortoninstitutes.org/ February 27, 2007 TURNAROUND MANAGEMENT ASSOCIATION Member Appreciation FREE Happy Hour Maggianos, Tampa, FL Contact: 561-882-1331 or http://www.turnaround.org/ February 27, 2007 PRACTISING LAW INSTITUTE Intercreditor Agreements & Bankruptcy Issues Workshop San Francisco, CA Contact: http://www.pli.edu/ February 27, 2007 TURNAROUND MANAGEMENT ASSOCIATION Devil Rays Turnaround Centre Club, Tampa, FL Contact: http://www.turnaround.org/ February 27-28, 2007 EUROMONEY INSTITUTIONAL INVESTOR 5th Annual Corporate Restructuring Summit Sheraton Park Lane Hotel, London, UK Contact: http://www.euromoneyplc.com/ March 1, 2007 AMERICAN BANKRUPTCY INSTITUTE Nuts and Bolts for Young Practitioners - West Regency Beverly Wilshire, Los Angeles, CA Contact: http://www.abiworld.org/ March 2, 2007 AMERICAN BANKRUPTCY INSTITUTE 15th Annual Bankruptcy Battleground West Regency Beverly Wilshire, Los Angeles, CA Contact: http://www.abiworld.org/ March 14, 2007 TURNAROUND MANAGEMENT ASSOCIATION The Great Debate Sydney, Australia Contact: http://www.turnaround.org/ March 14-15, 2007 TURNAROUND MANAGEMENT ASSOCIATION Atlanta, GA Contact: http://www.turnaround.org/ March 15, 2007 TURNAROUND MANAGEMENT ASSOCIATION LI Turnaround Management Event Long Island, NY Contact: http://www.turnaround.org/ March 15, 2007 TURNAROUND MANAGEMENT ASSOCIATION Martini Madness Cocktail Reception with Geraldine Ferraro Westin Buckhead, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ March 15-18, 2007 NATIONAL ASSOCIATION OF BANKRUTPCY TRUSTEES NABT Spring Seminar Ritz-Carlton Buckhead, Atlanta, GA Contact: http://www.NABT.com/ March 18-21, 2007 INSOL Annual Europe, Africa & Middle East Conference Cape Town, South Africa Contact: http://www.insol.org/CapeTown07/ March 20, 2007 THOMSON WEST LEGALWORKS Insurance and Reinsurance Allocation Superbowl New York, NY Contact: http://www.westlegalworks.com/ March 21, 2007 TURNAROUND MANAGEMENT ASSOCIATION The Next Wave of Distressed Businesses: A Panel Discussion South Florida Contact: http://www.turnaround.org/ March 21, 2007 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner TBA, South FL Contact: 561-882-1331 or http://www.turnaround.org/ March 21-22, 2007 EUROMONEY 2nd Annual Vietnam Investment Forum Melia, Hanoi, Vietnam Contact: http://www.euromoneyplc.com/ March 21-22, 2007 EUROMONEY Euromoney Indian Financial Market Congress Grand Hyatt, Mumbai, India Contact: http://www.euromoneyplc.com/ March 22-23, 2007 EUROMONEY INSTITUTIONAL INVESTOR Euromoney Indonesian Financial Markets Congress Bali, Indonesia Contact: http://www.euromoneyplc.com/ March 27, 2007 TURNAROUND MANAGEMENT ASSOCIATION "The Six Keys of Sustained Profitable Growth" Rodney Page, Senior Partner of Blue Springs Partners Citrus Club, Orlando, FL Contact: http://www.turnaround.org/ March 27-31, 2007 TURNAROUND MANAGEMENT ASSOCIATION Spring Conference Four Seasons Las Colinas, Dallas, Texas Contact: http://www.turnaround.org/ March 29-31, 2007 ALI-ABA Chapter 11 Business Reorganizations Scottsdale, Arizona Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/ April 5, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA Case Study "When Everything Goes Wrong" University of Florida, Gainesville, FL Contact: http://www.turnaround.org/ April 11-15, 2007 AMERICAN BANKRUPTCY INSTITUTE ABI Annual Spring Meeting J.W. Marriott, Washington, DC Contact: 1-703-739-0800; http://www.abiworld.org/ April 12, 2007 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION IWIRC 4th Spring Luncheon and Founders Awards Washington, DC Contact: http://www.iwirc.org/ April 12, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon University Club, Jacksonville, FL Contact: 561-882-1331 or http://www.turnaround.org/ April 12, 2007 AMERICAN BANKRUPTCY INSTITUTE Nuts and Bolts for Young Practitioners - East JW Marriott, Washington, DC Contact: http://www.abiworld.org/ April 19, 2007 TURNAROUND MANAGEMENT ASSOCIATION Wine Tasting Social TBA, Long Island, NY Contact: 631-251-6296 or http://www.turnaround.org/ April 20, 2007 TURNAROUND MANAGEMENT ASSOCIATION Breakfast meeting with Chapter President, Bruce Sim Westin Buckhead, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ April 24, 2007 TURNAROUND MANAGEMENT ASSOCIATION "Why Prospects Become Clients" Mark Fitzgerald, President of Sales Training Institute Inc Centre Club, Tampa, FL Contact: http://www.turnaround.org/ April 26, 2007 TURNAROUND MANAGEMENT ASSOCIATION Jacksonville Zoo Turnaround University Club, Jacksonville, FL Contact: http://www.turnaround.org/ April 26, 2007 TURNAROUND MANAGEMENT ASSOCIATION 1st Annual Credit & Bankruptcy Symposium Golf/Spa Outing Fox Hopyard Golf Club, East Haddam, CT Contact: 203-265-2048 or http://www.turnaround.org/ April 26, 2007 TURNAROUND MANAGEMENT ASSOCIATION Spa Outing Mohegan Sun, Uncasville, CT Contact: 203-265-2048 or http://www.turnaround.org/ April 26-27, 2007 TURNAROUND MANAGEMENT ASSOCIATION 1st Annual Credit & Bankruptcy Symposium Mohegan Sun, Uncasville, CT Contact: http://www.turnaround.org/ April 26-28, 2007 ALI-ABA Fundamentals of Bankruptcy Law Philadelphia, PA Contact: http://www.ali-aba.org April 29 - May 1, 2007 INTERNATIONAL BAR ASSOCIATION International Insolvency Conference Zurich, Switzerland Contact: http://www.ibanet.org/ May 4, 2007 AMERICAN BANKRUPTCY INSTITUTE Nuts and Bolts for Young Practitioners - NYC Alexander Hamilton US Custom House, SDNY New York, NY Contact: http://www.abiworld.org/ May 7, 2007 AMERICAN BANKRUPTCY INSTITUTE 9th Annual New York City Bankruptcy Conference Millennium Broadway Hotel & Conference Center New York, NY Contact: http://www.abiworld.org/ May 14, 2007 TURNAROUND MANAGEMENT ASSOCIATION Annual TMA Atlanta Golf Outing White Columns, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ May 16, 2007 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner TBA, South FL Contact: 561-882-1331 or http://www.turnaround.org/ May 16, 2007 TURNAROUND MANAGEMENT ASSOCIATION Bankruptcy Judges Panel Marriott North, Fort Lauderdale, FL Contact: http://www.turnaround.org/ May 17-18, 2007 TURNAROUND MANAGEMENT ASSOCIATION 6th Annual Great Lakes Regional Conference Renaissance Quail Hollow Resort, Painesville, OH Contact: http://www.turnaround.org/ May 29, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon - Bankruptcy Judges Panel Citrus Club, Orlando, FL Contact: http://www.turnaround.org/ May 30-31, 2007 FINANCIAL RESEARCH ASSOCIATES Distressed Debt Harvard Club, New York, NY Contact: http://www.frallc.com/ June 6-8, 2007 TURNAROUND MANAGEMENT ASSOCIATION 5th Annual Mid-Atlantic Regional Symposium Borgata Hotel Casino & Spa, Atlantic City, NJ Contact: http://www.turnaround.org/ June 6-9, 2007 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 23rd Annual Bankruptcy & Restructuring Conference Westin River North, Chicago, Illinois Contact: http://www.airacira.org/ June 14-17, 2007 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ June 26, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon - Bankruptcy Judges Panel Centre Club, Tampa, FL Contact: http://www.turnaround.org/ June 28 - July 1, 2007 NORTON INSTITUTES Norton Bankruptcy Litigation Institute Jackson Lake Lodge, Jackson Hole, WY Contact: http://www2.nortoninstitutes.org/ July 12, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon - Bankruptcy Judges Panel University Club, Jacksonville, FL Contact: http://www.turnaround.org/ July 12, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon University Club, Jacksonville, FL Contact: 561-882-1331 or www.turnaround.org July 12-15, 2007 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Marriott, Newport, RI Contact: 1-703-739-0800; http://www.abiworld.org/ July 18, 2007 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner TBA, South FL Contact: 561-882-1331 or http://www.turnaround.org/ July 25-28, 2007 AMERICAN BANKRUPTCY INSTITUTE 12th Annual Southeast Bankruptcy Workshop The Sanctuary, Kiawah Island, SC Contact: http://www.abiworld.org/ August 9-11, 2007 AMERICAN BANKRUPTCY INSTITUTE 3rd Annual Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay Cambridge, MD Contact: http://www.abiworld.org/ August 23-26, 2007 NATIONAL ASSOCIATION OF BANKRUPTCY JUDGES NABT Convention Drake Hotel, Chicago, IL Contact: http://www.nabt.com/ August 28, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon - Healthcare Panel Centre Club, Tampa, FL Contact: http://www.turnaround.org/ September 6-8, 2007 AMERICAN BANKRUPTCY INSTITUTE 15th Annual Southwest Bankruptcy Conference Four Seasons Las Vegas, NV Contact: http://www.abiworld.org/ September 19, 2007 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner TBA, South FL Contact: 561-882-1331 or http://www.turnaround.org/ September 19, 2007 TURNAROUND MANAGEMENT ASSOCIATION Buying and Selling Troubled Companies Marriott North, Fort Lauderdale, FL Contact: http://www.turnaround.org/ September 25, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon - Retail Panel Citrus Club, Orlando, FL Contact: http://www.turnaround.org/ October 10-13, 2007 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Orlando, Florida Contact: http://www.ncbj.org/ October 11, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon University Club, Jacksonville, FL Contact: 561-882-1331 or http://www.turnaround.org/ October 16-19, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Copley Place, Boston, Massachusetts Contact: 312-578-6900; http://www.turnaround.org/ October 30, 2007 TURNAROUND MANAGEMENT ASSOCIATION Crisis Communications With Employees,Vendors and Media Centre Club, Tampa, FL Contact: http://www.turnaround.org/ October 30, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Centre Club, Tampa, FL Contact: 561-882-1331 or http://www.turnaround.org/ November 14, 2007 TURNAROUND MANAGEMENT ASSOCIATION Dinner South FL Contact: 561-882-1331 or http://www.turnaround.org/ December 6-8, 2007 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Westin Mission Hills Resort, Rancho Mirage, California Contact: 1-703-739-0800; http://www.abiworld.org/ December 19, 2007 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner TBA, South FL Contact: 561-882-1331 or http://www.turnaround.org/ TBA 2008 INSOL Annual Pan Pacific Rim Conference Shanghai, China Contact: http://www.insol.org/ January 10, 2008 TURNAROUND MANAGEMENT ASSOCIATION Luncheon University Club, Jacksonville, FL March 25-29, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference Ritz Carlton Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ April 3-6, 2008 AMERICAN BANKRUPTCY INSTITUTE 26th Annual Spring Meeting The Renaissance, Washington, DC Contact: http://www.abiworld.org/ June 4-7, 2008 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 24th Annual Bankruptcy & Restructuring Conference JW Marriott Spa and Resort, Las Vegas, NV Contact: http://www.airacira.org/ June 12-14, 2008 AMERICAN BANKRUPTCY INSTITUTE 15th Annual Central States Bankruptcy Workshop Grand Traverse Resort and Spa, Traverse City, MI Contact: http://www.abiworld.org/ August 16-19, 2008 AMERICAN BANKRUPTCY INSTITUTE 13th Annual Southeast Bankruptcy Workshop Ritz-Carlton, Amelia Island, FL Contact: http://www.abiworld.org/ September 24-27, 2008 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Scottsdale, Arizona Contact: http://www.ncbj.org/ October 28-31, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Copley Place, Boston, Massachusetts Contact: 312-578-6900; http://www.turnaround.org/ December 4-6, 2008 AMERICAN BANKRUPTCY INSTITUTE 20th Annual Winter Leadership Conference Westin La Paloma Resort & Spa Tucson, AZ Contact: http://www.abiworld.org/ June 21-24, 2009 INSOL 8th International World Congress TBA Contact: http://www.insol.org/ October 5-9, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900; http://www.turnaround.org/ 2009 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Las Vegas, Nevada Contact: http://www.ncbj.org/ October 4-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ 2010 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, Louisiana Contact: http://www.ncbj.org/ BEARD AUDIO CONFERENCES Coming Changes in Small Business Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Distressed Real Estate under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Changes to Cross-Border Insolvencies Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Healthcare Bankruptcy Reforms Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Calpine's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Changing Roles & Responsibilities of Creditors' Committees Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Validating Distressed Security Portfolios: Year-End Price Validation and Risk Assessment Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Employee Benefits and Executive Compensation under the New Code Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Dana's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Reverse Mergers-the New IPO? Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Fundamentals of Corporate Bankruptcy and Restructuring Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES High-Yield Opportunities in Distressed Investing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Privacy Rights, Protections & Pitfalls in Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES When Tenants File -- A Landlord's BAPCPA Survival Guide Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Clash of the Titans -- Bankruptcy vs. IP Rights Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Distressed Market Opportunities Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Homestead Exemptions under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES BAPCPA One Year On: Lessons Learned and Outlook Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Surviving the Digital Deluge: Best Practices in E-Discovery and Records Management for Bankruptcy Practitioners and Litigators Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Deepening Insolvency - Widening Controversy: Current Risks, Latest Decisions Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES KERPs and Bonuses under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Diagnosing Problems in Troubled Companies Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Equitable Subordination and Recharacterization Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Marie Therese V. Profetana, Shimero R. Jainga, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, Jason A. Nieva, Melvin C. Tabao, 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 ***