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/raid1/www/Hosts/bankrupt/TCR_Public/070216.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, February 16, 2007, Vol. 11, No. 40 Headlines ACE SECURITIES: S&P Puts Default Rating on Class M-4 Certificates ADVANCED MARKETING: Mark E. Ravits Appointed as Director ADVANCED MARKETING: Robert E. Robotti Resigns as Director ALLIS-CHALMERS ENERGY: Board Picks Zane Tankel as Director AMERICAN AIRLINES: Parent Possible Buyout Target AMERICAN RAILCAR: Moody's Puts B1 Rating on Proposed Senior Notes AMERICAN TOWER: Moody's Lifts Corp. Family Rating to Ba1 from Ba2 AMR CORP: Likely Buyout Target of Goldman Sachs & British Airways ANTELOPE TECHNOLOGIES: Case Summary & 20 Largest Unsec. Creditors ASCENDIA BRANDS: Buys Coty Inc. Brands and Licenses for $125 Mil. ATLANTIC BROADBAND: S&P Rates $525 Million Senior Facility at B AUTOCAM CORP: Proposed $150 Mil. Senior Facilities Rated B by S&P BAYVIEW APARTMENTS: Involuntary Chapter 11 Case Summary BEAR STEARNS: Fitch Holds BB Rating on Class M-7 Certificates BEN CASTON: Voluntary Chapter 11 Case Summary BEVERAGES & MORE: TowerBrook Deal Cues Moody's Junk Rating on Debt BNS HOLDING: Proposes Plan to Deregister with the SEC CAL-BAY INT'L: To Refinance Properties in Southern California CENTRAL PARKING: Earns $9.3 Mil. in 1st Fiscal Qtr. Ended Dec. 31 CENVEO INC: S&P Rates Proposed $925 Million Senior Facility at B+ COLLINS & AIKMAN: Solicitation Papers Must be Mailed by Feb. 20 COLLINS & AIKMAN: Wants JCI Parties' Customer Agreement Approved COMMODORE APPLIED: Committee Dismisses Tanner LLC as Accountants COPELANDS' ENTERPRISES: Files Joint Liquidation Plan in Delaware COPELANDS' ENTERPRISES: Disclosure Statement Slated for March 19 COPELANDS' ENTERPRISES: Admin. Expense Claims Due on March 22 CORPSOURCE FINANCE: Moody's Junks Rating on Proposed $125MM Loan CROWN CASTLE: Moody's Places Corporate Family Rating at Ba3 DAIMLERCHRYSLER: Finalizes Pact with Canadian Auto Workers DAIMLERCHRYSLER: Chrysler Group In Talks with General Motors DANA CORP: Seeks Approval of Franklin Settlement Agreement DANA CORP: Trade Creditors Sell 35 Claims Totaling $4,624,406 DEAL GOLF: Case Summary & Largest Unsecured Creditor DEATH ROW: Court OKs Virgil Roberts as Business Affairs Consultant DELPHI CORP: Posts $1.97 Bil. Net Loss in 3rd Qtr. Ended Sept. 30 DELTA AIR: Comair Wants Approval on Loss Payment Agreement DOMINO'S PIZZA: Subsidiary Inks Interest Rate Swap Agreement DUNNAIR BUSINESS: Discontinues Luxury Jet Furnishing Operations DUNNAIR BUSINESS: Case Summary & 20 Largest Unsecured Creditors EAGLE BROADBAND: AMEX Rejects Plan of Compliance EAGLE BROADBAND: Closes $1.3 Million Promissory Note Transaction EDDIE BAUER: S&P Says Ratings Still Remain on Negative CreditWatch FIRST HORIZON: Fitch Holds Low-B Ratings on 3 Certificate Classes FRONTIER FUNDING: Moody's Lowers Rating on Class B Certs. to Ba3 GB HOLDINGS: Panel's 8th Modified Liquidation Plan is Effective GENERAL MOTORS: In Talks with DaimlerChrysler AG's Chrysler Group GLOBAL TEL*LINK: Proposed $10MM Add-on Cues Moody's to Cut Ratings GMAC 2005: Fitch Affirms B- Rating on $4 Mil. Class O Certificates GRAY TELEVISION: Plans to Ink New $1 Bil. Senior Credit Facility GRAY TELEVISION: S&P Rates Proposed $1 Bil. Senior Facility at B GREENMAN TECH: Dec. 31 Balance Sheet Upside-Down by $11.4 Million GSAMP TRUST: S&P Junks Rating on Series 2006-S3 Class B-2 Certs. GSAMP TRUST: S&P Places Ratings on Negative CreditWatch HARRAH'S ENT: Buyout May Get a B Issuer Default Rating from Fitch HARRINGTON HOLDINGS: Moody's Junks Rating on $50 Million Term Loan HCP ACQUISITION: Moody's Rates $427.9 Mil. Senior Facility at B1 HECTOR MERCADO: Case Summary & 16 Largest Unsecured Creditors HUGHES COMMS: Unit Inks Commitment Letter for $115 Mil. Financing ICEWEB INC: Sherb & Co. LLP Raises Going Concern Doubt IMAGIVISION FX: Case Summary & 10 Largest Unsecured Creditors INVACARE CORP: Closes $710 Million Refinancing Transactions IRONWOOD COURTYARD: Case Summary & Eight Largest Unsec. Creditors ISIDORO MARTINEZ: Case Summary & 12 Largest Unsecured Creditors JAMES ERNSBERGER: Case Summary & 11 Largest Unsecured Creditors LB-UBS: Moody's Junks Ratings on Class N and P Certificates LESLIE'S POOLMART: Good Performance Cues S&P's Ratings Upgrade MATTRESS HOLDINGS: Moody's Cuts $225MM Sr. Facility's Rating to B1 MERRILL LYNCH: Loan Repayment Prompts DBRS to Upgrade Ratings MESABA AVIATION: Northwest Seeks Formal Approval of Acquisition MILLS CORP: Board Says Simon/Farallon Offer is Better MILSPERING INC: Case Summary & 20 Largest Unsecured Creditors MORGAN STANLEY: Moody's Holds B3 Rating on $3 Mil. Class Q Certs. MORTGAGE LENDERS: Can Access Cash Collateral Until March 30 MORTGAGE LENDERS: Can Obtain Up to $3 Million of DIP Financing NASDAQ STOCK: Fourth Quarter 2006 Net Income Rose to $63 Million NEW CENTURY: S&P Places Ratings on Negative CreditWatch NEWTRAC PACIFIC: Case Summary & Four Largest Unsecured Creditors NORTHWEST AIRLINES: Wants Sanction Imposed on Ad Hoc Equity Panel NORTHWEST AIRLINES: Files Disclosure Statement in New York NORTHWEST AIRLINES: Disclosure Statement Hearing Set for March 26 NORTHWEST AIRLINES: Wants Court Approval on Mesaba Purchase NOVELIS CORP: Hindalco Deal Cues Fitch to Hold B Sr. Notes Rating NPC INT'L: Agrees to Acquire 59 Pizza Hut Units for $27.1 Million ORREX MEDICAL: Involuntary Chapter 11 Case Summary PITTSFIELD WEAVING: NH Revenue Dept. Wants Chap. 11 Case Dismissed POPULAR ABS: Fitch Affirms Low-B Ratings on 5 Certificate Classes REALOGY CORP: Refinancing Prompts S&P's Negative CreditWatch REFCO INC: Former President Tone Grant Charged with Fraud REFCO INC: Plan Administrator Wants AIDMA Pact Approved Today RESI FINANCE: S&P Assigns B- Rating to $20 Million Class B12 Notes RESIX FINANCE: S&P Assigns B- Rating to $20 Mil. Class B12 Notes RITE AID: Launched Offering of $800 Million Senior Notes Last Week SAINT VINCENTS: Can Finance $10.5 Million Debt to Pay Premiums SAN FRANCISCO OCEANSIDE: Case Summary & 12 Largest Creditors SANMINA-SCI: S&P Lowers Corporate Credit Rating to B+ from BB- SASCO 2007: S&P Rates $1.2 Million Class S Certificates at B- SEMINOLE HARD: S&P Places Corporate Credit Rating at BB SIERRA PACIFIC: DBRS Puts BB (low) Rating on Senior Notes SOLECTRON CORP: Michael Cannon Resigns as CEO; Joins Dell SOLUTIA INC: Various Parties React to Exclusivity Extension Motion SOLUTIA INC: Wants to Implement 2007 Incentive Program SOLUTIA INC: Court Extends Removal of Actions Period Until May 7 SOLUTIA INC: AMEC Transfers $33,942 Claim to Contrarian Funds SOURCECORP INC: S&P Cuts Corporate Credit Rating to B from B+ SPECIALTY RESTAURANT: Case Summary & 20 Largest Unsec. Creditors SPECIALTY RESTAURANT: Wants Access to GECC Cash Collateral SPECIALTY RESTAURANT: Wants More Time to File Schedules STONE TOWER: S&P Rates $31 Million Class D Notes at BB STRUCTURED ADJUSTABLE: S&P Junks Rating on Class M-3 Certificates STRUCTURED ASSET: S&P Places Ratings on Negative CreditWatch SUN COAST: S&P Cuts Rating on $22.5 Million Revenue Bonds to B SUPERIOR WHOLESALE: Fitch Rates $16 Million Class D Notes at BB+ TERWIN MORTGAGE: S&P Places Ratings on Negative CreditWatch UAL CORP: Officers Disclose Shares Ownership UAL CORP: United Airlines Refinances $2 Billion Exit Facility VALASSIS COMMS: S&P Cuts Corporate Credit Rating to B+ from BB VALENCE TECH: Posts $5.9 Million Net Loss in Quarter Ended Dec. 31 WARNER MUSIC: 1st Qtr. Fiscal Results Cues S&P's Negative Outlook WORLD HEALTH: Chapter 7 Trustee Hires Miller Coffey as Accountants * Sheppard Mullin San Francisco Adds Jennifer Redmond as Partner * BOOK REVIEW: Railroad Consolidation: Its Economics and Controlling Principles ********* ACE SECURITIES: S&P Puts Default Rating on Class M-4 Certificates ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class M-4 from Ace Securities Corp. Home Equity Loan Trust Series 2002-HE1 to 'D' from 'CCC'. Concurrently, the rating on class M-3 was lowered to 'CCC' from 'B' and removed from CreditWatch with negative implications, where it was originally placed Aug. 1, 2006. The downgrades reflect actual and projected credit support percentages that are insufficient to maintain the previous ratings. Excess interest has been insufficient to cover realized losses for the past 12 months, and overcollateralization was depleted in December 2006. Cumulative losses for this transaction total $15,014,186, or 3.00% of the original pool balance. As of the Jan. 25, 2007, distribution date, total delinquencies were 41.96% of the current pool principal balance, with 26.70% categorized as seriously delinquent. The outstanding pool balance of this series is 7.97% of its original size. Standard & Poor's will continue to closely monitor the performance of this transaction. If the delinquent loans translate into further realized losses, Standard & Poor's may take additional negative rating actions on class M-3, depending on the size of the losses and the remaining credit support. Rating Lowered And Removed From Creditwatch Negative Ace Securities Corp. Home Equity Loan Trust Series 2002-HE1 Rating ------ Class To From ----- -- ---- M-3 CCC B/Watch Neg Rating Lowered Ace Securities Corp. Home Equity Loan Trust Series 2002-HE1 Rating ------ Class To From ----- -- ---- M-4 D CCC ADVANCED MARKETING: Mark E. Ravits Appointed as Director -------------------------------------------------------- Advanced Marketing Services Inc. has appointed Marc E. Ravitz, CFA, as its director. Mr. Ravitz is executive vice president of Grace & White Inc., an investment advisory firm which, together with certain 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. Mr. Ravitz stated: "I look forward to working with the other members of the Board and management to chart a positive course for the company." The company also announced that the company's meeting of stockholders, which was scheduled to be conducted on Jan. 24, 2007, was adjourned until 8:00 a.m. Pacific Standard Time on Feb. 23, 2007, 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. 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. (Advanced Marketing Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ADVANCED MARKETING: Robert E. Robotti Resigns as Director --------------------------------------------------------- Robert E. Robotti, who was appointed in November 2006, has resigned as a director of Advanced Marketing Services Inc. Mr. Robotti is a managing member of Ravenswood Management Company, L.L.C., the General Partner of Ravenswood Investment Company, L.P. In resigning as a director, Mr. Robotti stated that he disagreed with the Board's decision to proceed with the annual meeting of stockholders on Jan. 24, 2007, as previously scheduled. Mr. Robotti expressed his concern that, given the advance notice requirements in the company's bylaws, the opportunity has passed for stockholders to nominate director candidates or to bring other business before the meeting. Mr. Robotti instead sought to postpone the annual meeting until a later date. Robert F. Bartlett, Chairman of the Board of Directors, stated: "The company originally announced the January 24 meeting date back on Oct. 3, 2006, and the Board has determined that it is in the best interests of the company and its stockholders to proceed with the meeting as scheduled. We regret that Bob has decided to resign from the Board, but we respect his viewpoint, and we thank him for his contributions during his period of service." 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. (Advanced Marketing Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ALLIS-CHALMERS ENERGY: Board Picks Zane Tankel as Director ---------------------------------------------------------- The Board of Directors of Allis-Chalmers Energy Inc. elected Zane Tankel as a member of its Board of Directors. There is no arrangement between Mr. Zankel and any other persons pursuant to which Mr. Zankel was selected as a director. There are no relationships between Mr. Zankel and the company or its subsidiaries that would require disclosure pursuant to Item 404(a) of Regulation S-K. At present, Mr. Tankel is the chief executive officer of Apple-Metro Inc., the New York Metropolitan Area franchisee for Applebee's Neighborhood Grill & Bar, and has been the chairman of the board of Apple-Metro, Inc. and Chevys Fresh Mex Restaurants since 1994. Mr. Tankel also serves as a member of the board of directors of Wilshire Restaurant Group Inc., and BKH Acquisition Corp and serves as chairman of the board of the Metropolitan Presidents Organization. Based in Houston, Texas, Allis-Chalmers Energy Inc. (AMEX: ALY) -- http://www.alchenergy.com/-- provides oilfield services and equipment to the oil and gas exploration and development companies primarily in Texas, Louisiana, New Mexico, Colorado, and Oklahoma; offshore in the United States Gulf of Mexico; and offshore and onshore in Mexico. The company offers directional drilling, compressed air drilling, casing and tubing, rental tools, and production services. * * * As reported in the Troubled Company Reporter on Jan. 18, 2007, Moody's Investors Service placed Allis-Chalmers Energy Inc.'s ratings on review for possible upgrade. At the same time, Moody's assigned a B3 rating to the proposed $225 million senior unsecured notes to be issued by Allis-Chalmers. AMERICAN AIRLINES: Parent Possible Buyout Target ------------------------------------------------ AMR Corp., parent company of American Airlines, might be a buyout target of a group including Goldman Sachs and British Airways, Gene Marcial of BusinessWeek magazine reports. The proposed bid is said to be between $9.8 billion ($46 a share) and $11.1 billion ($52 a share), BusinessWeek adds. The bid is uncertain to materialize, BusinessWeek notes citing people familiar with the matter. About AMR Corp. Based in Fort Worth, Texas, AMR Corporation is the parent company of American Airlines Inc. American Airlines -- http://www.AA.com/ -- is the world's largest airline. American, American Eagle and the AmericanConnection regional airlines serve more than 250 cities in over 40 countries with more than 3,800 daily flights. The combined network fleet numbers more than 1,000 aircraft. American Airlines is a founding member of the oneworld Alliance, whose members serve more than 600 destinations in over 135 countries and territories. About American Airlines American Airlines, Inc. -- http://www.AA.com/-- American Eagle, and the AmericanConnection regional airlines serve more than 250 cities in over 40 countries with more than 3,800 daily flights. The combined network fleet numbers more than 1,000 aircraft. American Airlines, Inc. and American Eagle are subsidiaries of AMR Corporation. * * * As reported in the Troubled Company Reporter on Nov. 21, 2006, Moody's Investors Service confirmed its B3 Corporate Family Rating of AMR Corp. and its subsidiary, American Airlines Inc., in connection with the rating agency's implementation of its Probability-of-Default and Loss-Given-Default rating methodology. AMERICAN RAILCAR: Moody's Puts B1 Rating on Proposed Senior Notes ----------------------------------------------------------------- Moody's Investors Service assigned a B1, 63 - LGD4 rating to the senior unsecured notes to be issued by American RailCar Industries Inc., a corporate family rating of Ba3, a probability of default rating of Ba3 and a SGL-1 Speculative Grade Liquidity rating. The rating outlook is stable. This is the first time Moody's assigned ratings to ARI. The ratings reflect ARI's record level of committed backlog for high-value covered hopper and tank rail cars which should produce steadily improving operating cash flow over 2007 and 2008, and the company's plans to increase manufacturing capacity. In addition, Moody's expects that ARI will maintain key credit metrics of Debt to EBITDA and EBIT to Interest over the near term at levels consistent with other issuers at the Ba3 corporate family rating. However, the railcar manufacturing sector is highly-cyclical and the industry has now enjoyed several years of increasing orders. As well, ARI's capacity is relatively small compared to its industry peers, and the non-manufacturing segment is also relatively small. Consequently, metrics could be expected to weaken somewhat during the trough of the cycle. "Actions by the company to maintain cost flexibility and the ability to reduce capital expenditures during periods of soft demand also support the ratings" said Jonathan Root, Moody's High- Yield Transportation Analyst. Moody's also notes that ARI expects to carry a considerable cash balance which provides the company the resources to pursue transactions including acquisitions that could potentially increase the company's risk profile. ARI intends to improve the efficiency of its manufacturing operations and to expand capacity, and the company expects improved EBITDA margins, to the low double digits, over the intermediate term. This level would approach those of its larger competitors Trinity Industries, Inc. and The Greenbrier Companies, Inc. The operating results of both of these competitors are influenced by their respective rail car leasing businesses, however, which provides more predictability to cash flows during cyclical downturns. ARI has made a strategic decision to not offer rail car leasing so as to not compete with its customers and prospects. ARI does offer repair and fleet management services, similar to other manufacturers, which provides some stability of cash flow during a down-cycle. Anticipated cash on hand of at least $200 million, cash flow from operations in 2007 of more than $45 million and the revolver remaining undrawn provide for a very good liquidity position and the SGL-1 liquidity rating. The probability of default rating of Ba3 and loss given default assessment of 63 - LGD4 indicate an expected loss rate on the notes of about seven percent. The senior unsecured notes will not be guaranteed, nor is the company's revolving credit agreement. The B1 rating of the notes, one notch below the Ba3 corporate family rating, reflects the lower priority claim as the notes are effectively subordinated to the obligations of the company's $100 million senior secured revolving credit due 2009. The stable outlook anticipates that increased production volumes should enhance margins and operating cash flow over the intermediate term. The ratings could be downgraded if expected improvements in margins do not materialize, or if the execution of capital projects disrupts ARI's ability to meet the output planned. Debt to EBITDA being sustained above 3.7x or EBIT to Interest being sustained below 2.7x could also pressure the ratings down as could meaningfully higher dividends or share repurchases, which are not anticipated over the near term. Ratings or the outlook could be upgraded if Debt to EBITDA was sustained below 2.0x and EBIT to Interest remained above 5.0x through the trough of the cycle. Assignments: * American Railcar Industries, Inc. -- Speculative Grade Liquidity Rating, Assigned SGL-1 -- Corporate Family Rating, Assigned Ba3 -- Senior Unsecured Regular Bond/Debenture, Assigned a range of 63 - LGD4 to B1 -- Probability of Default rating, Assigned Ba3 American Railcar Industries, Inc., headquartered in St. Charles, Missouri, is a leading North American manufacturer of covered hopper and tank rail cars, and also provides rail car repair and fleet management services. AMERICAN TOWER: Moody's Lifts Corp. Family Rating to Ba1 from Ba2 ----------------------------------------------------------------- Moody's Investors Service upgraded the corporate family rating of American Tower Corporation to Ba1 from Ba2, affirmed the company's SGL-1 liquidity rating and changed the ratings of its various debt instruments pursuant to the loss given default methodology, as noted below. This concludes the ratings review commenced Dec. 11, 2006. The outlook is stable. The upgrade to AMT's corporate family rating with a stable outlook reflects Moody's expectation that the fundamentals of the wireless tower sector are likely to remain favorable through the next several years and AMT's good market position will enable its strong earnings and cash flow momentum to continue. However, the rating also considers the company's single industry focus and relatively small scale although recognizes that much of its revenues are contractually derived from its relationships with the largest national wireless operators across the U.S. Finally, the rating reflects Moody's view that AMT is likely to direct its growing free cash flow to shareholders via share buy backs over the next few years, targeting adjusted leverage towards 6x. Moody's noted in its rating action that it has now equated the senior secured ratings at AMT's two main operating companies, Spectrasite Communications Inc. and American Tower L.P. to reflect the fact that AMT faces essentially no meaningful restrictions to the movement of funds between these the two entities. In Moody's opinion, this distinction has become a more important factor at this higher rating level, as Moody's believes AMT is equally likely to support either subsidiary financially, should the need arise. These ratings have been upgraded: * American Tower Corporation -- Corporate Family Rating to Ba1 from Ba2 -- Probability of Default Rating to Ba1 from Ba2 -- Senior Unsecured Rating to Ba2 LGD 5, 86% from Ba3 LGD 5, 85% * American Tower Inc. -- Senior Subordinate Rating to Ba1 LGD 4, 61% from Ba2 LGD4, 59% * Spectrasite Communications Inc. -- Senior Secured Rating to Baa3 LGD 2, 24% from Ba1 LGD 3, 38% These ratings have been lowered: * American Tower L.P./ American Tower Inc. -- Senior Secured Rating to Baa3 LGD 2, 24% from Baa2 LGD1, 9% This rating has been affirmed: * American Tower Corporation -- Speculative Grade Liquidity Rating at SGL-1 Based in Boston, American Tower Corporation is a wireless tower operator. AMR CORP: Likely Buyout Target of Goldman Sachs & British Airways ----------------------------------------------------------------- AMR Corp., parent company of American Airlines, might be a buyout target of a group including Goldman Sachs and British Airways, Gene Marcial of BusinessWeek magazine reports. The proposed bid is said to be between $9.8 billion ($46 a share) and $11.1 billion ($52 a share), BusinessWeek adds. The bid is uncertain to materialize, BusinessWeek notes citing people familiar with the matter. About American Airlines American Airlines, Inc. -- http://www.AA.com/-- American Eagle, and the AmericanConnection regional airlines serve more than 250 cities in over 40 countries with more than 3,800 daily flights. The combined network fleet numbers more than 1,000 aircraft. American Airlines, Inc. and American Eagle are subsidiaries of AMR Corporation. About AMR Corp. Based in Fort Worth, Texas, AMR Corporation is the parent company of American Airlines Inc. American Airlines -- http://www.AA.com/ -- is the world's largest airline. American, American Eagle and the AmericanConnection regional airlines serve more than 250 cities in over 40 countries with more than 3,800 daily flights. The combined network fleet numbers more than 1,000 aircraft. American Airlines is a founding member of the oneworld Alliance, whose members serve more than 600 destinations in over 135 countries and territories. * * * As reported in the Troubled Company Reporter on Nov. 21, 2006, Moody's Investors Service confirmed its B3 Corporate Family Rating of AMR Corp. and its subsidiary, American Airlines Inc., in connection with the rating agency's implementation of its Probability-of-Default and Loss-Given-Default rating methodology. ANTELOPE TECHNOLOGIES: Case Summary & 20 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Antelope Technologies, Inc. dba MCC Computer Company P.O. Box 22926 Houston, TX 77227-2926 Bankruptcy Case No.: 07-31159 Type of Business: The Debtor manufactures modular technologies. See http://modular-pc.com/ Chapter 11 Petition Date: February 14, 2007 Court: Southern District of Texas (Houston) Judge: Letitia Z. Clark Debtor's Counsel: Richard L. Fuqua, II, Esq. Fuqua & Keim 2777 Allen Parkway, Suite 480 Houston, TX 77019 Tel: (713) 960-0277 Total Assets: $448,925 Total Debts: $3,477,515 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Transmeta Corp. Trade Debt $229,000 3990 Freedom Circle Santa Clara, CA 95054 McGloin Davenport Legal Fees $113,012 Severson & Snow 1600 Stout Street, Suite 1600 Denver, CO 80202 Oxford Technologies $84,985 2202 Enchanted Isle Drive Houston, TX 77062 Meyers Land & Cattle Company Judgment $80,000 1660 17th Street, Suite 225 Denver, CO 80202 American Express $75,559 P.O. Box 360001 Ft. Lauderdale, FL 33336 Geko Design Judgment $64,000 101 Shire Court Los Gatos, CA 95032 Terry Henderson Services $61,506 16011 Diamond Rock Lane Houston, TX 77429 Guyer Management Assistance Inc. $51,657 1708 Grizzly Gulch Highlands Ranch, CO 80129 Key 3 Media Events Judgment $23,207 c/o Richard Schroeder, Esq. 8920 S. Barrons Blvd., Ste 105 Highlands Ranch, CO 80129 Terry Henderson Unsecured Loan $20,000 16011 Diamond Rock Lane Houston, TX 77429 GD&A Advertising $18,348 1774 Platte Street Denver, CO 80202-6157 Leisure Publications $17,841 4160 Wilshire Boulevard Los Angeles, CA 90010-3500 Ehrhardt Keefe Accountants $17,271 Steine & Hoffman, PC 7979 E. Tufts Avenue, Suite 400 Denver, CO 80237-2843 Federal Express $16,084 P.O. Box 1140 Memphis, TN 38101-1140 Think Outside $14,000 85 Saratoga, Suite 200 Santa Clara, CA 95051 Andrews & Kurth, LLP Legal Fees $13,396 P. O. Box 201785 Houston, TX 77216-1786 Liteeye Systems, LLC $13,037 8955 South Ridgeline Boulevard Suite 1200 Higlands Ranch, CO 80129 Richard O. Schroeder Legal Fees $10,852 Counselor at Law 8920 South Barrons Boulevard Suite 205 Highlands Ranch, CO 80129 United Healthcare $10,077 Small Group Accounting - EXBA P.O. Box 41738 Philadelphia, PA 19101-1738 McBride Sheet Metal $8,678 P.O. Box 1259 Longmont, CO 80502-1259 ASCENDIA BRANDS: Buys Coty Inc. Brands and Licenses for $125 Mil. ----------------------------------------------------------------- Ascendia Brands, Inc. completed the acquisition of the Healing Garden(R) and Calgon(R) brands, licenses and brand assets from Coty Inc. and certain affiliates. The purchase price (prior to closing adjustments) was $125 million, including a $20 million subordinated promissory note and $10 million in Ascendia stock, to be issued within 30 days following closing. The asset purchase agreement also contemplates possible earn-out payments, in July 2009, of up to $15 million in cash, and an additional $5 million in subordinated debt. Wells Fargo Foothill Inc., as arranger and agent for a syndicate of first lien lenders; Watershed Administrative, LLC, as agent for the second lien lenders; and Prencen Lending LLC and affiliates of Watershed Asset Management, L.L.C., as purchasers of third lien convertible notes, combined to provide a $246 million facility to fund the acquisition, pay costs and fees associated with the acquisition, fund working capital and general corporate expenses and refinance the company's existing secured notes and revolving credit facility. The company anticipates that the acquisition will roughly double annual revenues, and will be accretive to earnings for its 2008 fiscal year. Headquartered in Hamilton, New Jersey, Ascendia Brands, Inc. (AMEX: ASB) -- http://www.ascendiabrands.com/-- manufactures health and beauty care products. In November 2005, Ascendia expanded its range of product offerings through the acquisition of a series of brands, including Baby Magic(R), Binaca(R), Mr. Bubble(R) and Ogilvie(R). The company operates two manufacturing facilities, in Binghamton, New York, and Toronto, Canada. * * * [On Dec. 30, 2006, Prencen Lending agreed to waive certain defaults arising under convertible secured notes relating to the payment of accrued interest due Dec. 31, 2006, waive compliance with certain financial covenants through the end of Ascendia's current fiscal year, and to defer until June 30, 2007 the requirement to file a registration statement with respect to shares of the Ascendia's Common Stock issuable upon conversion of the Amended Note. In addition, the parties agreed to defer until Feb. 28, 2007 the date for determining the number of shares of the Ascendia's Common Stock that may be issued upon the exercise of the Series B Warrants held by Prencen Lending, and the exercise price of such Series B Warrants.] ATLANTIC BROADBAND: S&P Rates $525 Million Senior Facility at B --------------------------------------------------------------- Standard & Poor's Ratings Services it assigned a 'B' bank loan rating and a '3' recovery rating to Quincy, Massachusetts-based Atlantic Broadband Finance LLC's proposed amended and restated $525 million senior secured credit facility. The '3' recovery rating indicates expectations for meaningful (50%-80%) recovery of principal in the event of payment default. At the same time, Standard & Poor's affirmed the existing ratings, including the 'B' corporate credit rating, on Atlantic, a regional cable provider. The outlook is positive. The new bank facility will consist of a $435 million term loan B due 2012 and a $90 million revolving loan due 2010 and will replace the existing $445 million bank facility, which included a $30 million term loan A, a $325 million term loan B, and a $90 million revolving loan. In addition, the new facility will loosen the financial covenants. "The rating affirmations reflect our view that while the expanded bank borrowings will increase pro forma debt to EBITDA to 6.9x from 6.2x, this modest impact on ratings is offset by improved operating results in the past few quarters," said Standard & Poor's credit analyst Naveen Sarma. Atlantic will have total debt outstanding, pro forma for the proposed amendment, of $619 million. Proceeds will be used to redeem a portion of existing preferred equity, refinance the existing term loan A, and reduce borrowings under the existing revolving credit facility. Standard & Poor's will withdraw the ratings on the existing bank facility when the transaction closes. The ratings on Atlantic reflect a highly leveraged financial profile, aggressive competition from the direct-to-home satellite TV providers for video services and local telephone companies for high speed data services, integration risks associated with the November 2006 acquisition of G-Force's 21,000 subscribers in South Carolina, cost disadvantages from small company size, and exposure to the below-average growth potential of the Western Pennsylvania cluster. Tempering factors include the company's second-tier markets, which provide some protection from the local telephone companies aggressively deploying facilities-based video offerings in the intermediate term, the company's position as the dominant provider of pay-TV services in its markets, and growth potential from high-speed data, digital video services, and cable telephony. AUTOCAM CORP: Proposed $150 Mil. Senior Facilities Rated B by S&P ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Kentwood, Michigan-based Autocam Corp. At the same time, Standard & Poor's assigned its 'B' senior secured bank loan rating and '3' recovery rating to the company's proposed $150 million of senior secured credit facilities. The debt rating and recovery rating indicate the likelihood of a meaningful recovery of principal (50%-80%) in a default or bankruptcy, based on an assessment of the company's enterprise value. The senior credit facilities consist of a $30 million multicurrency revolving credit facility due 2012, a $37 million equivalent Euro-denominated term loan due 2014, and an $83 million U.S. term loan due 2014. The borrowers are Autocam Corp. and Autocam France SARL. The new credit facilities represent one part of Autocam's proposed capital restructuring. Proceeds from the credit facilities will be used to refinance Autocam's existing first-lien senior secured credit facility. In addition, $85 million of new PIK preferred equity, which Standard & Poor's views as equivalent to debt, will be provided by Autocam's existing senior subordinated note holders, and will be used to repay the company's existing second-lien debt. Also, $139 million of the senior subordinated notes will be converted into common equity by the holders. Pro forma total debt outstanding at close of the transaction will be about $136 million. Although the recapitalization will improve Autocam's liquidity and cash flow adequacy through the reduction of cash interest expense and relaxed covenants, the company remains highly leveraged and vulnerable to negative developments in the currently unstable environment for automotive suppliers. In addition, Autocam does not expect to begin generating meaningful free cash flow until mid-2008 following the completion of its restructuring activities in France. BAYVIEW APARTMENTS: Involuntary Chapter 11 Case Summary ------------------------------------------------------- Alleged Debtor: Bayview Apartments LLC c/o Michael B. Chavies, Receiver Akerman Senterfitt 1 Southeast 3 Avenue, Suite 28th Miami, FL 33131 Case Number: 07-10963 Involuntary Petition Date: February 15, 2007 Chapter: 11 Court: Southern District of Florida (Miami) Judge: A. Jay Cristol Petitioners' Counsel: Rex E. Russo, Esq. Russo + Kavulich, P.L. 2655 LeJeune Road PH 1D Coral Gables, FL 33134 Tel: (305) 442-7393 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Diamonds Realty of Sales Agent $360,000 Miami Beach Inc. c/o Nestor Mendoza 960 Arthur Godfrey Road Suite 212 Miami Beach, FL 33140 Diamonds Properties, LLC Condominium $50,000 960 Arthur Godfrey Road Developer Suite 212 Miami Beach, FL 33140 Spotless Pool Service Inc. Pool Remodeling $48,200 c/o Hernan Prieto Services 18838 Northwest 83 PL Hialeah, FL 33015 BEAR STEARNS: Fitch Holds BB Rating on Class M-7 Certificates ------------------------------------------------------------- Fitch has affirmed Bear Stearns Asset Backed Securities' mortgage pass-through certificates and removed one from Rating Watch Negative: Series 2005-2: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'A-'; -- Class M-4 affirmed at 'BBB+'; -- Class M-5 affirmed at 'BBB'; -- Class M-6 affirmed at 'BBB-'; and -- Class M-7 affirmed at 'BB', removed from Rating Watch Negative. The mortgage pool consists of fixed- and adjustable-rate mortgage loans secured by first and second liens on one- to four-family residential properties, all extended to sub-prime borrowers. EMC Mortgage Corporation by Fitch is the servicer. The affirmations reflect a satisfactory relationship of credit enhancement to future expected losses, and affect approximately $164.07 million in outstanding certificates. Since class M-7 was placed on Rating Watch Negative in July 2006, monthly losses have declined. The average monthly excess spread over the past six months has been greater than monthly losses and has allowed overcollateralization to grow. Although the OC amount has not yet reached its target, the class' CE percentage has increased by approximately 56% since the last review. As a result, Fitch is removing this class from Rating Watch Negative. BEN CASTON: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Ben Caston Construction, Inc. 117 East County Line Road Springdale, AR 72764 Tel: (479) 872-8000 Bankruptcy Case No.: 07-70434 Type of Business: The Debtor's owners, Benjamin Franklin Caston & Lois Caston, filed for chapter 11 protection on January 8, 2007 (Bankr. W.D. Ark. Case No. 07-70063). The Debtor's affiliate, Heber Homes, Inc., filed for chapter 11 protection on January 18, 2007 (Bankr. E.D. Ark. Case No. 07-10268). Chapter 11 Petition Date: February 15, 2007 Court: Western District of Arkansas (Fayetteville) Debtor's Counsel: Stanley V. Bond, Esq. Bond Law Office P.O. Box 1893 Fayetteville, AR 72701-1893 Tel: (479) 444-0255 Fax: (479) 444-7141 Total Assets: $4,834,448 Total Debts: $4,324,520 The Debtor did not file a list of its 20 largest unsecured creditors. BEVERAGES & MORE: TowerBrook Deal Cues Moody's Junk Rating on Debt ------------------------------------------------------------------ Moody's Investors Service assigned first time ratings to Beverages & More, Inc., including a corporate family rating of B3 and a senior secured notes rating of Caa1. The rating outlook is stable. Ratings assigned: * Corporate family rating at B3; * Probability-of-default rating at B3; and * $100 million senior secured notes at Caa1, LGD4, 62%. The ratings take into account BevMo's agreement to be acquired by TowerBrook Capital Partners, LP in a transaction valued at approximately $205 million. The acquisition will be financed with the proceeds of the proposed $100 million secured senior notes along with $113 million of unrated preferred stock being held by Towerbrook and management, as well as a common equity contribution by TowerBrook and management. The transaction value represents a multiple of roughly 9.7x reported EBITDA for the fiscal year ended Jan. 28, 2007. The B3 corporate family rating of BevMo reflects post-transaction credit metrics that will be very weak, particularly the very high leverage and limited levels of operating cash flow that are expected to be generated over the next several years. For example, BevMo's debt/EBITDA -- incorporating Moody's standard analytic adjustments -- would be approximately 8.2x. Moody's adjustments for the proposed transaction include, among others, the inclusion of approximately 50% of the new preferred stock offering as debt obligation in accordance to Moody's rating methodology for instruments of this type and profile. The B3 rating is further restrained by the company's high seasonality, its small scale with top line revenues for the latest twelve months ended Dec. 30, 2006, of $374 million, its slim operating margins which is below that of its retailing peers, and its aggressive financial policies. Moody's notes, however, that although the company participates in a very fragmented and highly competitive alcoholic beverage retail market, its ratings are supported by its strong and well established position within the markets in which it competes. BevMo is a leading alcoholic beverage superstore chain in the Western United States and offers an extensive selection of premium and exclusive alcoholic beverages to its customers, which provides a meaningful competitive advantage over its competition. "Although BevMo has created a solid operating model in California, the LBO of this company is creating a significant amount of leverage for a relatively small and concentrated business at a time when it is pursuing a significant growth strategy" stated Ed Henderson, Moody's Senior Analyst. The stable outlook reflects Moody's expectation that the company will continue to maintain solid comparable store sales performance coupled with improved operating margins. It also assumes that the company will manage its growth in such a way that maintains its leverage, liquidity, and financial flexibility at levels acceptable to its ratings. Given the magnitude of BevMo's post-transaction leverage, an upgrade is unlikely in the intermediate term. Over the longer term, an upgrade would require BevMo to maintain solid operating performance, and be able to materially reduce leverage such that Debt/EBITDA can be sustained below 6.5x with positive free cash flow. Conversely, negative rating pressure could develop if operating performance is weaker than expected, cash flow coverage continues to be weak, or liquidity erodes. Beverage & More!, Inc., headquartered in Concord, California, is engaged in the alcohol and beverage-lifestyle superstore retail business in the Western United States. The company operates 62 superstores, 35 in Northern California, 26 in Southern California and one in Arizona. BNS HOLDING: Proposes Plan to Deregister with the SEC ----------------------------------------------------- The Board of Directors of BNS Holding Inc. has approved a plan, for consideration and approval by its shareholders, to reduce the number of shareholders of record to fewer than 300 and thus terminate the company's obligation to file reports with the Securities and Exchange Commission. This would be accomplished through a 1-for-200 reverse stock split of the company's outstanding Class A Common Stock, followed immediately by a 200- for-1 forward stock split. The company anticipates that its stock will continue to be quoted on the Pink Sheets. Completion of the transaction is subject to the fulfillment of all of the filing requirements of the SEC. The company intends to continue to provide shareholders with annual audited financial statements and quarterly financial information by making these documents available on a company website. These documents will not be as detailed or extensive as the information the company was required to file with the SEC or has provided to its shareholders in the past. "There are a number of advantages to this transaction," said President and CEO Michael Warren. "Significant cost savings will result each year from the elimination of these reporting requirements. The company will also avoid the substantial one- time costs associated with initial Sarbanes-Oxley Section 404 compliance. But as important as the direct cost savings, we expect that the reduced administrative burden will allow our management team to focus their attention on operating performance and capitalizing on market opportunities." In the Reverse/Forward Stock Split, shareholders holding less than 200 shares of Common Stock immediately before the transaction will receive a cash payment equal to $13.62 per share for those pre- split shares. Shareholders holding 200 or more shares of common stock immediately before the transaction will not receive cash payment, but will continue to hold the same number of shares after completion of the transaction. "The effect is that the small lot shareholders will be able to liquidate their holdings without paying commissions," added Mr. Warren. The company estimates that approximately 2% of its outstanding shares will be redeemed as a result of the Reverse/Forward Stock Split. The Board of Directors engaged Capitalink, L.C. as advisors to review the fairness of the transaction, and received from them an opinion that the per share cash consideration to be paid in the proposed Reverse/Forward Stock Split transaction is fair, from a financial point of view, to the company's shareholders that would be cashed out as a result of the Reverse/Forward Stock Split. At its February 10 meeting, the Board of Directors also took steps that would grant to the company a standing option to repurchase any shares of common stock proposed to be transferred by a shareholder after the Reverse/Forward Stock Split, if after such proposed transfer the number of shareholders of record of the common stock would equal or exceed 250. "This is a measure to ensure the company continues to stay well below the requirements for filing reports with the Securities and Exchange Commission," Mr. Warren explained. And finally, the Board of Directors approved amendments to the company's Amended and Restated Certificate of Incorporation to decrease the number of authorized shares of Common Stock from 30,000,000 to 5,000,000, and to eliminate the authorized shares of Class B Common Stock, $.01 par value. The proposed Reverse/Forward Stock Split, Right of First Refusal and Authorized Share Reduction are subject to approval by the holders of a majority of the issued and outstanding shares of common stock. Even if the shareholders approve the Reverse/Forward Stock Split, Right of First Refusal and Authorized Share Reduction, the Board of Directors reserves the right to defer or not to implement the transactions. About BNS Headquartered in Middletown, Rhode Island, BNS Holding Inc. is the parent of BNS Company. BNS Co. was engaged in the Metrology Business and in the design, manufacture and sale of precision measuring tools and instruments and manual and computer controlled measuring machines. The company at present has no active trade or business operations but is searching for a suitable business to acquire. Prior to Oct. 31, 2006, BNS Holding Inc. was a public shell holding company, having sold all of its previous manufacturing operations and assets. On Oct. 31, 2006, the company acquired, through a holding company, an 80% interest in Collins Industries, Inc. -- http://www.collinsindustries.com/ Collins was founded in 1971 as a manufacturer of small school buses and ambulances. Collins manufactures specialty vehicles and accessories for various basic service niches of the transportation industry. The company also manufactures ambulances, terminal trucks and small school buses and of sweepers used in the road construction industry. Going Concern Doubt As reported in the Troubled Company Reporter on Mar. 17, 2006, Ernst & Young LLP expressed substantial doubt about BNS Holding, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the year ended Dec. 31, 2005. The auditing firm pointed to the fact that BNS Holding presently has no active trade or business operations. CAL-BAY INT'L: To Refinance Properties in Southern California ------------------------------------------------------------- Cal-Bay International Inc. President and CEO Roger Pawson disclosed that the company has made application for the refinancing of two of the company's Southern California owned development properties with a current combined appraised value of approximately $19 million. "The refinancing would enable the company to start the development process on each of the properties and significantly reduce the monthly note payments currently in place on the properties," Mr. Pawson stated. "The combined total owed by Cal-Bay on the two properties is approximately $11.4M, a structured refinancing along with an Interest Reserve and Construction allotment would allow the company to move forward with the initial planning and entitlement process for each property in early March 2007. "Cal-Bay's strategy for 2005 and 2006 was to acquire properties with significant equity appreciation at a discount to the market value. The company has successfully achieved these goals, and now 2007 is the company's target for the leverage of the equity built for the purpose of development, revenues and profit for the company and its Investors," Mr. Pawson added. About Cal-Bay International Headquartered in Carlsbad, California, Cal-Bay International Inc. (OTCBB: CBAY) -- http://www.calbayinternational.com/-- is a publicly traded real estate development and investment company. Cal-bay International Inc. acquires, develops, and manages a diversified portfolio of real estate properties. Going Concern Doubt Lawrence Scharfman CPA PC expressed substantial doubt about Cal-Bay's ability to continue as a going concern after auditing the company's financial statements for the years ended Dec. 31, 2005, and 2004. The auditing firm pointed to the company's need to secure additional working capital for its planned activity and to service its debt. CENTRAL PARKING: Earns $9.3 Mil. in 1st Fiscal Qtr. Ended Dec. 31 ----------------------------------------------------------------- Central Parking Corp. filed its first fiscal quarter financial statements ended Dec. 31, 2006, with the Securities and Exchange Commission on Feb. 9, 2007. Net earnings, which include property-related gains and discontinued operations for the first quarter of fiscal 2007, were $9.3 million, compared with $18 million in the year earlier period. Total revenues for the first fiscal quarter were $281.7 million compared with $272.5 million in the first quarter of fiscal 2006. Excluding reimbursed management expenses, revenues in the first quarter of fiscal 2007 were $160.8 million compared with $160 million in the prior year period. The company reported that operating earnings before property- related gains for its first fiscal quarter ended Dec. 31, 2006, increased to $15.4 million compared with $7.7 million earned in the first quarter of the previous fiscal year. Earnings from continuing operations, which include property- related gains for the first quarter of fiscal 2007, totaled $8.4 million compared with $16.4 million in the year-earlier period. Pre-tax property-related gains totaled $400,000 in the first quarter of fiscal 2007 compared with $22.9 million in the first quarter of last year. "The on-going execution of our strategic plan continues to drive improvements in operating results," President and Chief Executive Officer Emanuel J. Eads said. "The first quarter of fiscal 2007 marks the fourth consecutive quarter we have recorded substantial, year-over-year gains in operating earnings. "Same store sales increases of 5.8% and reduced costs improved margins in our leased and owned segment to 11.4%, compared with 8.7% in the first quarter of last year. Management contract margins improved to 62% compared with 61.3% in the first quarter of 2006 while general and administrative costs decreased by $3.3 million, or 15.7%. "We continue to make good progress in executing other aspects of our strategic plan as well. Our Operational Excellence initiative, which is focused on increasing profits at the location level, gained momentum during the quarter as we expanded the program to Los Angeles and Washington, D.C., and initiated a 'jumpstart' program to introduce Operational Excellence concepts company-wide. "Our efforts to capitalize on the burgeoning downtown residential market were rewarded with three new contracts: a long-term lease to operate a 360 space garage serving the Millennium Center in Chicago, management agreements to operate a 400 space garage at 1500 Locust in Philadelphia, and a 388 space garage in Wilmington, Del. "We also have had success across other market segments, as evidenced by the award of a multiple facility contract by Oregon Health & Science University in Portland, Ore. "This contract, which became effective Oct. 1, 2006, includes a garage, two surface lots, two valet operations, and a shuttle operation. "We also continue to add profitable, new business in our international markets. The most significant recent example is the addition of a lease to operate a 900-space facility in Calgary, Alberta. "Our focus on the high-end hospitality market continues to yield positive results as we signed leases to operate the Marriott San Diego and the Hyatt La Jolla. "We also signed a contract to manage Phoenix Plaza, one of the largest office developments in Phoenix, Ariz.," Mr. Eads concluded. The company has made the determination that due to the strategic review process it announced on Nov. 28, 2006, it will not hold a conference call to discuss first quarter results. At Dec. 31, 2006, the company had $789.03 million in total assets, $373.48 million in total liabilities, and $415.55 million in total shareholders' equity. Full-text copies of the company's first quarter financials are available for free at http://ResearchArchives.com/t/s?19e1 About Central Parking Nashville, Tenn.-based Central Parking Corporation (NYSE: CPC) -- http://www.parking.com/-- owns, operates, and manages parking and related services including surface and multi-level parking facilities, design consultation, customer and employee shuttle services, valet and special event parking, parking meter enforcement, toll-road collections, and parking notice and collection services. As of Dec. 31, 2006, Central Parking operates more than 3,100 parking facilities containing over 1.5 million spaces at locations in 37 states, the District of Columbia, Canada, Puerto Rico, the United Kingdom, the Republic of Ireland, Chile, Colombia, Peru, Spain, Switzerland, and Greece. * * * As reported in the Troubled Company Reporter on Dec. 4, 2006, Standard & Poor's Ratings Services placed its rating on Central Parking Corp., including the B+ corporate credit rating, on CreditWatch with negative implications. CENVEO INC: S&P Rates Proposed $925 Million Senior Facility at B+ ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Cenveo Inc. and assigned its bank loan and recovery ratings to subsidiary Cenveo Corp.'s proposed $925 million senior secured credit facility. The facility was rated 'B+' with a recovery rating of '2', indicating the expectation for substantial (80%-100%) recovery of principal in the event of a payment default. At the same time, Standard & Poor's removed all ratings from CreditWatch. The outlook is positive. "The ratings affirmation and positive outlook reflect operating improvements in 2006 at Cenveo, notwithstanding high levels of pro forma leverage following the close of the acquisitions and our expectation that Cenveo will pursue a strategy of debt financed acquisitions over the intermediate term," said Standard & Poor's credit analyst Emile Courtney. COLLINS & AIKMAN: Solicitation Papers Must be Mailed by Feb. 20 --------------------------------------------------------------- The Honorable Steven W. Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan directs that the First Amended Joint Plan filed by Collins & Aikman Corp. and its debtor- affiliates on Jan. 24, 2007, or its Court-approved summaries, accompanying disclosure statement, and a ballot conforming to Official Form 13 be mailed to creditors, equity holders and other parties-in-interest, and be transmitted to the United States Trustee, no later than Feb. 20, 2007. The Court previously set April 9, 2007, as the deadline by which holders must accept or reject the Plan, and the deadline to file any objections to the Plan's confirmation. The hearing to consider confirmation of the Plan is scheduled to begin on April 19, 2007. As reported in the Troubled Company Reporter on Feb. 7, 2007, Judge Rhodes fixed Jan. 26, 2007, as the record date for determining: (i) the creditors that are entitled to receive Solicitation Documents pursuant to the Solicitation Procedures; (ii) the creditors entitled to vote to accept or reject the Plan; and (iii) whether Claims have been properly transferred to an assignee pursuant to Rule 3001(e) of the Federal Rules of Bankruptcy Procedure such that the assignee can vote as the Holder of the Claim. 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. 52; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) COLLINS & AIKMAN: Wants JCI Parties' Customer Agreement Approved ---------------------------------------------------------------- Collins & Aikman Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Michigan to approve their agreement with Johnson Controls Inc., Bridgewater Interiors LLC, Intertec Systems LLC, and affiliates of Johnson Controls, pursuant to Rule 9019(a) of the Federal Rules of Bankruptcy Procedure. Additionally, the Debtors seek to file under seal the exhibits -- JCI Agreement and the Letter Agreements -- and any portions of pleadings with respect to the JCI Agreement approval request filed by any party that references the Exhibits, to prevent the disclosure of confidential commercial information that could substantially harm them, their estates and stakeholders, JCI, and their Customers. The Debtors successfully negotiated a comprehensive customer agreement with their major customers, including DaimlerChrysler Corp., Ford Motor Company, General Motors Corp., Auto Alliance International Inc., and Honda of America Mfg. Inc. The Court approved the Customer Agreement on Jan. 11, 2007. Section 21 of the Customer Agreement provides that the Debtors will use their commercial best efforts to obtain agreements from all customers whose production at a plastics and convertibles plant is greater than 5% of the business, which are non- participating customers to the Customer Agreement. Specifically, Section 21 provides that the Debtor may not use funding provided directly or indirectly by the Customers or through the Customer accommodations to manufacture parts for Non- Participating Customers who do not execute an agreement containing specific accommodations. The Debtors produce component parts for Non-Participating Customers Johnson Controls, Inc.; Bridgewater Interiors, LLC; Intertec Systems, LLC; and affiliates of Johnson Controls. Consequently, the Debtors forwarded proposed letter agreements that include the terms outlined in Section 21 and have reached a comprehensive agreement with the JCI Parties. The significant terms of the JCI Agreement include: (a) The JCI Parties agree to the terms contained in the letter agreements; (b) The JCI Parties to waive any damage claims against the Debtors arising from the JCI Agreement, including surcharges and waivers under the Letter Agreements. The JCI Parties retain ordinary course set-offs and preserves their right as to the prepetition dispute between them and the Debtors; (c) The Debtors will continue to produce component parts for the JCI Parties through the dates provided in the JCI Agreement; (d) The Debtors will produce service parts requested by the JCI Parties subject to capacity and resource constraints and payment of all reasonable and verifiable direct and indirect service JCI part production costs; (e) The retroactive surcharge in the Letter Agreements for Nov. 26, 2006, through the end of business on Feb. 5, 2007, will be paid by the JCI Parties in full, one business day after the execution date of the JCI Agreement; (f) The parties will endeavor to establish ownership of the service tooling, dies, jigs, patterns and other device used in the production of Component Parts for JCI; and to reconcile ownership of the Tooling and remove all impediments to JCI taking possession of the Tooling on or before the dates specified in the JCI Agreement. (g) The Debtors confirm that the Tooling is exclusively used for production for the JCI Parties. The Debtors have until Feb. 16, 2007 to notify the JCI Parties, in writing, of any prepetition or postpetition amounts owed for the Exclusive Use Tooling. The JCI Parties will be deemed to owe nothing if the Debtors fail to timely send the notice. The JCI Parties will have 21 days to challenge the amounts in the notice. If the response is not timely sent, the JCI Parties will be deemed to owe the stated amounts, which will be due and payable immediately, without set-off or counterclaim of any nature; (h) The Debtors will provide the JCI Parties access to their facilities and records needed to conduct an orderly move of the Exclusive Use Tooling, monitor the status of bank builds and monitor the Debtors' adherence to the JCI Agreement; and (i) The JCI Parties have the right the purchase the Debtors' interest in certain equipment unique to and only for the production of their Component Parts or Service Parts, for fair market value. The JCI Agreement also provides for the Debtors to seek modification of the automatic stay to allow the JCI Parties to take possession of the Exclusive Use Tooling. The JCI Agreement does not resolve the pending dispute between the Debtors and the JCI Parties concerning claims that existed before the Petition Date. 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. 52; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). COMMODORE APPLIED: Committee Dismisses Tanner LLC as Accountants ---------------------------------------------------------------- The Audit Committee of Commodore Applied Technologies Inc.'s Board of Directors approved dismissing Tanner LLC, the company's independent registered public accounting firm, by a resolution of the Committee. During the audited fiscal years ended Dec. 31, 2005, and Dec. 31, 2004, and the subsequent interim periods through the dismissal date, there were no disagreements with Tanner on any matter of accounting principals or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Tanner, would have caused Tanner to make reference to the subject matter of the disagreement in its reports on the Registrant's financial statements for such periods. The firm conducted the company's audits as of and for the years ended Dec. 31, 2005 and Dec. 31, 2004. The firm's reports on those audits did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles, except for the addition of an explanatory paragraph expressing substantial doubt about the Registrant's ability to continue as a going concern. About Commodore Applied Commodore Applied Technologies, Inc. -- http://www.commodore.com/ -- is a diverse technical solutions company focused on high-end environmental markets. The Commodore family of companies includes subsidiaries Commodore Solution Technologies and Commodore Advanced Sciences. The Commodore companies provide technical engineering services and patented remediation technologies designed to treat hazardous waste from nuclear and chemical sources. * * * On Sept. 30, 2006, Commodore Applied Technologies Inc.'s balance sheet showed a stockholders' deficit of $11,113,000, compared to a deficit of $9,864,000, on Dec. 31, 2005. COPELANDS' ENTERPRISES: Files Joint Liquidation Plan in Delaware ---------------------------------------------------------------- Copelands' Enterprises Inc. and its Official Committee of Unsecured Creditors delivered a disclosure statement describing their Joint Chapter 11 Plan of Liquidation to the U.S. Bankruptcy Court for the District of Delaware Monday, Feb. 12, 2007. Under the Plan, the Debtor and the Committee propose to pay Class 1 Other Priority Claims and Class 3 Other Secured Claims in full. Holders of Class 2 Subordinated Note Claims will receive 21% of their allowed claim while holders of Class 4 General Unsecured Claims will get 0.2% to 1.9%. Holders of Equity Interests in the Debtor will not receive any distributions under the Plan. Distributions under the Plan will be sourced from the proceeds of the store closing sales at eleven of the Debtor's store locations. The winning bidder, a joint venture composed of TSA Stores, Inc., Hilco Merchant Resources LLC and Hilco Real Estate LLC, purchased the subject properties for $21.7 million, predicated on an aggregare cost value of the Debtor's inventory of $23 million. Great American Group was the liquidator agent for the sale which concluded early December 2006. The Debtors' postpetition business operation was backed by a $25,000,000 debtor-in-possession financing provided by Wells Fargo Retail Finance LLC and a $5,000,000 mezzanine loan from Thomas and James Copeland. Both loans have been paid in full on Nov. 20, 2006. Based in San Luis Obispo, California, Copelands' Enterprises Inc. dba Copelands' Sports -- http://www.copelandsports.com/-- operates specialty sporting goods stores. The company filed for chapter 11 protection on Aug. 14, 2006 (Bankr. D. Del. Case No. 06-10853). James E. O'Neill, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones, & Weintraub LLP, in Los Angeles, California, represent the Debtor. Adam G. Landis, Esq., at Landis Rath & Cobb LLP represents the Official Committee of Unsecured Creditors. Clear Thinking Group serves as the Debtor's financial advisor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $50 million and $100 million. COPELANDS' ENTERPRISES: Disclosure Statement Slated for March 19 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware will convene a hearing at 9:30 a.m. on March 19, 2007, to consider approval of the disclosure statement describing the Chapter 11 Plan of Liquidation co-proposed by Copelands' Enterprises Inc. and its Official Committee of Unsecured Creditors on Feb. 12, 2007. The disclosure statement hearing will be held at Courtroom No. 4, 5th Floor, U.S. Bankruptcy Court for the District of Delaware, 824 Market Street, in Wilmington, Delaware. Objections to the disclosure statement are due by March 12, 2007. At the March 19 hearing, the Court will determine whether the Debtor's disclosure statement contain adequate information -- the right kind of the right amount for creditors to make informed decisions when asked to vote for the Plan -- as required by Section 1125 of the Bankruptcy Code. Based in San Luis Obispo, California, Copelands' Enterprises Inc. dba Copelands' Sports -- http://www.copelandsports.com/-- operates specialty sporting goods stores. The company filed for chapter 11 protection on Aug. 14, 2006 (Bankr. D. Del. Case No. 06-10853). James E. O'Neill, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones, & Weintraub LLP, in Los Angeles, California, represent the Debtor. Adam G. Landis, Esq., at Landis Rath & Cobb LLP represents the Official Committee of Unsecured Creditors. Clear Thinking Group serves as the Debtor's financial advisor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $50 million and $100 million. COPELANDS' ENTERPRISES: Admin. Expense Claims Due on March 22 ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has established March 22, 2007, at 5:00 p.m. EST, as the deadline for filing of requests for payment of administrative expenses arising in or during Copelands' Enterprises Inc.'s bankruptcy case through and including Dec. 31, 2006. The March 22 Deadline will not apply to: a) administrative expenses arising on or after Jan. 1, 2007; b) fees payable to the United States Trustee pursuant to 28 U.S.C. Sec. 1930; c) administrative expenses of professionals held pursuant to Sections 327, 328, 330, 331, 503(b)(2) or 1103 of the Bankruptcy Code; d) expenses of members of the Official Committee of Unsecured Creditors; e) administrative expense requests that have previously been filed or for which any request for payment pursuant to Section 503(a) of the Bankruptcy Code is pending; and f) reclamation rights, which are currently being dealt with under the Court's order establishing procedures for resolving reclamation demands. Administrative expense requests must be received on or before the deadline by the claims agent at: a) if by regular mail Copelands' Enterprises Inc. c/o JPMorgan Trust Company N.A. P.O. Box 56636 Jacksonville, FL 32241-6636 b) if by overnight mail or hand delivery Copelands' Enterprises Inc. c/o JPMorgan Trust Company NA Suite 110 8475 Western Way Jacksonville, FL 32256 Based in San Luis Obispo, California, Copelands' Enterprises Inc. dba Copelands' Sports -- http://www.copelandsports.com/-- operates specialty sporting goods stores. The company filed for chapter 11 protection on Aug. 14, 2006 (Bankr. D. Del. Case No. 06-10853). James E. O'Neill, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones, & Weintraub LLP, in Los Angeles, California, represent the Debtor. Adam G. Landis, Esq., at Landis Rath & Cobb LLP represents the Official Committee of Unsecured Creditors. Clear Thinking Group serves as the Debtor's financial advisor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $50 million and $100 million. CORPSOURCE FINANCE: Moody's Junks Rating on Proposed $125MM Loan ---------------------------------------------------------------- Moody's Investors Service assigned a Caa1 rating to the proposed $125 million senior unsecured term loan of Corpsource Finance Holdings, LLC, a newly created holding company and indirect parent of SOURCECORP, Incorporated. Corpsource expects to use the net proceeds from the term loan to fund a dividend to its shareholders. Concurrently, Moody's assigned a B2 Corporate Family Rating to Corpsource and raised the ratings on SOURCECORP's first lien credit facility to Ba2 from Ba3 and on its second lien term loan facility to B3 from Caa1. The raised ratings on SOURCECORP's credit facilities reflect higher expected recovery rates for these facilities in a default scenario. The ratings outlook is stable. The new financing and dividend will result in substantially higher pro forma consolidated leverage and will position the company weakly in the B2 ratings category based on key financial metrics. SOURCECORP's pre-transaction credit metrics were solid for the B2 rating category, allowing room for the company to absorb the increase in leverage associated with the holding company borrowing and dividend. However, any further deterioration in credit metrics could lead a ratings downgrade. The ratings will be constrained in the near term by weak credit metrics and the aggressive leverage policies of the company. The ratings, however, continue to be supported by solid business line and geographic diversity, moderate customer concentration and stable financial performance. Moody's assigned these ratings to Corpsource: -- $125 million senior unsecured term loan due 2013, Caa1, LGD5, 89% -- Corporate Family Rating, B2 -- Probability of Default Rating, B2 Moody's took these rating actions on SOURCECORP: -- Raised $75 million senior secured first lien revolving credit facility due 2012, to Ba2 from Ba3, LGD2, 21% from LGD3, 31% -- Raised $190 million senior secured first lien term loan due 2013, to Ba2 from Ba3, LGD2, 21% from LGD3, 31% -- Raised $120 million senior secured second lien term loan due 2013, to B3 from Caa1, LGD4, 64% from LGD5, 84% -- Withdrew Corporate Family Rating, B2 -- Withdrew Probability of Default Rating, B2 The B2 Corporate Family Rating and B2 Probability of Default Rating of SOURCECORP were withdrawn and assigned to Corpsource, the highest level parent company with rated debt. The ratings are subject to the receipt of final documentation and the 2006 audited financial statements of Corpsource. The stable ratings outlook anticipates modest revenue growth and margin expansion over the next 12-18 months. SOURCECORP is a provider of business process outsourcing solutions specializing in document and information management and specialized knowledge- based processing and/or consulting solutions. Services are provided primarily to U.S.-based clients in information intensive industries including the commercial, financial services, government, healthcare and legal industries. Revenues for fiscal 2006 are expected to be about $370 million. CROWN CASTLE: Moody's Places Corporate Family Rating at Ba3 ----------------------------------------------------------- Moody's Investors Service assigned a Ba3 corporate family, Ba3 senior secured and SGL-1 liquidity ratings to Crown Castle Operating Company. The long term ratings reflect a Ba3 probability of default and LGD assessment of LGD 3, 48% on the company's $850 million senior secured bank facility. The outlook is stable. CCOC's Ba3 corporate family rating and stable outlook reflects Moody's expectation that the fundamentals of the wireless tower sector are likely to remain favorable through the next several years and CCOC's good market position will enable its strong earnings and cash flow momentum to continue. Additionally, the rating considers the company's increased scale following its recent acquisition of Global Signal Inc. as well as the expected stability of much of its revenues, which are predominately derived from contractual relationships with the largest wireless operators in the U.S. Finally, the rating reflects Moody's view that CCOC is likely to retain an aggressive financial policy, directing cash flow to shareholders via share buy backs and targeting adjusted leverage towards 8x. The SGL-1 liquidity rating reflects Moody's view that CCOC has very good liquidity characterized by modest cash balances, full access to its unused $250 million revolver and expected free cash flow in excess of $250 million over the next year with no near term debt amortization requirements. Reinstatements: * Crown Castle Operating Company -- Speculative Grade Liquidity Rating, Reinstated to SGL-1 -- ....Corporate Family Rating, Reinstated to Ba3 Outlook Actions: * Crown Castle Operating Company -- Outlook, Changed To Stable From Rating Withdrawn Based in Houston, Crown Castle Operating Company (NYSE:CCI) owns and operates communication towers and is a subsidiary of Crown Castle International Corp. DAIMLERCHRYSLER: Finalizes Pact with Canadian Auto Workers ---------------------------------------------------------- The Canadian Auto Workers and DaimlerChrysler Canada Inc. has finalized an agreement to mitigate the personal impact of the company's workforce reduction plan. The agreement creates retirement and separation incentives to help reduce DaimlerChrysler's Canadian hourly workforce, as part of the company's Recovery and Transformation plan. The programs, full details of which will be relayed to employees shortly, are specifically designed for the workforces at the Windsor Assembly Plant, Brampton Assembly Plant, and Etobicoke Casting Plant. These retirement and separation incentives are intended to help those who are eligible to retire or interested in leaving the workforce to do so and at the same time provide job opportunities for other workers. The incentives negotiated, which follow the pattern established earlier at Ford of Canada, include: -- $70,000 in enhanced retirement allowance for eligible production workers and $85,000 for eligible skilled trades workers; -- those eligible to retire also receive a $30,000 voucher toward the purchase of a Chrysler vehicle registered in either the employee's or their spouse's name; -- anyone eligible to retire who declines all post-retirement benefits (other than pension benefits) receives an additional $40,000; -- there will be Separation of Employment offers, for those not eligible to retire, of $50,000 with one to five years service; $75,000 with five to eight years service, and of $100,000 for workers with eight or more years of service. The total number of separation packages will be determined from location to location. "These incentives are an effort on the part of the union and company to protect the jobs of CAW members with young families and at the same time will help with the transition for retirement eligible workers," said CAW President Buzz Hargrove. "The Chrysler Group's Recovery and Transformation Plan calls for our Canadian operations to continue to operate at full capacity, but to become more productive and thus more competitive," said Ken McCarter, DaimlerChrysler Vice President, Labor Relations. "In order to reduce our Canadian hourly workforce, DaimlerChrysler and the CAW have agreed upon socially responsible separation incentives. With this agreement, we can support those who choose to leave the company and lower the number of employees on layoff." About DaimlerChrysler Based in Stuttgart, Germany, DaimlerChrysler AG -- http://www.daimlerchrysler.com/-- develops, manufactures, distributes, and sells various automotive products, primarily passenger cars, light trucks, and commercial vehicles worldwide. It primarily operates in four segments: Mercedes Car Group, Chrysler Group, Commercial Vehicles, and Financial Services. The Chrysler Group segment offers cars and minivans, pick-up trucks, sport utility vehicles, and vans under the Chrysler, Jeep, and Dodge brand names. It also sells parts and accessories under the MOPAR brand. The Chrysler Group is facing a difficult market environment in the United States with excess inventory, non-competitive legacy costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles. At the same time, key competitors have further increased margin and volume pressures -- particularly on light trucks -- by making significant price concessions. In addition, increased interest rates caused higher sales & marketing expenses. In order to improve the earnings situation of the Chrysler Group as quickly and comprehensively, measures to increase sales and cut costs in the short term are being examined at all stages of the value chain, in addition to structural changes being reviewed as well. DAIMLERCHRYSLER: Chrysler Group In Talks with General Motors ------------------------------------------------------------ DaimlerChrysler AG and General Motors Corp. are in talks about a possible purchase of the Chrysler Group by GM, according to German publication Manager Magazin. According to various news agencies, DaimlerChrysler hired JPMorgan for advice regarding strategic alternatives. In a TCR report yesterday, DaimlerChrysler Chairman of the Board of Management Dr. Dieter Zetsche said, "... in order to optimize and accelerate the presented plan, we are looking into further strategic options with partners .... In this regard, we do not exclude any option in order to find the best solution for both the Chrysler Group and DaimlerChrysler." GM and DaimlerChrysler AG's Chrysler Group are also in talks of an alliance to share costs of chassis designs and reduce development expenses for a large sport utility vehicle, Jeff Green and Jeff Bennett of Bloomberg report citing people familiar with the talks. GM and the Chrysler Group have been discussing the matter for six months without reaching an agreement, the Wall Street Journal notes. About General Motors Corp. General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- is the world's largest automaker and has been the global industry sales leader since 1931. Founded in 1908, GM employs about 284,000 people around the world. It has manufacturing operations in 33 countries and its vehicles are sold in 200 countries. GM sells cars and trucks under these brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. About DaimlerChrysler Based in Stuttgart, Germany, DaimlerChrysler AG -- http://www.daimlerchrysler.com/-- develops, manufactures, distributes, and sells various automotive products, primarily passenger cars, light trucks, and commercial vehicles worldwide. It primarily operates in four segments: Mercedes Car Group, Chrysler Group, Commercial Vehicles, and Financial Services. The Chrysler Group segment offers cars and minivans, pick-up trucks, sport utility vehicles, and vans under the Chrysler, Jeep, and Dodge brand names. It also sells parts and accessories under the MOPAR brand. The Chrysler Group is facing a difficult market environment in the United States with excess inventory, non-competitive legacy costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles. At the same time, key competitors have further increased margin and volume pressures -- particularly on light trucks -- by making significant price concessions. In addition, increased interest rates caused higher sales & marketing expenses. In order to improve the earnings situation of the Chrysler Group as quickly and comprehensively, measures to increase sales and cut costs in the short term are being examined at all stages of the value chain, in addition to structural changes being reviewed as well. DANA CORP: Seeks Approval of Franklin Settlement Agreement ---------------------------------------------------------- Dana Corp. and its debtor-affiliates ask the Honorable Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York to approve their settlement agreement with Franklin Fueling Systems Inc. In November 2005, the Debtors, non-debtor Dana Nobel Plastiques, SA, and Franklin Fueling Systems, Inc., entered into a supply agreement, a bailment agreement, and an equipment sale agreement, for the supply and manufacturing of in-ground flexible pipe designed for petroleum fuel transfer. The Debtors estimated that their ongoing business relations under the Supply Agreement, if maintained, could generate as much as $1,500,000 in annual net income during the remainder of the Initial Term from sales of XP Pipe. Franklin has alleged that the Debtors have defaulted under the Supply Agreement on multiple occasions, including missing multiple purchase order deadlines, failing to deliver the full amount of XP Pipe ordered under various purchase orders and, in many instances, delivering XP Pipe that does not meet required specifications or otherwise is defective. Franklin has issued numerous default notices to the Debtors asserting the Alleged Defaults and has asked the Court to lift the automatic stay to permit it to terminate the Pipe Agreements. In response, the Debtors emphasized that their performance under the Supply Agreement is legally sound and that the Alleged Defaults are not material, incurable nor non-monetary. They also asserted that Franklin has not suffered material harm from any of the Alleged Defaults and has been able to meet its customer demand for XP Pipe. In mid-November 2006, the parties were fully engaged in parallel paths of litigation preparation and settlement discussions. The parties ultimately suspended all discovery and trial preparation to spare them the costs and burdens of litigating the disputed issues and to focus their resources on seeking a mutually acceptable business resolution. Accordingly, the Debtors, Dana Nobel and Franklin entered into a settlement agreement, which provides that: (a) The Production Line of XP Pipe will be transferred to Franklin's facility in Madison, Wisconsin, from the Debtors' facility in Paris, Tennessee. The Transfer will be made on an "as is, where is" basis. Franklin will pay all costs associated with the Transfer. The removal process is expected to be completed by May 1, 2007. (b) Franklin may approach and interview certain of the Debtors' employees at the Paris Facility for potential hiring to work at the Madison Facility and assist in the Production Line's operation. (c) The Debtors will provide technical assistance, through a Project Technical Consultant, to Franklin for free during the consulting period and for a fee for periods after the consulting period until all royalties are paid in full. (d) Franklin will purchase certain finished goods for $473,000, and the on-hand new and reusable raw materials for the production of the XP Pipe, which value is estimated at $1,650,000. (e) Franklin will pay the Debtors: -- a $250,000 success fee after a "Successful Start-Up" of the Production Line at the Madison Facility; and -- a $500,000 additional success fee if during the Production Success Period, the Production Line meets certain Target Production Standards. (f) Franklin will pay the Debtors royalties of up to $2,100,000 on the production of XP Pipe from the Production Line from and after its installation at the Madison Facility. (g) The Debtors will grant to Franklin an irrevocable, perpetual, royalty-free, non-exclusive right to use all of their Intellectual Property, Technology and Background IP. (h) The parties will exchange mutual releases of claims and liabilities arising under or related to the XP Pipe Agreements. Franklin will retain its rights to assert certain warranty claims. (i) The Debtors' rights, benefits and obligations under the Supply Agreement will be freely assignable without Franklin's consent, to the successful purchaser of the Fluids Group Business. (j) Franklin will limit sales of extruded pipe to the petroleum equipment industry worldwide and explicitly agrees not to compete with Nobel with respect to the sale of extruded pipe in the vehicle component industry worldwide. The Debtors will not sell or produce extruded pipe to or for the petroleum equipment industry worldwide. The Non-Compete Covenants will expire on October 31, 2013. (k) The XP Pipe Agreements will be terminated. (l) Franklin will withdraw its Lift Stay Motion with prejudice. About Dana Corp. Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Sept. 30, 2005, the Debtors listed $7,900,000,000 in total assets and $6,800,000,000 in total debts. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. The Debtors' exclusive period to file a plan expires on Sept. 3, 2007. They have until Nov. 2, 2007, to solicit acceptances of that plan. (Dana Corporation Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). DANA CORP: Trade Creditors Sell 35 Claims Totaling $4,624,406 ------------------------------------------------------------- In January 2007, the Clerk of the Bankruptcy Court for the Southern District of New York recorded 35 claims transfers totaling $4,624,406 in Dana Corp. and its debtor-affiliates' Chapter 11 cases: (a) Contrarian Funds, LLC: Transferor Claim Amount ---------- ------------ TI Group Automotive Systems $1,112,045 BASF Corporation 340,679 Magna Donnelly Corporation 203,497 New Standard Corporation 180,798 Fry Commuications, Inc. 143,624 New Standard Corporation 105,583 (b) Amroc Investments, LLC: Transferor Claim Amount ---------- ------------ MiniGears North America $316,249 Port City Castings Corp. 154,187 Porter Precision 116,699 Triple O Electric 53,351 Gene Ray Electric Co., Inc. 37,730 Mitch Murch's Maintenance 30,296 Woodley Building Maintenance 29,827 Muskegon Castings Corporation 28,593 Kasper Machine Company 26,086 Art Kuhn Co., Inc. 20,482 Dove Plastics, Inc. 18,672 Innovative Tooling Solutions 15,000 (c) Longacre Master Fund, Ltd.: Transferor Claim Amount ---------- ------------ Penn Aluminum International $240,776 Indiana Tube Corporation 20,328 (d) 3V Capital Master Fund, Ltd.: Transferor Claim Amount ---------- ------------ Rapid Industries, Inc. $92,850 Roc Lun International, Inc. 53,611 Salazar Industries Corporation 39,147 (e) Redrock Capital: Transferor Claim Amount ---------- ------------ International Precision $329,877 Harrah Hose & Hydraulic, Inc. 19,485 The Court Clerk also recorded nine claims transfers to various transferees: Transferor Transferee Claim Amount ---------- ---------- ------------ Kaiser Aluminum Fabricated Silver Point $467,945 American Materials, Inc. JPMorgan 325,000 A. Schulman, Inc. Madison Investment 98,535 Shaped Wire Debt Acquisition 1,743 Laroy Plumbing and Heating Debt Acquisition 1,711 H&H Tool, Inc. Hain Capital - Chipper Express Ltd. Hain Capital - I2 Techonologies Hain Capital - North American Plastics Hain Capital - About Dana Corp. Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Sept. 30, 2005, the Debtors listed $7,900,000,000 in total assets and $6,800,000,000 in total debts. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. The Debtors' exclusive period to file a plan expires on Sept. 3, 2007. They have until Nov. 2, 2007, to solicit acceptances of that plan. (Dana Corporation Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). DEAL GOLF: Case Summary & Largest Unsecured Creditor ---------------------------------------------------- Debtor: Deal Golf LLC 311 Crosby Avenue Deal, NJ 07723 Bankruptcy Case No.: 07-11982 Chapter 11 Petition Date: February 13, 2007 Court: District of New Jersey (Trenton) Judge: Kathryn C. Ferguson Debtor's Counsel: Timothy P. Neumann, Esq. Broege, Neumann, Fischer & Shaver 25 Abe Voorhees Drive Manasquan, NJ 08736 Tel: (732) 223-8484 Fax: (732) 223-2416 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million Debtor's Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Charles Ishay $5,000,000 3 Broad Street New York, NY Tel: (212) 629-5779 DEATH ROW: Court OKs Virgil Roberts as Business Affairs Consultant ------------------------------------------------------------------ The Honorable Ellen Carroll of the U.S. Bankruptcy Court for the Central District of California in Los Angeles authorized R. Todd Neilson, the Chapter 11 Trustee appointed in Death Row Records Inc.'s bankruptcy case, to employ Virgil P. Roberts, Esq., as his business affairs consultant and legal advisor. As reported in Troubled Company Reporter on Nov. 1, 2006, Mr. Roberts is expected to: a) identify music-related assets owned by or under the control of the Debtor; b) assist the Trustee is valuing music-related assets owned or controlled by the Debtor; c) provide the Trustee with business affairs and related legal advice relating to the disposition, operation, or exploitation of music-related assets owned or controlled by the Debtor; d) analyze and renegotiate the Debtor's existing music- related agreements; e) assist the Trustee in evaluating the appropriateness of existing royalty; f) negotiate new agreements for the disposition, operation, or exploration of music-related assets owned or controlled by the Debtor; and g) providing other legal advice and assistance as the Trustee requests. The Trustee agreed to compensate Mr. Roberts in an amount equal to: i) his regular hourly billing rate of $450 per hour for services he perform on behalf of the estate; and ii) 5% of all gross income received by the Debtor resulting from his services in negotiating agreements on behalf of the Debtor. Mr. Roberts assured the Court his firm is "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Mr. Roberts can be reached at: Virgil P. Roberts, Esq. Bobbitt & Roberts 6100 Center Drive, Suite 910 Los Angeles, CA 90045 Tel: (310) 645-4100 Fax: (310) 645-5900 http://www.bobroblaw.com/ Headquartered in Compton, California, Death Row Records Inc. -- http://www.deathrowrecords.net/-- is an independent record producer. The company and its owner, Marion Knight, Jr., filed for chapter 11 protection on April 4, 2006 (Bankr. C.D. Calif. Case No. 06-11205 and 06-11187). Daniel J. McCarthy, Esq., at Hill, Farrer & Burrill, LLP, and Robert S. Altagen, Esq., represent the Debtors in their restructuring efforts. R. Todd Neilson serves as Chapter 11 Trustee for the Debtors' estate. When the Debtors filed for protection from their creditors, they listed total assets of $1,500,000 and total debts of $119,794,000. DELPHI CORP: Posts $1.97 Bil. Net Loss in 3rd Qtr. Ended Sept. 30 ----------------------------------------------------------------- Delphi Corp. and its debtor-affiliates reported its third quarter financial results for the period ended Sept. 30, 2006: * Revenue of $6,000,000,000 in 2006 third quarter, down from $6,300,000,000 in 2005 third quarter. Revenue of $20,000,000,000 for the first nine months of 2006, down slightly from the comparable period in 2005. * Non-GM revenue for the quarter of $3,400,000,000, essentially flat compared to 2005 third quarter revenue of $3,300,000,000, representing 57% of third quarter revenues. Third quarter non-GM growth was more than offset by a 12% year-over-year decline in GM revenues. Non-GM revenue of $11,100,000,000 for the first nine months of 2006, representing 56% of total revenues. * Net loss of $1,973,000,000 compared with 2005 third quarter net loss of $788,000,000. Included in the 2006 third quarter net loss are charges related to the U.S. employee special attrition programs of $1,000,000,000. The net loss of $4,600,000,000 for the first nine months of 2006 includes $2,900,000,000 of charges related to the U.S. employee special attrition programs. * Cash used in operations of $222,000,000 for the first nine months of 2006, compared with cash used in operations of $609,000,000 for the first nine months of 2005. "While Delphi continues to experience substantial losses stemming from competitive pressures in our U.S. operations, approximately half of the third quarter loss was due to charges related to the U.S. employee special attrition programs," Delphi Corp. Executive Chairman Robert S. "Steve" Miller said. "Currently, we remain focused on reaching a consensual agreement with our stakeholders, unions and General Motors Corp. on a comprehensive restructuring that will enable Delphi's core U.S. operations to become competitive." Effective July 1, 2006, Delphi realigned its business operations to focus its product portfolio on core technologies for which Delphi believes it has significant competitive and technological advantages. Delphi's revised operating structure consists of its four core business segments -- Electronics and Safety, Thermal Systems, Powertrain Systems, and Electrical/Electronic Architecture -- as well as two additional segments, Steering and Automotive Holdings Group, as these operations are transitioned. Given this new operational structure, Delphi will begin reporting its financial results along the company's six reporting segments, which are grouped on the basis of similar product, market and operating factors. Previously, the company reported the financial results of its three business sectors. These reporting changes are effective along with the filing of the third quarter 2006 10-Q. Delphi Corporation, et al. Unaudited Consolidated Balance Sheet As of September 30, 2006 (In Millions) ASSETS Current assets: Cash and cash equivalents $1,443 Restricted cash 150 Accounts receivable, net General Motors and affiliates 2,564 Other 2,997 Inventories, net Productive material, work-in-process and supplies 1,566 Finished goods 654 Other current assets 478 -------- TOTAL CURRENT ASSETS 9,852 Long-term assets: Property, net 4,898 Investment in affiliates 403 Goodwill & other intangible assets, net 425 Pension intangible assets 414 Other 699 -------- TOTAL LONG-TERM ASSETS 6,839 -------- TOTAL ASSETS $16,691 ======== LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Notes payable $3,102 Accounts payable 2,761 Accrued liabilities 2,430 -------- TOTAL CURRENT LIABILITIES 8,293 DIP financing & other long-term debt 297 Employee benefit plan obligations and other 350 Other 958 Liabilities subject to compromise 16,664 -------- TOTAL LIABILITIES 26,562 Minority interest in consolidated subsidiaries 194 Stockholders' deficit: Common stock 6 Additional paid-in capital 2,764 Accumulated deficit (11,040) Minimum pension liability (1,835) Accumulated other comprehensive loss 92 Treasury stock, at cost (3.2 million shares) (52) -------- TOTAL STOCKHOLDERS' DEFICIT (10,065) -------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $16,691 ======== Delphi Corporation, et al. Unaudited Consolidated Statement of Operations Three Months Ended September 30, 2006 (In Millions) Net sales: General Motors and affiliates $2,598 Other customers 3,410 -------- Total net sales 6,008 -------- Operating expenses: Cost of sales 6,088 U.S. employee special attrition program charges 1,043 Selling, general and administrative 392 Depreciation and amortization 272 -------- Total operating expenses 7,795 -------- Operating loss (1,787) Interest expense (116) Other income, net 8 -------- Loss before reorganization items, income taxes, minority interest, equity income, & cumulative effect of accounting change (1,895) Reorganization items, net (25) -------- Loss before income taxes, minority interest, equity income, & cumulative effect of accounting change (1,920) Income tax expense (46) -------- Loss before minority interest, equity income, & cumulative effect of accounting change (1,966) Minority interest, net of tax (4) Equity (loss) income (3) -------- Loss before cumulative effect of accounting change (1,973) Cumulative effect of accounting change - -------- NET LOSS ($1,973) ======== Delphi Corporation, et al. Unaudited Consolidated Statement of Cash Flows Nine Months Ended September 30, 2006 (In Millions) Cash flows from operating activities: Net loss ($4,611) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 814 Deffered income taxes 23 Pension and other postretirement benefit expenses 1,189 Equity income (28) Reorganization items 58 U.S. employee attrition program charges 2,948 Changes in operating assets and liabilities: Accounts receivable, net (200) Inventories, net (319) Other current assets (86) Accounts payable 445 Employee & product line obligations - Accrued & other long-term liabilities (70) Pension contributions & benefit payments (219) Other postretirement benefit payments (182) Net payments for reorganization items (39) Other, net 55 -------- Net cash used in operating activities (222) Cash flows from investing activities: Capital expenditures (606) Proceeds from sale of property 53 Proceeds from sale of trade bank notes 130 Increase in restricted cash (110) Proceeds from divestitures 24 Other, net (6) -------- Net cash used in investing activities (515) Cash flows from financing activities: Net proceeds from term loan facility - Repayments of borrowing under term loan facility - Proceeds from revolving credit facility, net 2 Repayments under cash overdraft (29) Net repayments under other debt agreements (27) Dividend payments - Other, net (19) -------- Net cash used in financing activities (73) -------- Effect of exchange rate fluctuations on cash & cash equivalents 32 Decrease in cash and cash equivalents (778) Cash and cash equivalents at beginning of period 2,221 -------- Cash and cash equivalents at end of period $1,443 ======== A full-text copy of Delphi's Form 10-Q report for the third quarter ended Sep. 30, 2006, filed with the Securities and Exchange Commission is available for free at http://ResearchArchives.com/t/s?19ea Troy, Mich.-based Delphi Corporation (OTC: DPHIQ) -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Corporation Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELTA AIR: Comair Wants Approval on Loss Payment Agreement ---------------------------------------------------------- Comair Inc. seeks the U.S. Bankruptcy Court for the Southern District of New York's authority to perform its obligations under a Loss Payment Agreement dated Feb. 8, 2007, with: (a) Export Development Canada, solely as loan participant; (b) Wachovia Bank, National Association, solely as owner trustee; (c) Cranford Aircraft Commercial Leasing Corporation, as owner participant; and (d) Wells Fargo Bank Northwest, National Association, solely as indenture trustee. Comair and Wachovia Bank are parties to a Lease Agreement dated January 30, 2001, relating to Comair's use of a Bombardier Inc. Canadair Regional Jet, Model CL-600-2B19, with Tail No. N431CA, and related engines, equipment and documents. Pursuant to a Trust Agreement, dated as of January 30, 2001, Cranford is the beneficial owner of the trust that holds title to the Aircraft. On the other hand, Wachovia Bank, as the nominal owner of the Aircraft, takes Cranford's direction with respect to matters related to the Aircraft. Wachovia's acquisition of the Aircraft was financed, in part, through its issuance of loan certificates to Export Development. The certificates are secured by Wachovia's assignment, mortgage and pledge to Wells Fargo of, among other things, Wachovia's right, title and interest in the Aircraft pursuant to the Trust Indenture and Security Agreement, dated January 30, 2001. On August 27, 2006, the Aircraft was destroyed in an accident in Lexington, Kentucky. Under the terms of the Lease, the destruction of the Aircraft constitutes an event of loss as a result of which certain amounts have become payable under the Lease. After arm's-length negotiation, Comair and the Aircraft Parties have reached a settlement that resolves any and all claims of: -- the Aircraft Parties against Comair relating to insurance proceeds with respect to the Event of Loss, and with respect to the Stipulated Loss Value, the Reduced Outstanding Basic Rent Amount and the fees and expenses specified in the Loss Payment Agreement; and -- Cranford with respect to a tax indemnity agreement. Loss Payment Agreement The Loss Payment Agreement provides for the settlement of the amounts due and payable under the Lease, the Participation Agreement and other operative documents in connection with the Event of Loss and the treatment and distribution of those amounts to the Aircraft Parties. The salient terms of the Loss Payment Agreement are: (a) Comair and the Aircraft Parties will amend the Operative Documents in order to reduce the amounts of Basic Rent" outstanding under the Lease to the amounts as agreed by the parties; (b) For purposes of determining the "Stipulated Loss Value" payable under the applicable Operative Documents as a result of the Event of Loss, the "Loss Payment Date" will be February 30, 2007; (c) The insurance proceeds that Comair will receive with respect to the Event of Loss will be applied in accordance with the terms of the Loss Payment Agreement. Comair has agreed to endorse over to the Wells Fargo any check received from the insurer containing the Insurance Proceeds; (d) On the Payment Date, Comair will pay the Insurance Proceeds to Wells Fargo and will make an additional cash payment, if applicable, in immediately available funds equal to the difference of: * the sum of the aggregate Reduced Outstanding Basic Rent Amounts, the Stipulated Loss Value as of the Loss Payment Date, the fees and expenses of Wells Fargo and Wachovia Bank, each as the parties agreed, the fees and expenses of the Cranford and Export Development incurred in connection with reviewing the Loss Payment Agreement and any related documents; and * the amount of the Insurance Proceeds. (e) The Aircraft Payment will be paid to Wells Fargo and will be promptly distributed in the order of priority and to the parties set forth in the applicable provisions of the Indenture and the Trust Agreement. Export Development will not be entitled to distribution of any amount of the Aircraft Payment in respect of: * the Interest Reduction Amount; * overdue interest on principal or interest under the Certificates; or * its fees and expenses in excess of the amount set forth in the Loss Payment Agreement. (f) Upon the payment of the Aircraft Payment to Wells Fargo: * any claims of the Aircraft Parties against Comair relating to insurance proceeds with respect to the Event of Loss, and with respect to the Stipulated Loss Value, the Reduced Outstanding Basic Rent Amount and the fees and expenses specified the Loss Payment Agreement, will be deemed satisfied in full; * Comair will not be required to make any payments with respect to the Tax Indemnity Agreement, and Cranford will be deemed to have irrevocably waived any and all claims under or with respect to the Tax Indemnity Agreement; * all remaining claims with respect to the Aircraft and the Operative Documents will be general unsecured non-priority prepetition claims against Comair's estate and will not be payable as administrative expenses of the estate; and * Comair will be deemed to reject each of the Operative Documents to which it is a party. About Delta Air Headquartered in Atlanta, Georgia, Delta Air Lines (OTC: DALRQ) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) DOMINO'S PIZZA: Subsidiary Inks Interest Rate Swap Agreement ------------------------------------------------------------ Domino's Inc., a Domino's Pizza Inc. subsidiary, disclosed that on Feb. 12, 2007, it entered into a five-year forward-starting interest rate swap agreement with a notional amount of $1.25 billion to hedge the interest rate variability of the coupon payments associated with the anticipated issuance of up to $1.85 billion of securitized debt in connection with the recapitalization plan that was disclosed by Domino's Pizza Inc. on Feb. 7, 2007. Under the swap agreement, the company has agreed to pay a fixed interest rate of approximately 5.16%, beginning on March 31, 2008, through March 31, 2013, in exchange for receiving floating payments based on three-month LIBOR on the same $1.25 billion notional amount for the same five-year period. The swap agreement is expected to be cash settled, in accordance with its terms, concurrent with the issuance date of the securitized debt. Recapitalization Plan Domino's Pizza disclosed both equity and debt tender offers as part of an overall plan to recapitalize the company. The plan consists of four key elements: 1) Tender offer for up to 13.85 million shares of Domino's Pizza, Inc. common stock at a purchase price not less than $27.50 or greater than $30.00 per share providing a liquidity event for shareholders electing to reduce their level of ownership under the newly proposed capital structure. 2) Tender offer for all of the remaining 8-1/4% Senior Subordinated Notes due 2011 issued by Domino's, Inc. The aggregate outstanding principal amount of the notes is approximately $274 million. 3) Repayment of all outstanding borrowings under the existing senior credit facility and the termination of that facility. 4) An asset-backed securitized facility in an amount of up to $1.85 billion. The process to convert to securitized financing from traditional bank and bond financing is complex and the outcome cannot be predicted with exact certainty. The company anticipates obtaining the funds needed to finance the tender offers and to repay existing bank debt from a bridge loan facility (for which it has received a customary commitment) providing for borrowings of up to $1.35 billion. In the event an ABS facility is not completed, the bridge loan facility will convert into a five-year term loan, which may, subject to market terms and conditions, be refinanced through traditional financing options. In comparison to the company's current bank and bond debt structure, or other debt options, management believes an ABS facility is an attractive source of financing with a lower interest rate and fewer restrictive covenants. After repayment of all outstanding amounts under the bridge loan facility, Domino's Pizza expects to use all or a portion of remaining proceeds from the ABS facility to pay a significant special cash dividend and to make equivalent payments and adjustments to holders of outstanding stock options. Domino's Pizza has retained Lehman Brothers as structuring advisor for the securitization financing. "Based on the strong cash flow characteristics of our business, the appropriate corporate finance decision for our company is one that includes significant leverage," David A. Brandon, Chairman and CEO, said. "The most efficient and flexible debt we can negotiate is asset-backed securitization, which provides the lowest cost of financing available to us. With this additional capital, we will have a considerable amount of financial flexibility and the ability to return equity to our shareholders through our announced tender offer as well as the possibility of a significant special cash dividend and future open-market share repurchases. "As part of this plan, we are tendering for up to 22% of our outstanding common stock in order to provide a selling opportunity for those shareholders who prefer a less-levered balance sheet. Alternatively, shareholders who don't participate may increase their percentage ownership and will benefit from any potential future special dividends. As part of this go- forward plan, we will be recommending to our Board of Directors the discontinuation of our ordinary dividend." Stock Tender Offer Domino's Pizza has announced a modified "Dutch auction" tender offer to purchase up to 13.85 million shares of its common stock at a price per share not less than $27.50 and not greater than $30.00, for a maximum aggregate purchase price of up to approximately $415.5 million. The company commenced the stock tender offer on Feb. 7, 2007, and expects the stock tender offer to expire at 5:00 p.m. on March 9, 2007, unless extended. The number of shares proposed to be purchased in the stock tender offer represents approximately 22% percent of the company's currently outstanding common stock. The directors and executive officers of the company have all advised Domino's Pizza that they will not participate in this tender offer. Investment funds associated with Bain Capital, LLC (who currently own approximately 27% of Domino's Pizza's outstanding shares) have elected not to participate in the stock tender offer. However, the company has entered into a repurchase agreement with Bain that provides for Domino's Pizza to purchase shares from the investment funds associated with Bain shortly after the completion of the stock tender offer so that the aggregate ownership of Bain's investment funds will not exceed 1/3 of Domino's Pizza's total outstanding shares immediately after the repurchase. This obligation to repurchase shares from Bain will be triggered if the shares tendered in the stock tender offer exceed approximately 11.6 million shares. If the stock tender offer is fully subscribed, then Domino's Pizza will purchase approximately 1.1 million shares from Bain at the same price as is paid in the stock tender offer. The company expects to return a significant amount of the remaining capital raised by this recapitalization to shareholders in the form of a significant special cash dividend. Any special dividend considerations are expected to occur only after the completion of the ABS funding facility, which will be dependent on conditions of the company and market at that time. In this event, the company will, pursuant to its dividend equivalent rights policy, pay option holders with vested options a cash payment equivalent to the dividend amount. Holders of unvested options will receive a reduction in exercise price, to the extent permitted by applicable law, equivalent to the dividend amount. The information agent for the stock tender offer is MacKenzie Partners, Inc. The depositary for the offer is American Stock Transfer and Trust Company. The dealer managers for the stock tender offer are JP Morgan Securities Inc., Lehman Brothers and Merrill Lynch & Co. Shareholders with questions, or who would like to receive additional copies of the tender offer documents, may call the information agent toll-free at (800) 322-2885. Bond Tender Offer Domino's, Inc. is offering to purchase for cash any and all of its 8-1/4% Senior Subordinated Notes due 2011 and is soliciting consents to amend provisions of the notes and the indenture dated as of June 25, 2003 in order to eliminate the restrictive covenants currently contained in the notes and the indenture. The Consent Payment Deadline is 5:00 p.m., New York City time, on Feb. 23, 2007, unless extended, and the bond tender offer expires at 12:01 a.m., New York City time, on March 9, 2007, unless extended or earlier terminated. If the company extends either of these dates and times, it will announce the new dates and times. The price offered for the notes will be calculated on Feb. 23, 2007, using a yield equal to a fixed spread plus the yield to maturity of a U.S. Treasury note with a maturity date that is close to July 1, 2007, the first date on which the Company may redeem the notes. The fixed spread and the reference U.S. Treasury note Domino's is using are specified in the chart. In addition, holders will be paid accrued interest on the tendered notes to, but not including, the settlement date of the bond tender offer. Series of Outstanding Redemption Redemption Reference Fixed Securities Principal Date Price on U.S. Spread Amount Redemption Treasury (in basis Date Note points) ---------- ------ ---- ---- ---- ------- Domino's, $273.9MM July 1, 104.125% 3.875% + 50 Inc. 8-1/4% 2007 U.S. Sr. Sub. Treasury Notes due Note due 2011 July 31, 2007 The information agent for the bond tender offer is Global Bondholder Services Corporation. The depositary for the bond tender offer is The Bank of New York. The dealer managers for the bond tender offer are JP Morgan Securities Inc., Lehman Brothers and Merrill Lynch & Co. Bondholders with questions or who would like additional copies of the bond tender offer documents may call the information agent toll-free at (866) 804-2200. Bridge Loan Facility The company has obtained a commitment from Lehman Brothers, JPMorgan and Merrill Lynch, to enter into a bridge loan facility in order to provide financing for the tender offers and proceeds to repay its existing bank debt. The bridge loan facility will provide financing during the interim period between closing of the tender offers and the expected completion of the ABS facility. Borrowings under the bridge loan facility are expected to be made shortly before the expiration of the bond tender offer, in an amount sufficient to pay for tendered bonds, and shortly before settlement of the stock tender offer, in an amount sufficient to pay for tendered shares. The bridge facility will be structured to permit multiple draws in order to provide Domino's Pizza with maximum flexibility in timing the company's borrowings under the bridge loan facility. ABS Facility Domino's Pizza is in the process of negotiating the terms of an ABS issuance that it expects will involve securitizing substantially all of the company's existing revenue-generating assets, which principally consist of the company's franchise- related agreements, product distribution agreements and license agreements for its intellectual property. Domino's Pizza has engaged Lehman Brothers as the sole structuring advisor and joint bookrunner for the ABS facility. JP Morgan Securities Inc. and Merrill Lynch & Co. will also act as joint bookrunners. The company is currently targeting the first half of 2007 for completion of the ABS facility. However, no assurance can be given that the company will be able to successfully complete an ABS facility on these terms or at all. Once the securitization is completed, Domino's Pizza may use the remaining funds for general corporate purposes, including the contemplated significant special dividend. The company may also determine in the future to implement an open-market share repurchase program. About Domino's Pizza Headquartered in Ann Arbor, Michigan, Domino's Pizza Inc. (NYSE:DPZ) -- http://www.dominos.com/-- through its primarily franchised system, operates a network of 8,190 franchised and company-owned stores in the United States and more than 50 countries. Founded in 1960, the company has more than 500 stores in Mexico. The Domino's Pizza(R) brand, named a Megabrand by Advertising Age magazine, had global retail sales of nearly $5 billion in 2005, comprised of $3.3 billion domestically and $1.7 billion internationally. As of Sept. 10, 2006, Domino's Pizza's balance sheet showed a $592,435,000 stockholders' deficit compared with a $609,112,000 at June 18, 2006. DUNNAIR BUSINESS: Discontinues Luxury Jet Furnishing Operations --------------------------------------------------------------- The DunnAir Business Jet Completion Center, a luxury jet furnishing company, finally went out of business last month, Steven Siceloff of the Arizona Daily Star reports. According to the source, the company rented a hangar at the Tucson International Airport, a property occupied by Bombardier Inc. before it moved its own jet furnishing operations to Kansas, and Montreal, Canada, during 2004. DunnAir had wanted to tap around 600 employees that Bombardier laid-off during its transfer, the Daily Star relates. The company hired, at most, 55 employees, and laid-off 40 of them last year, the Daily Star said. Why It Folded Up In an interview with the Daily Star, Jim Garcia, senior director of business development for the Tucson Airport Authority, explained that DunnAir discontinued its business because it did not have an "established customer base". Tim Kanavel, a former human resource director and operations manager for DunnAir also stated in an interview with the Daily Star that the company leased the hangar from Bombardier for $108,000 a month, or $1.3 million a year. Bombardier, in turn, pays $285,000 a month to TIA for use of their land. The company however, did not fully utilize all of the space afforded by the hangar. Kanavel said that the lease payment was a heavy burden to the company. "We were paying twice as much for half as much," Kanavel said. Kanavel also noted that the investors funding the company "seemed to lose interest" in the company's operations. DunnAir currently has unsecured debt of up to $8 million borrowed from Walnut Creek, California-based Lighthorse Investors. "Did I think that was excessive? Yes," Kanavel told the Daily Star. "It looked like it was a funding issue that wrecked the whole train," he commented. "If the money's not there, you simply can't continue." Searching for New Tenants Authorities at the Tucson airport have already conducted a research on tenants who are likely to use the property. Garcia disclosed with the Daily Star that they would consider prospective tenants that have been operating for at least 10 years, and are concentrating on aircraft maintenance and repair work. Garcia reasons that the demand for aircraft repair and maintenance services is relatively consistent compared to services for business aircraft furnishing. However, Bombardier will still have the final say on who should lease the property and how much of the hangar it will lease, Garcia told the Daily Star. Dale Dunn, president of DunnAir, could not be reached for comments. About DunnAir Business Previously based in Tucson, Arizona, DunnAir Business Jet Completion Center used to lease an airport hangar from Bombardier, Inc. at the Tucson International Airport. The Debtor operated a luxury jet furnishing business. The company filed for chapter 11 protection on February 14, 2007 (Bankr. D. Ariz. Case No. 07- 00215). Eric Slocum Sparks, Esq. represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $10,000 to $100,000 in total assets and $1 Million to $100 Million in total liabilities. DUNNAIR BUSINESS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Dunnair Business Jet Completion Center c/o Dale Dunn 7739 Broadway Boulevard, Suite 412 Tucson, AZ 85710 Bankruptcy Case No.: 07-00215 Type of Business: The Debtor used to lease an upgraded airport hangar from Bombardier Inc. in Tucson International Airport to operate its luxury jet furnishing business. Chapter 11 Petition Date: February 14, 2007 Court: District of Arizona (Tucson) Judge: James M. Marlar Debtor's Counsel: Eric Slocum Sparks, Esq. Eric Slocum Sparks, P.C. 110 South Church Avenue, Suite 2270 Tucson, AZ 85701 Tel: (520) 623-8330 Fax: (520) 623-9157 Estimated Assets: $10,000 to $100,000 Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Lighthorse Investors Unsecured Loans $8,000,000 1600 Main Street Walnut Creek, CA 94596 Internal Revenue Service Taxes $200,000 210 East Earll Phoenix, AZ 85012 Bombardier Learjet Inc. Trade Debt $129,559 P.O. Box 7707 Wichita, KS 67277 Learjet Inc. Hangar Lease Facility Lease $112,280 1255 East Aero Park Boulevard Tucson, AZ 85706 Accordia of California Insurance $159,442 Insurance Service, Inc. P.O. Box 39000 Department 33385-01 San Francisco, CA 94139 Isaacson Rosenbaum Trade Debt $66,527 Wells Fargo Visa Trade Debt $55,173 Trajen FBO Network Trade Debt $32,957 Trajen FBO, Inc. $32,957 Central Alarm Security Inc. Trade Debt $20,470 Bob Snodgrass Trade Debt $19,227 American Express Trade Debt $18,258 Kazel Fire Protection, Inc. Trade Debt $12,815 Reynolds Air Express Trade Debt $11,965 Rental Service Corp. $11,945 Arizona Dept. of Revenue Taxes $10,000 Commonwealth Electric Co. Trade Debt $9,286 Tucson Electric Power Trade Debt $9,043 Atlantis Cooling & Heating Inc. Trade Debt $7,792 AICCO, Inc. Insurance $7,231 EAGLE BROADBAND: AMEX Rejects Plan of Compliance ------------------------------------------------ Eagle Broadband Inc. reported Tuesday that it received notice from the American Stock Exchange indicating that the staff of the Amex Listing Qualifications Department has determined not to accept the company's plan to regain compliance with the Amex stockholders' equity requirement for continued listing, as set forth in Sections 1003(a)(i)-(iii) of the Amex Company Guide. The notice indicated that the company's common stock would be subject to delisting unless the company requests a hearing before a Listing Qualifications Panel. The company has requested such a hearing, which will stay the delisting action until the company has had an opportunity to present its plan to evidence compliance with all applicable listing requirements to the Panel. There can, however, be no assurance that the Panel will grant the company's request for continued listing. "We look forward to meeting with the panel and presenting our updated plan," said Dave Micek, president and CEO of Eagle Broadband. Headquartered in League City, Texas, Eagle Broadband Inc. (AMEX:EAG) -- http://www.eaglebroadband.com/-- provides bundled digital services, satellite communications products, project management, and enterprise management products and services. Going Concern Doubt As reported in the Troubled Company Reporter on Dec. 27, 2006, LBB & Associates Ltd. LLP in Houston, Texas, raised substantial doubt about Eagle Broadband Inc.'s ability to continue as a going concern after auditing the company's financial statements for the fiscal years ended Aug. 31, 2006, and 2005. The auditing firm pointed to the company's negative working capital, losses in 2005 and 2006, and need for additional financing necessary to support its working capital requirements. EAGLE BROADBAND: Closes $1.3 Million Promissory Note Transaction ---------------------------------------------------------------- Officials with Eagle Broadband Inc. closed a $1.3 million promissory note transaction with Dutchess Private Equities Fund, Ltd., for a purchase price of $1 million. In addition, Eagle recently secured a $5 million equity line of credit from Brittany Capital Management Limited. "We are exceptionally pleased to have secured additional financing from Dutchess," Dave Micek, chief executive officer of Eagle Broadband, commented. "In the last year, they have provided Eagle with financing through a convertible note, a $5 million equity line of credit and a $5.5 million promissory note. With our super headend complete and running in Miami, this additional investment and confidence Dutchess has placed in us will help us implement our IPTV strategy and provide the necessary funding for production of set-top boxes and SatMAX(R) units. As with the promissory note last year, this note is not convertible, minimizing the impact on our shareholders." Under terms of the agreement with Brittany Capital, Eagle will have a right to periodically put common shares to Brittany Capital and receive cash at a 7% discount to the market price calculated over a five-trading-day period. While the agreement commits Brittany Capital to purchase up to $5 million over the three-year term, the maximum aggregate number of common shares issuable to Brittany Capital will not exceed 4,200,000, unless the Company seeks and obtains shareholder approval in accordance with rules and requirements of the American Stock Exchange. Headquartered in League City, Texas, Eagle Broadband Inc. (AMEX:EAG) -- http://www.eaglebroadband.com/-- provides bundled digital services, satellite communications products, project management, and enterprise management products and services. Going Concern Doubt As reported in the Troubled Company Reporter on Dec. 27, 2006, LBB & Associates Ltd. LLP in Houston, Texas, raised substantial doubt about Eagle Broadband Inc.'s ability to continue as a going concern after auditing the company's financial statements for the fiscal years ended Aug. 31, 2006, and 2005. The auditing firm pointed to the company's negative working capital, losses in 2005 and 2006, and need for additional financing necessary to support its working capital requirements. EDDIE BAUER: S&P Says Ratings Still Remain on Negative CreditWatch ------------------------------------------------------------------ Standard & Poor's Ratings Services reported that its ratings, including the 'B' corporate credit rating, on specialty apparel retailer Eddie Bauer Holdings Inc., are still on CreditWatch with negative implications. This follows the Redmond, Washington-based company's report that shareholders rejected the proposed sale to Sun Capital Partners and Golden Gate Capital for $285 million. The day after the shareholder vote, Fabian Mansson, the CEO and president, resigned. Standard & Poor's believes considerable uncertainty remains for the company because of operating performance being lower than expected, the CEO vacancy, its highly leveraged capital structure, and covenant compliance issues. "Although operations apparently trended up in the fourth quarter of 2006," said Standard & Poor's credit analyst David Kuntz, "we believe that the year as a whole was below our expectations." Furthermore, Standard & Poor's estimate that debt leverage continued to worsen. FIRST HORIZON: Fitch Holds Low-B Ratings on 3 Certificate Classes ----------------------------------------------------------------- Fitch Ratings affirms First Horizon Home Loan Mortgage Trust's issues: Series 2005-9: -- Class A at 'AAA'; -- Class B1 at 'AA+'; -- Class B2 at 'AA+'; -- Class B3 at 'AA+'; -- Class B4 at 'AA+'; -- Class B5 at 'AA'; -- Class B6 at 'AA-'; -- Class B7 at 'A+'; -- Class B8 at 'A'; -- Class B9 at 'A-'; -- Class B10 at 'BBB-'; and -- Class B11 at 'BB'. Series 2005-14: -- Class A at 'AAA'; -- Class B1 at 'AA'; -- Class B2 at 'A'; -- Class B3 at 'BBB'; and -- Class B4 at 'BB+'. Series 2005-15: -- Class A at 'AAA'; -- Class B1 at 'AA+'; -- Class B2 at 'AA+'; -- Class B3 at 'AA'; -- Class B4 at 'AA'; -- Class B5 at 'A+'; -- Class B6 at 'A'; -- Class B7 at 'A-'; -- Class B8 at 'BBB+'; -- Class B9 at 'BBB'; and -- Class B10 at 'BBB-'. Series 2005-16: -- Class A at 'AAA'; -- Class B1 at 'AA+'; -- Class B2 at 'AA'; -- Class B3 at 'AA-'; -- Class B4 at 'A+'; -- Class B5 at 'A'; -- Class B6 at 'A-'; -- Class B7 at 'BBB+'; -- Class B8 at 'BBB'; -- Class B9 at 'BBB-'; and -- Class B10 at 'BB'; The mortgage loans are adjustable-rate mortgages with the potential to negatively amortize, commonly known as Option ARMs, and are extended to prime borrowers and are secured by first liens on one- to four-family residential properties. The Option ARM borrowers have four payment options: interest only, minimum monthly payment, principal and interest payment based on a 15-year amortization schedule, and principal and interest payment based on a 30-year amortization schedule. The loans may negatively amortize if the borrower chooses to make the MMP. As of the January 2007 distribution date, the transactions are seasoned from a range of 14 to 17 months and the pool factors range from approximately 53% to 77%. The servicer for all transactions include Washington Mutual Bank, Countrywide Home Loan Servicing, GMAC Mortgage Corporation, Washington Mutual Bank, and Wells Fargo Bank, N.A. as master servicer. The affirmations reflect stable relationships of credit enhancement to future loss expectations and affect approximately $3.865 billion of outstanding certificates. All classes in the transactions detailed above have experienced small to moderate growth in CE since closing, and there have been no collateral losses to date. FRONTIER FUNDING: Moody's Lowers Rating on Class B Certs. to Ba3 ---------------------------------------------------------------- Moody's Investors Service downgrades the ratings of four classes of notes issued in three small ticket equipment securitizations sponsored by Frontier Leasing Corp. and confirms three classes at their current ratings. The notes were placed on review for possible downgrade on Oct. 20, 2006 and the current action concludes the review of the securitizations. The review was prompted by improper advances made by a Frontier subservicer. The write-off of the affected leases caused an increase in defaults and a decline in credit enhancement in the deals. In the 2004-1 securitization, the Class B notes were partially written down and the Class C notes were written down to a zero balance. Based on the information available at this time, Moody's believed the other two securitizations had sufficient available credit enhancement to prevent a write-down of the subordinate tranches. Moody's expects that the trusts will still receive significant recoveries on the written-off contracts in the future. In addition, the priority of principal payments has changed from pro rata to sequential; future recoveries will also be applied sequentially to the classes of notes. The receivables previously serviced by the subservicer are now serviced by Frontier pursuant to the subservicer event of default provisions. These are the rating actions: * Frontier Equipment Receivables Trust 2002-1 -- Class A Receivables-Backed Certificates, rating confirmed at A1 -- Class B Receivables-Backed Certificates, rating confirmed at Baa3 -- Class C Receivables-Backed Certificates, downgraded to B1 from Ba3 Issuer: Frontier Equipment Receivables Trust 2004-1 -- Class A Receivables-Backed Certificates, rating confirmed at Baa2 -- Class B Receivables-Backed Certificates, downgraded to B2 from Ba2 -- Class C Receivables-Backed Certificates, downgraded to Caa1 from B1 Issuer: Frontier Funding Company V, LLC -- Class B Receivables-Backed Certificates, downgraded to Ba3 from Ba2 As of the Dec. 31, 2006 cutoff date, the pool factor in the 2002-1 securitization was approximately 7.41% and the cumulative net default rate was 3.98%. Credit support for the notes included overcollateralization and subordination. Overcollateralization amounted to 1.53% of the current pool balance. The Class A notes benefit from the subordination of the Class B and C notes, respectively 13.68% and 3.03% of the current pool balance. The Class B notes benefit from the subordination of Class C. Certain triggers were hit as a consequence of the write-off; pursuant to trigger event provisions, the reserve account has been used to partially redeem Class A notes, and the dedicated reserve account for Class C to partially redeem Class C notes. The reserves will not be replenished so long as a trigger event continues. As of the Dec. 31, 2006 cutoff date, the pool factor in the 2004-1 securitization was approximately 27.28% and the cumulative net default rate was 5.32%. As the Class C notes were entirely written down, the Class A notes now benefit only from the subordination of the Class B notes, representing 10.35% of the current pool balance. The Class B notes do not benefit from subordination, because the Class C notes were written down to zero. Certain triggers were hit as a consequence of the write-off; pursuant to trigger event provisions, the reserve account has been used to partially redeem Class A notes, and the dedicated reserve account for Class C to partially redeem Class C notes. The reserves will not be replenished so long as a trigger event continues. As of the Dec. 31, 2006 cutoff date, the pool factor in the Funding Company V securitization was approximately 74.62% and the cumulative net default rate was 5.29%. Class B notes benefit from overcollateralization, which amounted to 4.80% of the current pool balance. Certain triggers were hit as a consequence of the write-off; pursuant to trigger event provisions, the reserve account has been used to partially redeem Class A notes. The reserve will not be replenished so long as a trigger event continues. Frontier was founded in April of 1999 to originate and service equipment leases to a broad range of small-and medium sized businesses on a national level. The firm focuses primarily on the small-ticket sector of the equipment leasing market. Most leases range from $5,000 to $250,000, with an average transaction size of $40,000. The notes were sold in a privately negotiated transaction without registration under the Securities Act of 1933 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under Rule 144A. GB HOLDINGS: Panel's 8th Modified Liquidation Plan is Effective --------------------------------------------------------------- GB Holdings Inc.'s Eighth Modified Chapter 11 Plan of Liquidation, which was proposed by the Official Committee of Unsecured Creditors and confirmed by the Honorable Judith H. Wizmur of the U.S. Bankruptcy Court for the District of New Jersey on Jan. 30, 2007, is now effective. As reported in the Troubled Company Reporter on Feb. 1, 2007, Judge Wizmur determined that the Plan satisfies all the requirements for confirmation stated in Section 1129(a) of the Bankruptcy Code. In a TCR news on Jan. 2, 2007, Judge Wizmur gave her stamp of approval to the disclosure statement following billionaire investor Carl Icahn's bid to pay $53 million for the company's remaining stake in Atlantic City's Sands Hotel & Casino. Additionally, TCR reported on Dec. 4, 2006, that Mr. Icahn's offer could provide the estate with as much as $53 million in cash to satisfy administrative expenses and general unsecured claims. The Committee anticipated a 90% recovery for general unsecured creditors under the agreement with Mr. Icahn. Mr. Icahn agreed to pay $53 million for the 2,882,938 shares of Atlantic common stock, an Icahn-controlled affiliate. AP says that an Icahn affiliate owned 77% of GB Holdings while Robino Stortini Holdings, a minority shareholder, owned a 16% stake. Court documents showed that Robino Stortini would market its right to buy stock in Atlantic Coast to Mr. Icahn for $3.7 million. Robino Stortini and a group of bondholders settled their claims against Mr. Icahn and his affiliates in return for a bigger share of proceeds from the Sands Hotel sale in the Dec. 20, 2006, settlement. Headquartered in Atlantic City, New Jersey, GB Holdings, Inc., primarily generated revenues from gaming operations in Atlantic Coast Entertainment Holdings, which owned and operated The Sands Hotel and Casino in Atlantic City, New Jersey. The Debtor also provided rooms, entertainment, retail store and food and beverage operations. These operations generated nominal revenues in comparison to the casino operations. The Debtor filed for chapter 11 protection on September 29, 2005 (Bankr. D. N.J. Case No. 05-42736). Alan I. Moldoff, Esq., at Adelman Lavine Gold and Levin, represents the Debtor. Charles A. Stanziale, Jr., Esq., at McElroy, Deutsch, Mulvaney & Carpenter, serves as counsel to the Official Committee Of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million to $50 million. GENERAL MOTORS: In Talks with DaimlerChrysler AG's Chrysler Group ----------------------------------------------------------------- General Motors Corp. and DaimlerChrysler AG are in talks about a possible purchase of the Chrysler Group by GM, according to German publication Manager Magazin. According to various news agencies, DaimlerChrysler hired JPMorgan for advice regarding strategic alternatives. In a TCR report yesterday, DaimlerChrysler Chairman of the Board of Management Dr. Dieter Zetsche said, "... in order to optimize and accelerate the presented plan, we are looking into further strategic options with partners .... In this regard, we do not exclude any option in order to find the best solution for both the Chrysler Group and DaimlerChrysler." GM and DaimlerChrysler AG's Chrysler Group are also in talks of an alliance to share costs of chassis designs and reduce development expenses for a large sport utility vehicle, Jeff Green and Jeff Bennett of Bloomberg report citing people familiar with the talks. GM and the Chrysler Group have been discussing the matter for six months without reaching an agreement, the Wall Street Journal notes. About DaimlerChrysler Based in Stuttgart, Germany, DaimlerChrysler AG -- http://www.daimlerchrysler.com/-- develops, manufactures, distributes, and sells various automotive products, primarily passenger cars, light trucks, and commercial vehicles worldwide. It primarily operates in four segments: Mercedes Car Group, Chrysler Group, Commercial Vehicles, and Financial Services. The Chrysler Group segment offers cars and minivans, pick-up trucks, sport utility vehicles, and vans under the Chrysler, Jeep, and Dodge brand names. It also sells parts and accessories under the MOPAR brand. The Chrysler Group is facing a difficult market environment in the United States with excess inventory, non-competitive legacy costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles. At the same time, key competitors have further increased margin and volume pressures -- particularly on light trucks -- by making significant price concessions. In addition, increased interest rates caused higher sales & marketing expenses. In order to improve the earnings situation of the Chrysler Group as quickly and comprehensively, measures to increase sales and cut costs in the short term are being examined at all stages of the value chain, in addition to structural changes being reviewed as well. About General Motors Corp. General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- is the world's largest automaker and has been the global industry sales leader since 1931. Founded in 1908, GM employs about 284,000 people around the world. It has manufacturing operations in 33 countries and its vehicles are sold in 200 countries. GM sells cars and trucks under these brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. * * * As reported in the Troubled Company Reporter on Dec. 15, 2006, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating and other ratings on General Motors Corp. and removed them from CreditWatch with negative implications, where they were placed March 29, 2006. S&P said the outlook is negative. As reported in the Troubled Company Reporter on Nov. 14, 2006, Moody's Investors Service assigned a Ba3, LGD1, 9% rating to the proposed $1.5 billion secured term loan of General Motors Corp. The term loan is expected to be secured by a first priority perfected security interest in all of the US machinery and equipment, and special tools of General Motors and Saturn Corp. GLOBAL TEL*LINK: Proposed $10MM Add-on Cues Moody's to Cut Ratings ------------------------------------------------------------------ Moody's Investors Service downgraded Global Tel*Link Corporation's corporate family and senior secured ratings to B2 from B1 following the company's report of its intention to increase the size of its delayed draw term facility by $10 million. The ratings reflect a B3 probability of default and loss given default assessment of LGD 3, 31% for the senior secured bank debt. Moody's has not taken any action on GTEL's existing first and second lien facilities, as related ratings are expected to be withdrawn in the next few days, once the prospective bank facility closes. The outlook is stable. GTEL's owners have elected to increase the size of its delayed draw term loan rather than inject roughly $8 million of additional preferred equity, as Moody's had previously expected. This effective shareholder distribution is in addition to the $20 million that shareholders will have withdrawn since Moody's first assigned ratings to GTEL's proposed bank facility on Jan. 8, 2007. In Moody's opinion, the resulting increase in initial pro-forma leverage to roughly 4.6x is no longer consistent with metrics at the B1 rating level. Moody's noted that GTEL's adjusted leverage was likely to remain above 4x by the end of 2008, which the rating agency had previously identified as a key downgrade criteria. Ratings Downgraded to B2 LGD 3, 31%: -- $20 million senior secured revolver due 2012 -- $120 million senior secured term loan due 2013 -- $60 million senior secured delayed draw term loan due 2013 -- $10 million senior secured synthetic L/C facility due 2013 -- $40 million senior secured delayed draw synthetic L/C facility due 2013 Global Tel*Link Corporation, based in Mobile, Alabama, is majority owned by The Gores Group, LLC and provides telecommunications services to correctional facilities. GMAC 2005: Fitch Affirms B- Rating on $4 Mil. Class O Certificates ------------------------------------------------------------------ Fitch affirms GMAC 2005-C1 commercial mortgage pass-through certificates series: -- $48.4 million class A-1 'AAA'; -- $343.9 million class A-1A 'AAA'; -- $300 million class A-2 'AAA'; -- $187.3 million class A-3 'AAA'; -- $68.1 million class A-4 'AAA'; -- $157.4 million class A-5 'AAA'; -- Interest only class X-1 'AAA'; -- Interest only class X-2 'AAA'; -- $159.8 million class A-M 'AAA'; -- $127.8 million class A-J 'AAA'; -- $34 million class B 'AA'; -- $12 million class C 'AA-'; -- $24 million class D 'A'; -- $16 million class E 'A-'; -- $16 million class F 'BBB+'; -- $16 million class G 'BBB'; -- $20 million class H 'BBB-'; -- $6 million class J 'BB+'; -- $6 million class K 'BB'; -- $8 million class L 'BB-'; -- $4 million class M 'B+'; -- $4 million class N 'B'; and -- $4 million class O 'B-'. Fitch does not rate the $22 million class P. The rating affirmations reflect stable transaction performance and minimal paydown since issuance. As of the May January distribution date, the pool's aggregate certificate balance has decreased 0.88% to $1.58 billion from $1.60 billion at issuance. Fitch reviewed two credit assessed loans in the transaction, General Motors Building (11.4%) and Loews Miami Beach (1.5%). Both loans maintain their investment grade credit assessments due to stable performance. The General Motors Building loan is secured by a 1,905,103-square foot office building with a retail component located in midtown Manhattan, New York. The whole loan comprises six pari-passu A-notes, of which only the A-4 note is included in this transaction. Occupancy as of October 2006 increased to 97% from 94% at issuance. The Loews Miami Beach loan is secured by a 790-unit full service hotel property located in Miami Beach, Florida. The whole loan comprises three pari-passu A-notes, of which only the A-3 note is included in this transaction. As of 3Q06, average daily occupancy increased to 86% from 81% at issuance. Currently there are five assets in special servicing. The largest two specially serviced assets are multifamily properties located in San Marcos and College Station, Texas. The loans on these two assets were originally made to the same borrower. The assets became REO in November 2006. Recent appraisal valuations indicate losses are likely upon the liquidation of these two assets. GRAY TELEVISION: Plans to Ink New $1 Bil. Senior Credit Facility ---------------------------------------------------------------- Gray Television reported that it intends to enter into a new $1 billion senior credit facility. The company plans to use the proceeds from the new senior credit facility to refinance its existing senior credit facility, refinance its existing 9-1/4% senior subordinated notes, call its Series C preferred stock and general corporate purposes. Headquartered in Atlanta, Georgia, Gray Television Inc. is a television broadcast company. Including its previously announced pending acquisition of WNDU-TV, South Bend, IN, Gray operates 36 television stations serving 30 markets. Each of the stations are affiliated with either CBS (17 stations), NBC (10 stations), ABC (8 stations), or Fox (1 station). In addition, Gray currently operates seven digital multi-cast television channels in seven of its existing markets, which are affiliated with either UPN or Fox. GRAY TELEVISION: S&P Rates Proposed $1 Bil. Senior Facility at B ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Gray Television Inc. to 'B' from 'B+' and removed the ratings from CreditWatch, where they were placed with negative implications on Sept. 11, 2006. The rating outlook is stable. At the same time, Standard & Poor's assigned a 'B' bank loan rating, at the same level as the corporate credit rating, and a recovery rating of '2' to Gray's proposed $1 billion senior secured credit facility. The recovery rating indicates expectation of substantial (80%-100%) recovery of principal in the event of a payment default. The bank facility consists of a $100 million revolving credit facility and a $900 million term loan B. Borrowings under the new credit facility will be used to refinance the company's existing credit facility and to redeem the company's outstanding subordinated notes and preferred stock. The ratings on the company's existing credit facility will be withdrawn upon the closing of the new facility. Pro forma for the refinancing, the Atlanta, Georgia-based TV broadcaster will have total debt of approximately $920 million as of Dec. 31, 2006. "The rating downgrade reflects our expectation that Gray's leverage will remain elevated for the foreseeable future," said Standard & Poor's credit analyst Deborah Kinzer. Gray's leverage increased significantly following two debt-financed TV station acquisitions in late 2005 and early 2006. Favorable advertising demand in 2006 from Olympics and elections has enabled the company to make some progress in reducing its leverage. The EBITDA improvement and modest debt paydowns were not sufficient to restore leverage to its previous levels. Standard & Poor's believes that the absence of significant political ad spending in 2007, a nonelection year, will further slow the company's efforts to reduce leverage. GREENMAN TECH: Dec. 31 Balance Sheet Upside-Down by $11.4 Million ----------------------------------------------------------------- Greenman Technologies Inc.'s balance sheet at Dec. 31, 2006, showed $9.3 million in total assets and $20.7 million in total liabilities, resulting in an $11.4 million total stockholders' deficit. The company's balance sheet at Dec. 31, 2006, also showed strained liquidity with $3.3 million in total current assets available to pay $7.3 million in total current liabilities. GreenMan Technologies reported a $9,052 net loss on $4.9 million of net sales for the first quarter ended Dec. 31, 2006, compared to a $1.4 million net loss on $4.3 million of net sales for the same period in fiscal 2006. Continuing operations processed approximately 3.65 million passenger tire equivalents during the quarter ended Dec. 31, 2006, compared to approximately 3.1 million passenger tire equivalents in the same period last year. In addition, the overall fee the company is paid to collect and dispose of a scrap tire increased 2 percent compared to last year. Gross profit was $1.5 million or 30.4 percent of net sales, compared to $1.3 million or 30.5% of net sales for the prior period quarter. Cost of sales increased $431,877 or 15 percent primarily due to increased collection and processing costs associated with higher inbound volume and higher repair and maintenance expense. In addition, due to the completion of several large civil engineering projects, which use more of the scrap tire including waste wire, processing residual waste costs increased $58,000 during the quarter ended Dec. 31, 2006, as compared to the prior year period. Selling, general and administrative expenses increased to $967,942 compared to $775,659 last year due to an increase of approximately $116,000 in salaries and wage related expenses, sales commissions and the re-allocation of approximately $52,000 of net corporate operating expenses which were absorbed by discontinued operations during the quarter ended Dec. 31, 2005. Interest and financing costs increased $243,856 mainly due to the inclusion of approximately $138,000 of deferred interest associated with the June 2006 Laurus credit facility restructuring, increased rates and the allocation of all Laurus related interest to continuing operations during the fiscal year ended Sept. 30, 2006. Non-cash financing fees and interest were zero during the quarter ended Dec. 31, 2006, as compared to $656,271 for the same period last year. Gain from discontinued operations was $9,825 compared to a loss of $977,995 in last year's quarter, which included approximately $746,000 associated with the company's Georgia operations and $232,000 associated with the company's California operations. Lyle Jensen, GreenMan's President and Chief Executive Officer stated, "I am very pleased with the continued positive trend in operating results across the board. Overall revenue was up 14 percent from the same period last year with inbound tire volume up over half a million tires during the December 2006 quarter as a result of ongoing efforts to increase market share and the commencement of several Iowa based tire cleanup projects. "Included in this increase, crumb rubber revenue was up 43 percent during the December 2006 quarter primarily due to strong demand for product produced by our new Des Moines powderizer equipment. Gross margins for the quarter remained above 30 percent despite higher operating costs associated with increased volumes and increased repairs and maintenance costs during the December 2006 quarter." Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?19de About GreenMan Based in Lynnfield, Massachusetts, GreenMan Technologies Inc. (OTCBB: GMTI) -- http://www.greenman.biz/ -- together with its subsidiaries, engages in collecting, processing, and marketing scrap tires in whole, shredded, or granular form in the United States and Canada. The company recycles this material into many interesting and useful applications. The company markets its products and services through a direct sales staff. The company was founded in 1992 and currently operates processing facilities in Savage, Minnesota, and Des Moines, Iowa. The two facilities process nearly 14 million tires out of the nearly 300 million scrap tires created in the U. S. each year. GSAMP TRUST: S&P Junks Rating on Series 2006-S3 Class B-2 Certs. ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on five classes from GSAMP Trust's series 2002-HE, 2003-HE1, and 2006-S3. Concurrently, the ratings on two of these classes were placed on CreditWatch negative, two remain on CreditWatch negative, and one was removed from CreditWatch negative. In addition, the ratings on two other classes were placed on CreditWatch negative. Finally, the ratings on the remaining classes from these three transactions were affirmed. The downgrades and CreditWatch placements reflect the deteriorating performance of the collateral pools backing series 2002-HE, 2003-HE1, and 2006-S3. Credit support for these series is derived from a combination of subordination, excess interest, and overcollateralization. For the pool backing series 2002-HE, realized losses have been consistently outpacing excess interest spread and eroding O/C. As of the January 2007 remittance period, O/C had been reduced to $1.60 million, or 0.36% of the original pool balance, below its target of 0.50%. Severe delinquencies and total delinquencies constitute 26.75% and 42.57% of the current pool balance, respectively. For the same period, the pool backing series 2003-HE1 had cumulative losses amounting to $6.95 million, or 1.6% of the original pool balance, and O/C had been reduced to $2.0 million. Severe delinquencies and total delinquencies constitute 19.64% and 31.22% of the current pool balance, respectively. The pool backing series 2006-S3 incurred a record loss of $12.52 million during the January 2007 remittance period. Cumulative losses amounted to $21.68 million, or 4.39% of the original pool balance. O/C had been reduced to $4.99 million, or 1.0% of the original pool balance, severely under its target of 6.55% of the original pool balance. Severe delinquencies and total delinquencies constitute 9.27% and 18.05% of the current pool balance, respectively. The ratings on class B-2 from series 2003-HE1 and B-1 from series 2006-S3 remain on CreditWatch negative due to Standard & Poor's concerns over continuing erosion of credit support. Standard & Poor's will continue to closely monitor the performance of the classes with ratings on CreditWatch. If the delinquent loans cure to a point at which monthly excess interest begins to outpace monthly net losses, thereby allowing O/C to build and provide sufficient credit enhancement, Standard & Poor's will affirm the ratings and remove them from CreditWatch. Conversely, if delinquencies cause substantial realized losses in the coming months and continue to erode credit enhancement, S&P will take further negative rating actions on these classes. The rating on class B-1 from series 2006-S3 was removed from CreditWatch because it was lowered to 'CCC'. According to Standard & Poor's surveillance practices, ratings lower than 'B-' on classes of certificates or notes from RMBS transactions are not eligible to be on CreditWatch negative. The affirmations are based on credit support percentages that are sufficient to maintain the current ratings. Credit support for these transactions is provided through a combination of subordination, excess spread, and O/C. The underlying collateral consists of conventional, fully amortizing, 30-year, fixed- and adjustable-rate mortgage loans secured by first and second liens on one- to four-family residential properties. GSAMP Trust Ratings Lowered And Placed On Creditwatch Negative Rating ------ Series Class To From ------ ----- -- ---- 2002-HE B-2 BB/Watch Neg BBB 2006-S3 M-7 BB/Watch Neg BBB- Ratings Lowered And Remaining On Creditwatch Negative Series Class To From ------ ----- -- ---- 2003-HE1 B-2 BB/Watch Neg BBB-/Watch Neg 2006-S3 B-1 B/Watch Neg BB+/Watch Neg Rating Lowered And Removed From Creditwatch Negative Series Class To From ------ ----- -- ---- 2006-S3 B-2 CCC BB/Watch Neg Ratings Placed On Creditwatch Negative Series Class To From ------ ----- -- ---- 2002-HE B-1 BBB+/Watch Neg BBB+ 2006-S3 M-6 BBB/Watch Neg BBB Ratings Affirmed Series Class Rating ------ ----- ------ 2002-HE M-1 AA+ 2002-HE M-2 A 2003-HE1 M-1 AA+ 2003-HE1 M-2 A 2003-HE1 M-3 BBB+ 2003-HE1 B-1 BBB 2006-S3 A-1, A-2, A-3 AAA 2006-S3 M-1 AA 2006-S3 M-2 AA- 2006-S3 M-3 A 2006-S3 M-4 A- 2006-S3 M-5 BBB+ GSAMP TRUST: S&P Places Ratings on Negative CreditWatch ------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on 18 subordinate classes from 11 different residential mortgage-backed securities transactions issued in 2006 on CreditWatch with negative implications. The affected classes are rated 'BBB-', 'BB+', and 'BB'. The CreditWatch placements reflect early signs of poor performance of the collateral backing these transactions. Most of the transactions were issued during the first half of 2006. The percentage of loans in these pools that are severely delinquent ranges from 2.77% to 13.46%. Losses range from zero to 1.30%. Placing Standard & Poor's ratings on CreditWatch when a transaction has not experienced a loss represents a new methodology derived from its normal practice. The combination of early high delinquencies and minimal or no loss experience had not been seen in the performance exhibited by prior vintages. Because there have been no substantial cumulative realized losses, Standard & Poor's measured deal performance against the stressed time to disposition of the loans and a reinstatement rate assumption of zero for all severely delinquent loans. Many of the 2006 transactions may be showing weakness because of origination issues, such as aggressive residential mortgage loan underwriting, first-time home-buyer programs, piggyback second- lien mortgages, speculative borrowing for investor properties, and the concentration of affordability loans. Most of the transactions with subordinate ratings being placed on CreditWatch were issued during the first half of 2006, before Standard & Poor's raised its loss coverage levels for loans with the layered risks mentioned above. Three of the affected transactions were closed-end second-lien deals that were issued during the second half of 2006. Standard & Poor's consecutively raised the 'BBB' loss coverage levels for transactions issued from the first through fourth quarters of 2006. The average quarterly 'BBB' loss coverage levels during the year were as follows: 7.36% in the first quarter, 7.83% in the second quarter, 12.10% in the third quarter, and 12.70% in the fourth quarter. The extent to which the high levels of severely delinquent mortgage loans result in increased levels of actual realized losses will ultimately determine the extent of future rating actions on these transactions and others in the 2006 vintage. Generally, transactions issued during the second half of 2006 are passing the stress levels based on the January 2007 reported data, primarily because they typically have more loss coverage. Increased loss coverage was introduced for the deals issued in July 2006. Credit support for each series is derived from either subordination or a combination of subordination, excess interest, and overcollateralization (O/C). O/C levels are at or near their targets, and subordination amounts have not yet declined significantly. Standard & Poor's will continue to closely monitor the performance of these transactions. Over the next three months, Standard & Poor's will monitor the losses incurred as a result of the liquidation of REO assets. If these losses are material, and if delinquencies continue at their present pace, Standard & Poor's would expect to lower its ratings up to three notches depending on individual performance. Conversely, if the delinquency rates decline and substantial cumulative losses are not realized, Standard & Poor's will affirm the ratings and remove them from CreditWatch negative. Additionally, Standard & Poor's has determined that the CreditWatch placements affecting the ratings on these RMBS tranches will have no impact on outstanding CDO ratings. These transactions are collateralized by subprime, Alt-A, or closed-end second-lien loans. The transactions were initially backed by pools of fixed- and adjustable-rate mortgage loans secured by first, second, or third liens on one- to four-family residential properties. Standard & Poor's will hold a teleconference Thursday, Feb. 15, 2007, at 10:00 a.m. to discuss market concerns regarding the performance of many of the transactions issued in 2006 and the impact of the rating performance of these transactions on CDO transactions. This discussion will focus on Standard & Poor's rationale and methodology used for the CreditWatch actions detailed in this release. The details for the teleconference are listed below the ratings list. Ratings Placed On Creditwatch Negative Asset-Backed Certificates Trust 2006-IM1 Rating ------ Series Class To From ------ ----- -- ---- 2006-IM1 B BBB-/Watch Neg BBB- GSAMP Trust 2006-S5 Rating ------ Series Class To From ------ ----- -- ---- 2006-S5 M-7 BBB-/Watch Neg BBB- 2006-S5 B-1 BB+/Watch Neg BB+ 2006-S5 B-2 BB+/Watch Neg BB+ New Century Home Equity Loan Trust 2006-S1 Rating ------ Series Class To From ------ ----- -- ---- 2006-S1 M-7 BB+/Watch Neg BB+ 2006-S1 M-8 BB+/Watch Neg BB+ Securitized Asset Backed Receivables LLC Trust 2006-NC1 Rating ------ Series Class To From ------ ----- -- ---- 2006-NC1 B-3 BBB-/Watch Neg BBB- Structured Asset Investment Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-1 B1 BBB-/Watch Neg BBB- 2006-1 B2 BB+/Watch Neg BB+ 2006-2 B2 BB/Watch Neg BB 2006-BNC1 B2 BB+/Watch Neg BB+ 2006-BNC2 B2 BB/Watch Neg BB Structured Asset Securities Corp. Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-BC1 B3 BB/Watch Neg BB Terwin Mortgage Trust Rating ------ Series Class To From ------ ----- -- ----- 2006-6 I-B-7 BB+/Watch Neg BB+ 2006-6 I-B-8 BB/Watch Neg BB 2006-6 II-B-5 BB+/Watch Neg BB+ 2006-6 II-B-6 BB+/Watch Neg BB+ 2006-8 I-B-8 BB+/Watch Neg BB+ HARRAH'S ENT: Buyout May Get a B Issuer Default Rating from Fitch ----------------------------------------------------------------- Fitch Ratings may downgrade Harrah's Entertainment Inc.'s Issuer Default Rating into the 'B' category from its current 'BB+' rating based on the planned capital structure for its leveraged buyout by Apollo Management and Texas Pacific Group, which was outlined in its preliminary proxy statement. If the transaction is completed as planned, Fitch estimates that Harrah's total debt/EBITDA leverage could be in the 8.5x - 9.0x range, while its EBITDA/interest expense coverage could be below 2.0x. The term loan could be levered around the 3.5x-4.0x range after adjusting for the commercial mortgage backed securities cash flow carve out and close to 60% of the company's pro forma debt will be secured. These credit metrics are inconsistent with Harrah's current 'BB+' IDR. Despite the significantly weaker credit metrics, Harrah's long-term credit profile would still benefit from being the largest and most diversified casino operator with solid brands and excellent marketing ability. Future Implications for Harrah's Ratings The transaction still needs to clear a number of hurdles, the most significant of which are shareholder approval and regulatory hurdles, since the private equity firms will likely have to get licensed in every jurisdiction in which Harrah's operates. Therefore, Fitch will look to resolve the existing Rating Watch Negative and revise Harrah's ratings for the LBO transaction following milestones during the transaction process which demonstrate there is reasonable certainty that the transaction will close. Since the transaction could close more than a year from now, there is a good possibility the parameters can change. The transaction aims to tap the bank, bond, and CMBS markets, the cost and accessibility of which can change swiftly. Also, it is unclear if there will be meaningful asset sales prior to or concurrent with the transaction. Fitch believes there are a number of properties in Harrah's portfolio that could be deemed 'non-core' and be potentially monetized to help fund the transaction. However, certain unidentified assets are going to be collateralized in the CMBS note, which could affect asset sale potential. Finally, competing bids could emerge while shareholders are considering this transaction. Rating Context: Fitch downgraded Harrah's IDR to 'BB+' from 'BBB-' and placed Harrah's ratings on Rating Watch Negative following the Oct. 2, 2006 reported of the receipt of the LBO proposal. At that time, the existence of the public bid changed Harrah's credit profile primarily because Fitch believed there was a high likelihood of a shareholder-friendly capital allocation decision that would have a negative impact on the credit profile, which was already weak investment grade, even if the transaction was not completed. Transaction Detail: The planned $26.1 billion transaction has been approved by Harrah's board of directors and has received equity and debt commitments. The planned transaction will include: -- $5.87 billion equity contribution from the private equity firms; -- $7 billion senior secured 7-year term loan; -- $6.025 billion bond issue; and -- $7.25 billion commercial mortgage-backed securities note. In addition to the $7 billion term loan, the senior secured credit facilities will also include a $2 billion six-year revolver that is expected to be undrawn at closing. If the $6.025 billion bond issue is not completed by the closing of the transaction, the lenders have agreed to provide a senior unsecured bridge facility until the bonds are issued. The $7.25 billion CMBS loan could be upsized to $8 billion and will have a two-year initial term with options for three one-year extensions. If the CMBS deal cannot be completed by the closing of the transaction, the lenders have agreed to provide a senior secured real estate bridge facility. Certain unidentified real estate assets that account for roughly one-third of Harrah's LTM EBITDA will collateralize the CMBS note. HARRINGTON HOLDINGS: Moody's Junks Rating on $50 Million Term Loan ------------------------------------------------------------------ Moody's Investors Service assigned a B2 Corporate Family Rating to Harrington Holdings Inc. At the same time, Moody's assigned a B1 rating to the company's new $175 million first lien term loan and $45 million first lien revolver and a Caa1 to the company's $50 million second lien term loan. The rating outlook is negative. This is the first time that Moody's is rating the debt of Harrington. Proceeds from this transaction were used to finance the recapitalization of Harrington with the assistance of The Jordan Company, L.P. Ratings assigned: * Harrington Holdings, Inc. -- Corporate Family Rating at B2 -- First lien Senior Secured Term Loan at B1, LGD3, 40.56% -- First lien Senior Secured Revolver at B1, LGD3, 40.56% -- Second lien Term Loan at Caa1, LGD5, 89.17% -- PDR at B2 Harrington is a leading marketer and distributor of medical supplies and equipment. As a family-owned and managed business with a long-standing management team, the company has enjoyed a history of continuity and stability. The company distributes a broad array of medical products including those related to ostomy, diabetes, urology, incontinence, wound care, respiratory, chiropractic medicine, and physical therapy. Harrington's B2 CFR considers its small size and relatively high leverage, providing the company with limited financial flexibility. These concerns are partially mitigated by historically steady operating cash flow generation, the retention of key management post-acquisition, healthy diversification with respect to both products and payors, and entrenched relationships with its customers. Moody's assignment of a negative outlook to the ratings reflects limited cash flow, affording minimal cushion for operational missteps as well as concerns regarding the possible augmentation of its organic growth strategy with one that involves more acquisitions under new equity sponsorship. Harrington Holdings, Inc., headquartered in Cleveland, Ohio, is a leading marketer and distributor of medical supplies and equipment in the US. HCP ACQUISITION: Moody's Rates $427.9 Mil. Senior Facility at B1 ---------------------------------------------------------------- Moody's Investors Service has assigned a provisional Corporate Family Rating of B2 to HCP Acquisition Inc. and a B1 rating to HCP's $427.9 million senior secured 1st lien bank credit facility. HCP's 1st lien loan has been assigned an LGD assessment of LGD3 and an LGD rate of 37%. The ratings are provisional upon the final financing documents conforming to the transaction as described to Moody's to date. HCP's rating outlook is stable. HCP is a newly formed entity indirectly established by Harbinger Capital Partners, a division of Harbert Management Corporation. In a series of transactions HCP intends to acquire 100% interests in three fully contracted power generation facilities and a loan to an entity which owns a 50% interest in a fourth fully contracted generation facility, the Whitby Cogen Facility. Collectively the transactions necessary to acquire the foregoing interests are referred to as the Acquisition. The first transaction is the purchase of 100% of Calpine Power Income Fund, a publicly traded entity whose units are listed on the Toronto Stock Exchange. The second transaction is the purchase, from Calpine Canada Power Ltd., an indirect subsidiary of Calpine Corp., of that portion of CPIF's indirect subsidiary, Calpine Power, L.P., that is not currently owned by CPIF together with certain contractual rights associated with CPIF and its subsidiaries. While both CCPL and Calpine are operating under bankruptcy protection, none of the entities or assets to be acquired by HCP is party to those bankruptcy proceedings. Furthermore, HCP's acquisition from CCPL of the interest in CLP and the contractual rights associated with CPIF and its subsidiaries have been approved by the Canadian bankruptcy court overseeing CCPL's restructuring. Following HCP's acquisition of the interests in the four power plants, HCP is expected to have virtually no ongoing interaction with entities associated with Calpine's restructuring other than as a creditor of Calpine and a Calpine subsidiary. HCP's status as a Calpine creditor relates principally to the rejection of the former Calgary Energy Facility tolling agreement by the Calpine subsidiary. HCP's base case financial forecasts do not reflect any potential upside that might ultimately be available to HCP in respect of its claims against Calpine and its subsidiaries. HCP will fund the Acquisition with $427.9 million of senior secured 1st lien bank debt, $171.2 million of senior secured 2nd lien bank debt and approximately CDN$254 million of equity and deeply subordinated debt. HCP will convert its US$ funding to CDN$ coincident with closing. The 1st and 2nd lien loan facilities will have tenors of seven and eight years respectively. The 1st lien debt has 1% scheduled principal amortization but benefits from a cash sweep of virtually all cash available after payment of 1st lien debt service and 2nd lien interest. Interest on the 2nd lien debt is paid in cash provided that cash flow is sufficient to pay all of the 2nd lien interest due, otherwise 2nd lien interest accrues and compounds. While approximately $70 million of the funding provided to HCP by its shareholders is in the form of deeply subordinated debt, in its analysis, Moody's has treated this amount as equity since it is fully postponed and subordinated and stapled to HCP's common equity. The B2 CFR and B1 1st lien loan ratings are reflective of several credit challenges. Following the Acquisition, HCP will be very highly levered resulting in relatively weak debt service coverage and CFADS/debt ratios limited debt reduction during the term of the 1st lien loan. During the first five years of the loan, HCP expects an average total DSCR and CFADS/total debt in the range of 1.2x and 3.0% respectively in the base case. Consequently, the base case financial forecast assumes that there will be limited repayment of the 1st lien loan and no repayment of the 2nd lien loan prior to the 2013 1st lien loan maturity and the 2014 2nd lien loan maturity. As such, Moody's notes that any inability to achieve base case cash flow projections would meaningfully reduce the amount of 1st lien debt repaid prior to maturity and potentially impact HCP's ability to pay cash interest on the 2nd lien loan. The ratings also consider the complexity of HCP's organizational structure and potential hedging issues arising out of the fact that the debt will be raised in US$ at floating rates and swapped into CDN$ at fixed rates. While HCP expects to utilize a combination of swaps and options-based derivative hedging instruments, Moody's notes that it may be challenging to fully hedge HCP's debt obligations given the inability to forecast principal repayments due to the operation of the 1st lien cash sweep. The ratings also reflect the fact that prior to closing, HCP had only limited ability to perform due diligence on the assets. For instance HCP has not had access to all of the underlying contracts or to technical advisors' evaluations of the assets. The ratings also reflect the fact that two of the four assets, the Whitby Cogen Facility and the King City Facility, have asset level debt that is structurally senior to the 1st lien debt. This impact is somewhat mitigated by the fact that these two assets are expected to provide a relatively small, albeit growing, portion of the total cash flow available to service HCP's debt. The ratings also reflect a degree of uncertainty surrounding the performance of the largest of HCP's assets, the Island Cogen Facility, which has encountered a number of operational challenges since commissioning including a recent extended unplanned outage. The ratings also recognize that the relatively weak financial profile of the steam host at the Island Cogen Facility. The B2 CFR and B1 1st lien loan ratings also reflect a number of important credit strengths including the fully-contracted nature of the underlying power plants which have no merchant exposure before the 2018 expiry of the first of the power purchase agreements. The ratings also reflect the generally strong investment grade credit ratings of the power purchasers and the fact that the plants providing the majority of the cash flow are subject to tolling agreements which substantially reduces HCP's exposure to fuel price and volume risk. The ratings also reflect the diversity of the plants by geography and power purchasers. While Moody's has not had an opportunity to review the financing documents in their final form, the rating reflects its understanding that the 1st lien credit agreement, 2nd lien credit agreement and intercreditor agreement will contain protections and provisions typical of 1st lien/2nd lien financings of this nature. Key provisions of the financing documents include limitations on equity distributions so long as first or second lien debt remains outstanding, a 1st lien cash sweep, an "all-assets" security package to be provided within a short period of funding of the loans and six-month debt service reserve accounts for each of the 1st and 2nd lien loans. The cash sweep feature has been structured such that the proceeds from any asset sale, equity offering or recovery under the claims against Calpine, will be applied to the repayment of any outstanding 1st lien loans. HCP Acquisition Inc. is a Nova Scotia limited liability company created for the purposes of acquiring interests in four power generating facilities through a series of transactions. HCP Acquisition Inc. is indirectly owned by funds managed by Harbinger Capital Partners, a division of Harbert Management Corporation. HECTOR MERCADO: Case Summary & 16 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Hector Mercado Perez Inc. P.O. Box 456 Arecibo, PR 00613-0456 Tel: (787) 878-2730 Fax: (787) 879-8042 Bankruptcy Case No.: 07-00695 Chapter 11 Petition Date: February 14, 2007 Court: District of Puerto Rico (Old San Juan) Debtor's Counsel: Fausto David Godreau Zayas Latimer, Biaggi, Rachid & Godreau P.O. Box 9022512 San Juan, PR 00902-2512 Total Assets: $2,117,013 Total Debts: $15,265,847 Debtor's 16 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Lisandra Abrahm's Reverol $3,000,000 HC 01 Box 4706 Bo. San Antonio Quebradillas, PR 00678 Internal Revenue Service $2,506,864 Mercantil Plaza Building Suite 904 Stop 27 1/2 San Juan, PR 00918 John M. Kilgore $1,200,000 p/c LCDA Wilda Rodriguez P.O. Box 70364 San Juan, PR 00936-8364 Gilberto Vargas Ocasio $1,010,000 p/c LCDO Ceferino Flores 32 Acosta Street P.O Box 1209 Caguas, PR 00725 Treasury Department $1,316,040 P.O. Box 9022501 San Juan, PR 00902-2501 Nilsa Roman Guzman $600,800 HC 02 Box 16338 Arecibo, PR 00612 Miguel Mercado Perez $397,235 P.O. Box 456 San Juan, PR 00612 Dr. Jose Rodriguez $300,000 c/o LCDO Hector Melendez P.O. Box 366283 San Juan, PR 0036-6283 Patente Municipal $298,383 Municipio de Arecibo P.O. Box 70179 San Juan, PR 00936-7170 AEE $291,808 P.O. Box 3508 San Juan, PR 00936-350 Arnaldo Mercado Perez $271,230 P.O. Box 356 Arecibo, PR 00613 Hector Mercado Perez $202,900 Anastacio Mercado and Felicita Perez $200,000 Borschow Hospital & Medical Supplies $102,983 Future Health Concepts $73,905 Diversified Collection Services Inc. $35,200 HUGHES COMMS: Unit Inks Commitment Letter for $115 Mil. Financing ----------------------------------------------------------------- Hughes Communications Inc.'s wholly owned subsidiary, Hughes Network Systems LLC, entered into a commitment letter with Bear Stearns Corporate Lending Inc., as the initial lender, Bear Stearns & Co. Inc., as lead arranger and bookrunning manager, and BSCL, as administrative agent. Pursuant to the Commitment Letter, BSCL agreed to provide Hughes Network with debt financing in the aggregate principal amount of $115 million in the form of an unsecured senior term loan facility. The entry into the Loan Facility and financing thereunder is subject to the satisfaction of certain customary conditions. The Commitment Letter will terminate on March 31, 2007, unless terminated earlier by the Hughes Network. Pursuant to the Commitment Letter, the Loan Facility will be guaranteed on a senior unsecured basis by all existing and future subsidiaries of Hughes Network that guarantee the its existing 9-1/2% Senior Notes due 2014 and its existing $50 million senior secured revolving credit facility. HNS Finance Corp., a wholly owned subsidiary of Hughes Network and co-issuer of the senior notes, will be a co-borrower under the loan facility. The interest rate on the Loan Facility is expected to be, at the option of Hughes Network, the Adjusted LIBO Rate plus 2.75% or ABR plus 1.75%. The loan facility will be subject to certain mandatory and optional prepayment provisions and contain negative covenants and events of default, in each case, substantially similar to those provisions contained in the indenture governing the senior notes. The maturity date of the loan facility will be April 15, 2014. Hughes Network plans to use the net proceeds from the loan facility to partially fund the purchase and/or construction of a satellite and/or for general corporate purposes. Hughes Network expects that it will enter into the loan facility on or about Feb. 28, 2007. About Hughes Communications Headquartered in Germantown, Maryland, Hughes Communications, Inc. (Nasdaq: HUGH) -- http://www.hughes.com/-- is the 100% owner of Hughes Network Systems, LLC. Hughes Communications provides broadband satellite networks and services for enterprises, governments, small businesses, and consumers. HughesNet(TM) encompasses all broadband solutions and managed services from Hughes, bridging the best of satellite and terrestrial technologies. Its broadband satellite products are based on the IPoS global standard, approved by the TIA, ETSI, and ITU standards organizations. * * * As reported in the Troubled Company Reporter on Feb. 14, 2007, Standard & Poor's Ratings Services assigned its 'B-' rating to satellite services provider Hughes Network Systems LLC's proposed $115 million senior unsecured term loan due 2014. Simultaneously, the outlook on the company was revised to negative from stable due to the further delay in the launch of Spaceway 3 to early 2008 which will defer anticipated EBITDA improvement. The corporate credit rating is affirmed at 'B' as are the 'BB-' bank loan rating and '1' recovery rating on the company's $50 million senior secured revolving credit facility. The senior unsecured term loan rating of 'B-' is based on preliminary documentation subject to receipt of final information. Pro forma total debt is approximately $611 million and includes roughly $42 million in customer premise equipment financing. Moody's Investors Service assigned a B1 rating to Hughes Network Systems, LLC's proposed $115 million senior unsecured term loan, due 2014. In addition, the ratings agency also affirmed the B1 corporate family rating, the B1 rating on the existing $450 million senior notes due 2014 and the Ba1 rating on the $50 million senior secured revolving credit facility. The proceeds of the new term loan will be used primarily to fund capital expenditures and for general corporate purposes. ICEWEB INC: Sherb & Co. LLP Raises Going Concern Doubt ------------------------------------------------------ Sherb & Co. LLP, in Boca Raton, Florida, expressed substantial doubt about Ice Web Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Sept. 30, 2006. The auditing firm pointed to the company's net losses for the years ended Sept. 30, 2006 and 2005. Ice Web reported a $3.9 million net loss on $4.8 million of sales for the year ended Sept. 30, 2006, compared with a $903,508 net loss on $6.8 million of sales for the year ended Sept. 30, 2005. The increase in net loss is mainly attributable to the $750,037 decrease in gross profit, the increase in operating expenses, and the increase in interest expenses. Total operating expenses increased approximately 53.1% to $4.4 million during fiscal 2006 as compared to $2.9 million during fiscal 2005, primarily due to the $1.8 million increase in general and administrative expenses, the $168,800 increase in marketing and selling expenses, and a $220,800 impairment of goodwill expense, partly offset by the $594,836 decrease in depreciation and amortization expenses. The increase in general and administrative expenses was mainly due to the $1 million increase in salaries and related taxes and the $435,432 increase in other operating expenses. The increase in marketing and selling expenses was due to an increase in stock-based marketing expense of $50,998 and an increase in online web marketing, advertising and print advertising expenses. In fiscal 2006, the company recorded an impairment of goodwill of $180,000 in connection with the sale of the company's PatriotNet subsidiary. Additionally the company recorded an impairment of goodwill of $40,800 related to prior acquisitions. Interest expense amounted to $728,619 in fiscal 2006 as compared to $114,540 in fiscal 2005, an increase of $614,079 or 536.1%. At Sept. 30, 2006, the company's balance sheet showed $2.6 million in total assets and $3.7 million in total liabilities, resulting in a $1.1 million total stockholders' deficit. The company's balance sheet at Sept. 30, 2006, also showed strained liquidity with $1.7 million in total current assets available to pay $3.3 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the year ended Sept. 30, 2006, are available for free at http://researcharchives.com/t/s?19df About IceWEB Headquartered in Herndon, Virginia, IceWeb Inc. (OTC: IWEB) -- http://www.iceweb.com/-- is a diversified technology company. The company is a provider of hosted web-based collaboration solutions that enable organizations to establish Internet, Intranet, and email/collaboration services with little or no up-front capital investment. The company also provides consulting services to larger enterprise and government customers including network infrastructure, enterprise email/collaboration, and Internet/Intranet portal implementation and support services. The company also markets an array of information technology services and third party computer network hardware and software to large enterprise and government clients. IMAGIVISION FX: Case Summary & 10 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Imagivision FX Inc. 7455 France Avenue, Suite 510 Edina, MN 55435 Tel: (952) 893-8058 Bankruptcy Case No.: 07-40519 Chapter 11 Petition Date: February 15, 2007 Court: District of Minnesota (Minneapolis) Judge: Dennis D. O'Brien Debtor's Counsel: Joseph W. Dicker, Esq. Joseph W. Dicker, P.A. 1406 West Lake Street, Suite 208 Minneapolis, MN 55408 Tel: (612) 827-5941 Fax: (612) 822-1873 Estimated Assets: $1 Million to $100 Million Estimated Debts: $100,000 to $1 Million Debtor's 10 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Landmark Bank $700,000 c/o T. Chris Stewart Anastasia & Associates 6120 Oren Avenue North Stillwater, MN 55082 St. Stephens Bank $75,000 101 South Benton Drive Sauk Rapids, MN 56379-1417 Stage By Design $62,550 601 Carlson Parkway, Suite 1050 Minnetonka, MN 55305 Eide Bailly $9,571 Centerpoint Energy $4,877 Chase Financial $4,590 American Family Insurance $3,512 Xcel Energy $1,684 Dorsey & Whitney $1,510 Metropolitan Mechanical $607 INVACARE CORP: Closes $710 Million Refinancing Transactions ----------------------------------------------------------- Invacare Corporation discloses the completion of its refinancing transactions. The new financing program provides the company with total capacity of approximately $710 million, the net proceeds of which have been used to refinance substantially all of the company's existing indebtedness and pay related fees and expenses. As part of the financing, the company entered into a $400 million senior secured credit facility consisting of a $250 million term loan facility and a $150 million revolving credit facility. The company's obligations under the new senior secured credit facility are secured by substantially all of the company's assets and are guaranteed by its material domestic subsidiaries, with certain obligations also guaranteed by its material foreign subsidiaries. Borrowings under the new senior secured credit facility will generally bear interest at LIBOR plus a margin of 2.25%, including an initial facility fee of 0.50% per annum on the facility. The company also completed the sale of $175 million principal amount of its 9-3/4% Senior Notes due 2015 to qualified institutional buyers pursuant to Rule 144A and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act of 1933, as amended. The notes are unsecured senior obligations of the Company guaranteed by substantially all of the company's domestic subsidiaries, and pay interest at 9-3/4% per annum on each February 15 and August 15. The net proceeds to the Company from the offering of the notes, after deducting the initial purchasers' discount and the estimated offering expenses payable by the company, were approximately $167 million. Also, as part of the refinancing, the company completed the sale of $135 million principal amount of its Convertible Senior Subordinated Debentures due 2027 to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The debentures are unsecured senior subordinated obligations of the company guaranteed by substantially all of the company's domestic subsidiaries, pay interest at 4.125% per annum on each February 1 and August 1, and are convertible upon satisfaction of certain conditions into cash, common shares of the company, or a combination of cash and common shares of the company, subject to certain conditions. The initial conversion rate is 40.3323 shares per $1,000 principal amount of debentures, which represents an initial conversion price of approximately $24.79 per share. The debentures are redeemable at the Company's option, subject to specified conditions, on or after February 6, 2012 through and including Feb. 1, 2017, and at the company's option after Feb. 1, 2017. On Feb. 1, 2017 and 2022 and upon the occurrence of certain circumstances, holders have the right to require the Company to repurchase all or some of their debentures. The net proceeds to the company from the offering of the debentures, after deducting the initial purchasers' discount and the estimated offering expenses payable by the company, were about $132.3 million. "We are very pleased to have completed our refinancing program and believe that the long-term capital structure we have put in place gives us the platform to continue restructuring our business and assist us in carrying out our plans to overcome industry challenges and deliver improved operating income in 2007," A. Malachi Mixon, III, chairman and chief executive officer stated. "We would like to thank our senior lenders, Bank of America, National City Bank and KeyBank, for their support through this refinancing." About Invacare Headquartered in Elyria, Ohio, Invacare Corp. (NYSE: IVC) -- http://www.invacare.com/-- is the global leader in the manufacture and distribution of innovative home and long-term care medical products. The company has 5,900 associates and markets its products in 80 countries around the world. * * * As reported in the Troubled Company Reporter on Jan. 22, 2007, Moody's Investors Service assigned a Ba2 rating on the company's proposed $400 million Senior Secured Credit Facility, a B2 rating on the company's proposed $175 million Senior Notes due 2015, and a B3 rating on the company's proposed $125 million Senior Subordinated Convertible Notes due 2027. Standard & Poor's Ratings Services assigned its B corporate credit rating to Invacare Corp. At the same time, S&P assigned a B+ rating on the company's proposed $400 million Senior Secured Credit Facility, consisting of a $150 million Revolver maturing in 2012 and a $250 million Term Loan maturing in 2013. Standard & Poor's also assigned its B- rating to the company's proposed $175 million senior unsecured notes maturing in 2015 and its CCC+ rating to the company's proposed $125 million senior subordinated convertible notes maturing in 2027. IRONWOOD COURTYARD: Case Summary & Eight Largest Unsec. Creditors ----------------------------------------------------------------- Debtor: Ironwood Courtyard Holdings, LLC 9590 East Ironwood Square Drive, Suite 215 Scottsdale, AZ 85258 Bankruptcy Case No.: 07-00614 Chapter 11 Petition Date: District of Arizona (Phoenix) Court: February 15, 2007 Judge: Redfield T. Baum Sr. Debtor's Counsel: Donald W. Powell, Esq. Carmichael & Powell, P.C. 7301 North 16th Street, Suite 103 Phoenix, AZ 85020 Tel: (602) 861-0777 Fax: (602) 870-0296 Total Assets: $3,761,210 Total Debts: $4,816,617 Debtor's Eight Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Ralph Vescio $492,000 8100 East Camelback Road, Suite 21 Scottsdale, AZ 85251 Bob Fleischman $147,500 Home National Bank, Custodian 13840 Northsight Boulevard, Suite 109 Scottsdale, AZ 85260 Clarke Family Trust $120,000 11055 East Cochise Drive, Suite 2051 Scottsdale, AZ 85259 Landers Family Trust $75,000 Steve Gaines $60,000 Elaine Kapach $25,000 RAE Complete Technical Systems $12,000 TCT Property Services, LLC $11,880 ISIDORO MARTINEZ: Case Summary & 12 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Isidoro Martinez 3322 West Woodlawn Avenue Tampa, FL 33607-6630 Bankruptcy Case No.: 07-01122 Chapter 11 Petition Date: February 14, 2007 Court: Middle District of Florida (Tampa) Debtor's Counsel: Herbert R. Donica, Esq. Donica Law Firm, P.A. 106 South Tampania Avenue, Suite 250 Tampa, FL 33609 Tel: (813) 878-9790 Fax: (813) 878-9746 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ford Credit 2006 ford F-350 $47,269 P.O. Box 542000 Secured: Omaha, NE 68154 $37,500 Argent HFS St. Josephs $1,175 7715 Northwest 48 Street Hospital Suite 100 Miami, FL 33166 CBE Group Dish Network $1,175 131 Tower Park Drive Suite 1 Waterloo, IA 50702 HSBC NV Credit Card $778 Gemb/JCP Charge Account $546 Medical Data Systems I Memorial Hospital $411 Gemb/Dillards Charge Account $253 [unknown debtor] Collection $251 [unknown debtor] Collection $180 GTE FCU 2004 Chevrolet $33,639 Corvette Secured: $33,500 MBC $45 Doug Belden, Tax Collector Unknown JAMES ERNSBERGER: Case Summary & 11 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: James Russell Ernsberger 8270 Bella Veduta Avenue Las Vegas, NV 89178 Bankruptcy Case No.: 07-10722 Chapter 11 Petition Date: February 15, 2007 Court: District of Nevada (Las Vegas) Judge: Mike K. Nakagawa Debtor's Counsel: Zachariah Larson, Esq. Larson & Stephens, LLC 810 South Casino Center Boulevard, Suite 104 Las Vegas, NV 89101 Tel: (702) 382-1170 Fax: (702) 382-1169 Total Assets: $1,019,053 Total Debts: $2,235,440 Debtor's 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Chen H. Liu Judgment $1,194,858 c/o Matthew Callister 823 Las Vegas Boulevard, South Las Vegas, NV 89101 Chevy Chase Federal 8270 Bella Veduta $671,000 Savings Bank Avenue, Las Vegas NV Managing Agent Value of Security: 6200 Chevy Chase Drive $655,573 Laurel, MD 20707 Snell & Wilmer, LLP Legal Fees $70,080 Managing Agent 3800 H. Hughes Parkway Suite 1000 Las Vegas, NV 89109 Bank of America 2007 Lexus LX470 $47,711 Clark County Water Structured Water $23,000 Improvement Payment Citi Credit Card Purchases $3,031 Internal Revenue Services $6,700 Ladco Leasing Credit Card $2,636 Machine Lease Thomas E. Crowe Legal Fees $900 NCC Business Services Inc. Agriculture $395 Camden Greens/Camden Sears/CBSD Credit Card Purchases $323 LB-UBS: Moody's Junks Ratings on Class N and P Certificates ----------------------------------------------------------- Moody's Investors Service upgraded the ratings of five classes, downgraded the ratings of three classes and affirmed the ratings of eight classes of LB-UBS Commercial Mortgage Trust 2001-C2, Commercial Mortgage Pass-Through Certificates, Series 2001-C2: -- Class A-1, $127,877,548, Fixed, affirmed at Aaa -- Class A-2, $789,260,000, Fixed, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class B, $49,466,000, Fixed, affirmed at Aaa -- Class C, $62,656,000, Fixed, upgraded to Aaa from Aa2 -- Class D, $16,488,000, Fixed, upgraded to Aa1 from A1 -- Class E, $13,191,000, Fixed, upgraded to Aa3 from A3 -- Class F, $19,786,000, Fixed, upgraded to A2 from Baa2 -- Class G, $16,489,000, Fixed, upgraded to Baa1 from Baa3 -- Class H, $23,084,000, Fixed, affirmed at Ba1 -- Class J, $14,840,000, Fixed, affirmed at Ba2 -- Class K, $11,541,000, Fixed, affirmed at Ba3 -- Class L, $9,894,000, Fixed, affirmed at B1 -- Class M, $13,190,000, WAC, downgraded to B3 from B2 -- Class N, $6,596,000, WAC, downgraded to Ca from B3 -- Class P, $3,298,000, WAC, downgraded to C from Caa2 As of the Jan. 18, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 9.8% to $1.2 billion from $1.3 billion at securitization. The Certificates are collateralized by 133 mortgage loans ranging in size from less than 1.0% to 6.3% of the pool, with the top 10 loans representing 35.7% of the pool. The pool includes a shadow rated component, representing 14.7% of the pool, and a conduit component, representing 50.6% of the pool. Thirty-six loans, representing 34.7% of the pool, have defeased and are collateralized by U.S. Government securities. Two loans have been liquidated resulting in approximately $500,000 of realized losses. Nine loans, representing 5.1% of the pool, are in special servicing. The largest specially serviced concentration consists of the Atlanta Portfolio and Houston I-10 Portfolio Loans at $24.5 million (2.1%), which are two cross collateralized REO loans securitized by four hotel properties. Moody's has estimated aggregate losses of approximately $16.8 million for all of the specially serviced loans. Thirty-four, loans representing 27.8% of the pool, are on the master servicer's watchlist. Moody's was provided with full-year 2005 and partial-year 2006 operating results for approximately 99.9% and 56.4%, respectively, of the pool's performing non-defeased loans. Moody's loan to value ratio for the conduit component is 89.8%, compared to 89.5% at Moody's last full review in September 2005 and compared to 89.3% at origination. Moody's is upgrading Classes C, D, E, F and G due to the high percentage of defeased loans, improvement in the shadow rated loans and increased credit support. Classes C, D and E were upgraded on Dec. 08, 2006 based on a Q tool based portfolio review. Moody's is downgrading Classes M, N and P due to realized and projected losses from the liquidated and specially serviced loans. The largest shadow rated loan is the Westfield Shoppingtown Meriden Loan at $74.4 million (6.3%), which is secured by the borrower's interest in a 914,000 square foot regional mall located in Meriden, Connecticut. Built in 1971, and renovated and expanded in 1999, the mall is located 22 miles south of Hartford and 23 miles north of New Haven. The mall is anchored by Macy's, J.C. Penney and Sears. Other major tenants include Dick's Sporting Goods, Best Buy, Steve & Barry's and Borders. The collateral securing the loan consists of in-line space and a pad formerly occupied by Lord & Taylor. Lord & Taylor vacated in 2004 and its premises have been 100.0% re-leased to Dick's Sporting Goods and Best Buy. As of the third quarter of 2006, the in-line space was 79.8% leased, compared to 84.7% at last review and compared to 88.9% at securitization. The loan is on the master servicer's watchlist due to the April 2007 lease expiration date of Macy's. Moody's current shadow rating is A1, compared to Baa1 at securitization. The second shadow rated loan is the NewPark Mall Loan at $70.5 million (5.9%), which is secured by the borrower's interest in a 1.2 million square foot regional mall located approximately 15 miles north of San Jose in Newark, California. The mall is anchored by Macy's, Sears, J.C. Penney, Mervyn's and Target. The collateral securing the loan consists of 389,600 square feet of in-line space and an outparcel. The in-line space is 89.6% occupied, compared to 77.0 % at last review and compared to 88.9% at securitization. Net operating income improvement has resulted from base rent increases. The loan sponsors are General Growth Properties Inc. and the New York State Common Retirement Fund. Moody's current shadow rating is A2, compared to Baa1 at securitization. The third shadow rated loan is the Courtyard by Marriott - Philadelphia Loan at $30.2 million (2.5%), which is secured by a 498-room hotel located in downtown Philadelphia, Pennsylvania adjacent to City Hall and the Convention Center. Occupancy and RevPAR are 77.0% and $105.62 as of the third quarter of 2006, compared to 75.0% and $100.62 as of year-end 2005 and compared to 57.8% and $79.83 at securitization. The borrower has a 15-year operating lease with Marriott at a base rent of $6.5 million, plus an additional 7% of rental revenue in excess of base year revenues. Moody's current shadow rating is Baa2, the same as at last review and at securitization. The top three non-defeased conduit loans represent 8.5% of the outstanding pool balance. The largest conduit loan is the Harmon Meadow Plaza Loan at $54.6 million (4.6%), which is secured by a 510,000 square foot mixed-use complex located in Secaucus, New Jersey. The complex contains office, retail and a hotel ground lease and is part of a larger master development of approximately 2.0 million square feet. The largest tenants include NBA Entertainment and Scholastic and AMC/Loews Cinemas. As of October 2006 the property was 90.4% occupied, compared to 85.6% at last review and compared to 99.2% at securitization. The loan is on the master servicer's watchlist due to low debt service coverage. Moody's LTV is 83.8%, compared to 88.7% at last review and compared to 81.7% at securitization. The second largest conduit loan is the 215 Coles Street Loan at $23.6 million (2.0%), which is secured by a 714,000 square foot industrial building located in Jersey City, New Jersey. Built in 1927 and renovated in 2000, the major tenant is Guarantee Records Management. The property is 100.0% occupied, the same as at securitization. The loan amortizes on a 300-month schedule. Moody's LTV is 82.4%, compared to 98.8% at last review and compared to 64.2% at securitization. The third largest conduit loan is the Pointe Chase Apartments Loan at $22.9 million (1.9%), which is secured by a 519-unit office building located in the northwest Atlanta suburb of Norcross, Georgia. Built in 1972, the property is 82.3% occupied, compared to 92.0% at year-end 2005 and compared to 94.8% at securitization. Performance has been impacted by lower revenue and higher expenses. The loan is on the master servicer's watchlist due to a decline in debt service coverage. Moody's LTV is in excess of 100.0%, similar to last review and compared to 86.2% at securitization. The pool's collateral is a mix of U.S. Government securities, retail, office and mixed use, multifamily and manufactured housing, lodging and industrial and self storage. The collateral properties are located in 23 states. The highest state concentrations are California, New Jersey, Florida, Connecticut and Georgia. All of the loans are fixed rate. LESLIE'S POOLMART: Good Performance Cues S&P's Ratings Upgrade -------------------------------------------------------------- Standard & Poor's Ratings Services raised the corporate credit rating on Phoenix, Arizona-based Leslie's Poolmart Inc. to 'B+' from 'B'. At the same time, Standard & Poor's raised the rating on the 7.75% senior unsecured notes due 2013 to 'B' from 'B-'. These actions reflect the company's credit metrics which are consistent with current ratings given the highly seasonal nature of the its business, and the company's track record of successfully improving its credit metrics following prior recapitalization and debt issuance activity. The outlook is stable. The ratings reflect the highly seasonal nature of Leslie's business, which can be affected by unfavorable weather, its participation in the relatively small pool-supply market, its relatively small cash flow base, and the potential for further recapitalization activity. Leslie's is owned by LPM Acquisition LLC, which, in turn, is owned by an affiliate of Leonard Green & Partners L.P. Hence, given market conditions, there is risk that additional refinancing activity could occur. According to Standard & Poor's credit analyst Stella Kapur, "Current ratings have room to digest some modest debt issuance, assuming the company's operations continue to perform well." MATTRESS HOLDINGS: Moody's Cuts $225MM Sr. Facility's Rating to B1 ------------------------------------------------------------------ Moody's Investors Service downgraded Mattress Holdings Corp. senior secured credit facilities to B1 and affirmed the B2 corporate family rating following the report that the company had revised its capital structure to upsize senior secured term loan by $40 million to $225 million and reduce the privately place subordinated notes by the corresponding amount. The rating outlook is stable. The ratings are conditioned upon review of final documentation. The downgrade reflects a higher amount of debt sharing in the first lien asset pledge as well as the reduction in the amount of junior debt in the capital structure. Moody's has applied its Probability of Default and Loss-Given-Default rating methodology to Mattress Holdings resulting in B1 ratings on the senior secured credit facilities, one notch higher than the corporate family rating. The ratings on the senior secured credit facilities primarily reflect: their collateral package, which includes a first lien all asset pledge and, the junior support provided by the mezzanine financing. In addition the ratings on the bank facilities reflect their size relative to the whole capital structure and the guarantees provided by the operating subsidiaries. These ratings are downgraded: -- $25 million senior secured revolving credit facility to B1, LGD3, 35% from Ba3, LGD2, 28%; and -- $225 million senior secured term loan facility to B1, LGD3, 35% from Ba3, LGD2, 28%. These ratings are affirmed: -- Corporate family rating at B2; and -- Probability-of-default rating at B2. The B2 corporate family rating of Mattress Holdings reflects post- transaction credit metrics that will be weak, particularly the very high leverage and low cash flow coverage. The B2 rating is constrained by the company's very small scale with top line revenues for the LTM period ended Oct. 31, 2006 of $362 million, and its shareholder friendly financial policies. Offsetting these high yield characteristics are several investment grade characteristics including: its low seasonality, the stability of the U.S. retail mattress market, the company's credible market position in the very defined specialty retail sleep channel, and its strong comparable store sales growth over the past two years. Lastly, the rating category is supported by the company's primarily regional presence and its modest profitability. The stable outlook reflects Moody's expectation that the company will continue to grow comparable store revenues, improve operating margins, and maintain moderately positive free cash flow and adequate liquidity. Given the magnitude of Mattress Holdings post-transaction leverage, an upgrade is unlikely in the intermediate term. Over the longer term, an upgrade would require continuing solid operating performance coupled with Debt/EBITDA being sustained below 5.5x and FCF/Debt above 5% on a sustainable basis. Conversely, negative rating pressure would develop if: operating performance is weaker than expected, liquidity erodes, or if overall comparable store sales were to become negative. Quantitatively, ratings would be lowered should, as calculated using Moody's standard adjustments, Debt/EBITDA rise above 7.25x, EBITA/IE fall below 1.0x, or if FCF/Debt remains negative. Mattress Holding Corp., headquartered in Houston, Texas, is a leading specialty retailer of conventional and specialty mattresses. The company operates 295 company owned stores and 54 franchised stores in 19 states. Revenues for the LTM period ended October 31, 2006 are estimated to be nearly $362 million. MERRILL LYNCH: Loan Repayment Prompts DBRS to Upgrade Ratings ------------------------------------------------------------- Dominion Bond Rating Service upgraded nine classes of Merrill Lynch Financial Assets Inc. Commercial Mortgage Pass-Through Certificates, Series 2002-Canada 8: -- Class B upgraded to AAA from AA (high) -- Class C upgraded to AA from AA (low) -- Class D upgraded to A from A (low) -- Class E upgraded to A (low) from BBB (high) -- Class F upgraded to BBB from BBB (low) -- Class G upgraded to BBB (low) from BB (high) -- Class H upgraded to BB (high) from BB (low) -- Class J upgraded to B (high) from B -- Class K upgraded to B from B (low) In addition, DBRS confirmed four classes of Merrill Lynch 2002- Canada 8: -- Class A-1 at AAA -- Class A-2 at AAA -- Class X-1 at AAA -- Class X-2 at AAA DBRS also changed the trends of Classes C, D, E, F, and G to Positive from Stable. The trends on classes A-1, A-2, X-1, X-2, B, H, J and K remain Stable. The upgrades follow the repayment of the three loans in October 2006, which combined with amortization represents an 11.2% reduction in balance from origination along with the defeasance of three loans bringing the total defeased to five loans, representing 7.9% of the pool. The trend change of classes C through G to Positive from Stable is due to the 12 loans that mature in 2007. DBRS completed a refinance analysis applying a stressed refinance constant to the balloon amount and based on the most recent cash flow, all 12 loans should be able to refinance at their respective maturities. The transaction contains 66 of the original 70 loans, with a total current balance of $415,884,847. The weighted-average debt service coverage ratio for the pool has improved to 1.58x from 1.44x at issuance and the weighted-average loan-to-value has improved from 68.8% at issuance to 63.1%.There are no loans on the DBRS HotList. The transaction is concentrated with loans secured by retail properties consisting of 46% of the pool. However, the average LTV for loans secured by retail properties is 65%, and 88% of the loans secured by retail in the pool are secured by anchored retail properties that benefit from a store with significant drawing power serving as part of the collateral. Forty-five loans have full recourse to the borrower and/or sponsor. The largest loan in the pool, Crosswinds Apartments, is secured by a 347-unit multi-family property located in Ottawa, Ontario. The property's occupancy and net cash flow have declined from issuance. In 2005, the property's revenue declined 3% due to a decline in occupancy, which is in line with submarket performance, where vacancy increased from 2004 to 2005. Voluntary expenses increased by 10% in 2005, with the largest increase in advertising and marketing. As of a February 2006 rent roll, the property is 94.5% occupied, brining it closer to the submarket occupancy of 96.6% for 2006. Shelter Canadian Properties Limited manages the property and provides a full recourse guarantee. The second largest loan in the pool, Montenach Mall, is secured by a 313,200 square foot mall anchored by Zellers, Super C and Librarie Citation. The property is located on a provincial highway that runs through the rural town of Beloeil, approximately 50 kilometres east of downtown Montreal. As of Sept. 1, 2006, the property was 97.4 % occupied. The property's cash flow has improved, covering debt service at 2.09x. The loan matures Nov. 1, 2007, and is expected to be able to refinance. MESABA AVIATION: Northwest Seeks Formal Approval of Acquisition --------------------------------------------------------------- Northwest Airlines, Inc., has formally sought the approval of the U.S. Bankruptcy Court for the Southern District of New York to acquire the operations of Mesaba Aviation, Inc., as a going concern pursuant to a Stock Purchase and Reorganization Agreement. Northwest has also asked the New York Court to approve a settlement and compromise with Mesaba. The Stock Purchase and Reorganization Agreement dated January 22, 2007, represents a comprehensive, global settlement of matters between Northwest and Mesaba. Under the deal, Northwest will receive an allowed $7,300,000 general unsecured claim against Mesaba. Mesaba, in turn, will receive an allowed $145,000,000 general unsecured claim against Northwest. On January 22, 2007, Mesaba filed a plan of reorganization, which implements the Stock Purchase and Reorganization Agreement. The Purchase Agreement and Mesaba's Plan provide that all Mesaba equity will be cancelled and that Mesaba will issue and sell to Northwest 1,000 new shares of Mesaba common stock. Mesaba's operations have considerable value to Northwest, Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP, in Washington, D.C., tells Judge Allan L. Gropper. "Mesaba's operations are critical and complementary to Northwest's business," Mr. Ellenberg says. Mesaba derives nearly all of its revenue from providing regional jet services pursuant to an Airline Services Agreement with Northwest dated August 29, 2005. Under the ASA, Northwest establishes the scheduling, pricing, reservations, ticketing and seat inventories for Mesaba flights. Mesaba has asserted a $252,821,231 claim against Northwest. The Mesaba Allowed Claim will satisfy in full Mesaba's Filed Claim. Northwest will also pay up to $10,000,000 to Mesaba to assure the payment of certain allowed administrative expenses in Mesaba's bankruptcy case. Northwest has also entered into a separate settlement and compromise with MAIR Holdings, Inc., Mesaba's parent company. Unless MAIR will have breached in any material respect its obligations set forth its settlement with Northwest, if the closing of the transactions contemplated in the agreement between Northwest and MAIR will have been consummated, Northwest will allow Mesaba to use up to $4,500,000 of its cash to pay for amounts necessary to cure defaults under certain of Mesaba's contracts. The deal is also subject to approval by the U.S. Bankruptcy Court for the District of Minnesota under Mesaba's bankruptcy case. The deal may be terminated at any time prior to the Closing: (i) by mutual consent of Northwest and Mesaba; (ii) by Northwest or Mesaba, if the other party breaches the Agreement; or (iii) by Northwest or Mesaba, if the Closing will not have taken place on or prior to April 30, 2007. Northwest may extend the April 30 Termination Date to May 30, 2007, to give Mesaba time to obtain approval, permit or authorization from any government authority. Mesaba may terminate the Purchase Agreement if: -- Northwest will not have obtained approval of the deal from the Northwest Bankruptcy Court on or prior to March 8, 2007; or -- its board of directors will have approved or recommended, or if it will have executed or entered into a definitive agreement with respect to, a superior proposal. If Mesaba pursues a competing proposal, it will have to pay Northwest a termination fee equal to 3% of the lesser of: * the sum of the Allowed Claim plus $10,000,000; and * the sum of the aggregate consideration of the Allowed Claim -- if sold to a third party -- plus the portion of the Allowed Claim that was not disposed, if any, plus $10,000,000. As previously reported, Mesaba has sold the Allowed Claim to Goldman Sachs Credit Partners, L.P., for about 86.125% of its value. Mesaba is expected to receive $124,881,250 in the aggregate from that sale. The Purchase Agreement does not benefit any insider, nor does it unfairly favor any creditor or other party-in-interest, Mr. Ellenberg assures Judge Gropper. A full-text copy of the Stock Purchase and Reorganization Agreement with Mesaba is available at no charge at: http://ResearchArchives.com/t/s?19eb The New York Court will consider approval of the Purchase Agreement on February 27, 2007, at 11:00 a.m. Objections, if any, to the transaction must be filed by February 22. About Northwest Airlines Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. 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. 39; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) MILLS CORP: Board Says Simon/Farallon Offer is Better ----------------------------------------------------- The Mills Corporation's Board of Directors disclosed in a regulatory filing with the Securities and Exchange Commission that after consultation with its outside counsel and independent financial advisors, it determined, in accordance with a merger agreement between The Mills and Brookfield Asset Management Inc., that the transaction contemplated by the Simon Property Group Inc. and Farallon Capital Management LLC offer is more favorable to The Mills' stockholders than the Brookfield merger and constitutes a "Superior Competing Transaction," as defined in the Brookfield merger agreement. In making its determination, the board considered the advice of its outside legal counsel and independent financial advisors, and considered a number of factors, including the higher per-share consideration that Simon and Farallon have offered and the likelihood that the Simon/Farallon transaction could be completed more quickly than the Brookfield merger. Accordingly, while at this time the merger agreement with Brookfield remains in effect, the Board of Directors has authorized The Mills, subject to satisfaction of the terms and conditions set forth in the Simon/Farallon offer, to terminate the merger agreement with Brookfield and enter into a definitive agreement with the Simon/Farallon group, unless, within three business days, The Mills and Brookfield amend the existing Brookfield agreement or Brookfield irrevocably agrees to enter into an amendment to that agreement that causes the transaction contemplated by the Simon/Farallon offer to cease to be a Superior Competing Transaction, as defined in the Brookfield merger agreement. In accordance with the terms of the Brookfield merger agreement, The Mills has notified Brookfield of this determination and is ready and willing to negotiate such an amendment to the Brookfield merger agreement. J.P. Morgan Securities Inc. and Goldman, Sachs & Co. are serving as financial advisors and Wachtell, Lipton, Rosen & Katz and Hogan & Hartson LLP are serving as legal advisors to The Mills. As reported in the Troubled Company Reporter on Feb. 7, 2007, the company received a proposal from Simon/Farallon to acquire The Mills for $24 in cash per share. As reported in the Troubled Company Reporter on Jan. 18, 2007, the company and Brookfield Asset Management Inc. has entered into a definitive agreement pursuant to which Brookfield will acquire The Mills for cash at a price of $21 per share, representing a total transaction value of approximately $1.35 billion for all of the outstanding common stock of The Mills and common units of The Mills Limited Partnership, and approximately $7.5 billion including assumed debt and preferred stock. About The Mills Corporation Headquartered in Chevy Chase, Maryland, The Mills Corporation (NYSE: MLS) -- http://www.themills.com/-- develops, owns, manages retail destinations including regional shopping malls, market dominant retail and entertainment centers, and international retail and leisure destinations. The Company owns 42 properties in the U.S., Canada and Europe, totaling 51 million square feet. In addition, The Mills has various projects in development, redevelopment or under construction around the world. * * * As reported in the Troubled Company Reporter on Jan. 10, 2007, The Mills Corp. issued a warning in a Securities and Exchange Commission filing saying that it could file for bankruptcy protection if it cannot sell all or part of the company amidst accounting errors and speculations of possible executive misconduct. MILSPERING INC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Milspering, Inc. dba American Medical Wholesale 145 Vallecitos de Oro, Suite 204 San Marcos, CA 92069 Bankruptcy Case No.: 07-00706 Type of Business: The Debtor manufactures electric lift chairs specifically designed for people with severe arthritis and other muscular & joint degenerative diseases. The Debtor also wholesales medical devices. See http://www.americanmedicalwholesale.com/ and http://www.milspering.com/ Chapter 11 Petition Date: February 14, 2007 Court: Southern District of California (San Diego) Judge: James W. Meyers Debtor's Counsel: Gerald N. Sims, Esq. Pyle Sims Duncan & Stevenson 401 B Street, Suite 1500 San Diego, CA 92101 Tel: (619) 687-5200 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ GF Health Products, Inc. $1,000,648 2935 Northeast Parkway Atlanta, GA 30360 Merits Health Products, Inc. $749,530 730 Northeast 19th Place North Fort Myers, FL 33903 Invacare Corp. $274,543 33416 Treasury Center Chicago, IL 60694 Kendall Healthcare Products $245,286 15 Hampshire Street, Building 3 Mansfield, MA 02048 Whitestone $244,367 c/o UMB Bank of St. Louis 2 South Broadway St. Louis, MO 63102 Paper-Pak Products $213,942 Humanicare Int. $172,356 Hospital Specialty Company $160,238 Invacare Supply Group $144,938 PMI, Inc. $104,194 FNC Medical Corporation $102,391 First Quality Products $90,390 Invacare Corporation $81,622 Tri-State Surgical Supply & Eq. $68,748 American Express $62,814 Mason Medical Products $58,898 Golden Technologies $40,520 G. Hirsch $37,098 Chester Labs, Inc. $35,093 ED 1125 LLC $27,650 MORGAN STANLEY: Moody's Holds B3 Rating on $3 Mil. Class Q Certs. ----------------------------------------------------------------- Moody's Investors Service upgraded the ratings of six classes and affirmed the ratings of 15 classes of Morgan Stanley Capital I Trust 2004-HQ3, Commercial Mortgage Pass-Through Certificates, Series 2004-HQ3 as: -- Class A-1, $29,123,040, Fixed, affirmed at Aaa -- Class A-2, $319,750,000, Fixed, affirmed at Aaa -- Class A-3, $145,475,000 Fixed, affirmed at Aaa -- Class A-4, $547,150,000, Fixed, affirmed at Aaa -- Class X-1, Notional, affirmed at Aaa -- Class X-2, Notional, affirmed at Aaa -- Class B, $16,562,000, Fixed, upgraded to Aaa from Aa1 -- Class C, $16,562,000, Fixed, upgraded to Aaa from Aa2 -- Class D, $13,250,000, Fixed, upgraded to Aa1 from Aa3 -- Class E, $19,875,000, Fixed, upgraded to Aa3 from A1 -- Class F, $13,250,000, Fixed, upgraded to A1 from A2 -- Class G, $16,562,000, Fixed, upgraded to A2 from A3 -- Class H, 16,562,000, Fixed, affirmed at Baa1 -- Class J, $11,594,000, Fixed, affirmed at Baa2 -- Class K, $23,187,000, Fixed, affirmed at Baa3 -- Class L, $6,625,000, Fixed, affirmed at Ba1 -- Class M, 6,625,000, Fixed, affirmed at Ba2 -- Class N, $6,625,000, Fixed, affirmed at Ba3 -- Class O, $4,968,000, Fixed, affirmed at B1 -- Class P, $3,313,000, Fixed, affirmed at B2 -- Class Q, $3,312,165, Fixed, affirmed at B3 As of the Jan. 16, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 6.5% to $1.2 billion from $1.3 billion at securitization. The Certificates are collateralized by 91 mortgage loans ranging in size from less than 1.0% to 15.1% of the pool, with the top 10 loans representing 56.9% of the pool. The pool includes four shadow rated investment grade loans comprising 30.1% of the pool. Eight loans, representing 13.3% of the pool balance, have defeased and are collateralized by U.S. Government securities. One loan has been liquidated from the pool, resulting in an approximate loss of $1.1 million. Currently there are no loans in special servicing. Six loans, representing 3.9% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2005 and partial-year 2006 operating results for approximately 80.2% and 56.0%, respectively, of the pool. Moody's loan to value ratio for the conduit component is 89.7%, compared to 93.4% at securitization. Moody's is upgrading Classes B, C, D, E, F and G due to stable overall pool performance, defeasance and increased credit support. The largest shadow rated loan is the Arundel Mills Loan at $187.0 million (15.1%), which is secured by the borrower's interest in a 1.3 million square foot regional outlet mall located approximately eight miles south of downtown Baltimore in Hanover, Maryland. The property is owned by the Mills Corporation and Kan Am and focuses on entertainment oriented retail. The largest tenants are Bass Pro Shops Outdoor and Burlington Coat Factory. The loan is interest only for its entire term. Moody's current shadow rating is A3, the same as at securitization. The second shadow rated loan is the GIC Office Portfolio Loan at $110.0 million (8.9%), which is a pari passu interest in a $700.0 million first mortgage loan. The loan is secured by 12 office properties totaling 6.4 million square feet located in seven states. The highest geographic concentrations are Chicago, San Francisco and suburban Philadelphia. The portfolio is 90.6% occupied, essentially the same as at securitization. The Chicago concentration is comprised of two buildings -- the AT&T Corporate Center and the USG Building. The performance of these properties has declined slightly since securitization. The loan sponsor is Prime Plus Investments, Inc., a private REIT wholly owned by the Government of Singapore Investment Corporation Pte Ltd. The loan matures in January 2014 and is structured with an initial five-year interest only period. Moody's current shadow rating is A2, the same as at securitization. The third shadow rated loan is the Stone Ridge at University Center Loan at $40.0 million (3.2%), which is secured by a 630-unit multifamily property located in Ashburn, Virginia. As of March 2006 the property was 90.0% occupied, compared to 97.0% at securitization. Despite the decline in occupancy, financial performance has been stable. The loan is interest only for its entire term. Moody's current shadow rating is Aa3, the same as at securitization. The fourth shadow rated loan is the International Plaza Loan at $35.4 million (2.9%), which represents a pari passu interest in a $178.9 million first mortgage loan. The loan is secured by the borrower's interest in a 1.2 million square foot regional mall located in Tampa, Florida. The center is the dominant mall in its trade area and is anchored by Dillard's, Nordstrom and Neiman Marcus. The center is 97.0% occupied, the same as at securitization. The property's net cash flow has improved significantly since securitization. Mall shop sales were $700 per square foot in 2006, compared to $400 per square foot at securitization. Moody's current shadow rating is Aaa, compared to Baa3 at securitization. The top three conduit loans represent 18.1% of the outstanding pool balance. The largest conduit loan is the Harbor Steps Apartments Loan at $99.0 million (8.0%), which is secured by a 738-unit high rise apartment complex located in downtown Seattle, Washington. As of June 2006 the property was 96.0% occupied, compared to 91.0% at securitization. Moody's LTV is 82.9%, compared to 85.8% at securitization. The second largest conduit loan is the Alamo Quarry Market & Quarry Crossing Loan at $41.1 million (4.1%), which represents a pari passu interest in a $108.8 million first mortgage loan. The loan is secured by a 590,000 square foot power center located in San Antonio, Texas. As of June 2006 the center was 98.0% occupied, essentially the same as at securitization. Major tenants include Regal Cinema, Bed Bath & Beyond, Whole Foods and Borders Books. The property's performance has been impacted by increased expenses. Moody's LTV is in excess of 100.0%, compared to 99.2% at securitization. The third largest conduit loan is the Wells Fargo Tower Loan at $59.2million (4.8%), which represents a pari passu interest in a $248.2 million first mortgage loan. The loan is secured by a 1.4 million square foot Class A office building located in downtown Los Angeles, California. As of year-end 2005 the property was 89.0% leased, compared to 84.0% at securitization. The property is anchored by Wells Fargo Bank N.A. and Gibson Dunn & Crutcher. The loan was interest only for the first 35 months of its term. Moody's LTV is 91.0%, essentially the same as at securitization. The pool's collateral is a mix of retail, office and mixed use, multifamily, U.S. Government securities, industrial and self storage and lodging. The collateral properties are located in 27 states and Washington D.C. The highest state concentrations are Maryland, California, Washington, Virginia and Texas. All of the loans are fixed rate. MORTGAGE LENDERS: Can Access Cash Collateral Until March 30 ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Mortgage Lenders Network USA Inc. authority, on an interim basis, to use Residential Funding Company LLC's cash collateral. The Debtor's right to use the Cash Collateral will commence on the date of its bankruptcy filing and expire on the earliest of: (i) the close of business on March 30, 2007; (ii) the completion of transfer of all servicing obligations with respect to the Owned Services Loans, Emax Serviced Loans and Master Serviced Loans and the completion of the sale or transfer of servicing of all MLN Serviced Loans; or (iii) the occurrence of a Termination Date. The Debtor may use the Cash Collateral for working capital to support servicing and sale of mortgage loans and to fund fees of professionals. The Court authorizes the Debtor to grant RFC superpriority administrative expense claim and certain security interests and liens as adequate protection for any diminution in the value of RFC's interests in the Collateral. Prepetition Debt Prior to filing for bankruptcy, the Debtor obtained funds from Residential Funding, under two prepetition agreements: Amount Outstanding Prepetition Agreement at February 2, 2007 --------------------- ------------------- Fourth Amended and Restated $442,413,085 Warehousing Credit, Senior Working Capital and Security Agreement dated June 30, 2006 Amended and Restated Loan $1,500,000 Agreement (Convertible Debt) dated May 21, 2004 Under the Warehousing Credit Agreement, Mortgage Lenders Network obtained advances against certain types of mortgage loans and other collateral, as well as advances for working capital purposes. The advances are secured generally by mortgage loans in respect of which the advances were made. The convertible debenture issued under the Convertible Debt Loan Agreement to RFC is, at RFC's option, convertible into 9.5% of the fully diluted equity of Mortgage Lenders Network. Amounts outstanding under the Convertible Debt Loan Agreement are secured by a second lien in the collateral that secures repayment of amounts under the Prepetition Credit Agreement. Mortgage Lenders Network also sells mortgage loans, on a servicing-released basis, to RFC under a Client Contract and Client Guide. According to Daniel Scouler, Mortgage Lenders Network's chief restructuring officer, all loan commitments under the Warehousing Credit Agreement were terminated pursuant to a Forbearance Agreement, a Sixth Amendment to the Warehousing Credit Agreement, and an amendment to the Convertible Debt Agreement executed January 4, 2007. RFC, however, agreed to make discretionary advances until January 19 to fund retail mortgage loans originated by Mortgage Lenders Network. Mr. Scouler also relates that Mortgage Lenders Network serves as sub-servicer for certain loans serviced by its affiliate, Emax Financial Group LLC. Emax, as servicer, and Mortgage Lenders Network, as sub-servicer, are obligated to service mortgage loans owned or master serviced by RFC pursuant to RFC's Servicer Guide. The Servicing Agreement between Mortgage Lenders Network and Emax, has a stated termination date of February 28, 2007. On January 24, 2007, Freddie Mac terminated Mortgage Lenders Network's servicing rights. On the same date, RFC notified Emax and Mortgage Lenders Network that it was immediately terminating Emax's servicing rights. Under RFC's Service Guide and its Servicing Agreement with Mortgage Lenders Network, the Debtor is obligated to transfer servicing of the loans in an orderly and efficient manner after termination. Mr. Scouler says the process for transferring the servicing of RFC's loans has begun and is expected to have been completed before the Petition Date. The transfer of servicing of mortgage loans owned by Emax and pledged to RFC, and mortgage loans master serviced by RFC is expected to be completed on or before March 1, 2007, unless extended by RFC. Mr. Scouler notes that the RFC Owned Serviced Loans have an outstanding Unpaid Principal Balance of approximately $847,000,000. The aggregate UPB of the Master Serviced Loans and the Emax Serviced Loans is approximately $7,939,000 and $429,000,000. Prior to termination, Emax paid to Mortgage Lenders Network a servicing fee equal to 32 basis points per annum. No servicing fee is payable for mortgage loans owned by the Debtor but pledged to RFC. Mr. Scouler tells the Court that Mortgage Lenders Network may not generate sufficient cash collateral to operate its business. Mortgage Lenders Network, Mr. Scouler continues, also does not have the ability to adequately protect RFC's security interests or complete its servicing obligations without the use of RFC's Cash Collateral or additional financing. The Debtor and its estate will suffer immediate and irreparable harm unless the Debtor is immediately authorized to use cash collateral, Mr. Scouler contends. Mr. Scouler adds that RFC is willing to consent to the use of cash collateral, limited to the collections of principal and interest on the Debtor's mortgage loans pledged to RFC, and subject to a budget. As adequate protection for any diminution in the value of RFC's interest in the Collateral resulting from (i) Mortgage Lenders Network's use of the Cash Collateral; or (ii) its breach, after the Petition Date, of any obligation regarding servicing, sale, or transfer of loans, the Debtor proposes to grant RFC: (i) pursuant to Sections 361 and 363 of the Bankruptcy Code, a superpriority administrative expense claim with priority over all administrative expenses of the kind specified in Sections 105, 326, 328, 503(b), 506(c), 507(a), 507(b) and 726; (ii) pursuant to Sections 361 and 363, a perfected junior security interest and lien in the Collateral securing the Debtor's obligations under a new postpetition DIP financing agreement with RFC, which is subject to prepetition non-avoidable, valid, enforceable and perfected liens in favor of other parties; and (iii) pursuant to Sections 361 and 363, a perfected first priority priming security interest in the DIP Collateral, which is not subject to Prior Claims or which is Prepetition Collateral. About Mortgage Lenders Middletown, Conn.-based Mortgage Lenders Network USA Inc. -- http://www.mlnusa.com/-- is a privately held company offering a full range of Alt-A/Non-Conforming and Conforming loan products through its retail and wholesale channels. The company filed for chapter 11 protection on Feb. 5, 2007 (Bankr. D. Del. Case No. 07-10146). Pachulski Stang Ziehl Young Jones & Weintraub LLP represents the Debtor. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. The Debtor's exclusive period to file a chapter 11 plan expires on June 5, 2007. MORTGAGE LENDERS: Can Obtain Up to $3 Million of DIP Financing -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved, on an interim basis, Mortgage Lenders Network USA Inc.'s request to obtain up to $3,000,000 in cash advances and other extensions of credit from Residential Funding Company LLC. The rate of interest to be charged on DIP Loans and other extension of credit to the Debtor under the DIP Agreement will be at a rate of LIBOR plus 4% per annum. The Debtor will pay RFC a $50,000 commitment fee upon execution of the DIP Agreement. Mortgage Lenders Network has $7,900,000 in assets to distribute to unsecured creditors owed at least $117,000,000, Judge Walsh noted at the February 7, 2007 hearing, according to Bloomberg News. "Obviously, in a liquidation, this is a limited recovery," Judge Walsh said. Need for Financing The Debtor says that it needs the money for working capital purposes, and to support the servicing and sale of mortgage loans and to fund fees of professionals. The Debtor must have access to the DIP Revolving Loans, Daniel Scouler, Mortgage Lenders Network's chief restructuring officer, tells Judge Walsh. If the DIP Facility is not approved, the Debtor may not be able to orderly liquidate and parties for whom the Debtor services loans will suffer irreparable harm, Mr. Scouler explains. Mr. Scouler notes that Mortgage Lenders Network may be unable to service loans for its customers while its wind-down is completed. "The Debtor's effort to sell its assets will be completely derailed," Mr. Scouler says. Mr. Scouler relates that Mortgage Lenders Network has been unable to obtain financing from other capital sources, given its extremely distressed financial condition. No other lender or capital source will provide the Debtor with postpetition financing on terms equal or more favorable to the estate than the proposed DIP Facility under the circumstances. Pursuant to the terms of a Loan and Security Agreement dated February __, 2007, RFC will receive security interests in and liens and mortgages on all prepetition and postpetition assets of the Debtor. The DIP Liens will secure both the Debtor's obligations under the DIP Facility and under its prepetition financing arrangements with RFC. The DIP Liens will extend to Mortgage Lenders Network's avoidance claims under Sections 544, 545, 547, 548, 551 and 553. However, the Debtor is entitled to maintain control of the Avoidance Actions. The DIP Liens (a) will constitute first priority liens in and to all Collateral to the extent Mortgage Lenders Network's assets is not subject to any valid, perfected, enforceable and non- avoidable lien in existence as of the Petition Date other than the Lender's lien, and (b) would be immediately junior in priority to any and all other valid, perfected, enforceable and non-avoidable liens on the Debtor's assets in existence as of the Petition Date other than statutory and governmental liens filed or otherwise perfected prior to the Petition Date. The Debtor's obligations under the DIP Facility will have superpriority administrative expense status subject to a carve out for professional fees and certain other fees, and any Prior Liens. All outstanding advances under the DIP Facility will bear interest at a floating rate per annum equal to a current rate of LIBOR plus 4%. The Debtor's DIP Obligations will be due and payable on the earliest to occur of (i) April 28, 2007 unless extended; or (ii) the occurrence of an Event of Default. The Debtor also seeks permission to pay a $50,000 commitment fee to RFC. The Debtors will also pay an Unused Line Fee equal to 1/2 of 1% per annum on every dollar committed by RFC but not borrowed by the Debtor. In addition to customary events of default, the suspension of RFC by any court or governmental agency from continuing to conduct all or any material part of its business, or the appointment of a trustee, receiver or custodian for RFC or any of its properties also constitutes an event of default. A full-text copy of Mortgage Lenders Network's Loan and Security Agreement with RFC is available at no charge at: http://ResearchArchives.com/t/s?19e3 About Mortgage Lenders Middletown, Conn.-based Mortgage Lenders Network USA Inc. -- http://www.mlnusa.com/-- is a privately held company offering a full range of Alt-A/Non-Conforming and Conforming loan products through its retail and wholesale channels. The company filed for chapter 11 protection on Feb. 5, 2007 (Bankr. D. Del. Case No. 07-10146). Pachulski Stang Ziehl Young Jones & Weintraub LLP represents the Debtor. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. The Debtor's exclusive period to file a chapter 11 plan expires on June 5, 2007. NASDAQ STOCK: Fourth Quarter 2006 Net Income Rose to $63 Million ---------------------------------------------------------------- The Nasdaq Stock Market Inc. reported fourth quarter 2006 net income of $63.0 million, an increase of $45.9 million from $17.1 million in the fourth quarter of 2005, and an increase of $32.8 million from $30.2 million in the third quarter of 2006. Net income for the full year 2006 was $127.9 million versus net income of $61.7 million for the full year 2005. Included in fourth quarter 2006 net income is a $29.4 million gain, net of tax, on foreign currency option contracts purchased to hedge the foreign exchange exposure on the acquisition bid for the London Stock Exchange. Operating income was $68.1 million for the fourth quarter of 2006, an increase of $34.9 million, or 105.1% when compared to $33.2 million for the fourth quarter of 2005, and up slightly from $67.9 million for the third quarter 2006. Operating income for the full year was $214.1 million, an increase of 88.3% when compared to $113.7 million for the full year 2005. Gross margin, representing total revenues less cost of revenues, was $183.1 million in the fourth quarter of 2006, an increase of 32.1% from $138.6 million in the year-ago period, and up 7.0% from $171.2 million reported in the third quarter of 2006. Gross margin for the full year 2006 was $687.4 million, an increase of 30.7% from $526.0 million in 2005. Commenting on the results, NASDAQ's chief executive officer, Robert Greifeld, said, "[o]ur strong financial results point to the success that we achieved in 2006. During the year we began operations as a national securities exchange, completed the migration of Nasdaq-listed stocks to a single trading platform, increased our share of U.S. equity trading and initial public offerings, and continued to increase the value proposition for listing on NASDAQ by offering more products and services." Mr. Greifeld concluded, "We enter 2007 with a stronger core business that will support our new growth initiatives to increase revenue and profitability. We plan to achieve this by gaining market share and through new initiatives such as our planned options exchange and Portal market." Recent Highlights * Achieved new market share highs in trading NYSE- and Amex- listed stocks. Matched market share for NYSE-listed stocks increased in December 2006 to 14.2%, up from 5.5% in December 2005. Matched market share for AMEX-listed stocks increased to 24.6% in December 2006, up from 19.7% in December 2005. * Completed the migration to single book platform for Nasdaq-listed securities, providing market participants with a deeper liquidity pool, improved system performance and greater order interaction. * Continued success in obtaining switches from other markets, with 94 companies transferring their listing to NASDAQ during the year. * Redeemed the Series D preferred stock that had been issued to NASD. NASD no longer maintains voting control over NASDAQ. * Fully integrated the newly acquired press release newswire service, PrimeNewswireSM. Charges Associated with NASDAQ's Cost Reduction Program and INET Integration Included in total expenses for the fourth quarter 2006 are pre-tax charges of $4.6 million relating to NASDAQ's continuing efforts to reduce operating expenses and improve the efficiency of its operations, as well as to integrate INET. These charges include: * Technology Review - NASDAQ recorded expenses of $3.3 million in the quarter associated with its technology review, in which it previously changed the estimated useful life of some assets as it migrates to lower cost operating platforms and processes. * Workforce Reductions - NASDAQ recorded charges of $1.3 million in the quarter for severance and outplacement costs. "During the year we continued to demonstrate our ability to effectively integrate acquisitions while driving innovation and growth in our core businesses. The fourth quarter 2006 represents an impressive string of nine consecutive quarters of sequential top-line growth for NASDAQ. Operating margins also improved, with operating income for 2006 increasing by 88.3% when compared to the prior year. This consistent record of performance improvement highlights our ability to compete effectively in a rapidly changing marketplace," David Warren, NASDAQ's chief financial officer, said. Failed LSE Bid As reported in the Troubled Company Reporter on Feb. 13, 2007, Nasdaq failed in its attempt to buy the London Stock Exchange PLC. LSE shareholders rejected Nasdaq's $5.3 billion bid on Feb. 10, 2007, reports said. According to Nasdaq, only 0.41% of LSE's ordinary shares were tendered and accepted. Its existing 28.75% share of LSE's stock plus the newly accepted shares fell short of the 50% it needed to begin taking control of the London exchange. Nasdaq Chief Executive Officer Bob Greifeld, in a statement to the media, said, "Nasdaq will continue to pursue other opportunities to build on its existing position as the world's largest electronic equities exchange and we look forward to maintaining our strong track record of creating shareholder value through our industry-leading business model and strategy." According to various news articles, the LSE is in talks with the Tokyo Stock Exchange to explore a strategic alliance. LSE previously indicated that Nasdaq's $24.42 offer is too low. Nasdaq, on the other hand, refused to up the ante because it believes that LSE's stock is overvalued. As reported in the Troubled Company Reporter on Feb. 14, 2007, Moody's Investors Service confirmed the Ba3 ratings of The NASDAQ Stock Market Inc. following NASDAQ's Feb. 10 disclosure that its Final Offer to acquire the LSE has lapsed. NASDAQ's rating outlook is stable. The rating action concludes Moody's review that commenced on Nov. 20, 2006. The Nasdaq Stock Market Inc. -- http://www.nasdaq.com/-- is the largest electronic equity securities market in the United States with approximately 3,200 companies. NEW CENTURY: S&P Places Ratings on Negative CreditWatch ------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on 18 subordinate classes from 11 different residential mortgage-backed securities transactions issued in 2006 on CreditWatch with negative implications. The affected classes are rated 'BBB-', 'BB+', and 'BB'. The CreditWatch placements reflect early signs of poor performance of the collateral backing these transactions. Most of the transactions were issued during the first half of 2006. The percentage of loans in these pools that are severely delinquent ranges from 2.77% to 13.46%. Losses range from zero to 1.30%. Placing Standard & Poor's ratings on CreditWatch when a transaction has not experienced a loss represents a new methodology derived from its normal practice. The combination of early high delinquencies and minimal or no loss experience had not been seen in the performance exhibited by prior vintages. Because there have been no substantial cumulative realized losses, Standard & Poor's measured deal performance against the stressed time to disposition of the loans and a reinstatement rate assumption of zero for all severely delinquent loans. Many of the 2006 transactions may be showing weakness because of origination issues, such as aggressive residential mortgage loan underwriting, first-time home-buyer programs, piggyback second- lien mortgages, speculative borrowing for investor properties, and the concentration of affordability loans. Most of the transactions with subordinate ratings being placed on CreditWatch were issued during the first half of 2006, before Standard & Poor's raised its loss coverage levels for loans with the layered risks mentioned above. Three of the affected transactions were closed-end second-lien deals that were issued during the second half of 2006. Standard & Poor's consecutively raised the 'BBB' loss coverage levels for transactions issued from the first through fourth quarters of 2006. The average quarterly 'BBB' loss coverage levels during the year were as follows: 7.36% in the first quarter, 7.83% in the second quarter, 12.10% in the third quarter, and 12.70% in the fourth quarter. The extent to which the high levels of severely delinquent mortgage loans result in increased levels of actual realized losses will ultimately determine the extent of future rating actions on these transactions and others in the 2006 vintage. Generally, transactions issued during the second half of 2006 are passing the stress levels based on the January 2007 reported data, primarily because they typically have more loss coverage. Increased loss coverage was introduced for the deals issued in July 2006. Credit support for each series is derived from either subordination or a combination of subordination, excess interest, and overcollateralization (O/C). O/C levels are at or near their targets, and subordination amounts have not yet declined significantly. Standard & Poor's will continue to closely monitor the performance of these transactions. Over the next three months, Standard & Poor's will monitor the losses incurred as a result of the liquidation of REO assets. If these losses are material, and if delinquencies continue at their present pace, Standard & Poor's would expect to lower its ratings up to three notches depending on individual performance. Conversely, if the delinquency rates decline and substantial cumulative losses are not realized, Standard & Poor's will affirm the ratings and remove them from CreditWatch negative. Additionally, Standard & Poor's has determined that the CreditWatch placements affecting the ratings on these RMBS tranches will have no impact on outstanding CDO ratings. These transactions are collateralized by subprime, Alt-A, or closed-end second-lien loans. The transactions were initially backed by pools of fixed- and adjustable-rate mortgage loans secured by first, second, or third liens on one- to four-family residential properties. Standard & Poor's will hold a teleconference Thursday, Feb. 15, 2007, at 10:00 a.m. to discuss market concerns regarding the performance of many of the transactions issued in 2006 and the impact of the rating performance of these transactions on CDO transactions. This discussion will focus on Standard & Poor's rationale and methodology used for the CreditWatch actions detailed in this release. The details for the teleconference are listed below the ratings list. Ratings Placed On Creditwatch Negative Asset-Backed Certificates Trust 2006-IM1 Rating ------ Series Class To From ------ ----- -- ---- 2006-IM1 B BBB-/Watch Neg BBB- GSAMP Trust 2006-S5 Rating ------ Series Class To From ------ ----- -- ---- 2006-S5 M-7 BBB-/Watch Neg BBB- 2006-S5 B-1 BB+/Watch Neg BB+ 2006-S5 B-2 BB+/Watch Neg BB+ New Century Home Equity Loan Trust 2006-S1 Rating ------ Series Class To From ------ ----- -- ---- 2006-S1 M-7 BB+/Watch Neg BB+ 2006-S1 M-8 BB+/Watch Neg BB+ Securitized Asset Backed Receivables LLC Trust 2006-NC1 Rating ------ Series Class To From ------ ----- -- ---- 2006-NC1 B-3 BBB-/Watch Neg BBB- Structured Asset Investment Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-1 B1 BBB-/Watch Neg BBB- 2006-1 B2 BB+/Watch Neg BB+ 2006-2 B2 BB/Watch Neg BB 2006-BNC1 B2 BB+/Watch Neg BB+ 2006-BNC2 B2 BB/Watch Neg BB Structured Asset Securities Corp. Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-BC1 B3 BB/Watch Neg BB Terwin Mortgage Trust Rating ------ Series Class To From ------ ----- -- ----- 2006-6 I-B-7 BB+/Watch Neg BB+ 2006-6 I-B-8 BB/Watch Neg BB 2006-6 II-B-5 BB+/Watch Neg BB+ 2006-6 II-B-6 BB+/Watch Neg BB+ 2006-8 I-B-8 BB+/Watch Neg BB+ NEWTRAC PACIFIC: Case Summary & Four Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Newtrac Pacific, Inc. 4918 North Harbor Drive, Suite 101 San Diego, CA 92106 Bankruptcy Case No.: 07-00725 Chapter 11 Petition Date: February 15, 2007 Court: Southern District of California (San Diego) Judge: Peter W. Bowie Debtor's Counsel: Michael T. O'Halloran, Esq. 1010 Second Avenue, Suite 1727 San Diego, CA 92101-4908 Tel: (619) 233-1727 Fax: (619) 233-6526 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Sorrento Carlsbad, LLC 10% Realty Co-Owner $250,000 4370 La Jolla Village Drive Suite 640 San Diego, CA 92122 Ashwill Associates Sales Commissions $225,000 17890 Castleton Street Suite 128 Rowland Heights, CA 91748 Dan Salas Legal Fees $15,000 401 West A Street, Suite 2220 San Diego, CA 92101 Rincon Consultants Services $14,466 790 East Santa Clara Street Ventura, CA 93001 NORTHWEST AIRLINES: Wants Sanction Imposed on Ad Hoc Equity Panel ----------------------------------------------------------------- Northwest Airlines Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to impose civil contempt sanctions on the Ad Hoc Committee of Equity Security Holders as a result of the panel's improper and blatant disregard of the Court's explicit orders staying discovery with respect to its request for appointment of an equity panel. At the discovery conference on the Ad Hoc Equity Committee's Motion in January 2007, the Court held that no discovery in connection with the panel's Motion will commence until after the Debtors file a Disclosure Statement explaining their Plan of Reorganization on February 15, 2007, Bruce R. Zirinsky, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, relates. In a "blatant and willful" disregard of the Court's rulings, Mr. Zirinsky says, the Ad Hoc Equity Committee served on February 7, 2007, subpoenas requesting both documents and deposition testimony on nine third parties: -- the Official Committee of Unsecured Creditors; -- the Debtors' financial advisor, Seabury Group LLC; -- Delta Air Lines; -- The Blackstone Group, financial advisor to Delta Air Lines; -- American Airlines; -- Continental Airlines Inc.; -- UAL Corporation; -- Lehman Brothers Inc.; and -- Deutsche Bank Securities Inc. The Ad Hoc Equity Committee asked the Discovery Parties to produce documents related to, among others: (a) a potential merger, consolidation, sale or any other business combination between the Debtors and any other entity, including Delta; (b) a valuation of or any transaction involving the share of Series B preferred stock in Continental Airlines, known as the Golden Share, held by Northwest Airlines, Inc.; (c) exit financing proposals in any form, like rights offering, and debt capacity analyses; (d) valuation and solvency analyses of Northwest's Pacific routes, Northwest Airlines Cargo, the WorldPerks plan, hard asset appraisals, including aircraft, and non- core/non-operating assets; and (e) board minutes with regard to the hiring of Evercore, the Debtors' merger advisor, Evercore's pitch materials, strategic alternative analyses, and documents reflecting any discussions between Evercore and potential buyers or other counterparties to a transaction with the Debtors. The Wall Street Journal reported in January 2007 that Northwest and Delta had been in recurring talks about a possible merger. Both companies' CEOs have denied the report. In December 2006, Bloomberg News reported that United and Continental were also discussing a merger. Bloomberg noted, however, that one potential complication in a United-Continental combination is the Golden Share Northwest received from Continental in 2001. In settling a dispute over an alliance to sell seats on each other's planes, Northwest has the power to block a Continental merger in cases involving a shareholder vote, Bloomberg explained. However, Continental may avoid the Golden Share provision if it makes an all-cash acquisition, Bloomberg said. The Ad Hoc Equity Committee also asked for documents showing the amount of claims against the Debtors, the validity of the claims against the Debtors, and the likely allowed amount of claims against the estate. The panel also sought data underlying the intercompany claims, including the $384,000,000 intercompany claim owed to Northwest Airlines Corporation. On January 23, 2007, Northwest disclosed in a regulatory filing with the Securities and Exchange Commission that the aggregate dollar amount of unsecured claims that will eventually be allowed against them is in the range of $8,750,000,000 to $9,500,000,000. The documents requested by the Ad Hoc Equity Committee relate to issues beyond the scope of the hearing on the Ad Hoc Committee Motion, Mr. Zirinsky says. "[I]t is clear that the Ad Hoc Committee is determined to try to disrupt and delay the reorganization process through improper discovery tactics," Mr. Zirinsky tells Judge Gropper. Mr. Zirinsky also argues that the Debtors will need to devote substantial time and resources to prepare and file their Disclosure Statement by the February 15, 2007 deadline set by the Court. If the Debtors are diverted from this task, their ability to meet the February 15 deadline will be impaired, Mr. Zirinsky explains. The Debtors' counsel has asked Kasowitz, Benson, Torres & Friedman LLP, the Ad Hoc Equity Committee's counsel, to: -- withdraw the subpoenas and notices of deposition; -- confine the depositions to those witnesses each party identifies as an individual who will or may testify at the evidentiary hearing on the Ad Hoc Committee Motion; -- defer document discovery until the Ad Hoc Committee reviews the Disclosure Statement information. The Ad Hoc Committee's counsel, however, refused. The Debtors also ask Judge Gropper to limit the nature and scope of discovery the Ad Hoc Equity Committee may seek in regard to its Motion, and quash the subpoenas the Ad Hoc Committee served on third parties. The Debtors want the Ad Hoc Equity Committee to pay for their attorneys' fees and costs for filing the Contempt Motion. The Debtors also want the Ad Hoc Equity Committee to file a verified statement pursuant to Rule 2019(a) of the Federal Rules of Bankruptcy Procedure. Other Discovery Parties Want Subpoena Quashed Delta Air Lines, Inc., and its financial advisors, The Blackstone Group L.P.; the Official Committee of Unsecured Creditors in Northwest's case; and AMR Corp. and its affiliate, American Airlines, Inc., want the subpoenas issued to them quashed. They also want the Ad Hoc Equity Committee to pay for their attorneys' fees and costs. The expert valuation opinions requested by the Ad Hoc Equity Committee cannot be properly obtained through a third-party subpoena, Benjamin S. Kaminetzky, Esq., at Davis Polk & Wardwell, in New York, says on behalf of Delta and Blackstone. That data is considered trade secrets, confidential research, confidential commercial information and the opinions of experts, and is protected from disclosure under Rule 45(c) of the Federal Rules of Civil Procedure, Mr. Kaminetzky argues. The Subpoenas also violate the automatic stay imposed in Delta's bankruptcy case, Mr. Kaminetzky points out. Delta and Northwest both filed for Chapter 11 protection on September 14, 2005, before the U.S. Bankruptcy Court for the Southern District of New York. Delta's case is presided by Judge Adlai Hardin. Mr. Kaminetzky also contends that the Ad Hoc Equity Committee's Subpoenas cannot possibly procure relevant evidence or testimony with respect to the panel's request for appointment of an official equity committee. "The decision to appoint an equity committee rests on a narrow determination based upon the utility of such a committee, not a full and final valuation of the Debtors," Mr. Kaminetzky says. Mr. Kaminetzky notes that any of Delta's or its advisors' opinions about valuations relating to the Debtors would be based on information readily available to the Ad Hoc Equity Committee. American is not a party in the dispute, let alone in any matter before the Court relating to Northwest's Chapter 11 cases, in any respect, Richard A. Rothman, Esq., at Weil, Gotshal & Manges LLP, in New York, says. American has not made a bid for the Debtors and has no interest or intention to formulate a plan of reorganization for the Debtors, Mr. Rothman tells the Court. "Any valuation analysis performed by American would have been prepared solely in connection with its evaluation of the competitive environment and for strategic business purposes utilizing publicly available information and American's proprietary business methodologies," Mr. Rothman says. The Ad Hoc Equity Committee's document request is nothing more than an attempt to sidestep the Court's prior rulings, Brett H. Miller, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., on behalf of the Creditors' Committee. Ad Hoc Equity Committee Objects The Debtors' request for sanctions is a bully's tactic, David S. Rosner, Esq., at Kasowitz, Benson, Torres & Friedman LLP, in New York, contends on behalf of the Ad Hoc Committee of Equity Security Holders. The Ad Hoc Equity Committee has not violated any Court orders, Mr. Rosner explains. The panel narrowly tailored limited third party discovery to seek relevant information that is likely to lead to admissible evidence on its pending request for appointment of an official equity committee. Mr. Rosner also points out that at the January 23, 2007 informal discovery conference, the Court permitted parties to use the time leading up to filing of the Disclosure Statement for certain discovery, including (i) production of the exhibits from the 1113 hearing, (ii) production of any finalized but non-public financial statements, which the Debtors have not produced, and (iii) suggestion that the Debtors may take discovery, if any is appropriate, of the Ad Hoc Equity Committee. "The Court's remarks are plainly inconsistent with a blanket stay of discovery," Mr. Rosner asserts. However, if the Court did intend to stay all discovery at the January 23 conference, the Ad Hoc Equity Committee's acts were a case of good faith misunderstanding and not susceptible to sanction, Mr. Rosner says. The Ad Hoc Equity Committee must prove that the shareholders are not adequately represented and the Debtors are not hopelessly insolvent, Mr. Rosner tells Judge Gropper. Through very few, limited third party document requests, Mr. Rosner explains, the Ad Hoc Equity Committee sought documents reasonably calculated to lead to the discovery of admissible evidence: (1) merger documents to show the Debtors' value, distributable to equity, as a strategic partner and to show the likely existence of a post-confirmation transaction that, absent adequate shareholder representation, would deny shareholders' rightful recovery; (2) valuation documents to show the Debtors' enterprise and specific asset value, distributable to equity, from entities with specific knowledge; and (3) "Golden Share" valuation documents to show the value, distributable to equity, of the Debtors' unique "Golden Share" asset. The documents may or may not assist the Ad Hoc Equity Committee in carrying its burden, but "certainly the Debtors should not attack, abuse, bully, and punish the Ad Hoc Committee merely for asking for them," Mr. Rosner says. The Ad Hoc Equity Committee also relates that the Debtors' Bankruptcy Rule 2019 attack "may be the sharpest practice" in their request for sanctions. Mr. Rosner says the Debtors and the Creditors' Committee have agreed in writing to resolve all disputes concerning the Ad Hoc Equity Committee's Rule 2019 disclosure. Moreover, Kasowitz Benson's Rule 2019 statement comports with industry practice and custom, and with every Rule 2019 statements filed in the case, including that of Cadwalader, Wickersham & Taft's. Kasowitz Benson -- not the Ad Hoc Equity Committee -- is the entity that represents more than one shareholder within the meaning of Rule 2019, Mr. Rosner clarifies. The Ad Hoc Committee does not represent any other shareholders. About Northwest Airlines Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. (Northwest Airlines Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). NORTHWEST AIRLINES: Files Disclosure Statement in New York ---------------------------------------------------------- Northwest Airlines Corporation and certain of its subsidiaries have filed their Disclosure Statement with the U.S. Bankruptcy Court for the Southern District of New York on Feb. 15, 2007. The disclosure statement provides additional information and details regarding the company's Plan of Reorganization, filed with the court on Jan. 12, 2007, and amended with yesterday's filing. The disclosure statement provides an overview of Northwest's business plan, which is built on the work the airline has done to reposition the company for long-term success. Initial results of these efforts, which included implementation of a competitive global network carrier cost structure, allowed the company to report in 2006, its first profitable year since 2000. The disclosure statement also outlines how Northwest employees will share in the company's financial success through profit sharing, as well as realizing the value of unsecured claims that they hold. "The submission provides further evidence of the progress we have made toward realizing the three overarching goals put in place when we filed for Chapter 11 protection: to achieve a competitive cost structure, a more efficient business model and a revitalized balance sheet," Doug Steenland, Northwest Airlines president and chief executive officer, said. "While we have made substantial progress in our restructuring, and we remain on track to emerge from bankruptcy in the second quarter of this year, we still have work ahead of us. "Our employees have contributed to this transformation through their personal sacrifices and continued dedication to our customers. Our employees will continue to play a critical role in Northwest's future success. "A key element of our restructuring plan has always been to find ways for employees to participate in the success of a profitable Northwest. Our plan re-affirms that employees will receive unsecured claims related to new, ratified collective bargaining agreements as well as to participate in a profit sharing plan. "Through the claims and profit sharing, our employees would have the equivalent of a 20 percent economic interest in the airline. During the 2006-2010 period of the business plan, Northwest forecasts that the claims and profit sharing would result in employees receiving $1.5 billion in distributions. "The business plan calls for pre-tax margins to increase year- over-year to 9.9% by 2010. Revenue is forecast to grow to more than $14 billion by 2010. The plan also outlines the introduction of new, 76-seat regional jets and the new-generation Boeing 787 during the next four years," Mr. Steenland added. Included in the disclosure statement is a valuation analysis of Northwest prepared by Seabury Securities LLC, which estimates a range of equity value of the company with a midpoint of approximately $7 billion, before any new common stock sales. The aggregate amount of allowed general unsecured claims against Northwest are estimated to be $8.75 billion to $9.5 billion. Recovery for unsecured creditors -- in the form of new common stock in Northwest Airlines Corporation -- would be substantial. In addition, the plan provides for the sale of $750 million in new common stock in Northwest, pursuant to a fully underwritten equity rights offering. A substantial portion of that amount will be raised by offering unsecured creditors the opportunity to purchase additional new common stock in the airline through a rights offering underwritten by J.P. Morgan Securities Inc. "Our ability to raise $750 million of new equity demonstrates not only our desire to ensure that creditors share in the airline's future success, but it also underscores the market's confidence in Northwest's future," Mr. Steenland added. Treatment of Claims Under the plan, allowed administrative, priority and secured claims will receive a full cash recovery. Creditors with allowed unsecured claims against debtor entities other than Northwest Airline, Inc., NWA Corp., Northwest Airlines Holdings Corporation, and NWA Inc., will also receive payment in full in cash, without interest. Distributions to all creditors due to receive a recovery will begin on the date that Northwest's plan becomes effective. Because not all unsecured creditor claims will be satisfied in full, the prepetition equity holders' interests in Northwest's common and preferred stock will be cancelled, and those holders will not receive a distribution. "We are confident that our plan treats our creditors fairly, and we look forward to working with them to obtain their support for our reorganization plan so that they can receive their recovery as quickly as possible and Northwest can move forward on a sound economic footing," Mr. Steenland stated. Approval of the disclosure statement by the court will allow Northwest to begin solicitation of votes for confirmation of the Plan of Reorganization. The company remains on track to emerge from bankruptcy protection during the second quarter of 2007. Restructuring Progress Reflecting on the airline's restructuring progress to date, Mr. Steenland said, "Because of our progress in addressing important cost and revenue issues including labor costs and employee pensions, new and re-negotiated agreements with key suppliers and partners, restructuring and modernizing the Northwest fleet, right-sizing our level of flying and substantially reducing our debt load, we have reached the critical milestone of filing our disclosure statement in just 17 months." These are the highlights of Northwest's restructuring efforts: * Northwest Airlines right-sized and re-optimized its fleet and global network by reducing systemwide capacity by approximately 10% during the first 12 months in bankruptcy (through Sept. 30, 2006). The airline also removed 71 mainline and regional aircraft from its fleet. For the full year 2006, Northwest reduced its system-wide consolidated available seat miles by 7.5% over 2005. * The airline was able to achieve a competitive network carrier cost structure during 2006 due to a 10.8% year-over-year improvement in cost per available seat mile, excluding fuel and unusual items, on reduced capacity. The improved results were due in large part to implementation of $2.4 billion in annual cost reductions including: $1.4 billion in labor cost reductions, $400 million in annual fleet ownership cost savings and a $150 million reduction in annual interest expense related to unsecured debt. Northwest also realized approximately $100 million of the identified $350 million in non-labor savings during 2006. The airline expects to achieve the majority of the remaining savings during 2007. In addition, Northwest recorded a 12.3% year-over-year improvement in its consolidated passenger unit revenue during 2006. * Northwest made it a priority to protect employees' hard- earned pensions. Northwest worked closely with its union leadership and the Congress on a landmark legislative solution, the Pension Protection Act, which preserved pension benefits for some 73,000 Northwest pension plan participants. "Saving employees' pensions and avoiding pension plan terminations has been one of our greatest accomplishments in bankruptcy," Mr. Steenland said. The carrier froze its defined benefit pension plans and implemented new defined contribution plans for its employees. * The global carrier also began sharing its improved financial position with its employees in the form of $1.2 billion in unsecured claims in Northwest's bankruptcy proceedings. These claims were received by the company's unions as part of their new, ratified collective bargaining agreements. Through claims and profit sharing, employees would have the equivalent of a 20% economic interest in the airline. During the 2006-2010 period of the business plan, Northwest forecasts that the claims and profit sharing will result in employees receiving $1.5 billion in distributions. * Northwest has achieved a key goal of its restructuring efforts by reducing total debt by nearly $4.2 billion. This was done through the elimination of unsecured debt and the restructuring of aircraft and other secured obligations. Northwest also refinanced its bank term loan into a new Debtor in Possession/Exit financing facility on favorable terms. The elimination and/or refinancing of these obligations allow the carrier to achieve a competitive balance sheet as well as favorable capitalization ratios. * The carrier also reached its re-fleeting objectives by negotiating new agreements as well as affirming existing new aircraft arrangements. Northwest affirmed its deliveries of the fuel-efficient and customer friendly Airbus A330 aircraft and now has the youngest trans-Atlantic fleet in the industry. The carrier also maintained its position as the North American commercial service launch airline for the new, long-range Boeing 787. The airline will take initial deliveries of the new-generation aircraft in August 2008 and put the Dreamliner into service during October of that year. During 2006, Northwest also ordered seventy-two 76-seat regional jets that will begin to enter service with Northwest Airlink partner airlines in the second half of this year. As part of its aircraft retirement program, Northwest accelerated the retirements of the DC-10, 747-200, and the ARJ85 regional jet. * Perhaps the best example of the airline's commitment to the renewal of its fleet was the retirement of the DC-10. The last DC-10 was retired from commercial service last month. International and domestic routes, formerly operated with the DC-10, are now serviced by Airbus A330 and Boeing 747-400 aircraft, which offer additional customer amenities while providing the airline with improved operating economics. * A prime indicator that the hard work to restructure Northwest for long-term financial success is working was the airline's announcement last week that it had recorded its first profitable year since 2000. The 2006 full-year results improved by nearly $1.7 billion over 2005. Northwest expects to report further financial improvements during 2007 and beyond. * Northwest will raise $750 million through the sale of new Northwest common stock, pursuant to a fully underwritten rights offering. Northwest has reached an agreement with J.P. Morgan Securities Inc. to serve as the backstop underwriter of the equity offering. Northwest was advised on the transaction by Seabury Securities LLC on financial matters and Cadwalader, Wickersham & Taft LLP on legal matters. About Northwest Airlines Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. NORTHWEST AIRLINES: Disclosure Statement Hearing Set for March 26 ----------------------------------------------------------------- The Honorable Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York will convene a hearing at 11:00 a.m. on March 26, 2007, to consider the adequacy of the disclosure statement describing Northwest Airlines Corporations and its debtor-affiliates' First Amended Joint and Consolidated Chapter 11 Plan of Reorganization. The disclosure statement hearing will be held at Room 617 of the U.S. Bankruptcy Court for the Southern District of New York, One Bowling Green in New York City. Objections to the disclosure statement will be due at 4:00 p.m. on March 19, 2007. Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. NORTHWEST AIRLINES: Wants Court Approval on Mesaba Purchase ----------------------------------------------------------- Northwest Airlines, Inc., has formally sought the approval of the U.S. Bankruptcy Court for the Southern District of New York to acquire the operations of Mesaba Aviation, Inc., as a going concern pursuant to a Stock Purchase and Reorganization Agreement. Northwest has also asked the New York Court to approve a settlement and compromise with Mesaba. The Stock Purchase and Reorganization Agreement dated January 22, 2007, represents a comprehensive, global settlement of matters between Northwest and Mesaba. Under the deal, Northwest will receive an allowed $7,300,000 general unsecured claim against Mesaba. Mesaba, in turn, will receive an allowed $145,000,000 general unsecured claim against Northwest. On January 22, 2007, Mesaba filed a plan of reorganization, which implements the Stock Purchase and Reorganization Agreement. The Purchase Agreement and Mesaba's Plan provide that all Mesaba equity will be cancelled and that Mesaba will issue and sell to Northwest 1,000 new shares of Mesaba common stock. Mesaba's operations have considerable value to Northwest, Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP, in Washington, D.C., tells Judge Allan L. Gropper. "Mesaba's operations are critical and complementary to Northwest's business," Mr. Ellenberg says. Mesaba derives nearly all of its revenue from providing regional jet services pursuant to an Airline Services Agreement with Northwest dated August 29, 2005. Under the ASA, Northwest establishes the scheduling, pricing, reservations, ticketing and seat inventories for Mesaba flights. Mesaba has asserted a $252,821,231 claim against Northwest. The Mesaba Allowed Claim will satisfy in full Mesaba's Filed Claim. Northwest will also pay up to $10,000,000 to Mesaba to assure the payment of certain allowed administrative expenses in Mesaba's bankruptcy case. Northwest has also entered into a separate settlement and compromise with MAIR Holdings, Inc., Mesaba's parent company. Unless MAIR will have breached in any material respect its obligations set forth its settlement with Northwest, if the closing of the transactions contemplated in the agreement between Northwest and MAIR will have been consummated, Northwest will allow Mesaba to use up to $4,500,000 of its cash to pay for amounts necessary to cure defaults under certain of Mesaba's contracts. The deal is also subject to approval by the U.S. Bankruptcy Court for the District of Minnesota under Mesaba's bankruptcy case. The deal may be terminated at any time prior to the Closing: (i) by mutual consent of Northwest and Mesaba; (ii) by Northwest or Mesaba, if the other party breaches the Agreement; or (iii) by Northwest or Mesaba, if the Closing will not have taken place on or prior to April 30, 2007. Northwest may extend the April 30 Termination Date to May 30, 2007, to give Mesaba time to obtain approval, permit or authorization from any government authority. Mesaba may terminate the Purchase Agreement if: -- Northwest will not have obtained approval of the deal from the Northwest Bankruptcy Court on or prior to March 8, 2007; or -- its board of directors will have approved or recommended, or if it will have executed or entered into a definitive agreement with respect to, a superior proposal. If Mesaba pursues a competing proposal, it will have to pay Northwest a termination fee equal to 3% of the lesser of: * the sum of the Allowed Claim plus $10,000,000; and * the sum of the aggregate consideration of the Allowed Claim -- if sold to a third party -- plus the portion of the Allowed Claim that was not disposed, if any, plus $10,000,000. As previously reported, Mesaba has sold the Allowed Claim to Goldman Sachs Credit Partners, L.P., for about 86.125% of its value. Mesaba is expected to receive $124,881,250 in the aggregate from that sale. The Purchase Agreement does not benefit any insider, nor does it unfairly favor any creditor or other party-in-interest, Mr. Ellenberg assures Judge Gropper. A full-text copy of the Stock Purchase and Reorganization Agreement with Mesaba is available at no charge at: http://ResearchArchives.com/t/s?19eb The New York Court will consider approval of the Purchase Agreement on February 27, 2007, at 11:00 a.m. Objections, if any, to the transaction must be filed by February 22. 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. About Northwest Airlines Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. (Mesaba Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) NOVELIS CORP: Hindalco Deal Cues Fitch to Hold B Sr. Notes Rating ----------------------------------------------------------------- Fitch Ratings has placed the Issuer Default Ratings of 'B' for Novelis Inc. and its subsidiary Novelis Corp. on Rating Watch Negative. The company's senior secured bank debt ratings and senior unsecured debt ratings have been affirmed as: Novelis Inc. -- Senior secured revolver and term loan at 'BB/Recovery Rating 1'; and -- Senior unsecured notes at 'B/RR4'. Novelis, Corp. -- Senior secured revolver and term loan B at 'BB/RR1'. Approximately $2.3 billion of debt is covered by these ratings. The company's Korean bank debt is excluded from the ratings. The rating actions follow Novelis' report that it has reached an agreement to be acquired by Hindalco Industries Limited. The transaction has been approved by the Boards of Directors of both companies. The transaction will require shareholder and regulatory approval. The placement of the IDR's on Rating Watch Negative reflects uncertainty regarding the financing of the transaction, potential changes to Novelis' capital structure as a result of the transaction, and possible changes in the company's operating and financial strategy. The Rating Watch Negative will be resolved after Fitch's assessment of these factors before or concurrent with the consummation or termination of the transaction. The affirmations of the senior secured bank debt and senior unsecured notes are based on credit protections incorporated into the credit agreement and bond indenture. Both of these documents contain change of control protections, and it appears that the bank debt and unsecured notes also benefit from other covenants that limit credit risk resulting from the proposed transaction. Fitch rates the debt of Hindalco Industries Ltd. 'AAA (ind)' on a National Ratings basis in India. The ratings have been placed on Ratings Watch with negative implications. Given the additional debt with recourse to Hindalco, Fitch expects the long-term rating to come under pressure if the acquisition is finalized with the indicated debt financing. Hindalco's current ratings denote the best credit risk relative to all other issuers or issues in the country. This rating is therefore not directly comparable to the North American ratings on Novelis. Novelis' financial condition is supported by the company's leading market position, strong and flexible asset base, emphasis on innovation and value-added applications, and solid cash-generating potential. Credit concerns focus on high leverage, inflexible contract pricing with some customers, near-term cash flow constraints, high and volatile aluminum prices and material weaknesses in internal controls. NPC INT'L: Agrees to Acquire 59 Pizza Hut Units for $27.1 Million ----------------------------------------------------------------- Consistent with NPC International Inc.'s objective to continue growth in the Pizza Hut system, the company has signed an asset purchase agreement with Pizza Hut of Idaho Inc.; Rocky Mountain Pizza Huts Inc.; Northwest Restaurant Group Inc.; and Northern Idaho Pizza Huts Inc. to acquire 59 Pizza Hut units located primarily in Idaho and the Spokane Valley for $27.1 million. According to information provided to NPC, the 51 restaurants, 6 delivery/carryout units and 2 express units generated $46.7 million in sales during the 52 weeks ended December 2006. Forty of these stores are located throughout Idaho, 4 in eastern Oregon and 15 in Washington, primarily in the Spokane Valley. Forty-four of these locations will be leased from the sellers on certain agreed-upon terms and 15 locations will be leased from unrelated third parties. The transaction will be funded by approximately $16 million of available cash reserves and borrowings on the company's $75 million revolving credit facility. NPC expects the acquisition to close in mid-March 2007. Consummation of the transaction is subject to approval by Pizza Hut, Inc. and other customary consents and approvals. "We are truly excited about this acquisition due in large part to the high-quality restaurant teams that operate in these markets and the opportunity for future organic growth in the high-growth markets of Idaho and the Spokane Valley," Jim Schwartz, Chairman and CEO of NPC International, Inc., said. "In addition, this acquisition, when combined with the 26 stores we currently operate in Portland, Oregon, will provide us the critical mass to leverage our above store support infrastructure and a beachhead for additional growth through acquisition in the rapidly growing mountain states." NPC International Inc. is a franchisee of Pizza Hut restaurants, with about 800 restaurants and delivery kitchens in more than 25 states, mostly in the South. * * * As reported in the Troubled Company Reporter on Nov. 6, 2006, in connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the restaurant sector, the rating agency confirmed its B2 Corporate Family Rating for NPC International Inc. ORREX MEDICAL: Involuntary Chapter 11 Case Summary -------------------------------------------------- Alleged Debtor: Orrex Medical Technologies, LLP 403 Acker Street Sanger, TX 76266 Involuntary Petition Date: February 14, 2007 Case Number: 07-40287 Chapter: 11 Court: Eastern District of Texas (Sherman) Petitioner's Counsel: E.P. Keiffer, Esq. Hance Scarborough Wright Ginsberg & Brusilow 1401 Elm Street, Suite 4750 Dallas, TX 75202 Tel: (214) 651-6517 Petitioner Nature of Debt Amount of Claim ---------- -------------- --------------- Orrex Holdings LLC General Partner To be determined, 403 Acker Street and Landlord plus $21,000 in Sanger, TX 76266 rental arrears Attn: Nicol Rae Orr Manager PITTSFIELD WEAVING: NH Revenue Dept. Wants Chap. 11 Case Dismissed ------------------------------------------------------------------ The State of New Hampshire Department of Revenue Administration asks the U.S. Bankruptcy Court for the District of New Hampshire to dismiss or in the alternative convert Pittsfield Weaving Co.'s Chapter 11 Case into a chapter 7 liquidation proceeding. On April 24, 2006, the State of New Hampshire said it issued a Notice of Assessment of $28,306, upon the Debtor stating a tax liability, interest and penalties for 2005. It also issued a Notice of Assessment of $780, stating a liability for interest and underpayment penalty for 2004, on May 3, 2006. The State of New Hampshire tells the Court that it recorded $29,422 tax lien against the Debtor for the unpaid 2004 and 2005 taxes, interest and penalties. On Nov. 30, 2006, the state of New Hampshire filed a $29,738 proof of claim in taxes, interest and penalties for years 2004 and 2005, against the Debtor. Representing the state, Kelly A. Ayotte, Esq., tells the Court that the Debtor has not paid $45,169 to William S. Gannon PLLC, its counsel, in postpetition fees. Ms. Ayotte also reveals to the Court that the Debtor does not appear to be making payments for real property taxes of $16,952 that it owes to the Town of Pittsfield. The State of New Hampshire maintains that the Debtor's case must be dismissed or converted to a liquidation proceeding because the Debtor failed to pay postpetition taxes, it has continuing losses in its estate, and there is absence of reasonable rehabilitation. Based in Pittsfield, New Hampshire, Pittsfield Weaving Company -- -- http://www.pwcolabel.com/-- provides brand identification to the apparel and soft goods industries, and manufactures woven and printed labels and RFID/EADS solutions. The company filed it chapter 11 protection on Sept. 20, 2006 (Bankr. D. NH Case No. 06-11214). Williams S. Gannon, Esq., at William S. Gannon PLLC represent the Debtor in its restructuring efforts. Bruce A. Harwood, Esq., at Sheehan Phinney Bass + Green, PA serves as counsel to the Official Committee of Unsecured Creditors. Pittsfield Weaving estimated its assets and debts at $10 million to $50 million when it filed for protection from its creditors. POPULAR ABS: Fitch Affirms Low-B Ratings on 5 Certificate Classes ----------------------------------------------------------------- Fitch Ratings has affirmed the ratings on Popular ABS, Inc.'s mortgage pass-through certificates: Series 2005-1; -- Class A 'AAA'; -- Class M-1 'AA'; -- Class M-2 'A'; -- Class M-3 'A-'; -- Class M-4 'BBB+'; -- Class B-1 'BBB'; -- Class B-2 'BBB-'; -- Class B-3 'BB+'; and -- Class B-4 'BB'. Series 2005-2; -- Class A 'AAA'; -- Class M-1 'AA'; -- Class M-2 'A'; -- Class M-3 'A-'; -- Class M-4 'BBB+'; -- Class M-5 'BBB'; -- Class M-6 'BBB-'; -- Class B-1 'BB+'; -- Class B-2 'BB'; and -- Class B-3 'BB-'. The collateral in the aforementioned transactions consists of fixed- and adjustable-rate mortgages secured by fully amortizing and balloon, first- and second-lien loans on residential properties, all extended to sub-prime borrowers. The servicer for both transactions is Popular Mortgage Servicing. The affirmations reflect a satisfactory relationship between credit enhancement and future expected losses, and affect approximately $609.41 million in outstanding certificates. As of the January 2007 distribution report, series 2005-1 and 2005-2 have pool factors of approximately 51% and 61%, are 24 months and 22 months seasoned, and are maintaining their overcollateralization targets. Their 60+ delinquency buckets are 7.22% and 6.04%, respectively, and have experienced 0.22% and 0.18% in cumulative losses. REALOGY CORP: Refinancing Prompts S&P's Negative CreditWatch ------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'BBB' rating on Realogy Corp.'s senior unsecured notes on CreditWatch with negative implications. The company's 'BB+' corporate credit rating remains on CreditWatch with negative implications where it was placed on Dec. 18, 2006. Also, the 'BBB' rating on the company's senior unsecured credit facility was affirmed, given the expectation that this facility will be refinanced in conjunction with the company's proposed LBO. "The placement on CreditWatch negative of the company's senior unsecured notes reflects our increased level of uncertainty surrounding their refinancing in conjunction with the pending LBO," said Standard & Poor's credit analyst Michael Scerbo. "Previously, we had expected that a high probability existed that these notes would be refinanced upon the issuance of new debt associated with the transaction. As time has passed, it has become less certain that these notes will be refinanced, either prior to or in conjunction with, the pending LBO transaction. In the event the refinancing does not occur, we would lower our rating on these notes to a level in line with or below the corporate credit rating, depending on the amount of secured debt placed in the capital structure." The Parsippany, New Jersey-headquartered real estate services company had pro forma consolidated debt outstanding at Sept. 30, 2006, including liabilities under management programs and adjusted for operating leases, of about $3.2 billion. REFCO INC: Former President Tone Grant Charged with Fraud --------------------------------------------------------- Refco Inc.'s former president Tone N. Grant has been indicted on securities fraud, bank fraud, wire fraud, and money laundering in connection with an alleged scheme to hide hundreds of millions of dollars in trading losses by Refco and its customers from public investors, according to published reports. Mr. Grant became the third Refco executive to be charged with fraud, along with former chief executive officer Phillip Bennett and former chief financial officer Robert C. Trosten, the reports note. Michael J. Garcia, the United States Attorney for the Southern District of New York, said in a press statement that a superseding indictment was returned against Tone N. Grant. Moreover, the charges against Messrs. Bennett and Trosten have been expanded. Mr. Bennett previously has been charged with conspiracy, securities fraud, wire fraud, making false filings with the Securities and Exchange Commission, and making material misstatements to auditors. Mr. Trosten, on the other hand, had been charged with conspiracy, securities fraud, and wire fraud. The superseding Indictment, according to Mr. Garcia, charges Messrs. Bennett, Trosten, and Grant for the first time with bank fraud and money laundering in connection with the fraud at Refco. Mr. Bennett and, at certain times, Messrs. Grant and Trosten, directed a series of transactions every year from 1999 through 2005 to hide receivables of Refco Group Holdings Inc. -- Refco's holding company -- from, among others, Refco's auditors, by temporarily paying down the receivable from RGHI over Refco's fiscal year-end and replacing it with a receivable from one or more other entities not related to Mr. Bennett. Thus, at every fiscal year-end and, later, at every fiscal quarter-end, Mr. Bennett directed transactions that turned the debt owed to Refco from RGHI into a debt owed to Refco by a Refco customer. Shortly after each fiscal year or quarter end, these transactions were unwound, returning the debt to RGHI. The superseding Indictment charges that Mr. Grant participated with Messrs. Bennett and Trosten in the scheme to defraud participants in the 2004 leveraged buyout of Refco by led by private equity fund Thomas H. Lee Partners, by misleading the Lee fund and the purchasers of the $600 million in notes and $800 million in bank debt about the true financial health of Refco. The superseding Indictment alleges that Mr. Grant received $16 million in proceeds from the leveraged buyout transaction, as well as the right to share in half of Mr. Bennett's profits from any future sale of his Refco stock holdings. The superseding Indictment contains eight new counts: a bank fraud charge against Messrs. Bennett, Trosten, and Grant in connection with the 2004 leveraged buyout transaction; money laundering charges against Messrs. Bennett, Trosten, and Grant in connection with their laundering of the proceeds of the leveraged buyout transaction; and additional wire fraud charges against Messrs. Bennett and Grant. At the Jan. 19, 2006, hearing before the U.S. District Court for the Southern District of New York, the three former Refco executives entered a plea of "not guilty" to all charges, Reuters reports. U.S. District Judge Naomi Buchwald set a $10,000,000 bail for Mr. Grant. The trial date for all three Refco officers has been set for Oct. 9, 2007, said Norman Eisen, Esq., at Zuckerman Spaeder, LLP, in Washington, D.C., on Mr. Grant's behalf, according to Reuters. Each defendant could face a minimum of five and a maximum of 30 years in prison if found guilty. Each defendant could also be fined a minimum of $250,000 for conspiracy and wire fraud charges, and up to $5,000,000 for securities fraud. Mr. Bennett, 58, resides in Gladstone, New Jersey. Mr. Trosten, 37, resides in Sarasota, Florida. Mr. Grant, 62, resides in Chicago, Illinois. Mr. Garcia clarified that the charges contained in the superseding Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty. Assistant United States Attorneys David Esseks, Neil Barofsky, and Lisa Korologos are in charge of the prosecution, Mr. Garcia added. About Refco Inc. Headquartered in New York, New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. (Refco Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). REFCO INC: Plan Administrator Wants AIDMA Pact Approved Today ------------------------------------------------------------- RJM LLC, the Plan Administrator of Refco Inc. and its debtor- affiliates' bankruptcy cases, asks the Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York to approve a settlement agreement among Refco F/X Associates LLC, AIDMA Co. Ltd., and RefcoFX Japan K.K., pursuant to Rule 9019(a) of the Federal Rules of Bankruptcy Procedure. The Refco Administrator insists that the Court should approve the Settlement by Feb. 16, 2007, to timely process the payment in Japan. Pursuant to the Dec. 15, 2006, order confirming Refco, Inc.'s Chapter 11 Plan, RJM, LLC, as Plan Administrator of the Debtors' Chapter 11 cases, formed a non-Japan Refco F/X Associates LLC customer committee, which has consent rights with respect to any settlement regarding the litigation involving FXA's assets in Japan. FXA operated an online retail foreign exchange trading business under a Facilities Management Agreement between Refco Group Ltd. LLC and its designated subsidiaries, including FXA, and Forex Capital Markets LLC on a Web-based trading platform created and maintained by FXCM. Richard Levin, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, relates that approximately 35% of FXA's retail customer account balances are attributable to clients in Japan. To facilitate the Japan Clients' ability to make deposits and withdrawals to and from their foreign exchange trading account, FXA determined that it was desirable to open a Japanese yen denominated bank account. However, Mr. Levin notes, since FXA was not domiciled in Japan, FXCM formed a Japanese entity -- RefcoFX Japan K.K. -- to open and maintain a Japanese yen denominated account at the Hong Kong Shanghai Banking Corp. The shares in Refco Japan are presently held by FXCM. While the Japan Clients entered into client agreements with FXA rather than with Refco Japan, the Japan Clients' funds were deposited into Refco Japan's HSBC Account. Mr. Levin states that the HSBC Account currently holds Japanese yen valued at approximately $32,000,000. The Reorganized Debtors currently estimate that claims filed by Japan Clients total approximately $38,000,000. Japanese Civil Actions Forty-eight Japan Clients have commenced three separate civil actions in Japan against Refco Japan, asserting claims for the return of funds deposited by those clients and have obtained provisional attachment orders against the funds in the HSBC Account. The attachment orders have restricted FXA's and Refco Japan's ability to transfer the funds in the HSBC Account under Japanese law. In October 2006, FXA commenced an Adversary Proceeding in the Court against FXCM, Refco Japan, HSBC, and the FXA Japan Clients. FXA also commenced legal actions in Japan seeking declaratory judgment that the funds in the HSBC Account are property of FXA's estate and for turnover of those funds. In the alternative, the Turnover Action seeks declaratory relief that the shares in Refco Japan held by FXCM are property of the FXA estate and for turnover of the shares. Consequently, Refco Japan has sought to dismiss the Turnover Action for lack of personal jurisdiction. AIDMA Claim AIDMA Co., Ltd., is one of the largest Japanese clients of FXA. AIDMA's FXA foreign exchange account balances as of July 31, 2006, aggregate to JPY1,258,833,316, or about $10,600,000, subject to fluctuation with the dollar-yen exchange rate. Although AIDMA is not currently a plaintiff in the Japanese Civil Actions, it has asserted that its rights in the funds held in the HSBC Account are superior to the claims of non-Japan clients. FXA Settles With AIDMA & Refco Japan The Agreement provides, among others, that: (a) AIDMA will be paid JPY723,829,157, or approximately $6,100,000, which represents 57.5% of AIDMA's July 2006 yen-denominated FX Account balance; (b) AIDMA will be reimbursed $100,000 to cover its attorneys' fees; and (c) AIDMA will be entitled to receive an additional payment that would provide an equivalent aggregate percentage recovery if FXA, Refco Japan, and FXCM settle with a Japan Client on or before December 31, 2007, for a higher percentage recovery than 57.5% of AIDMA's FX Account balance. The parties further agree that all payments will be made from the HSBC Account in Japanese yen, and will be in full and final settlement of any and all claims that AIDMA has against Refco Japan, FXCM, or the Debtors or their estates. Upon receipt of the settlement payment, AIDMA will withdraw any proofs of claim it has filed in the Debtors' cases. The Refco Administrator asserts that the AIDMA Settlement is reasonable considering that: (i) the trust and tort claims raised by AIDMA and the other Japan Clients raise complex factual and legal issues of both U.S. and Japanese laws, including issues of cross- border enforcement of judgments, that present substantial litigation risks to both sides; and (ii) the resolution of the Japan Clients' claims is further complicated by the fact that: * FXA does not presently control Refco Japan; * there is no stay of actions against Refco Japan or the funds held in the HSBC Account; and * Refco Japan and the HSBC Account are located outside of the U.S. and are subject to the laws of Japan. About Refco Inc. Headquartered in New York, New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. (Refco Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). RESI FINANCE: S&P Assigns B- Rating to $20 Million Class B12 Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its ratings to RESI Finance Ltd. Partnership 2007-A/RESI Finance DE Corp. 2007-A's $180.89 million real estate synthetic investment notes series 2007-A. The ratings are based on the credit enhancement levels; the transaction's shifting interest structure; the legal structure, which is designed to minimize potential losses to security holders caused by the insolvency of the issuer; and the credit rating assigned to Bank of America N.A. based on its obligations according to the time deposit account and credit default swap agreements. Ratings Assigned RESI Finance Ltd. Partnership 2007-A/RESI Finance DE Corp. 2007-A Class Rating Amount ----- ------ ----------- B3 A- $6,699,000 B4 BBB+ $26,799,000 B5 BBB $13,399,000 B6 BBB- $26,799,000 B7 BB+ $20,099,000 B8 BB $20,099,000 B9 BB- $13,399,000 B10 B+ $20,099,000 B11 B $13,399,000 B12 B- $20,099,000 RESIX FINANCE: S&P Assigns B- Rating to $20 Mil. Class B12 Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its ratings to RESIX Finance Ltd.'s $107.194 million credit-linked notes series 2007-A. The ratings are based on the referenced ratings of RESI Finance L.P. 2007-A's credit enhancement levels and the legal structure, which is designed to minimize potential losses caused by the insolvency of the issuer. Ratings Assigned RESIX Finance Ltd. Class Rating Amount ----- ------ ----------- B7 BB+ $20,099,000 B8 BB $20,099,000 B9 BB- $13,399,000 B10 B+ $20,099,000 B11 B $13,399,000 B12 B- $20,099,000 RITE AID: Launched Offering of $800 Million Senior Notes Last Week ------------------------------------------------------------------ Rite Aid Corporation commenced offerings last week, subject to market and other conditions, of $300 million of 10-year senior secured notes due 2017 and $500 million of 8-year senior notes due 2015. Rite Aid intends to use the net proceeds from the offerings: * to redeem, at a purchase price of 104.750%, plus accrued interest, all of its $300 million outstanding 9-1/2% Senior Secured Notes due February 2011 and * to replenish the company's $1.75 billion revolving credit facility that was used to retire all of its $250 million outstanding 4.75% Convertible Notes due December 2006 and all of its $185 million outstanding 7.125% Senior Unsecured Notes due January 2007. Proceeds may also be used for general corporate purposes. The offerings are being lead managed by Citigroup. Copies of the prospectus and prospectus supplements related to the public offerings may be obtained from: Citigroup Brooklyn Army Terminal 140 58th Street, 5th Floor Brooklyn, New York 11220 Telephone (718) 765-6732 About Rite Aid Headquartered in Camp Hill, Pennsylvania, Rite Aid Corporation (NYSE, PCX: RAD) -- http://www.riteaid.com/-- runs a drugstore chain with fiscal 2006 revenues of $17.3 billion and 3,322 stores in operation in 27 states and the District of Columbia. * * * As reported in the Troubled Company Reporter on Feb. 14, 2007, Moody's Investors Service rated the proposed secured notes of Rite Aid Corporation at B3 and the proposed senior notes at Caa2. All other long-term ratings were downgraded at the same time. As reported in the Troubled Company Reporter on Feb. 13, 2007, Fitch has assigned ratings to Rite Aid Corporation's $300 million senior secured notes due 2017 'BB-/RR1'; and $500 million senior unsecured notes due 2015 'CCC+/RR5'. Standard & Poor's Ratings Services assigned its 'B+' rating to Harrisburg, Pennsylvania-based Rite Aid Corp.'s $300 million senior secured notes due in 2017 and its 'B-' rating to the company's $500 million senior unsecured notes due in 2015. "These ratings are placed on CreditWatch with negative implications," said Standard & Poor's credit analyst Diane Shand. All other ratings on Rite Aid, including the 'B+' corporate credit rating, remain on CreditWatch with negative implications, where they were placed on Aug. 24, 2006. SAINT VINCENTS: Can Finance $10.5 Million Debt to Pay Premiums -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York granted the request of Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates to finance, on a secured basis, $10,514,579 in combined premium payments for their professional and general liability insurance policies, and brokerage services. Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in New York, disclosed that the Debtors have financed, through parties other than their primary or revolving credit lender, the premiums for the professional and general liability insurance policies, and brokerage services, covering: -- St. Vincent's Hospital, Manhattan; -- St. Vincent's Hospital, Westchester; -- St. Elizabeth Ann's Health Care & Rehabilitation Center; -- Pax Christi; and -- SVCMC Home Health. Pursuant to previous premium financing agreements, the Debtors entered into with A.I. Credit Corporation, AICCO financed previous insurance policies. In turn, the Debtors paid AICCO monthly installments in accordance with a pre-set payment schedule and granted AICCO a security interest in "unearned premiums" to secure their obligations. The Previous Insurance Policies expired on Dec. 31, 2006, however, coverage has been "bound" from that date through Dec. 31, 2007, through a series of renewed policies and continues in effect, subject to combined, required premium and brokerage services payments of $13,489,805. Among other things, the Renewed Policies provide: A. Hospital Professional Liability (1) For SV Manhattan, the Debtors have obtained primary professional liability insurance coverage provided by Medical Liability Mutual Insurance Company for $1,000,000 per occurrence and $14,000,000 in the aggregate, and excess professional liability insurance coverage from Lexington Domestic, an affiliate of the American International Group, for $20,000,000 per occurrence. The claims must exceed both the Primary Coverage and a $9,000,000 self-insurance layer and a $5,000,000 "one time" system-wide inner aggregate deductible before the Excess Coverage is available to satisfy them; (2) For each of the Non-Debtor Affiliates, the Debtors have arranged for primary professional liability coverage from MLMIC and Physician's Reciprocal Insurers for $1,000,000 per occurrence and $3,000,000 in the aggregate followed by the Excess Coverage provided by Lexington; and (3) For SV Westchester, the Debtors have acquired primary professional liability insurance coverage from Healthcare Underwriters Mutual, a division of MLMIC, for $2,000,000 per occurrence and $6,000,000 in the aggregate, with the same Excess Coverage. B. General Liability (1) The Debtors have arranged for primary general liability insurance coverage from MLMIC and PRI: * $1,000,000 per occurrence and $3,000,000 in the aggregate for SV Manhattan and SVCMC Home Health; and * $1,000,000 per occurrence and $2,000,000 in the aggregate for St. Elizabeth Ann's and Pax Christi; (2) The Debtors have arranged for excess general liability insurance coverage for $50,000,000 per occurrence for SV Manhattan from Lexington and from AIG or its affiliate. Claims must exceed $3,000,000 before the Excess General Liability Coverage is available to satisfy them; (3) The Debtors will maintain excess coverage for the Non-Debtor Affiliates pursuant to a previously purchased excess general liability program; and (4) For SV Westchester, the Debtors have obtained primary general liability insurance coverage, from HUM, for $2,000,000 per occurrence and $6,000,000 in the aggregate, and Excess General Liability Coverage. Mr. Troop tells Judge Hardin that in light of the magnitude of the Insurance Premiums, the Debtors have determined it would be prudent to conserve their liquidity by financing the payment and have engaged in arm's-length, good faith negotiations with AICCO to finance the payment. Pursuant to the Premium Finance Agreement, the Debtors will repay the $13,489,805 in Insurance Premiums. Specifically, the Debtors will: (i) make a $2,975,226 initial cash payment to AICCO; (ii) pay interest on the balance of $10,514,579 at an annual percentage rate of 5.17%; (iii) commence making monthly payments on March 1, 2007; (iv) pay the Amounts Financed to be paid in nine equal monthly installments of $1,198,910; and (v) pay a total finance charge of $275,618. The Debtors will also grant AICCO a security interest in all unearned or returned Insurance Premiums and other amounts that may become due to the Debtors in connection with the Renewed Policies. Mr. Troop explains that the Debtors are unable to finance the payment of the Insurance Premiums on an unsecured basis and AICCO is unwilling to provide financing other than on a secured basis. According to Mr. Troop, it is common business practice for insurance premium finance companies to require that a borrowing party grant a security interest in the insurance policies financed in exchange for the financing provided. AICCO would not enter into the Agreement without obtaining the Security Interest. Mr. Troop notes that the costs of financing the Insurance Premiums through AICCO are less than the cost of financing that the Debtors would incur under their postpetition credit facility. Among other things, the interest rate being charged by AICCO is 5.17% while the interest rate currently applicable under the DIP Facility's term loan is 8.60%. The DIP Facility provides the Debtors with the latitude to enter into up to $25,000,000 of "purchase money" financing outstanding at any one time without the further consent of the DIP Facility lender. Financing the Insurance Premiums is within the Purchase Money Basket, Mr. Troop adds. About Saint Vincents Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 45 Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SAN FRANCISCO OCEANSIDE: Case Summary & 12 Largest Creditors ------------------------------------------------------------ Debtor: San Francisco Oceanside Sheet Metal, Inc. dba Oceanside Sheet Metal dba Ocean Sheet Metal & Heating 2331 Taraval Street San Francisco, CA 94116 Bankruptcy Case No.: 07-30172 Type of Business: The Debtor manufactures sheet metal. Chapter 11 Petition Date: February 13, 2007 Court: Northern District of California (San Francisco) Judge: Dennis Montali Debtor's Counsel: Ruth Elin Auerbach, Esq. 711 Van Ness Avenue, Suite 440 San Francisco, CA 94102 Tel: (415) 673-0560 Fax: (415) 673-0562 Estimated Assets: Unknown Estimated Debts: $100,000 to $1 Million Debtor's 12 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $100,000 Special Procedures 1301 Clay Street, Stop 1400S Oakland, CA 94612 The Sapiro Law Firm $52,500 711 Van Ness Avenue, Suite 440 San Francisco, CA 94102 Advanta Bank Corp. $47,000 c/o The Guerrini Law Firm 750 East Green Street, Suite 200 Pasadena, CA 91101 NC Two, LP $25,000 c/o Richard Bates Jr., Esq. 1465 Enea Circle, Suite 1040 Concord, CA 94520 State of California EDD $25,000 Bankruptcy Unit MIC 92E P.O. Box 826880 Sacramento, CA 94280-0001 Unifund CCR Partners $14,008 Northern California Glass Co. $5,000 Higash & Associates $3,800 Chase Bank $3,421 Pitney Bowes $2,082 Kaiser Foundation Health Plan $2,000 P.B.C.C. $550 SANMINA-SCI: S&P Lowers Corporate Credit Rating to B+ from BB- -------------------------------------------------------------- Standard & Poor's Ratings Services removed its ratings for San Jose, California-based Sanmina-SCI Corp. from CreditWatch, where they were placed on Aug. 14, 2006. The corporate credit and senior unsecured ratings were lowered to 'B+' from 'BB-'; the subordinated debt rating was lowered to 'B-' from 'B'. The outlook is stable. "The rating actions follow our review of the company's recent operating results and the results of its stock option investigation," said Standard & Poor's credit analyst Lucy Patricola. Over the past three quarters, Sanmina has experienced sharp operating cash flow deficits that have been funded from cash, diminishing liquidity. Further, leverage statistics have weakened because of lower profitability on declining revenues. For the 12 months ended Dec. 30, 2006, adjusted debt to EBITDA was over 5x, up from the low-4x area. While the company has launched a number of initiatives to reduce debt and improve profitability, the final outcome and timing of leverage and liquidity improvement are uncertain. While the stock option investigation surfaced a consistent pattern of misdated options, the concerns remain centered on two former executives, and the cash impact of the restatements was nominal. The ratings reflect continued erosion of profit measures, diminished liquidity and high leverage. These concerns partly are offset by the company's top-tier business position in low volume, complex electronic manufacturing services end markets and stable operating performance in that division. Sanmina-SCI is a leading provider of EMS for the computing, telecommunications, and data communications industries, generating sales of about $11 billion for the 12 months ended Dec. 30, 2006. The company had about $2 billion in lease-adjusted debt, including outstandings under accounts securitization programs, as of December 2006. SASCO 2007: S&P Rates $1.2 Million Class S Certificates at B- ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to SASCO 2007-NCM1 Trust's $501.3 million commercial mortgage pass-through certificates series SASCO 2007-NCM1. The preliminary ratings are based on information as of Feb. 13, 2007. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of securities and the geographic and property type diversity of the mortgaged properties securing the underlying CMBS collateral. The collateral pool consists of 88 classes of pass-through certificates taken from 42 CMBS transactions. Preliminary Ratings Assigned SASCO 2007-NCM1 Trust Preliminary Recommended Class Rating amount support ----- ------- ----------- ------------ A-1 AAA $350,912,000 30.000% A-2 AAA $68,929,000 16.250% X AAA $501,303,000 N.A. B AA+ $16,292,000 13.000% C AA $10,026,000 11.000% D AA- $3,133,000 10.375% E A+ $8,146,000 8.750% F A $5,013,000 7.750% G A- $6,266,000 6.500% H BBB+ $8,146,000 4.880% J BBB $4,386,000 4.000% K BBB- $5,013,000 3.000% L BB+ $3,759,000 2.251% M BB $1,253,000 2.001% N BB- $1,253,000 1.751% P B+ $2,506,000 1.251% Q B $1,253,000 1.001% S B- $1,253,000 0.751% T NR $3,764,000 N.A. RR NR N.A. N.A. NR -- Not rated. N.A. -- Not applicable. SEMINOLE HARD: S&P Places Corporate Credit Rating at BB ------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' corporate credit rating to Seminole Hard Rock Entertainment Inc. and Seminole Hard Rock International LLC. The rating outlook is stable. At the same time, Standard & Poor's assigned its senior secured debt and recovery ratings to Seminole Hard Rock's $25 million revolving credit facility due 2012 and $500 million senior secured notes due 2014. This secured debt is rated 'BB' with a recovery rating of '3', indicating the expectation for meaningful (50%-80%) recovery of principal in the event of a payment default. The bank loan and senior secured notes rank pari passu and share the same collateral package. Seminole Hard Rock was formed by the Seminole Tribe of Florida to acquire Hard Rock International Inc. and other related entities from The Rank Group Plc for approximately $965 million. Net proceeds from the proposed debt transactions, along with a $529 million equity contribution from the Seminole Tribe of Florida, will be used to consummate the acquisition. Closing is expected in early 2007. Pro forma for the transaction, Seminole Hard Rock will have $510 million of debt outstanding. "The 'BB' corporate credit rating on Seminole Hard Rock reflects its position in the highly competitive restaurant industry; the themed nature of its business, which makes the brand susceptible to changing consumer tastes and factors that affect tourism; earnings volatility in the past; and high debt leverage," said Standard & Poor's credit analyst Michael Scerbo. "These risks are partially offset by Hard Rock's long-established track record and brand, its modestly improved operating performance recently, and our expectation that, within certain limitations, the Seminole Tribe of Florida would support this wholly owned entity, even though it would not have the legal obligation to do so. The rating would likely be two notches lower in the absence of implied tribal support." EBITDA for the last 12 months ended Nov. 26, 2006 was $90 million, up 5% over the prior-year period. Hard Rock saw revenue growth in all segments. The EBITDA margin for the last 12 months ended Nov. 26, 2006 of 18% is consistent with other similarly rated restaurant companies, although Hard Rock generates a large portion of its earnings from the sale of Hard Rock-branded merchandise. Pro forma EBITDA coverage of interest was 1.8x, and debt to EBITDA was 6.5x at Nov. 26, 2006--weak for the rating. However, Standard & Poor's expect leverage to begin to improve toward the mid-5x area over the intermediate term. SIERRA PACIFIC: DBRS Puts BB (low) Rating on Senior Notes --------------------------------------------------------- Dominion Bond Rating Services assigned a new Senior Notes rating of BB (low) to Sierra Pacific Resources, and new General & Refunding Mortgage Bonds ratings to its two subsidiaries, Nevada Power Company and Sierra Pacific Power Company, at BBB (low). All trends are Stable. NPC's and SPPC's assigned ratings reflect the continued improvement in their financial and business profiles. Since 2002, operating results at NPC and SPPC have strengthened consistently, as core earnings and cash flow have steadily improved. Combined with lower interest expense from numerous re-financings, this has resulted in balanced increases in coverage and liquidity ratios more reflective of the assigned ratings categories. In addition, the Nevada regulatory environment has been more supportive over the same time frame, demonstrated by the fact there have been no fuel cost disallowances since 2002. The significant growth in Nevada provides both a source of earnings growth and capital expenditure challenges for SPR and its two utility subsidiaries. NPC and SPPC have historically sourced the majority of their load requirements from spot market purchases and third-party power contracts, exposing the utilities to volatile natural gas prices. To address this, as well as load growth, the utilities plan to invest approximately $4 billion over the next five years to build new generation facilities and enhance system reliability. In addition to this $4 billion program, SPR has applied for regulatory approval to construct the approximately $4 billion Ely Energy Centre project, a 1,500 MW coal-fired facility and a significant transmission line. While these capital projects offer potential for earnings and cash flow enhancement, they will also result in free cash flow deficits which will pressure SPR's and NPC's balance sheets and credit metrics over the medium term. The funding of these deficits will result in SPR, NPC and SPPC being heavily reliant on the public capital markets during this time of major capital investment. NPC and SPPC provide nearly 100% of SPR's earnings and cash flows, and SPR's ratings reflect the improvement in its utility subsidiaries' performance as noted above. SPR's ratings remain primarily constrained by two factors. First, regulatory-mandated restrictions limit the combined amount of dividends the utilities can pay to SPR annually to the amount of SPR's annual cash interest obligations. This lends uncertainty to the potential for any material debt reduction at the holding company level. Second, it will be reliant on the equity market to partially fund its anticipated equity injections into NPC and SPPC. SOLECTRON CORP: Michael Cannon Resigns as CEO; Joins Dell --------------------------------------------------------- Michael Cannon has resigned from his position as President and Chief Executive Officer and as a Director of Solectron Corporation effective as of Feb. 14, 2007. Paul Tufano has assumed the role of interim Chief Executive Officer and principal executive officer, in addition to his current role as Chief Financial Officer, while a search is conducted for Mr. Cannon's replacement. Mr. Tufano was appointed Executive Vice President and Chief Financial Officer on January 30, 2006. Prior to joining Solectron, Mr. Tufano, 53, served as President and Chief Executive Officer of Maxtor Corporation, from 2003 through 2004. From 1996 to 2003, he served as Maxtor's Chief Financial Officer, with a dual role as both Chief Financial Officer and Chief Operating Officer from 2001 to 2003. Prior to Maxtor, Mr. Tufano spent 17 years at IBM Corporation, serving in several senior financial as well as general management roles. Reuters reported Wednesday that Mr. Cannon was hired by Dell Inc. as president of global operations effective Feb. 26, 2007. Headquartered in Milpitas, California, Solectron Corporation (NYSE: SLR) -- http://www.solectron.com/-- provides a full range of worldwide manufacturing and integrated supply chain services to the world's premier high-tech electronics companies. Solectron's offerings include new-product design and introduction services, materials management, product manufacturing, and product warranty and end-of-life support. The company operates in more than 20 countries on five continents including France, Malaysia, and Brazil, among others. It had sales from continuing operations of $10.6 billion in fiscal 2006. * * * As reported in the Troubled Company Reporter on Dec. 14, 2006, Standard & Poor's Ratings Services raised its corporate credit and senior unsecured ratings on Milpitas, California-based Solectron Corp. to 'BB-' from 'B+', and its subordinated debt rating to 'B' from 'B-'. The outlook is revised to stable. SOLUTIA INC: Various Parties React to Exclusivity Extension Motion ------------------------------------------------------------------ Various parties filed with the U.S. Bankruptcy Court for the Southern District of New York responses with regards to Solutia Inc. and its debtor-affiliates' 10th motion for further extension of their exclusive periods to file a plan of reorganization through and including April 30, 2007, and to solicit acceptances of that plan through and including June 29, 2007. Objections (1) Monsanto Monsanto Co. does not oppose the Debtors' request for a further extension of their exclusive periods to file, and solicit acceptances of, a reorganization plan. Monsanto, however, notes the Debtors' extension request makes clear that the Chapter 11 cases are mired in unresolved litigation among parties who have been unable to settle, John C. Longmire, Esq., at Willkie Farr & Gallagher LLP, in New York, says. Notwithstanding the Debtors' efforts, it remains that progress in their cases is unlikely unless and until the Court rules on the pending litigation regarding re-collateralization of the Debtors' unsecured bonds, Mr. Longmire asserts. "[T]he clarity and definition a ruling would bring is essential to establish a common sense of reality -- a shared context for discussion -- in these cases," Mr. Longmire points out. The Debtors and other parties have resorted to, and often abandoned, various unorthodox alternative strategies in the hope for movement, and have cost the estates millions of dollars each month in unnecessary professional fees, he contends. (2) Retirees Committee The Official Committee of Retirees supports the proposed extension. Daniel D. Doyle, Esq., at Spencer Fane Britt & Browne LLP, in St. Louis, Missouri, notes that the holding pattern in the Debtors' cases is caused primarily by a recalcitrant Ad Hoc Bondholder Committee whose members buy and sell their positions often enough to create a moving target for negotiation or resolution. The Debtors' attempts to resolve the dispute over de- securitization of Bondholder debt most likely will be fruitless, particularly when intractable Bondholders continue to decline to negotiate directly with the Debtors, Mr. Doyle maintains. The Court should promptly enter judgment in the adversary proceeding and determine whether the Bondholders are secured and, if so, the value of their secured claims under Section 506 of the Bankruptcy Code, Mr. Doyle suggests. The adjudication would remove uncertainties about the allegedly Bondholder secured claims, allow more definitive Plan treatment of the claims, accelerate Solutia toward reorganization, and leave only the Committee of Equity Security Holders of Solutia, Inc.'s dispute to be resolved, he adds. (3) Noteholders Committee The Ad Hoc Committee of Solutia Noteholders asks the Court to deny the requested extension. The Debtors' request is not supported by real progress in the Chapter 11 cases, and the justifications given for extending exclusivity are hollow, argues Bennett J. Murphy, Esq., at Hennigan, Bennett & Dorman LLP, in Los Angeles, California. Mr. Murphy asserts that the Debtors need to fully abandon their partisan posture respecting the adversary proceeding commenced by the Official Committee of Equity Security Holders against JPMorgan Chase Bank, as indenture trustee. To advance toward a confirmable compromise plan, the Debtors need to advance a proposal that fairly reflect the vulnerabilities of their partisan position, he says. The Debtors, according to Mr. Murphy, also need to seek concessions from all constituencies on a fair and equitable basis, rather than ask for sacrifices from some, but not all parties. He points out that the Debtors' November 2006 term sheet called for no sacrifice from general unsecured creditors, instead they would receive a substantially higher recovery compared to the February lien-stripping Plan. In response to the November term sheet, the Noteholders continued their efforts to seek out a basis for a consensual plan by initiating and continuing a dialogue with Monsanto, the other major stakeholder in the Debtors' Chapter 11 cases. The Debtors have lost focus and still have no effective strategy to lead the Plan process, Mr. Murphy contends. A standalone, consensual plan should remain the central goal, he asserts. The Debtors have repeatedly emphasized the difficulty and complexity of legacy liability issues in promoting the so-called "global settlement," Mr. Murphy notes. The addition of a potential acquirer only multiplies the complexities and increases the difficulties. An indicative bid is not actually a bid as the term is used in normal discourse, but merely an expression of an interest in possibly making one later, Mr. Murphy relates, referring to the Debtors' statement of having received indicative bids in December. The Debtors do not state that any of the parties who submitted the indications of interest by the deadline of nearly two months ago thereafter actually followed through the bid, he argues, nor have the Debtors set a deadline for bids to be made. Mr. Murphy suggests that the Court provide the parties guidance as to when a ruling may be expected on the JPMorgan Adversary Proceeding, and when the Court would require the parties to proceed to trial in the Official Committee of Equity Security Holders' adversary proceeding against Monsanto and Pharmacia Corp. The prospect of an upcoming ruling in the adversary proceeding and the prospect of trial in the case would encourage parties to "pick up the pace," he tells the Court. Creditors Committee's Statement Solutia's Official Committee of Unsecured Creditors relates that the mediation, which commenced on November 9, 2006, by Monsanto, Pharmacia and the Equity Committee on the issues in dispute in connection with the Equity Committee Adversary Proceeding, upon information and belief, has been suspended to examine alternative emergence scenarios. The Creditors Committee believes that the Debtors' current request for extension should be accompanied by a direction from the Court that the parties-in-interest to the JPMorgan Adversary Proceeding, including the Debtors, Monsanto, Creditors Committee, Bondholders Committee and the Ad Hoc Trade Committee, participate in a compulsory formal 30-day mediation process. Despite some sporadic one-off negotiations between various parties to the JPMorgan Adversary Proceeding, Daniel H. Golden, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, says that there has yet to be any substantive negotiations or a single meeting that included all the relevant parties. A resolution of the Debtors' Chapter 11 cases is significantly more difficult without a consensual settlement of the issues raised in the JPMorgan Adversary Proceeding, Mr. Golden tells the Court. In the event that the mediation proves unsuccessful at the conclusion of the 30-day period, the Creditors Committee will join in Monsanto's and the Retirees Committee's request for an immediate ruling in the JPMorgan Adversary Proceeding. Court Enters Bridge Order Following the filing of the various parties' responses, the Honorable Prudence Carter Beatty entered a bridge order wherein: -- the Exclusive Filing Period is extended to the date on which the Court enters an order determining the Debtors' extension request, at which time the Court may extend the Exclusive Filing Period to April 30, 2007; and -- the Exclusive Solicitation Period is extended to the date 60 days after the Court enters an order determining the Debtors' extension request, at which time the Court may extend the Exclusive Solicitation Period to June 29, 2007. Reasons for the Exclusivity Extension Motion Representing the Debtors, Jonathan S. Henes, Esq., at Kirkland & Ellis LLP, in New York, as reported in the Troubled Company Reporter on Feb. 5, 2007, told the Court that the Debtors have used the previous extensions of their Exclusive Periods to make significant progress on three potential paths to: (1) seek confirmation of a modified version of a Global Settlement, which would provide the 2027 and 2037 noteholders a higher percentage recovery than the general unsecured creditors to resolve the JPM Adversary Proceeding; (2) work on another potential plan that would be funded by the proceeds from the sale of the equity of reorganized Solutia; and (3) analyze the viability of an alternative plan to sell certain businesses, use the cash proceeds from the sales to satisfy liabilities and pay creditors, and reorganize around the remaining businesses. Mr. Henes disclosed that in late November 2006, the Debtors prepared and provided a proposal for the Equity Premium Plan to its major stakeholders. In addition, beginning in late November 2006, the Debtors began a month-long sales process, during which it contacted 18 potential purchasers and obtained indications of interest from six of them. He stated that the Debtors are continuing to work with the parties that submitted the bids and its stakeholders to develop the Sale Plan. Moreover, Mr. Henes said that the stakeholders whose claims were not satisfied in cash would receive the equity of the reorganized company pursuant to the Modified Sale Plan. Jeffry N. Quinn, Chairman, President and Chief Executive Officer of Solutia, attested that the company has stabilized and improved its businesses, maximized the value of the estate, and provided for a fair distribution of value to its creditors by implementing its four-part strategy, in which: (a) Solutia improved its financial operating performance by recruiting a new management team that instilled greater commercial discipline across all business lines, achieved greater operating performance in its plants, reduced overhead costs, and used the Chapter 11 process to reject unfavorable contracts; (b) Solutia has improved the quality of its asset portfolio; (c) Solutia addressed its legacy liabilities by negotiating an agreement in principle that reallocated the majority of them back to Monsanto Company; and (d) Solutia is working to ensure that it has a competitive capital structure upon emergence by pursuing a plan of reorganization that would leave the company with a much improved and reasonably competitive balance sheet. Mr. Quinn related that Solutia has reached an agreement in principle with Monsanto and the Official Committee of Unsecured Creditors in June 2005. Solutia also negotiated a comprehensive settlement with the Official Committee of Retirees, providing for a $175,000,000 trust for the benefit of the company's 20,000 retirees in exchange for significant reductions in future retiree medical and life insurance obligations. Mr. Quinn stated, however, that the Plan confirmation process was stalled because: (i) two pending adversary proceedings were commenced by (x) the Official Committee of Equity Security Holders against Monsanto and Pharmacia Corp. in March 2005, and (y) JPMorgan Chase Bank, as indenture trustee, against Solutia in May 2005; and (ii) many of the stakeholders with whom Solutia negotiated the Global Settlement are no longer involved in the bankruptcy cases, and the successors want to negotiate a new deal. Mr. Quinn stated that Solutia is currently working to renegotiate an amended plan with the new constituents. However, the renegotiation has proved challenging because the new constituents have a different set of perspectives and expectations than their predecessors, Mr. Quinn told Judge Beatty. Furthermore, Mr. Quinn averred that even if the Debtors were to reach an agreement now with their stakeholders on the Proposal or with a potential purchaser under the Sale Plan or Modified Sale Plan, the Debtors would still not be able to confirm an amended plan by February 13, 2007. Mr. Henes asserted that extension of the Exclusive Periods is necessary and appropriate for the Debtors to work out a deal under any of the Emergence Paths. Mr. Henes maintains that any additional extension would not pressure creditors, but rather would provide the Debtors with the time to continue their efforts to good-faith negotiations between and among their stakeholders, without any one stakeholder exerting unwarranted leverage over negotiations. Furthermore, Mr. Henes contended that an exclusivity extension is necessary to allow for a Plan confirmation without a final, non- appealable judgment in the JPMorgan Adversary Proceeding. Similarly, the Equity Committee Adversary Proceeding must be resolved before a plan can be approved because of its impact on the Global Settlement, he maintains. Mr. Henes assured the Court that no party will be prejudiced by an extension of the Exclusive Periods because Solutia is paying its debts as they become due, as supported by the Debtors' Court- approved $1,225,000,000 of debtor-in-possession financing. Mr. Henes maintained that if Solutia loses exclusive control of the plan process, it could jeopardize the Global Settlement, which is necessary to any plan of reorganization. Any disruption in Solutia's control over the plan process could be debilitating and distract Solutia from moving forward with its reorganization efforts, he pointed out. About Solutia Inc. Headquartered in St. Louis, Missouri, Solutia Inc. (OTCBB:SOLUQ) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Allen E. Grimes, III, Esq., at Dinsmore & Shohl, LLP and Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher, LLP. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 79; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SOLUTIA INC: Wants to Implement 2007 Incentive Program ------------------------------------------------------ Solutia Inc. and certain of its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to implement their annual incentive program for 2007. Solutia, with the advice and support of its Board of Directors; the Board's Executive Compensation and Development Committee; Hal E. Wallach, Jr., a principal at Mercer Human Resource Consulting; and its major constituencies, developed the 2007 AIP based on two performance measures: increased EBITDAR and decreased working capital as a percentage of sales. Solutia's senior management analyzed historical financial results, projections for 2007 and other data to refine the specific goals for each of Solutia's major business units. The senior management also refined the specific metrics for the emergence component of the 2007 AIP on the date of emergence and enterprise value upon emergence. The 2006 AIP was approved on the condition that the 2007 AIP include a performance measure for Mr. Quinn and certain of his direct reports related to the Debtors' emergence from their Chapter 11 cases. Based on the feedback provided by its major constituencies on the emergence portion of the AIP, Solutia modified the definition of "enterprise value" to reflect "distributable value"; increased the minimum amount of distributable value required to qualify under the emergence component; and added a provision that allows the emergence annual incentive program participants to share in any distributable value at emergence in excess of the maximum target. Jonathan S. Henes, Esq., at Kirkland & Ellis LLP, in New York, relates that, with few exceptions, all of Solutia's employees will participate in the 2007 AIP and have an opportunity to earn a bonus if Solutia meets or exceeds its financial or operational goals in 2007. Bonuses will be paid from pools that will be established for Solutia's corporate group and for each of Solutia's business units -- Integrated Nylon, Saflex, CPFilms and Specialty Products. The portion of the bonus pool allocated to each metric can exceed 100%, but the aggregate pool cannot exceed $7,500,000. Up to $2,343,750 can be earned for the pool based on Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA); up to $2,250,000 based on enterprise value; and up to $5,625,000 based on unsecured creditor recovery. The funding of each business unit incentive pool and the core function incentive pool will be 90% of all aggregate target bonuses for individuals assigned to the pool multiplied by the weighted average of pre-established funding factor for achievement of specific objective performance parameters relative to a targeted performance. In addition, an overall corporate discretionary bonus pool will be funded by the enterprise-level Earnings Before Interest, Taxes, Depreciation, Amortization and Restructuring costs (EBITDAR) performance relative to a pre-established target performance. The funding will be 10% of all aggregate target bonuses multiplied by a pre-established funding factor. The size of the emergence metric component of the AIP program will be calculated by multiplying the eligible employee's target emergence metric amount by a factor based on the emergence date and the Company's adjusted enterprise value available for distribution on the emergence date. The metrics for 2007: Core Pool and Business Pools Unit Measure Weight ---- ------- ------ Core Enterprise EBITDAR 75% Enterprise Ave. Working Capital % 25% Integrated Nylon EBITDAR 75% Ave. Working Capital % 25% Saflex EBITDAR 50% Gross Margin % 25% Ave. Working Capital % 25% CPFilms Gross Profit 75% Ave. Working Capital % 25% Other PPD EBITDAR 75% Ave. Working Capital % 25% Enterprise Discretionary Bonus Pool Unit Measure Weight ---- ------- ------ All Enterprise EBITDAR 100% The emergence metric pool will be increased by an amount equal to 3% of the total value greater than $1,161,000,000. The bankruptcy emergence metric adjusted enterprise value available for distribution is: Q2 2007 Q3 2007 Q4 2007 ------- ------- ------- $737,000,000 1.0x 0.9x 0.8x $837,000,000 1.2x 1.1x 1.0x $937,000,000 1.4x 1.3x 1.2x $1,037,000,000 1.6x 1.5x 1.4x $1,099,000,000 1.8x 1.7x 1.6x $1,161,000,000 2.0x 1.9x 1.8x Awards based on the 50% of the emergence metric will be paid out no later than 10 days after the emergence date. Awards based on the performance metric and the remaining 50% of the emergence metric will be paid out no later than two and a half months after the close of the calendar year 2007. An employee who has a component of their annual incentive program award comprised of the emergence metric will be entitled to his award even if his employment is terminated on or after the emergence date, or if the emergence employee is terminated without cause before the emergence date. A copy of the emergence bonus plan is available for free at: http://researcharchives.com/t/s?19e7 About Solutia Inc. Headquartered in St. Louis, Missouri, Solutia Inc. (OTCBB:SOLUQ) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Allen E. Grimes, III, Esq., at Dinsmore & Shohl, LLP and Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher, LLP. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 79; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SOLUTIA INC: Court Extends Removal of Actions Period Until May 7 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved Solutia Inc. and its debtor-affiliates' request to extend the time within which they can file notices of removal of civil actions and proceedings from Feb. 5, 2007, through and including May 7, 2007. As reported in the Troubled Company Reporter on Jan. 29, 2007, Jonathan S. Henes, Esq., at Kirkland & Ellis LLP, in New York, told the Court that the Debtors continue to review their files and records to determine whether to remove a number of civil causes of action pending in state or federal court to which it might be parties. Mr. Henes stated that the Debtors' key personnel and legal department are assessing the civil actions while being actively involved in the Debtors' Chapter 11 cases. Additional time to consider filing notices of removal in the Civil Actions is required, Mr. Henes asserted. The rights of any party to the Civil Actions will not be prejudiced by the extension, Mr. Henes assured the Court. Headquartered in St. Louis, Missouri, Solutia Inc. (OTCBB:SOLUQ) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Allen E. Grimes, III, Esq., at Dinsmore & Shohl, LLP and Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher, LLP. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 79; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SOLUTIA INC: AMEC Transfers $33,942 Claim to Contrarian Funds ------------------------------------------------------------- The Bankruptcy Clerk of the U.S. Bankruptcy Court for the Southern District of New York recorded the transfer of AMEC Earth & Environmental Inc. Claim No. 3589 against Solutia Inc. and its debtor-affiliates to Contrarian Funds LLC. AMEC Earth's claim has a face value of $33,942. Contrarian is located at Suite 225, 411 West Putnam Avenue, in Greenwich, Connecticut. Headquartered in St. Louis, Missouri, Solutia Inc. (OTCBB:SOLUQ) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Allen E. Grimes, III, Esq., at Dinsmore & Shohl, LLP and Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher, LLP. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 79; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SOURCECORP INC: S&P Cuts Corporate Credit Rating to B from B+ ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Dallas, Texas-based SOURCECORP Inc. to 'B' from 'B+'. In addition, Standard & Poor's assigned its 'CCC+' rating to the proposed $125 million senior unsecured note issuance at Corpsource Finance Holdings, LLC, a holding company two levels up from the borrower. The proceeds from the offering will be used to fund a special dividend to the equity owners of Corpsource Holdings, LLC, the parent company of SOURCECORP. The outlook is negative. "The ratings reflect a leveraged financial profile, niche position in the large, fragmented, business process outsourcing (BPO) market, and relatively modest EBITDA base," said Standard & Poor's credit analyst Martha Toll-Reed. These factors are partly offset by a material level of recurring revenues, significant barriers to entry and customer switching costs, and a diverse customer base. SOURCECORP had fiscal 2006 revenues of $372 million, up almost 5% from the prior year. The company provides solutions that enable its customers to automate high-volume, document-intensive workflow processes through services that include: Document canning or digitization, Web-based electronic document hosting and retrieval, and customer statement processing. In addition, the company offers specialized services that include class action claims administration services, and professional economic research and litigation services. In August 2006, SOURCECORP sold its medical records release of information operations, which did not contribute meaningfully to 2006 operating earnings. SOURCECORP focuses its operations primarily in the financial services, healthcare, legal and government markets. The majority of its BPO solutions--about 65% of revenues--are contractual and recurring in nature, with significant customer switching costs, enhancing revenue stability and predictability. Although the company's operations are based in the U.S., it utilizes international partner relationships to provide flexible and cost-effective service solutions. SPECIALTY RESTAURANT: Case Summary & 20 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Specialty Restaurant Group, LLC dba The American Cafe dba Silver Spoon Cafe dba L&N Seafood Grill dba Silver Spoon/American Cafe 340 South Washington Street Maryville, TN 37804 Bankruptcy Case No.: 07-30779 Type of Business: The Debtor owns and operates three restaurant concepts with over 35 restaurants primarily located in the Eastern United States: The American Cafe, Silver Spoon Cafe, and L&N Seafood Grill. See http://www.srg.us/ http://www.americancafe.com/ http://www.silverspooncafe.us/ http://www.lnseafood.com/ Chapter 11 Petition Date: February 14, 2007 Court: Northern District of Texas (Dallas) Judge: Harlin DeWayne Hale Debtor's Counsel: Gregory Michael Wilkes, Esq. Kristian W. Gluck, Esq. Fulbright & Jaworski LLP 2200 Ross Avenue, Suite 2800 Dallas, TX 75201 Tel: (214) 855-8000 Fax: (214) 855-8200 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ GECC Bank Loan $11,187,289 8377 E. Hartford Dr., Suite 200 Value of Scottsdale, AZ 85255 security: Tel: (800) 617-3783 $3,500,000 Internal Revenue Service Trade Debt $2,539,497 Special Procedures Staff Mail Code 5020-DAL 1100 Commerce Street, Room 9B8 Dallas, TX 75242 Ruby Tuesday, Inc. Trade Debt $700,725 150 W. Church Avenue Maryville, TN 37801 Tel: (865) 379-5700 Tia's Carrollton Trade Debt $250,000 c/o Today's Management, Inc. 17400 Dallas Parkway, Suite 216 Dallas, TX 75287 Simon Capital at Tyrone Square Trade Debt $250,000 c/o Simon Property Group, LLC National City Center 115 W. Washington Street Indianapolis, IN 46204 Tel: (972) 966-1111 Tia's Lewisville Trade Debt $245,000 c/o First Commerical Realty 2016 Justin Road, Suite 300 Lewisville, TX 75077 Tia's West Plano Trade Debt $235,603 c/o Old Shepard Place II, Ltd. 9400 N. Central Expressway Suite 1305 Dallas, TX 75231 Westlake Retail Trade Debt $233,709 Shafer Plaza XXI, Ltd. 7015 Snider Plaza, Suite 207 DALLAS, TX 75205 Governors Square Partnership Trade Debt $100,012 P.O. Box 64207 Baltimore, MD 21264 Tia's Fort Worth WRI Overton Trade Debt $96,175 Plaza, LP 2800 Citadel Plaza, Suite 300 Houston, TX 77008 Tel: (512) 328-4888 Franconia Two, L.P. Trade Debt $88,235 P.O. Box 33548 Hartford, CT 06150 Waterside Shops at Pelican Bay Trade Debt $86,652 Drawer #5871 PO Box 79001 Detroit, MI 48279 Tel: (800) 969-2069 Tia's Fairfax Trade Debt $80,000 c/o F.L. Promenade LP 12500 Fair Lakes Circle Suite 430 Fairfax, VA 22033 Tel: (703) 227-0888 4776 Granite Run Mall Trade Debt $78,110 P.O. Box 402215 Atlanta, GA 30384 Tel: (317) 263-8112 Jacksonville Landing Trade Debt $71,212 Investments 2 Independent Dr., Suite 250 Jacksonville, FL 32202 Lakeforest Associates LLC Trade Debt $70,225 P.O. Box 404574 A/C 375-6552702 Atlanta, GA 30384 Tel: (888) 327-4911 Tennessee Department of Revenue Trade Debt $68,275 Tax Enforcement Division 531 Henley Street, Suite 616 Knoxville, TN 37902 Tel: (865) 594-5963 Carousel Center Company LP Trade Debt $67,771 P.O. Box 8000 Department 692 Buffalo, NY 14267 Tel: (504) 888-2090 Florida Department of Revenue Trade Debt $67,678 Consolidated Tax Section 5050 West Tennessee Street Building F-3 Tallahassee, FL 32399 Tel: (850) 410-4900 Crystal Run Newco LLC Trade Debt $63,068 P.O. Box 8000 DEPT 534 Buffalo, NY 14267 Tel: (703) 920-8500 SPECIALTY RESTAURANT: Wants Access to GECC Cash Collateral ---------------------------------------------------------- Specialty Restaurant Group LLC asks the U.S. Bankruptcy Court for the Northern District of Texas for permission to use the cash collateral securing repayment of its debts to General Electric Capital Corporation. The Debtor owes GECC $11,187,289. The Debtor borrowed money from GECC to partially finance the purchase of its three restaurant concepts -- The American Cafe, Silver Spoon Cafe and Silver Spoon/American Cafe -- and for working capital. To secure its obligations, the Debtor granted GECC first priority liens and security interests in substantially all of its assets. The Debtor tells the Court it needs to use the cash collateral to fund payroll and other operating needs, including the costs of administration of its chapter 11 case. Currently, the Debtor has little or no available cash or assets readily convertible into cash that are not subject to its lenders' asserted liens and security interests. The Debtor assures the Court that GECC is adequately protected by virtue of the Debtor's continued operations and expenditure of cash on maintaining the business. The Debtor proposes to grant GECC replacement liens and security interests, which is limited to the diminution of the value of the collateral and solely to the extent GECC establishes valid and fully perfected liens in the collateral. Based in Maryville, Tennessee, Specialty Restaurant Group LLC -- http://www.srg.us/-- operates primarily through three unique, well-positioned restaurant concepts, The American Cafe, Silver Spoon Cafe and Silver Spoon/American Cafe. It presently owns and operates seven American Cafe's in Mobile, Alabama; Fort Myers, Florida; Jacksonville, Florida; Chattanooga, Tennessee; Germantown, Tennessee; Alexandria, Virginia; and Herndon, Virginia; two Silver Spoon Cafe's in Bonita Springs, Florida and Naples, Florida; and two Silver Spoon/American Cafe's in Atlanta, Georgia; and Knoxville, Tennessee. The company filed for chapter 11 protection on Feb. 14, 2007 (Bankr. N.D. Tex. Case No. 07-30779). Gregory Michael Wilkes, Esq., and Kristian W. Gluck, Esq., at Fulbright & Jaworski LLP, represent the Debtor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. SPECIALTY RESTAURANT: Wants More Time to File Schedules ------------------------------------------------------- Specialty Restaurant Group LLC asks the U.S. Bankruptcy Court for the Northern District of Texas to extend its deadline to file its various schedules of assets and liabilities and statements of financial affairs. Pursuant to Rule 1007(c) of the Federal Rules of Bankruptcy Procedure, the Debtor has until March 1, 2007, to file its Schedules and Statements. The Debtor anticipates it won't be able to complete its Schedules and Statements by the deadline. To prepare the required Schedules and Statements, the Debtor must gather information from books, records and documents relating to a multitude of transactions. According to the Debtor, collection of the necessary information requires an expenditure of substantial time and effort on the part of its employees. The Debtor has mobilized its employees to work diligently on the assembly of the necessary information. The Debtor expects that it will be able to file its Schedules and Statements, all in the appropriate formats prescribed by the Bankruptcy Code and the Bankruptcy Rules, by March 31, 2007. Based in Maryville, Tennessee, Specialty Restaurant Group LLC -- http://www.srg.us/-- operates primarily through three unique, well-positioned restaurant concepts, The American Cafe, Silver Spoon Cafe and Silver Spoon/American Cafe. It presently owns and operates seven American Cafe's in Mobile, Alabama; Fort Myers, Florida; Jacksonville, Florida; Chattanooga, Tennessee; Germantown, Tennessee; Alexandria, Virginia; and Herndon, Virginia; two Silver Spoon Cafe's in Bonita Springs, Florida and Naples, Florida; and two Silver Spoon/American Cafe's in Atlanta, Georgia; and Knoxville, Tennessee. The company filed for chapter 11 protection on Feb. 14, 2007 (Bankr. N.D. Tex. Case No. 07-30779). Gregory Michael Wilkes, Esq., and Kristian W. Gluck, Esq., at Fulbright & Jaworski LLP, represent the Debtor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. STONE TOWER: S&P Rates $31 Million Class D Notes at BB ------------------------------------------------------ Standard & Poor's Ratings Services assigned its preliminary ratings to Stone Tower CLO VI Ltd.'s $922 million floating-rate notes. The preliminary ratings are based on information as of Feb. 14, 2007. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The expected commensurate level of credit support in the form of subordination to be provided by the notes junior to the respective classes and by the subordinated notes and overcollateralization; -- The cash flow structure, which was subjected to various stresses requested by Standard & Poor's; -- The experience of the collateral manager; -- The coverage of interest rate risks through hedge agreements; and -- The legal structure of the transaction, including the bankruptcy remoteness of the issuer. Preliminary Ratings Assigned Stone Tower CLO VI Ltd. Class Rating Amount ----- ------ ------------ A-1 AAA $140,000,000 A-2a AAA $550,000,000 A-2b AAA $61,000,000 A-3 AA $56,000,000 B A $47,000,000 C BBB $37,000,000 D BB $31,000,000 Subordinated notes NR $78,000,000 NR -- Not rated. STRUCTURED ADJUSTABLE: S&P Junks Rating on Class M-3 Certificates ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class M-3 from Structured Adjustable Rate Mortgage Loan Trust's series 2004-9XS to 'CCC' from 'BBB' and removed it from CreditWatch with negative implications, where it was placed Nov. 21, 2006. Concurrently, the ratings on classes A, M-1, and M-2, the remaining classes from this transaction, were affirmed. The downgrade is the result of a cumulative write-down of $148,169 to the class M-3 certificates. The failure of the transaction to produce excess spread contributed to the write-down. As of the January 2007 remittance period, cumulative realized losses were $173,508, or 0.06% of the original pool balance. The class M-3 certificates absorbed approximately 85% of the total losses; the remaining 15% was covered by monthly excess spread. The transaction has not produced excess spread since the April 2006 distribution date. The removal of the rating on class M-3 from CreditWatch negative reflects the downgrade to 'CCC'. According to Standard & Poor's surveillance practices, ratings lower than 'CCC+' on classes of certificates or notes from RMBS transactions are not eligible to be on CreditWatch. The affirmations are based on credit support percentages that are sufficient to maintain the current ratings. Credit support is provided through a combination of excess spread and subordination. The underlying collateral consists of conventional, fully amortizing, adjustable-rate mortgage loans, which are secured by first liens on one- to four-family residential properties. Rating Lowered And Removed From Creditwatch Negative Structured Adjustable Rate Mortgage Loan Trust Mortgage Loan Asset-Backed Certificates Rating ------ Series Class To From ------ ----- -- ---- 2004-9XS M-3 CCC BBB/Watch Neg Ratings Affirmed Structured Adjustable Rate Mortgage Loan Trust Mortgage Loan Asset-Backed Certificates Series Class Rating ------ ----- ------ 2004-9XS A AAA 2004-9XS M-1 AA 2004-9XS M-2 A STRUCTURED ASSET: S&P Places Ratings on Negative CreditWatch ------------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings on 18 subordinate classes from 11 different residential mortgage-backed securities transactions issued in 2006 on CreditWatch with negative implications. The affected classes are rated 'BBB-', 'BB+', and 'BB'. The CreditWatch placements reflect early signs of poor performance of the collateral backing these transactions. Most of the transactions were issued during the first half of 2006. The percentage of loans in these pools that are severely delinquent ranges from 2.77% to 13.46%. Losses range from zero to 1.30%. Placing Standard & Poor's ratings on CreditWatch when a transaction has not experienced a loss represents a new methodology derived from its normal practice. The combination of early high delinquencies and minimal or no loss experience had not been seen in the performance exhibited by prior vintages. Because there have been no substantial cumulative realized losses, Standard & Poor's measured deal performance against the stressed time to disposition of the loans and a reinstatement rate assumption of zero for all severely delinquent loans. Many of the 2006 transactions may be showing weakness because of origination issues, such as aggressive residential mortgage loan underwriting, first-time home-buyer programs, piggyback second- lien mortgages, speculative borrowing for investor properties, and the concentration of affordability loans. Most of the transactions with subordinate ratings being placed on CreditWatch were issued during the first half of 2006, before Standard & Poor's raised its loss coverage levels for loans with the layered risks mentioned above. Three of the affected transactions were closed-end second-lien deals that were issued during the second half of 2006. Standard & Poor's consecutively raised the 'BBB' loss coverage levels for transactions issued from the first through fourth quarters of 2006. The average quarterly 'BBB' loss coverage levels during the year were as follows: 7.36% in the first quarter, 7.83% in the second quarter, 12.10% in the third quarter, and 12.70% in the fourth quarter. The extent to which the high levels of severely delinquent mortgage loans result in increased levels of actual realized losses will ultimately determine the extent of future rating actions on these transactions and others in the 2006 vintage. Generally, transactions issued during the second half of 2006 are passing the stress levels based on the January 2007 reported data, primarily because they typically have more loss coverage. Increased loss coverage was introduced for the deals issued in July 2006. Credit support for each series is derived from either subordination or a combination of subordination, excess interest, and overcollateralization (O/C). O/C levels are at or near their targets, and subordination amounts have not yet declined significantly. Standard & Poor's will continue to closely monitor the performance of these transactions. Over the next three months, Standard & Poor's will monitor the losses incurred as a result of the liquidation of REO assets. If these losses are material, and if delinquencies continue at their present pace, Standard & Poor's would expect to lower its ratings up to three notches depending on individual performance. Conversely, if the delinquency rates decline and substantial cumulative losses are not realized, Standard & Poor's will affirm the ratings and remove them from CreditWatch negative. Additionally, Standard & Poor's has determined that the CreditWatch placements affecting the ratings on these RMBS tranches will have no impact on outstanding CDO ratings. These transactions are collateralized by subprime, Alt-A, or closed-end second-lien loans. The transactions were initially backed by pools of fixed- and adjustable-rate mortgage loans secured by first, second, or third liens on one- to four-family residential properties. Standard & Poor's will hold a teleconference Thursday, Feb. 15, 2007, at 10:00 a.m. to discuss market concerns regarding the performance of many of the transactions issued in 2006 and the impact of the rating performance of these transactions on CDO transactions. This discussion will focus on Standard & Poor's rationale and methodology used for the CreditWatch actions detailed in this release. The details for the teleconference are listed below the ratings list. Ratings Placed On Creditwatch Negative Asset-Backed Certificates Trust 2006-IM1 Rating ------ Series Class To From ------ ----- -- ---- 2006-IM1 B BBB-/Watch Neg BBB- GSAMP Trust 2006-S5 Rating ------ Series Class To From ------ ----- -- ---- 2006-S5 M-7 BBB-/Watch Neg BBB- 2006-S5 B-1 BB+/Watch Neg BB+ 2006-S5 B-2 BB+/Watch Neg BB+ New Century Home Equity Loan Trust 2006-S1 Rating ------ Series Class To From ------ ----- -- ---- 2006-S1 M-7 BB+/Watch Neg BB+ 2006-S1 M-8 BB+/Watch Neg BB+ Securitized Asset Backed Receivables LLC Trust 2006-NC1 Rating ------ Series Class To From ------ ----- -- ---- 2006-NC1 B-3 BBB-/Watch Neg BBB- Structured Asset Investment Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-1 B1 BBB-/Watch Neg BBB- 2006-1 B2 BB+/Watch Neg BB+ 2006-2 B2 BB/Watch Neg BB 2006-BNC1 B2 BB+/Watch Neg BB+ 2006-BNC2 B2 BB/Watch Neg BB Structured Asset Securities Corp. Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-BC1 B3 BB/Watch Neg BB Terwin Mortgage Trust Rating ------ Series Class To From ------ ----- -- ----- 2006-6 I-B-7 BB+/Watch Neg BB+ 2006-6 I-B-8 BB/Watch Neg BB 2006-6 II-B-5 BB+/Watch Neg BB+ 2006-6 II-B-6 BB+/Watch Neg BB+ 2006-8 I-B-8 BB+/Watch Neg BB+ SUN COAST: S&P Cuts Rating on $22.5 Million Revenue Bonds to B -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Largo, Florida's $22.5 million series 1993 revenue bonds, issued for Sun Coast Hospital, to 'B' from 'BB-', reflecting University Community Hospital's terminated affiliation with Sun Coast, effective February 28; and Sun Coast's weaker financial profile in the past few years, with its financial losses and minimal liquidity. The outlook is developing. "The developing outlook reflects upside rating potential if an affiliation agreement is signed, although any rating upgrade or outlook revision would depend on the nature of the affiliation and the financial and operational strength of the affiliate," said Standard & Poor's credit analyst Cynthia Keller Macdonald. "If Sun Coast Hospital fails to substantially reduce the losses or sign a meaningful affiliation agreement to replace UCH, it would likely result in a lower rating or default as Sun Coast has virtually no liquidity to support losing operations over the long term." The 'B' rating also reflects Sun Coast's steadily weakening financial results, including losses from operations and minimal liquidity; potential management and operational disruption as Sun Coast's CEO--a UCH employee--returns to UCH at the end of February, and as many joint operating systems with UCH continue to be unwound; and significant competition in this service area from both hospitals and physicians. UCH remains obligated under the affiliation agreement for fiscal year end 2006 and so, as they did last year, UCH plans to reduce its management fee and overhead allocation by an amount sufficient to allow Sun Coast to reach 1.25x debt service coverage. Without the UCH support, Sun Coast's unaudited fiscal year 2006 results show an operating loss of $2.8 million and a bottom line loss of $2.4 million. Although management was able to reduce expenses significantly last year, revenue also dipped. Sun Coast's management indicates that it began to seek a new business partner once UCH notified it of the affiliation termination. Additionally, Sun Coast's CFO will assume an interim CEO position when the current CEO returns to UCH. "It is possible that the rating could remain in the 'B' category even if an affiliation agreement is not signed, as long as annual operating losses can be reduced to approximately breakeven levels," added Ms. Keller Macdonald. SUPERIOR WHOLESALE: Fitch Rates $16 Million Class D Notes at BB+ ---------------------------------------------------------------- Fitch Ratings rates the Superior Wholesale Inventory Financing Trust 2007-AE-1 floating-rate asset-backed term notes, as: -- $823,600,000 class A 'AAA'; -- $112,700,000 class B 'A+'; -- $48,300,000 class C 'BBB+'; and -- $16,100,000 class D 'BB+'. As in prior SWIFT transactions, the securitization is backed by a pool of loans made by GMAC LLC to retail automotive dealers franchised by General Motors Corp. to finance new and used vehicles inventories. This is the first dealer floorplan ABS securitization issued by GMAC since the completion of the sale in November 2006 of a 51% ownership interest to FIM Investors, LLC - an investment vehicle formed by Cerberus Capital Management, L.P., Aozora Bank Limited, Citigroup Inc., and PNC Financial Services Group, Inc. The class A, B, and C term notes are issued publicly, while the class D notes and certificates are initially being retained by the seller. 2007-AE-1 also issued class A floating-rate asset-backed revolving notes with a maximum balance of $400 million. The certificates and the A-RN are not rated by Fitch. The ratings on the notes are based on the quality of the underlying pool of receivables, available credit enhancement, sound legal and cash flow structures including early amortization triggers, and dealer and asset overconcentration limits. Credit enhancement for SWIFT 2007-AE-1: -- 25.50% for the class A term notes; -- 18.50% for the class B term notes; -- 15.50% for the class C term notes; and -- 14.50% for the class D term notes. Credit enhancement levels have increased compared with SWIFT XII. Class A credit enhancement rose to 25.50% from 10.50%; class B credit enhancement grew to 18.50% from 7.50%; class C credit enhancement increased to 15.50% from 6.25%; and for the class D notes, credit enhancement is 14.50% versus 5.0%. The early amortization event related to a GM bankruptcy has been modified in 2007-AE-1 to exclude a filing under Chapter 11 of the U.S. Bankruptcy Code, whereas in prior SWIFT transactions, a Chapter 11 filing was included. An early amortization event related to a GM filing under Chapter 7 of the U.S. Bankruptcy Code, either voluntary or involuntary, remains. In addition, this early amortization event also includes the cessation of operations by GM as an auto manufacturer or an undertaking by GM to sell or liquidate all or substantially all of its auto manufacturing assets or business, in either case after a Chapter 11 filing. Basis swaps have been incorporated into the structure to mitigate basis risk between prime-based floorplan receivables and London Interbank Offered Rate based notes. The reserve fund was fully funded at closing at 1.50% and includes step-up features, all consistent with SWIFT XII. As of the initial cut-off date, the pool of accounts included in SWIFT 2007-AE-1 contained 418 dealer accounts, with an aggregate principal balance of approximately $1.82 billion. New and used vehicles represented 90.89% and 9.11%, respectively. The average principal balance of eligible receivables in each account was approximately $3.73 million. Loss experience for GMAC's U.S. wholesale portfolio has been consistent. In the years 2002-2004, recoveries exceeded losses, while in 2005 and in the nine months ended Sept. 30, 2006, net losses remained negligible. Monthly payment rate performance has also generally been consistent in recent years. Since 2002, GMAC's U.S. wholesale portfolio's average MPR has ranged between 35.30% and 45.80%; for the nine months ended Sept. 30, 2006, the average MPR was 37.50%. Dealer credit rating distributions during the period 2001-2004 were fairly consistent; however some migration of dealer ratings occurred in 2005 and 2006 where the Satisfactory category, the strongest, represented decreased percentages of the dealer base, while the Limited category, the next strongest, represented an increased percentage. The dealers categorized as Programmed and No Credit, the weakest categories, remained a consistent proportion of the dealer base. TERWIN MORTGAGE: S&P Places Ratings on Negative CreditWatch ----------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on 18 subordinate classes from 11 different residential mortgage-backed securities transactions issued in 2006 on CreditWatch with negative implications. The affected classes are rated 'BBB-', 'BB+', and 'BB'. The CreditWatch placements reflect early signs of poor performance of the collateral backing these transactions. Most of the transactions were issued during the first half of 2006. The percentage of loans in these pools that are severely delinquent ranges from 2.77% to 13.46%. Losses range from zero to 1.30%. Placing Standard & Poor's ratings on CreditWatch when a transaction has not experienced a loss represents a new methodology derived from its normal practice. The combination of early high delinquencies and minimal or no loss experience had not been seen in the performance exhibited by prior vintages. Because there have been no substantial cumulative realized losses, Standard & Poor's measured deal performance against the stressed time to disposition of the loans and a reinstatement rate assumption of zero for all severely delinquent loans. Many of the 2006 transactions may be showing weakness because of origination issues, such as aggressive residential mortgage loan underwriting, first-time home-buyer programs, piggyback second- lien mortgages, speculative borrowing for investor properties, and the concentration of affordability loans. Most of the transactions with subordinate ratings being placed on CreditWatch were issued during the first half of 2006, before Standard & Poor's raised its loss coverage levels for loans with the layered risks mentioned above. Three of the affected transactions were closed-end second-lien deals that were issued during the second half of 2006. Standard & Poor's consecutively raised the 'BBB' loss coverage levels for transactions issued from the first through fourth quarters of 2006. The average quarterly 'BBB' loss coverage levels during the year were as follows: 7.36% in the first quarter, 7.83% in the second quarter, 12.10% in the third quarter, and 12.70% in the fourth quarter. The extent to which the high levels of severely delinquent mortgage loans result in increased levels of actual realized losses will ultimately determine the extent of future rating actions on these transactions and others in the 2006 vintage. Generally, transactions issued during the second half of 2006 are passing the stress levels based on the January 2007 reported data, primarily because they typically have more loss coverage. Increased loss coverage was introduced for the deals issued in July 2006. Credit support for each series is derived from either subordination or a combination of subordination, excess interest, and overcollateralization (O/C). O/C levels are at or near their targets, and subordination amounts have not yet declined significantly. Standard & Poor's will continue to closely monitor the performance of these transactions. Over the next three months, Standard & Poor's will monitor the losses incurred as a result of the liquidation of REO assets. If these losses are material, and if delinquencies continue at their present pace, Standard & Poor's would expect to lower its ratings up to three notches depending on individual performance. Conversely, if the delinquency rates decline and substantial cumulative losses are not realized, Standard & Poor's will affirm the ratings and remove them from CreditWatch negative. Additionally, Standard & Poor's has determined that the CreditWatch placements affecting the ratings on these RMBS tranches will have no impact on outstanding CDO ratings. These transactions are collateralized by subprime, Alt-A, or closed-end second-lien loans. The transactions were initially backed by pools of fixed- and adjustable-rate mortgage loans secured by first, second, or third liens on one- to four-family residential properties. Standard & Poor's will hold a teleconference Thursday, Feb. 15, 2007, at 10:00 a.m. to discuss market concerns regarding the performance of many of the transactions issued in 2006 and the impact of the rating performance of these transactions on CDO transactions. This discussion will focus on Standard & Poor's rationale and methodology used for the CreditWatch actions detailed in this release. The details for the teleconference are listed below the ratings list. Ratings Placed On Creditwatch Negative Asset-Backed Certificates Trust 2006-IM1 Rating ------ Series Class To From ------ ----- -- ---- 2006-IM1 B BBB-/Watch Neg BBB- GSAMP Trust 2006-S5 Rating ------ Series Class To From ------ ----- -- ---- 2006-S5 M-7 BBB-/Watch Neg BBB- 2006-S5 B-1 BB+/Watch Neg BB+ 2006-S5 B-2 BB+/Watch Neg BB+ New Century Home Equity Loan Trust 2006-S1 Rating ------ Series Class To From ------ ----- -- ---- 2006-S1 M-7 BB+/Watch Neg BB+ 2006-S1 M-8 BB+/Watch Neg BB+ Securitized Asset Backed Receivables LLC Trust 2006-NC1 Rating ------ Series Class To From ------ ----- -- ---- 2006-NC1 B-3 BBB-/Watch Neg BBB- Structured Asset Investment Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-1 B1 BBB-/Watch Neg BBB- 2006-1 B2 BB+/Watch Neg BB+ 2006-2 B2 BB/Watch Neg BB 2006-BNC1 B2 BB+/Watch Neg BB+ 2006-BNC2 B2 BB/Watch Neg BB Structured Asset Securities Corp. Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-BC1 B3 BB/Watch Neg BB Terwin Mortgage Trust Rating ------ Series Class To From ------ ----- -- ----- 2006-6 I-B-7 BB+/Watch Neg BB+ 2006-6 I-B-8 BB/Watch Neg BB 2006-6 II-B-5 BB+/Watch Neg BB+ 2006-6 II-B-6 BB+/Watch Neg BB+ 2006-8 I-B-8 BB+/Watch Neg BB+ UAL CORP: Officers Disclose Shares Ownership -------------------------------------------- In separate filings with the Securities and Exchange Commission, nine of Reorganized UAL Corporation's officers disclosed that they disposed of 223,962 shares of UAL Corp. Common Stock: Total Shares Total Beneficially Shares Owned After Officer Designation Disposed Transaction ------- ----------- -------- ------------- Glenn F. Tilton Chairman, President 96,854 408,325 and CEO (UAL) Frederic F. EVP - CFO (UAL) 14,980 166,089 Brace John P. Tague EVP - Chief Revenue 15,615 158,785 Officer (UAL) Peter D. EVP - Chief Operating 39,430 26,103 McDonald Officer (UAL) Graham W. EVP & Chief 16,715 60,649 Atkinson Customer Officer (UAL) Rosemary Moore SVP-Corp & Gov. 17,507 80,626 Affairs (United) Sara A. Fields SVP-Office of the 16,350 70,850 Chairman (UAL) Jane G. Allen SVP-HR (United) 3,434 41,870 Paul R. Lovejoy SVP, Gen. Counsel & 6,511 86,038 Secretary All of the sales reported were effected pursuant to a trading plan dated July 7, 2006, pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934. The UAL Officers also report that they acquired shares of UAL Common Stock on separate transactions on February 6, 2007: Officer Shares Acquired Price Per Share ------- --------------- --------------- Peter D. McDonald 21,933 $34.18 Graham W. Atkinson 2,725 $34.18 6,250 $34.55 Rosemary Moore 10,644 $34.18 289 $34.18 Glenn F. Tilton 51,965 $34.18 2,835 $34.18 Mr. McDonald has the option or right to buy 21,933 shares of UAL common stock at a $34.18 conversion price. Mr. Atkinson has the option or right to buy: * 2,725 shares of UAL common stock at a $34.18 conversion price; and * 6,250 shares of UAL common stock at a $34.55 conversion price. Ms. Moore has the option or right to buy: * 10,644 shares of UAL common stock at a $34.18 conversion price; and * 289 shares of UAL common stock at a $34.18 conversion price. Mr. Tilton has the option or right to buy: * 51,965 shares of UAL common stock at a $34.18 conversion price; and * 2,835 shares of UAL common stock at a $34.18 conversion price. All options -- except with respect Mr. McDonald's, which will expire on February 1, 2007 -- are exercisable until February 1, 2016. About UAL Corp. Headquartered in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. Judge Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The Company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News, Issue No. 138; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Jan. 19, 2007, Moody's Investors Service assigned B1, LGD-3 42% ratings to the United Air Lines Inc. $2.1 billion Senior Secured Revolving Credit and Term Loan. Moody's also assigned the B2 corporate family and probability of default rating and a stable outlook at UAL Corporation. At the same time, Moody's withdrew its corporate family and probability of default ratings assigned at the United level and affirmed its SGL-2 speculative grade liquidity rating. Moody's will withdraw the ratings on United's existing $3 billion of revolving credit and term loans once the new Bank Facilities close. The rating outlook is stable. UAL CORP: United Airlines Refinances $2 Billion Exit Facility ------------------------------------------------------------- United Airlines Inc., on Feb.2, 2007, used cash to pay down $972 million of its original $3 billion exit facility, and refinanced the remaining $2 billion. The new facility was arranged by J.P. Morgan Securities, Inc., and Citigroup Global Markets as joint lead arrangers and Credit Suisse Securities (USA) LLC, as syndication agent. The transaction results in significantly lower interest costs, less restrictive covenants, and releases approximately $2.5 billion of collateral. "Restructuring our exit facility to a lower rate reflects our improved financial condition and the market's confidence in United," said Jake Brace, executive vice president and chief financial officer. "It is a testament to our ability to generate cash over the past year. We are pleased to be working with JPMorgan, Citigroup and Credit Suisse as we continue our partnership with these premier financial institutions." The new credit facility consists of a $1.8 billion term loan and a $255 million revolving credit line. The refinancing was significantly oversubscribed, enabling the company to reduce its financing costs by 175 basis points to 200 basis points over the London Interbank Offered Rate. The lower pricing sets a new market benchmark for network carriers and is expected to result in net pre-tax savings of approximately $70 million per annum. The new credit facility will enable United to utilize its available collateral more efficiently. The primary collateral for the new facility includes intangible assets such as routes, airport gates, and slots. The refinancing enables United to remove 101 aircraft and the company's spare parts inventory, valued at approximately $2.5 billion, from the collateral pool. The credit facility does not restrict the company's use of these assets to secure new financing, providing a source of additional liquidity if needed. About UAL Corp. Headquartered in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. Judge Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The Company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News, Issue No. 138; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Jan. 19, 2007, Moody's Investors Service assigned B1, LGD-3 42% ratings to the United Air Lines Inc. $2.1 billion Senior Secured Revolving Credit and Term Loan. Moody's also assigned the B2 corporate family and probability of default rating and a stable outlook at UAL Corporation. At the same time, Moody's withdrew its corporate family and probability of default ratings assigned at the United level and affirmed its SGL-2 speculative grade liquidity rating. Moody's will withdraw the ratings on United's existing $3 billion of revolving credit and term loans once the new Bank Facilities close. The rating outlook is stable. VALASSIS COMMS: S&P Cuts Corporate Credit Rating to B+ from BB -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Valassis Communications Inc. to 'B+' from 'BB', and removed it from CreditWatch with negative implications where it was placed on July 6, 2006, following the company's report that it would acquire ADVO Inc. At the same time, Standard & Poor's assigned its 'BB-' bank loan and '1' recovery ratings to Valassis' proposed $820 million senior secured credit facility, reflecting the expectation that secured lenders, including bondholders expected to receive security due to springing liens would achieve full recovery of principal upon a payment default. Proceeds from the proposed credit facility would be used to partly finance Valassis' $1.2 billion acquisition of ADVO, including the refinancing of ADVO's debt of about $125 million. Valassis expects to put in place additional debt financing over the near term. Standard & Poor's also lowered its ratings on Valassis' existing $160 million senior unsecured convertible notes due 2033 and the company's $100 million senior unsecured notes due 2009 to 'BB-' from 'BB', and kept the ratings on CreditWatch with negative implications pending the close of the proposed credit facility. At that time, Standard & Poor's would expect to affirm them. These ratings are one notch above the corporate credit rating, reflecting springing liens that are expected to secure both issues upon the close of the proposed senior secured facility. Pro forma for proposed debt issuances Valassis had $1.5 billion in lease- adjusted debt as of December 2006. The outlook is stable. The downgrade reflects high levels of pro forma leverage and challenges that Valassis will face reversing trends of declining profitability in each of its and ADVO's respective businesses. VALENCE TECH: Posts $5.9 Million Net Loss in Quarter Ended Dec. 31 ------------------------------------------------------------------ Valence Technology Inc. reported a $5.9 million net loss on $2.3 million of revenues for the third fiscal quarter ended Dec. 31, 2006, compared with a $7 million net loss on $4.8 million of revenues for the same period in fiscal 2006. The substantial decrease in revenue is due to a rescheduled shipment of Segway battery packs and a temporary shortage of key components. Large-format battery systems sales represented 62 percent of the sales mix, compared to 59 percent in the same quarter of fiscal year 2006. "While quarterly results are disappointing, I am pleased with the substantial progress the company has made to decrease overhead, lower material costs, improve yields, and reduce scrap as a result of powder manufacturing process improvements," said Dr. James R. Akridge, president and chief executive officer of Valence Technology. "We persistently identify and implement strategic measures to ensure better results; these efforts will ultimately drive growth in revenue." At Dec. 31, 2006, the company's balance sheet showed $18.3 million in total assets, $77.1 million in total liabilities, $8.6 million in redeemable convertible preferred stock, resulting in a $67.4 million total stockholders' deficit. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?19db Going Concern Doubt As reported in the Troubled Company Reporter on July 5, 2006, Deloitte & Touche LLP expressed substantial doubt about Valence's ability to continue as a going concern after auditing the company's financial statements for the fiscal years ended March 31, 2006, and 2005. The auditing firm pointed to the company's recurring losses from operations, negative cash flows from operations and net stockholders' capital deficiency. About Valence Headquartered in Austin, Texas, Valence Technology, Inc. (Nasdaq: VLNC) -- http://www.valence.com/-- develops and markets battery systems using its Saphion(R) technology, the industry's first commercially available, safe, large-format Lithium-ion rechargeable battery technology. Valence Technology holds an extensive, worldwide portfolio of issued and pending patents relating to its Saphion technology and lithium-ion phospate rechargeable batteries. The company has facilities in Austin, Texas, Las Vegas, Nevada, and Suzhou and Shanghai, China. About Valence Technology Inc. WARNER MUSIC: 1st Qtr. Fiscal Results Cues S&P's Negative Outlook ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Warner Music Group Corp. to negative from stable, while affirming all ratings, including the 'BB-' corporate credit rating, on the company. As of Dec. 31, 2006, the company had $2.27 billion of debt outstanding, including its 9.5% holding company discount notes. "The outlook revision was based on the company's fiscal first-quarter results," said Standard & Poor's credit analyst Michael Altberg. "Although we expected a down quarter because of strong releases in the year-ago period, actual results were lower than we anticipated. Tough year-over-year comparisons will continue through the second quarter." The outlook revision also recognizes that uncertainty around the industry's digital migration is likely to be a long-term issue that exacerbates volatile release schedules. The rating on WMG reflects its heavy debt burden as a result of its 2004 LBO and debt-financed capital distributions to shareholders, the risks associated with the industry's migration to a digital downloading business model, the extent of cost downsizing that may be required as the online migration continues, and persistent leakage of industry sales to piracy. These are the rating actions: risks are partially offset by the company's competitive position as the fourth-largest recorded music company and currently second-largest music publisher, its recent market share gains, the industry's progress in combating piracy and establishing a legitimate commercial digital platform, and the company's good free cash flow. WMG was acquired from Time Warner Inc. in March 2004 by an investor group comprising Thomas H. Lee Partners L.P., Music Capital Partners L.P., Bain Capital Partners, and Providence Equity Partners Inc. WORLD HEALTH: Chapter 7 Trustee Hires Miller Coffey as Accountants ------------------------------------------------------------------ The United States Bankruptcy Court for the District of Delaware authorized George L. Miller, the Trustee overseeing the liquidation of World Health Alternatives Inc. and its debtor- affiliates to employ Miller Coffey Tate LLP as his accountants, nunc pro tunc to Dec. 26, 2006. Miller Coffey is expected to: a) provide general accounting and tax advisory services to the Trustee regarding the administration of the bankruptcy estates; b) review and assist in the preparation and filing of any tax returns, any assistance regarding existing and future IRS examinations and any and all other tax assistance as may requested from time to time; c) interpret and analyze financial materials, including accounting, tax, statistical, financial and economic data, regarding the Debtors and other relevant parties; d) analyze the Debtors' books and records regarding potential avoidance actions; e) analyze and advise regarding additional accounting, financial, valuation and related issues that may arise in the course of these proceedings; f) assist the Trustee's attorneys in the preparation and evaluation of any potential litigation, as requested; g) provide testimony on various matters, as requested; and h) perform all other services for the Trustee which are appropriate and proper in these Chapter 7 cases, as requested. The Trustee's application did not disclose the firm's compensation fee. To the best of the Trustee's knowledge, the firm does not hold any interest adverse to the Debtor's estate and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About World Health Alternatives Headquartered in Pittsburgh, Pennsylvania, World Health Alternatives Inc. -- http://www.whstaff.com/-- is a premier human resource firm offering specialized healthcare personnel for staffing and consulting needs in the healthcare industry. The company and six of its affiliates filed for chapter 11 protection on Feb. 20, 2006 (Bankr. D. Del. Case Nos. 06-10162 to 06-10168). Stephen M. Miller, Esq. at Morris James LLP and Felton E. Parrish, Esq. at King & Spalding LLP represent the Debtors. Edward J. Kosmowski, Esq., and Erin Edwards, Esq., at Young, Conaway, Stargatt & Taylor represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $50 million and $100 million. On Oct. 31, 2006, the Court converted the Debtors' cases into chapter 7 proceedings. George L. Miller was appointed trustee. Mr. Miller is represented by Anthony M. Saccullo, Esq. at Fox Rothschild LLP. * Sheppard Mullin San Francisco Adds Jennifer Redmond as Partner ---------------------------------------------------------------- Jennifer G. Redmond has joined the San Francisco office of Sheppard, Mullin, Richter & Hampton LLP as a partner in the firm's Labor and Employment practice group. Ms. Redmond most recently practiced with Bingham McCutchen in San Francisco. Ms. Redmond has close to twenty years of experience defending employers against claims of trade secret theft, defamation, disability discrimination, failure to accommodate, wrongful termination, discrimination, harassment, retaliation, breach of contract, fraud, wage and hour violations, and all other types of employment-related claims. "Attracting the best attorneys in their specializations is a top priority for the firm and Jennifer is one of the leading employment attorneys in the state," said Guy Halgren, chairman of the firm. "She substantially increases our employment law capabilities in San Francisco and allows us to provide clients with a tremendous breadth of service throughout the nation." "I look forward to growing the firm's employment practice in Northern California," Ms. Redmond said. "Sheppard's Labor and Employment group has an outstanding reputation throughout the state. I am excited to work with the great lawyers here and across the firm's offices, and to be able to offer a broader range of employment services to clients." "Jennifer is an excellent addition to the firm's strong employment practice," commented Kelly Hensley, co-chair of the firm's Labor and Employment practice group. "She adds tremendous depth to the group, which has more than 55 attorneys statewide." Ms. Redmond's clients are in industries such as global internet communications and media, technology, biotechnology, entertainment, property management, winemaking and distribution, and financial services and include companies like Lucasfilm and BRE Properties. Ms. Redmond's experience also includes counseling employers on enforcement of non-solicitation and non-compete agreements, protection of trade secrets, family and medical leave compliance, disability accommodation, wage and hour compliance, the use of independent contractors, and employee housing, among other topics; assisting in the design and implementation of restructuring and downsizing programs; mediating employment disputes; training management and employees on harassment and discrimination prevention; and all other aspects of employment law. She is the co-author of "How To Engage In The Interactive Process: A Field Guide For California Employers"; "How to Engage in the Interactive Process: A Field Guide on Disability Accommodation in the Workplace" (national version); and numerous other articles and presentations on reasonable accommodation of disabilities, among other topics. Ms. Redmond received her J.D., order of the coif, from Vanderbilt University School of Law in 1989 where she was an Andrew Ewing Scholar and senior articles editor of Vanderbilt Law Review. She then clerked for Judge Earl B. Gilliam of the United States District Court for the Southern District of California. Redmond has a B.A. in History, with honors, from the University of Virginia. About Sheppard, Mullin, Richter & Hampton Founded in 1927, Sheppard, Mullin, Richter & Hampton LLP -- http://www.sheppardmullin.com/is a full service AmLaw 100 firm with 490 attorneys in nine offices located throughout California and in New York and Washington, D.C. The firm's California offices are located in Los Angeles, San Francisco, Santa Barbara, Century City, Orange County, Del Mar Heights and San Diego. Sheppard Mullin provides legal expertise and counsel to U.S. and international clients in a wide range of practice areas, including Antitrust, Corporate and Securities; Entertainment, Media and Communications; Finance and Bankruptcy; Government Contracts; Intellectual Property; Labor and Employment; Litigation; Real Estate/Land Use; Tax/Employee Benefits/Trusts & Estates; and White Collar Defense. * BOOK REVIEW: Railroad Consolidation: Its Economics and Controlling Principles -------------------------------------------------------- Author: Julius Grodinsky Publisher: Beard Books Paperback: 352 pages List Price: $34.95 Order your personal copy at http://www.amazon.com/exec/obidos/ASIN/1893122417/internetbankrupt The book, Railroad Consolidation: Its Economics and Controlling Principles, presents a classic economic analysis of railroad consolidation, written 10 years after the passage of the Transportation Act of 1920, which was designed to encourage and promote such consolidation. Julius Grodinsky, the author, approached his subject from an economic perspective, asking: What are the business interests that underlie consolidation projects? The answer boils down to a simple fact: railroads exist to move traffic. His thesis that railroad consolidation was in essence about traffic -- a problem of economics and transportation, not politics -- was welcomed as a businesslike perspective on an issue that had become highly politicized. ********* 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, Cherry A. Soriano- Baaclo, Jason A. Nieva, Melvin C. Tabao, Tara Marie A. Martin, Frauline S. Abangan, 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 ***