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/raid1/www/Hosts/bankrupt/TCR_Public/070226.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, February 26, 2007, Vol. 11, No. 48 Headlines ACE SECURITIES: S&P Downgrades Rating on Class M-6 Debt to BB ADVANCED COMM: Posts $211,901 Net Loss in Quarter Ended Dec. 31 ADVANCED MARKETING: Court Okays Sale of PGW's Distribution Rights ADVANCED MARKETING: Committee Taps Traxi as Financial Advisor ADVANCED MULTI: Files Schedules of Assets & Liabilities AERCO LIMITED: Moody's Junks Rating on $241 Million Notes AMERIQUEST MORTGAGE: DBRS Reviews Low-B Ratings on 3 Class Certs. ARVINMERITOR INC: Earns $7 Million in Quarter Ended December 31 ARVINMERITOR INC: Repays in Full Outstanding Term Loan B ASHMORE ENERGY: S&P Rates $1.5 Billion Loans at B+ ASHMORE ENERGY: Moody's Rates Proposed $1.5 Bil. Sr. Debts at Ba3 BUILDING MATERIALS: S&P Rates $325 Million Senior Notes at B CDC MORTGAGE: Moody's Junks Rating on Series 2001-HE1 Certificates CHARTER COMMS: S&P Rates Proposed $7.5 Billion Facilities at B+ CITIGROUP MORTGAGE: DBRS Reviews BB Rating on $9.7 Million Certs. CONEXANT SYSTEMS: Receives $98.1 Million from Acquicor-Jazz Merger CONSOLIDATED ENERGY: Baker & Jennings Resigns as Directors CROWN CASTLE: S&P Holds BB+ Rating on $900 Mil. Credit Facility DAIMLERCHRYSLER: Chrysler CEO LaSorda Communicates with Employees FIRST FRANKLIN: DBRS Downgrades Ratings on Three Class Certs. FLEMING COS: Post-Con Trust Commences First Cash Distribution GETTY IMAGES: Gets Notice of Event of Default for Filing Failure GETTY IMAGES: To Acquire WireImage for $200 Million in Cash HCP ACQUISITION: S&P Junks Rating on Proposed $171.2 Mil. Sr. Loan HOLLINGER INC: Ontario Court to Hear Black Entities' Appeal Today INTERSTATE BAKERIES: Court Okays Ninth Amendment to DIP Agreement INEX PHARMA: Wants Protiva Declared Bankrupt On Unpaid Invoices INFOR GLOBAL: Increased Debt Prompts S&P's Stable Outlook INNOPHOS INC: Likely Debt Reduction Cues S&P's Positive Outlook JACK IN THE BOX: Earns $37.4 Million in Quarter Ended January 21 JANUSZ SLUPECKI: Case Summary & Three Largest Unsecured Creditors KAHUKU HOSPITAL: Case Summary & 20 Largest Unsecured Creditors LANCER MANAGEMENT: Inks Settlement Pacts with Receiver & Zi Corp. LAND O'LAKES: Sells California Operations to Saputo for $216 Mil. LAND O'LAKES: Saputo Agreement Prompts S&P's Positive Outlook LEATHERWOOD RESORT: Case Summary & 7 Largest Unsecured Creditors LISBON INN: Bankruptcy Filing Halts Auction of Property LISBON INN: Case Summary & 20 Largest Unsecured Creditors M/I HOMES: Weak Performance Cues S&P's Negative Outlook MARCAL PAPER: Panel Brings In Bridge Associates as Fin'l. Advisor MARCAL PAPER: Seeks July 28 Exclusive Plan Filing Deadline MARCAL PAPER: Wants Lease Decision Period Extended Until June 28 MERITAGE MORTGAGE: DBRS Reviews BB Rating on $7.8 Million Certs. MERRILL LYNCH: S&P Cuts Rating on Class B-3 Certificates to B MITTAL STEEL: Ordered to Sell Sparrows Point Plant in Baltimore MORTGAGE LENDERS: U.S. Trustee Appoints Seven-Member Committee MORTGAGE LENDERS: Hires Trumbull as Claims and Noticing Agent NATIONAL BEDDING: S&P Rates $210 Million Second-Lien Facility at B NORTH AMERICAN: Major Stockholder Wants J. Christian as Director NEW YORK RACING: Wants Exclusive Plan-Filing Period Extended NOVASTAR FINANCIAL: Expects GAAP Profitability in Coming Years NSG HOLDINGS: S&P Assigns BB Rating on $286 Million Senior Loan OCWEN FINANCIAL: Gets $45.9 Mil. Capital Sharing from BMS Holdings OLIN BRYANT JR: Case Summary & 12 Largest Unsecured Creditors OPTIMAL GEOMATICS: Oct. 31 Balance Sheet Upside Down by CDN$17.2MM OWNIT MORTGAGE: Picks Credit-Based Asset Servicing as Lead Bidder PALMDALE HILLS PROPERTY: S&P Withdraws Ratings on Facilities PARK PLACE: DBRS Reviews Low-B Ratings on Two Class Certificates PREDIWAVE CORPORATION: Court Denies New World's Dismissal Plea PRIME MORTGAGE: S&P Assigns Default Rating to 2004-CL1 B-5 Certs. PRUDENTIAL SECURITIES: S&P Lifts Rating on Class J Certs. to BB+ RICHARD WOOD: Case Summary & 10 Largest Unsecured Creditors ROBERT DAVIS: Voluntary Chapter 11 Case Summary SANDISK CORP: Cost Cutting Plan to Reduce Workforce by 10% SEMCO ENERGY: Cap Rock Deal Cues Moody's Developing Outlook SHERYL BERGMAN: Case Summary & 15 Largest Unsecured Creditors SHILOH INDUSTRIES: Moody's Holds Corporate Family Rating at Ba3 SHREVEPORT DOCTORS: Has Interim Access to Cash Collateral SOUNDVIEW HOME: DBRS Reviews BB Rating on $5.6 Mil. Certificates STAT AMBULANCE: Case Summary & 20 Largest Unsecured Creditors STATION CASINOS: Accepts $5.5 Bil. Offer from Management-Led Deal SWEETWATERS OF HAUPPAUGE: Voluntary Chapter 11 Case Summary TXU CORP: KKR, TPG & Goldman Sachs Offering $32 Billion for Firm TXU CORP: KGS Asks Investors to Participate in Deal Investigation TXU CORP: Ceres Investor Coalition Issues Report on Financial Risk VINCENT PETRAGLIA: Voluntary Chapter 11 Case Summary XEROX CORPORATION: Increases Share Repurchase Program * BOND PRICING: For the week of February 19 -- February 23, 2007 ********* ACE SECURITIES: S&P Downgrades Rating on Class M-6 Debt to BB ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class M-6 from ACE Securities Corp. Home Equity Loan Trust Series 2003-HE1 to 'BB' from 'BBB-'. The rating remains on CreditWatch, where it was placed with negative implications Aug. 16, 2006. The downgrade of class M-6 reflects deteriorating performance that has allowed losses to outpace excess interest and erode available credit support. Cumulative losses total 1.24% of the original pool balance of $7.1 million, while serious delinquencies total 21.27% of the current pool balance of $4.8 million. Currently, 17.09% of the pool balance remains outstanding. Standard & Poor's will continue to closely monitor the performance of class M-6. If losses decline to a point at which they no longer outpace excess interest, and the level of overcollateralization has not been further eroded, S&P will affirm the rating and remove it from CreditWatch. Conversely, if losses continue to outpace excess interest, S&P will take further negative rating actions on this class. Rating Lowered And Remaining On Creditwatch Negative ACE Securities Corp. Home Equity Loan Trust Series 2003-HE1 Rating ------ Class To From ----- -- ---- M-6 BB/Watch Neg BBB-/Watch Neg ADVANCED COMM: Posts $211,901 Net Loss in Quarter Ended Dec. 31 --------------------------------------------------------------- Advanced Communications Technologies Inc. reported a $211,901 net loss on $2 million of net sales for the second quarter ended Dec. 31, 2006, compared with a $224,682 net loss on $2.2 million of net sales for the same period last year. The decrease in net sales was primarily due to reduced repair orders from one of Cyber-test Inc.'s major customers, partially offset by an increase in repair orders from another major customer, as well as an increase in equipment salvage revenue. Gross profit decreased to 33.4% as compared to 36.9% last year due primarily to fuel surcharges that could not be passed on to customers and workforce training costs. Total operating expenses decreased $140,000 primarily attributable to decreases in depreciation and amortization expense and professional and consulting expenses of $64,000 and $116,000, respectively, offset by an increase of $39,000 in selling, general and administrative expenses. Interest expense decreased to $10,000 compared to $21,000 for the quarter ended Dec. 2005. The decrease is primarily due to a decrease in the amount of notes payables and capital leases outstanding in the quarter ended Dec. 31, 2006, compared to the comparable period in 2005. At Dec. 31, 2006, the company's balance sheet showed $5.4 million in total assets, $3.3 million in total liabilities, and $2.1 million in total stockholders' equity. The company's balance sheet at Dec. 31, 2006, also showed strained liquidity with $1.5 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 quarter ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?1a4a Going Concern Doubt Berenson LLP in New York raised substantial doubt about Advanced Communications Technologies, Inc.'s ability to continue as a going concern after auditing the company's financial statements for the fiscal year ended June 30, 2006. The auditing firm pointed to the company's net loss and working capital deficiency. About Advanced Communications Based in New York, Advanced Communications Technologies Inc. (OTCBB: ADVC.OB) -- http://www.advancedcomtech.net/-- is a public holding company specializing in the technology after-market service and supply chain, known as reverse logistics. Its wholly owned subsidiary and principal operating unit, Encompass Group Affiliates Inc. acquires and operates businesses that provide computer and electronics repair and end-of-life cycle services. Encompass owns Cyber-Test Inc., an electronic equipment repair company based in Florida and the company's principal operating business. The company operates in one business segment, the repair and refurbishment component of the reverse logistics industry. ADVANCED MARKETING: Court Okays Sale of PGW's Distribution Rights ----------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware gave Advanced Marketing Services Inc. and its debtor-affiliates authority to sell Publishers Group West Inc.'s rights under its distribution agreements with various publishers to Perseus Books LLC and Client Distribution Services Inc. AMS and its debtor-affiliates also obtained the Court's approval of the purchase agreement between the Debtors and Perseus, and the Court's authority to assume and assign the contracts to CDS. As reported in the Troubled Company Reporter on Jan. 31, 2007, Debtors asked the Court for authority to sell PGW's rights under its distribution agreements with various publishers to Perseus and CDS. Debtors also asked the Court to authorize PGW to assume and assign the Distribution Agreements, and sell certain other assets related to its distribution business to Perseus. As reported in the Troubled Company Reporter on Feb. 13, 2007, National Book Network Inc. made a competing and superior bid to purchase PGW's rights under its distribution agreements with various publishers, as disclosed by Rich Publishing LLC in its objection to the proposed sale to Perseus and CDI. NBN offered to pay 85 cents on the dollar for the claims of all PGW publishers, Rich Publishing said. As reported in the Troubled Company Reporter on Feb. 14, 2007, Amber-Allen Publishing Inc. disclosed that it will not enter into a Publisher Agreement with Perseus. Consequently, it asked the Court to include these provisions in the order approving the sale of PGW's rights under its distribution agreements to Perseus and CDS: (a) The Amber-Allen Distribution Agreement is deemed rejected, effective immediately upon entry of the ruling granting the PGW Sale; and (b) Within five business days of entry of that Court ruling, PGW will cooperate with Amber-Allen to return Amber- Allen's books, and Amber-Allen will pay the reasonable freight and handling charges. Judge Christopher S. Sontchi clarifies that nothing will constitute an exercise of jurisdiction over an approval by the Court of any of the Consenting Publisher Distribution Agreements or the New Publisher Agreements other than to authorize the Debtors to assume and assign the Assigned Contracts to CDS, including the requirement of the execution of the Agreements. Upon the closing of the PGW Sale, the Distribution Agreements of all Consenting Publishers will be deemed assumed and assigned subject to the terms of the Purchase Agreement and the Assignment Agreement. Upon the assumption and assignment, no payments made to Consenting Publishers prepetition on account of obligations due under the Assumed Contracts will be recoverable by, or for the benefit of, the Debtors' estates under the Bankruptcy Code including Sections 547 or 550. "We are excited to move forward as quickly as possible to write checks to PGW clients and to provide some certainty for PGW employees," said David Steinberger, president and chief executive of Perseus, The New York Times reports. National Book Network Inc., which formally delivered its competing bid to the Court on Feb. 14, 2007, offered to pay 85 cents on the dollar for the claims of all PGW publishers. Perseus, on the other hand, offered 70 cents on the dollar for the claims of all Consenting publishers. Judge Sontchi says the consideration under the PGW Sale is fair and reasonable and provides reasonably equivalent value in exchange for the assets transferred. The sale process was fair. The competitive sales process was not stifled. The price was negotiated at arm's-length between commercially sophisticated entities represented by counsel. The price was not the product of collusion or unfair or inequitable conduct and was the highest price offered. Perseus Books acted in good faith within the meaning of Section 363(m) of the Bankruptcy Code, Judge Sontchi adds. Amber-Allen Contract Deemed Rejected To address the objection filed by Amber-Allen Publishing, Inc., Judge Sontchi rules that: (a) the marketing and distribution agreement between PGW and AAP will be deemed rejected and terminated effective upon closing of the PGW Sale; (b) PGW will cooperate with AAP to enable AAP to retrieve all Products in PGW's possession, custody or control within 15 days after the closing of the PGW Sale with AAP paying all freight and handling charges for the retrieval; (c) upon the closing of the PGW Sale, AAP will be deemed to have waived any claim for damages arising out of the rejection of the AAP Agreement; and (d) notwithstanding the rejection and termination of the AAP Agreement, AAP will continue to accept returns of Products from PGW's trade accounts until the earlier of the effective date of any confirmed Plan in the Debtors' Chapter 11 cases, conversion to Chapter 7, or the date that is one year from the rejection and termination, and will credit the returns dollar for dollar against AAP's prepetition unsecured claim. All objections to the Sale that were not previously withdrawn are overruled. A full-text copy of the Court-approved Purchase Agreement between the Debtors and Perseus Books is available at no charge at: http://researcharchives.com/t/s?1a2d 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. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ADVANCED MARKETING: Committee Taps Traxi as Financial Advisor ------------------------------------------------------------- The Official Committee of Unsecured Creditors in Advanced Marketing Services Inc. and its debtor-affiliates' bankruptcy cases asks the U.S. Bankruptcy Court for the District of Delaware for permission to retain Traxi LLC as its financial advisors, nunc pro tunc to Jan. 12, 2007. The Committee tells the Court that it selected Traxi LLC because of its experience and knowledge and believes that Traxi is well qualified to represent it in the Debtors' bankruptcy cases. As the Creditors Committee's financial advisors, Traxi will: (a) provide financial analysis related to the proposed debtor- in-possession financing motion and other first day motions, including assistance in negotiations, attendance at hearings, and testimony; (b) review all financial information prepared by the Debtors or its consultants as requested by the Committee, including a review of the Debtors' financial statements as of the Petition Date showing in detail all assets and liabilities and priority and secured creditors; (c) monitor the Debtors' activities regarding cash expenditures, receivable collections, asset sales and projected cash requirements; (d) attend at meetings including the Committee, the Debtors, creditors, their attorneys and consultants, federal and state authorities, if required; (e) review the Debtors' periodic operating and cash flow statements; (f) review the Debtors' books and records for intercompany transactions, related party transactions, potential preferences, fraudulent conveyances and other potential prepetition investigations; (g) investigate any prepetition acts, conduct, property, liabilities and financial condition of the Debtors, their management, creditors including the operation of their business, and as appropriate, avoidance actions; (h) review any business plans prepared by the Debtors or their consultants; (i) review and analyze proposed transactions for which the Debtors seek Court approval; (j) assist in the Debtors' sale process, collectively or in segments, parts or other delineations, if any; (k) assist the Committee in developing, evaluating, structuring and negotiating the terms and conditions of all potential plans of reorganization; (l) estimate the value of the securities, if any, that may be issued to unsecured creditors under any the Plan; (m) provide expert testimony on the results of the Committee's findings; (n) analyze potential divestitures of the Debtors' operations; (o) assist the Committee in developing alternative Plans, including contacting potential Plan sponsors if appropriate; and (p) provide the Committee with other and further financial advisory services with respect to the Debtors, including valuation, general restructuring and advice with respect to financial, business and economic issues, as may arise during the course of the restructuring as requested by the Committee. Traxi will be paid on an hourly basis, plus reimbursement of the actual and necessary expenses that Traxi incurs in accordance with the ordinary and customary rates, which are in effect on the date the services are rendered, William Sinnott of Random House, the Committee Chairperson, says. Traxi's hourly rates are: Professional Hourly Rate ------------ ----------- Partners/Managing Directors $450 - $525 Managers/Directors $275 - $425 Associate/Analysts $125 - $275 According to Mr. Sinnott, the charges set forth are based on actual time charges on an hourly basis and based on the experience and expertise of the professional involved. The hourly rates set forth are subject to periodic adjustments to reflect economic and other conditions. Anthony J. Pacchia, senior managing director and unit holder at Traxi, assures the Court that Traxi represents no other entity in connection with the Debtors' bankruptcy cases, is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, and does not hold or represent any interest adverse to the Creditors Committee with respect to the matters on which it is to be employed. 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. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ADVANCED MULTI: Files Schedules of Assets & Liabilities ------------------------------------------------------- Advanced Multi Product Group Inc. delivered to the U.S. Bankruptcy Court for the Eastern District of Michigan its schedules of assets and liabilities. The Debtor discloses: Assets Liabilities ------ ----------- A. Real Property $0 B. Personal Property $27,482,516 C. Property Claimed as Exempt D. Secured Claims $9,178,662 E. Unsecured Priority Claims $2,261,734 F. Unsecured Non-priority Claims $3,474,885 ----------- ----------- Total $27,482,516 $14,915,282 Rockland Business Credit LLC holds the largest secured claim totaling $7,614,238. The Internal Revenue Service holds the largest unsecured priority claim totaling $2,008,973. Headquartered in Auburn Hills, Michigan, Advanced Multi Product Group Inc. manufactures plastic and metal parts for motor vehicles. The company filed for chapter 11 protection on Jan. 22, 2007 (Bankr. E.D. Mich. Case No. 07-41267). Arnold S. Schafer, Esq., Jason W. Bank, Esq., Leon N. Mayer, Esq., and Michael E. Baum, Esq., at Schafer and Weiner, PLLC, represent the Debtor. Franklin Advisors serves as the Debtor's financial advisor. When the Debtor filed for protection from its creditors, it listed $27,482,516 in total assets and $14,915,282 in total debts. The Debtor's exclusive period to file a chapter 11 plan expires on May 22, 2007. AERCO LIMITED: Moody's Junks Rating on $241 Million Notes --------------------------------------------------------- Moody's Investors Service downgraded six classes of pooled aircraft lease-backed notes issued by AerCo Limited Trust. There are two collection top-up accounts supporting the AerCo transaction. The first top-up amount, fully funded at $30 million, primarily supports expenses and Class A interest. The second top-up account supports the next priorities in the waterfall, including first Class A minimum principal, Class B interest and minimum principal, Class C interest and minimum principal, and finally Class D interest and minimum principal. The second top-up account, currently funded at $5.2 million, is expected to be depleted in the next several months, at which time cash flows available to this portion of the waterfall are expected to decline significantly. Moody's review focused on the degree to which proceeds generated by the aircraft portfolio are likely to support debt service under each of the Notes, as well as the degree of credit support available to each of the Notes. The rating differential between the Class A-3 and Class A-4 Notes results primarily from the expected amortization schedules over the next five to six years. These are the rating actions: -- $539.0 Million Class A-3 Floating Rate Notes due July 2025, downgraded to Ba3 from Baa3 -- $82.0 Million Class A-4 Floating Rate Notes due July 2025, downgraded to A3 from A1 -- $36.3 Million Class B-1 Floating Rate Notes due July 2023, downgraded to Caa3 from B1 -- $60.1 Million Class B-2 Floating Rate Notes due July 2025, downgraded to Caa3 from B1 -- $72.1 Million Class C-1 Floating Rate Notes due July 2023, downgraded to Ca from Caa1 -- $72.6 Million Class C-2 Floating Rate Notes due July 2025, downgraded to Ca from Caa1. AMERIQUEST MORTGAGE: DBRS Reviews Low-B Ratings on 3 Class Certs. ----------------------------------------------------------------- Dominion Bond Rating Service placed four classes under ueview with Negative Implications from four Ameriquest Mortgage Trust Securities Inc. transactions. -- $12,000,000 Asset-Backed Pass-Through Certificates, Series 2004-R7, Class M-11 currently rated BBB (low) -- $15,000,000 Asset-Backed Pass-Through Certificates, Series 2004-R8, Class M-10 currently rated BB (high) -- $7,000,000 Asset-Backed Pass-Through Certificates, Series 2004-R9, Class M-9 currently rated BB (high) -- $14,250,000 Asset-Backed Pass-Through Certificates, Series 2004-R11, Class M-10 currently rated BB (high) ARVINMERITOR INC: Earns $7 Million in Quarter Ended December 31 --------------------------------------------------------------- ArvinMeritor, Inc. reported $7 million of net income on $2.3 billion of sales for the quarter ended Dec. 31, 2006 compared with $34 million of net income on $2.09 billion of sales in the comparable period of 2005. "We are operating in a difficult environment in the passenger car, light-duty truck, and commercial vehicle segments. In an effort to address the ongoing challenges, and create value for our shareowners, we are making good progress and are on track with our recently announced initiative, Performance Plus. By proactively taking control of our future through this global transformational initiative, while at the same time maintaining focus on improving our operational and financial performance, we will emerge a stronger, more dynamic global organization," said Chip McClure, Chairman, CEO and President. The company reduced its fiscal year 2007 forecast for light vehicle production to 15.3 million vehicles in North America, down from 15.8 million forecasted last quarter. The company's forecast for Western Europe is unchanged at 16.1 million vehicles. The company anticipates sales from continuing operations in fiscal year 2007 in the range of $8.9 to $9.1 billion, and the outlook for full-year diluted earnings per share from continuing operations to be in the range of $1.15 to $1.25. Cash flow guidance for fiscal year 2007 is $75 million to $125 million, as previously forecast. This guidance excludes gains or losses on divestitures, restructuring costs, and other special items, including potential extended customer shutdowns or production interruptions. "We are focused on redefining ArvinMeritor by creating a culture of operational, commercial and individual excellence," said Mr. McClure. "Our vision is to be a global systems provider focused on our target markets, deliver strong financial performance and drive even greater value for our shareowners, employees and customers." A full-text copy of the company's Form 10-Q for the quarter ended Dec. 31, 2006 is available for free at: http://ResearchArchives.com/t/s?1a55 About ArvinMeritor Inc. Based in Troy, Mich., ArvinMeritor Inc. (NYSE: ARM) -- http://www.arvinmeritor.com/-- supplies integrated systems, modules and components serving light vehicle, commercial truck, trailer and specialty original equipment manufacturers and certain aftermarkets. * * * As reported in the Troubled Company Reporter on Feb. 12, 2007, Dominion Bond Rating Service assigned a rating of BB (low) to the $175 million Convertible Senior Unsecured Notes of ArvinMeritor Inc. The trend is Stable. ARVINMERITOR INC: Repays in Full Outstanding Term Loan B -------------------------------------------------------- ArvinMeritor, Inc., repaid in full the $169.5 million aggregate principal amount of its outstanding Term Loan B due in 2012. Net proceeds from the recent issue of convertible senior unsecured notes along with other sources were used to fund the repayment. The company also disclosed that lenders participating in the Senior Secured Revolving Credit Facility due in 2011 have unanimously approved amendments to the facility. The amendments include a reduction of the revolving credit facility from $980 million to $900 million in addition to less restrictive financial covenant levels. Jim Donlon, senior vice president and CFO said, "While the reductions and improvements to our revolving credit facility were not required, they demonstrate our ongoing effort to continuously improve our balance sheet." He continued, "With the recently announced agreement to sell our Emissions Technologies Group, the need for facilities of more than $1 billion is no longer necessary. We believe the enhancements will provide additional financial flexibility as we focus on transforming our company and we are pleased with the support of our bank group in helping us achieve our goals." Credit Facility Amendment The company entered into Amendment No. 1 to Credit Agreement, among ArvinMeritor, ArvinMeritor Finance Ireland, the financial institutions party and JPMorgan Chase Bank, National Association, as Administrative Agent. The amendment relates to the Credit Agreement, dated as of June 23, 2006, by and among ArvinMeritor, AFI, the institutions from time to time parties thereto as lenders, JPMorgan Chase Bank, National Association, as Administrative Agent, Citicorp North America, Inc. and UBS Securities LLC, as Syndication Agents, ABN AMRO Bank N.V., BNP Paribas and Lehman Commercial Paper Inc., as Documentation Agents, and J.P. Morgan Securities Inc. and Citigroup Global Markets, as Joint Lead Arrangers and Joint Book Runners. The primary purposes of the amendment are: (a) to provide for repayment by ArvinMeritor of the $170 million term loan under the Credit Agreement; (b) to reduce the amount of the revolving loan commitment under the Credit Agreement to $900 million from $980 million; and (c) to amend certain covenants in the Credit Agreement, including covenants with respect to maintenance by ArvinMeritor of specified debt and fixed charge coverage ratios. A full text copy of Amendment No. 1 to Credit Agreement, dated as of February 23, 2007, is available for free at: http://ResearchArchives.com/t/s?1a56 About ArvinMeritor Inc. Based in Troy, Mich., ArvinMeritor Inc. (NYSE: ARM) -- http://www.arvinmeritor.com/-- supplies integrated systems, modules and components serving light vehicle, commercial truck, trailer and specialty original equipment manufacturers and certain aftermarkets. * * * As reported in the Troubled Company Reporter on Feb. 12, 2007, Dominion Bond Rating Service assigned a rating of BB (low) to the $175 million Convertible Senior Unsecured Notes of ArvinMeritor Inc. The trend is Stable. ASHMORE ENERGY: S&P Rates $1.5 Billion Loans at B+ -------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Ashmore Energy International. At the same time, Standard & Poor's assigned its 'B+' secured debt rating and '3' recovery rating to AEI's $500 million revolving credit facility due 2012 and the company's $1.0 billion term loan due in 2014. The outlook is stable. AEI will use the proceeds from the term loan to refinance its original debt from when it acquired its assets from Enron Corp., provide for working capital, and other general corporate purposes. The '3' recovery rating assigned to the term loan indicates expectations of meaningful recovery of principal in a payment default scenario. AEI, a Cayman Island holding company, is majority owned by funds that have, directly or indirectly, appointed Ashmore Investment Management Ltd, a subsidiary of Ashmore Group PLC as their investment manager. AEI has ownership interests and managerial responsibilities in 19 energy assets in 14 countries. "We view AEI's significant asset concentration in emerging markets and its reliance on distributions from investments in companies focused on the energy sector in jurisdictions with considerable regulatory and operating uncertainties and potential currency devaluation to be material risks," said Standard & Poor's credit analyst Kenneth L. Farer. Standard & Poor's also said that the stable outlook reflects that Ashmore should maintain sufficient liquidity and dividends from its investment portfolio to meet its obligations over the near term. ASHMORE ENERGY: Moody's Rates Proposed $1.5 Bil. Sr. Debts at Ba3 ----------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to the proposed senior secured credit facilities of Ashmore Energy International. The proposed credit facilities include a $500 million revolving credit facility due 2012 and a $1 billion term loan due 2014. Moody's also assigned a B1 corporate family rating to the company. The ratings assigned to the senior secured facilities reflect both the overall probability of default of the company, for which Moody's assigns a probability of default rating of B1 and loss given default assessments of LGD3, 35% for the term loan and the revolving credit facility. The rating outlook for AEI is stable. Proceeds from the credit facilities will be used to refinance existing indebtedness, pay transaction fees, and for general corporate purposes. The credit facilities will be secured by a pledge on the shares of the top tier holding companies of AEI's operating companies and a pledge on all secured loans made by AEI to any of its subsidiaries. AEI's capital structure also includes subordinated PIK notes in the amount of approximately $560 million that are not rated. AEI is a diversified energy company with equity interests in energy infrastructure assets, including: -- natural gas distribution, transportation, and services; -- power generation; and -- power distribution. AEI is majority owned by investment funds that have directly or indirectly appointed Ashmore Investment Management Limited as their investment manager. The company was acquired from Enron and certain of its affiliates in 2006. The Ba3 rating on AEI's proposed credit facilities reflects the security afforded these facilities under the credit agreement. The company's B1 CFR reflects these credit challenges: 1) AEI's focus on equity investments in energy assets located primarily in speculative grade emerging markets, including some countries where the risk of nationalization or adverse changes to the contractual arrangements underlying several projects is particularly high; 2) Structural subordination of the credit facilities to existing project level debt of approximately $900 million; 3) Concentration risk associated with AEI's Brazilian power distribution company, which generates over 50% of the parent company's cash inflows; and 4) Risks associated with the company's current acquisitive growth strategy. These credit challenges are mitigated by these credit strengths: 1) The stable and predictable cash flows provided by most of the company's operating companies 2) AEI's moderately leveraged financial profile, including the relatively low amount of debt at key subsidiaries; and 3) The supportive regulatory frameworks and contractual arrangements governing most of the company's operating companies, which mitigate or insulate them against a number of risks, including inflation, fuel price volatility, volume risk, and, in some cases, currency fluctuations. AEI's stable outlook reflects Moody's expectation that the company will maintain a moderate financial profile and prudent risk management practices, including financing acquisitions with an appropriate mix of debt and equity. Moody's ratings are predicated upon the final structure and documentation being consistent with its current understanding of the transaction. AEI is a diversified energy company with operations in 14 countries and offices in Houston and London. BUILDING MATERIALS: S&P Rates $325 Million Senior Notes at B ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B' senior secured debt rating and '5' recovery rating to the $325 million senior secured notes due 2015 of Building Materials Corp. of America. The notes are to be issued under Rule 144a with registration rights. The '5' indicates the likelihood of negligible recovery of principal in the event of a payment default. Proceeds from the notes will be used to repay the $325 million bridge loan incurred in connection with the ElkCorp transaction. Upon completion of the transaction, BMCA will have about $1.8 billion of debt, adjusted for operating leases. The ratings on Wayne, New Jersey-based BMCA incorporate the narrow focus of the company's product line, the company's vulnerability to petroleum-based raw-material costs, its competitive industry, its aggressive debt leverage measures, certain legal risks associated with the bankruptcy proceedings of parent company G-I Holdings Inc., and the related asbestos litigation pending against BMCA. These factors are tempered by the company's position as a significant U.S. producer of asphalt roofing materials, favorable re-roofing market conditions, and the company's satisfactory liquidity and discretionary cash flow. Ratings List: * Building MatSerials Corp. of America -- Corporate Credit Rating at BB-/Stable/ -- Senior Secured at B, Recovery Rating: 5 CDC MORTGAGE: Moody's Junks Rating on Series 2001-HE1 Certificates ------------------------------------------------------------------ Moody's Investors Service has downgraded one class of certificates and has placed under review for possible downgrade seven classes of certificates from six CDC Mortgage Capital Trust deals issued in 2001, 2002, and 2003. The transactions consist of primarily first-lien, adjustable and fixed-rate subprime mortgage loans. All of the transactions have multiple originators. The loans in the 2001-HE1, 2002-HE1, and 2003-HE3 deals are serviced by Ocwen Federal Bank, FSB, the loans in the 2002-HE3 and 2003-HE1 deals are serviced by Fairbanks Capital Corp., and the loans in the 2004-HE1 deal are serviced by Countrywide Home Loans Servicing, LP. The subordinate certificates are being downgraded or reviewed for possible downgrade based on the fact that existing credit enhancement levels are low given the current projected losses on the underlying pools. As of the Jan. 25, 2007, reporting date, the overcollateralization amounts in all of the deals were well below their 50 bp floors and future losses could cause further erosion of the overcollateralization and put pressure on the most subordinate tranches. Furthermore, the overcollateralization in the 2002-HE3 deal has been fully eroded and the Class B-2 certificates are currently realizing losses. These are the rating actions: * CDC Mortgage Capital Trust * Downgrade: -- Series 2001-HE1, Class B, downgraded from B3 to Caa2 * Review for Downgrade: -- Series 2002-HE1, Class B, current rating Ba2, under review for possible downgrade -- Series 2002-HE3, Class B-1, current rating B3, under review for possible downgrade -- Series 2003-HE1, Class B-1, current rating Ba1, under review for possible downgrade -- Series 2003-HE1, Class B-2, current rating B3, under review for possible downgrade -- Series 2003-HE3, Class B-3, current rating B2, under review for possible downgrade -- Series 2004-HE1, Class B-2, current rating Baa2, under review for possible downgrade -- Series 2004-HE1, Class B-3, current rating Baa3, under review for possible downgrade. CHARTER COMMS: S&P Rates Proposed $7.5 Billion Facilities at B+ --------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'B+' rating to Charter Communications Operating LLC's proposed $7.5 billion senior secured facilities and a 'B' rating to the company's proposed $550 million second-lien term loan. In addition, a recovery rating of '1' was assigned to both tranches of debt, indicating a high expectation of full recovery of principal in the event of default. COO is an indirect subsidiary of St. Louis, Missouri-based Charter Communications Inc., a cable TV provider. The ratings are predicated on the successful completion of Charter's refinancing plan, which was announced on Feb. 9, 2007, and resulted in Standard & Poor's listing of its corporate credit and other ratings on Charter on CreditWatch with positive implications on Feb. 13. Upon completion of the transaction, Standard & Poor's expects to raise the corporate credit ratings on Charter and subsidiary Charter Communications Holdings LLC to 'B-' from 'CCC+', with a stable outlook. The proposed upgrade would be based on the improved, albeit, still limited, liquidity that would result from the new credit facilities. In particular, the new credit facilities would reduce Standard & Poor's concerns about the company's ability to meet 2007 and 2008 debt maturities in light of heavy capital spending related to the rollout of new services. On completion of the contemplated financing, the ratings on the existing $1.1 billion second-lien notes due 2012 and the $770 million second-lien notes due 2014 would be raised to 'B' from 'B-', as they would rank pari passu in right of payment with the new $550 million second-lien term loan. The new issue ratings are subject to final documentation and will fall away, should the financing not close. Proceeds from the proposed debt issue will primarily be used to refinance and expand the existing $6.85 billion senior secured credit facilities at CCO, and redeem up to $737 million of subsidiary notes due in 2009 and 2010. The proposed $7.5 billion in first-lien facilities consist of a $1.5 billion revolver maturing in 2013 and two term loans of $5 billion and $1 billion, respectively, both maturing in 2014. The second-lien term loan will mature six months after the senior secured first-lien term loans. Ratings List * Charter Communications Operating LLC -- Corporate Credit Rating at CCC+/Watch Pos/ -- $7.5 Billion Senior Secured Facilities at B+, Recovery Rating: 1 -- $550 Million Second-Lien Term Loan B, Recovery Rating: 1 CITIGROUP MORTGAGE: DBRS Reviews BB Rating on $9.7 Million Certs. ----------------------------------------------------------------- Dominion Bond Rating Service placed Class M-11 Under Review with Negative Implications from Citigroup Mortgage Loan Trust 2006-NC1 Asset-Backed Pass-Through Certificates, Series 2006-NC1's $9,735,000 Asset-Backed Pass-Through Certificates, Series 2006- NC1, Class M-11, currently rated BB (high). The rating was placed Under Review with Negative Implications as a result of the increased 90+ day delinquency pipeline relative to the available level of credit enhancement. The mortgage loans consist of fixed-rate and adjustable-rate first-lien and second- lien mortgage loans. The mortgage loans in the Underlying Trusts were acquired by Citigroup Mortgage Loan Trust from New Century Mortgage Corporation. CONEXANT SYSTEMS: Receives $98.1 Million from Acquicor-Jazz Merger ------------------------------------------------------------------ Conexant Systems Inc. has received $98.1 million as a result of the completion of the merger between Acquicor Technology Inc. and Jazz Semiconductor Inc. The closing of the all-cash transaction, valued at approximately $260.1 million, was reported [Tues]day by Acquicor and Jazz. Conexant Systems plans to use the proceeds for general corporate purposes, including debt retirement. The company also made an equity investment of $10 million in the merged company, which was renamed Jazz Technologies Inc. Jazz Semiconductor retains its name, and is now a wholly owned subsidiary of the newly merged company. Conexant Systems disclosed that it owned approximately 42% of Jazz Semiconductor. "The proceeds from the Acquicor-Jazz transaction strengthen Conexant's balance sheet and improve our liquidity," said Dwight W. Decker, Conexant chairman and chief executive officer. "In five short years, the Jazz team built an independent, world-class specialty-process wafer foundry serving more than one hundred customers across our industry. During that time, Conexant and Jazz enjoyed a close and mutually beneficial relationship, which we plan to continue. I'd like to congratulate the Jazz team on their accomplishments and wish the combined company continued success moving forward." The carrying value of Conexant Systems' investment in Jazz Semiconductor, Inc. was approximately $55.5 million as of Dec. 29, 2006. About Conexant Systems Headquartered in Newport Beach, California, Conexant Systems, Inc. (NASDA: CNXT) -- http://www.conexant.com/-- designs, develops and sells semiconductor system solutions that connect personal access products such as set-top boxes, residential gateways, PCs and game consoles to voice, video and data processing services over broadband and dial-up connections. Key semiconductor products include digital subscriber line and cable modem solutions, home network processors, broadcast video encoders and decoders, digital set-top box components and systems solutions, and the company's foundation dial-up modem business. * * * As reported in the Troubled Company Reporter on Oct. 31, 2006, Moody's Investors Service assigned a B1 rating to the senior secured floating rate notes and a Caa1 rating to the corporate family rating of Conexant Systems Inc. Moody's also assigned a Probability of default rating of Caa1, a LGD-2 rating for the senior secured notes and a SGL-3 speculative grade liquidity rating. The rating outlook is stable. CONSOLIDATED ENERGY: Baker & Jennings Resigns as Directors ---------------------------------------------------------- Consolidated Energy Inc.'s Board of Directors accepted the resignations of Carl Baker and Edward Jennings, each as a Director and Mr. Jennings as Chairman of the Board, pursuant to the terms of their resignation letters each dated Feb. 16, 2007. Messrs. Baker and Jennings resignations were for personal reasons, and neither Mr. Baker nor Mr. Jennings had any disagreements or disputes with the company or any of its principle officers. Also on Feb. 20, 2007, the Board unanimously voted Mr. Jesse Shelmire, an existing Director, to succeed Mr. Jennings as Chairman of the Board. Mr. Shelmire recused himself from this vote. The Board also unanimously voted to promote Mr. Joseph Jacobs to the position of President of the Company and appointed Mr. Barry Tackett as the company's Secretary. Mr. Jacobs will retain the title of Chief Operating Officer, and Mr. Tackett will retain the title of Controller. For each vote, Mr. Jacobs and Mr. Tackett recused himself from the voting process. No additional compensation was granted to Mr. Shelmire, Mr. Jacobs or Mr. Tackett for agreeing to serve the Company in these added capacities. Going Concern Doubt As reported in the Troubled Company Reporter on May 25, 2006, Killman, Murrell & Company, P.C., Houston, Texas, raised substantial doubt about Consolidated Energy, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's recurring losses from operations and limited capital resources. About Consolidated Energy Consolidated Energy, Inc. (OTCBB: CEIW) mines coal in Eastern Kentucky. The Company conducts business through its wholly owned coal-mining subsidiary, Eastern Consolidated Energy, Inc. The Company is also engage in gas and oil exploration and development, and develops related clean energy technologies that are environment friendly. CROWN CASTLE: S&P Holds BB+ Rating on $900 Mil. Credit Facility --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+' bank loan and '1' recovery ratings on Crown Castle Operating Co.'s $900 million first-lien bank credit facility, which was increased from $850 million. The 'BB+' rating is one notch above the corporate credit rating on parent company Crown Castle International Corp., and the recovery rating of '1' indicates Standard & Poor's expectations for a full recovery of principal in a simulated payment default scenario. Proceeds from the $650 million term loan have been used to repurchase shares of parent company, Crown Castle, while the revolving facility will be available for general corporate purposes. DAIMLERCHRYSLER: Chrysler CEO LaSorda Communicates with Employees ----------------------------------------------------------------- Chrysler Group Chief Executive Tom LaSorda has sent an e-mail message to employees saying that a "frenzy of rumors" circulated that DaimlerChrysler AG is seeking partners and strategic options for the group. In his message posted on a media Web site, Mr. LaSorda said, "The board of management has a duty to consider all options, but while this process is ongoing, the board -- including myself -- can't comment on developments because of strict legal requirements." He added that, "It may take weeks or months before official comments can be made on some issues." He stressed that: "Meanwhile, our job is very clear. Our mission is to produce great cars and trucks, to take care of our customers and to restore profitability ... Whatever fork in the road we may take, we first have to make sure we're on the road -- and the recovery and transformation plan is that road." As reported in the Troubled Company Reporter on Feb. 15, 2007, Chrysler Group disclosed a three-year Recovery and Transformation Plan that will result in an employee reduction of 13,000 people from 2007 to 2009 and $4.5 billion financial improvements by 2009. About DaimlerChrysler Headquartered 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. FIRST FRANKLIN: DBRS Downgrades Ratings on Three Class Certs. ------------------------------------------------------------- Dominion Bond Rating Service downgraded three classes and placed three classes from five First Franklin Mortgage Loan Trust transactions Under Review with Negative Implications: -- $5,259,000 Mortgage Pass-Through Certificates, Series 2005-FFH2, Class B-2 to BB (low) from BB -- $11,400,000 Mortgage Pass-Through Certificates, Series 2005-FFH3, Class B-3 to B (high) from BB (low) -- $16,800,000 Mortgage Pass-Through Certificates, Series 2005-FFH3, Class B-4 to B (low) from B (high) These downgrades are the result of the increased 90+ day delinquency pipeline relative to the available level of credit enhancement. The mortgage loans consist primarily of adjustable- rate and fixed-rate mortgage loans that are secured by first liens on residential properties. The original loan to value ratios are 99.52% and 99.92% for FFML 2005-FFH2 and FFML 2005-FFH3, respectively. The mortgage loans in the Underlying Trusts originated by First Franklin Financial Corporation. These ratings were placed Under Review with Negative Implications as a result of the increased 90+ day delinquency pipeline relative to the available level of credit enhancement. The mortgage loans consist primarily of adjustable-rate and fixed-rate mortgage loans that are secured by first liens on residential properties. The mortgage loans in the Underlying Trusts originated by First Franklin Financial Corporation. -- $6,974,000 Asset-Backed Certificates, Series 2004-FF10, Class M-6 currently rated BBB (low) -- $8,528,000 Mortgage Pass-Through Certificates, Series 2005- FF9, Class M-9 currently rated BBB (low) -- $4,586,000 Mortgage Pass-Through Certificates, Series 2006- FF2, Class B currently rated BB (high) FLEMING COS: Post-Con Trust Commences First Cash Distribution ------------------------------------------------------------- The Post Confirmation Trust for Fleming Companies Inc. has commenced its First Cash Distribution. The PCT is distributing 2.5 cents for each $1 of Allowed General Unsecured Claims, as approved by the U.S. Bankruptcy Court for the District of Delaware. The First Cash Distribution could aggregate up to $60 million, based upon the maximum General Unsecured Claims pool of $2.4 billion approved by the Court. The Trust also said it will shortly distribute additional shares of Core-Mark stock on account of Allowed General Unsecured Claims. That additional distribution will implement the recently approved reduction in the reserve maintained for disputed and unresolved general unsecured claims. As a result of the reduction of the reserve, the Trust will distribute Core-Mark stock based upon a maximum pool of General Unsecured Claims of $2.4 billion. Cash and shares will be distributed pursuant to the Third Amended and Revised Joint Plan of Reorganization of Fleming Companies, Inc. and Its Filing Subsidiaries and court order. The Trust advises that most holders of Allowed General Unsecured Claims have already provided the Trust with all necessary Tax Identification Numbers. Cash distributions allocable to those remaining holders of Allowed General Unsecured Claims, which have not yet provided the requisite tax information to the Trust, may be subject to withholding and delay. Furthermore, such holders also may be prohibited from the collection of Core-Mark stock. Those holders are urged to respond to PCT correspondence seeking the requisite tax information. Holders may contact the Trust to provide updated address information or to obtain the requisite tax forms at (972) 535-7149. Interested parties may review relevant court documents, including the Trust's Post-Confirmation Quarterly Summary Report for the quarter ended December 31, 2006. That report, together with other materials reflected in the court docket, can be found on the claims agent's website -- http://www.bmccorp.net/fleming Settlement of Litigation The Trust has also settled its remaining litigation regarding the misstatement of Fleming's financial statements. Upon completion of documentation, the remaining litigation in United States Federal Court in the Eastern District of Texas will be dismissed. Proceeds from the settlement are expected to be received during the second quarter of 2007. The financial terms of the settlement are confidential and will not be disclosed. Headquartered in Lewisville, Texas, Fleming Companies, Inc. -- http://www.fleming.com/-- was the largest multi-tier distributor of consumer package goods in the United States. The Company filed for chapter 11 protection on April 1, 2003 (Bankr. Del. Case No. 03-10945). Judge Walrath confirmed Fleming's Third Amended Plan on July 26, 2004, under which Core-Mark Holding Company, Inc., emerged as a rehabilitated company owned by Fleming's unsecured creditors on Aug. 23, 2004. A Post-Confirmation Trust was created to liquidate Fleming's remaining assets and liabilities not related to the convenience operations, to pursue causes of action, and to reconcile and pay claims. Richard L. Wynne, Esq., Bennett L. Spiegel, Esq., Shirley Cho, Esq., and Marjon Ghasemi, Esq., at Kirkland & Ellis, represented the Debtors. When the Debtors filed for protection from their creditors, they listed $4,220,500,000 in assets and $3,547,900,000 in liabilities. GETTY IMAGES: Gets Notice of Event of Default for Filing Failure ---------------------------------------------------------------- Getty Images, Inc., disclosed in a regulatory filing with the U.S. Securities and Exchange Commission that on Feb. 21, 2007, it received notice of an Event of Default related to the Company's failure to file its Third Quarter Report. The company had, on Nov. 29, 2006, received two notices of a purported default from certain holders of the Company's $265 million aggregate principal amount of 0.50% Convertible Subordinated Debentures, Series B due 2023. The notices were received from holders who claimed to hold more than 25% in principal amount of the outstanding Debentures asserting that the company's failure to file its Quarterly Report on Form 10-Q for the third quarter of 2006 with the SEC by the prescribed filing date under SEC regulations was a default under Section 17.01 of the Indenture dated as of December 16, 2004, between the company, as issuer, and The Bank of New York, as Trustee, relating to the Debentures. Section 17.01 incorporates by reference Section 314(a) of the Trust Indenture Act of 1940. The notices of default demanded that the company cure the purported default within 60 days from their receipt, after which such default would allegedly develop into an "Event of Default," as defined in the Indenture. The company did not cure the purported default within 60 days from receipt of the notices of purported default. The company does not believe that it has failed to perform any of its obligations under the Indenture because the Indenture does not contain an express covenant requiring the company to provide the Trustee or the bondholders with periodic reports such as the Quarterly Report on Form 10-Q for the third quarter of 2006. While Section 314(a) of the TIA is incorporated into the Indenture by virtue of Section 17.01 thereof, the company does not believe that the TIA requires periodic reports to be filed with the SEC or provided within any prescribed period of time. Consequently, in the company's view, these notices of default are without merit. Because the company has received a notice of an "Event of Default" from the Trustee, the Trustee or holders of at least 25% in aggregate principal amount of the Debentures then outstanding could declare all unpaid principal and accrued interest on the Debentures then outstanding to be immediately due and payable. The company believes that if the Debentures were to be accelerated, it would have adequate financial resources to pay any unpaid principal and any interest that would then be due on the Debentures and also would have the option of contesting the legal basis for the notices of default and any such acceleration. About Getty Images Getty Images Inc. (NYSE: GYI) -- http://gettyimages.com/-- creates and distributes visual content and the first place creative professionals turn to discover, purchase and manage imagery. The company's award-winning photographers and imagery help customers create inspiring work which appears every day in the world's most influential newspapers, magazines, advertising campaigns, films, television programs, books and Web sites. Headquartered in Seattle, WA and serving customers in more than 100 countries, Getty Images believes in the power of imagery to drive positive change, educate, inform, and entertain. GETTY IMAGES: To Acquire WireImage for $200 Million in Cash ----------------------------------------------------------- Getty Images, Inc., has entered into an agreement to purchase WireImage for approximately $200 million in cash. The deal also will include MediaVast, Inc. the owner of WireImage, and sub- brands FilmMagic and Contour Photos. The acquisition is subject to regulatory review and other customary closing conditions. Getty Images says that the acquisition is expected to support the company's stated strategy of accelerating the growth of its editorial imagery business. "The demand for entertainment, event and celebrity imagery is growing exponentially, and Getty Images has determined that there are great growth opportunities in the category," said Jonathan Klein, co-founder and CEO of Getty Images. "A key focus for us in the last several years has been to grow our editorial imagery business, particularly in international markets. The proposed acquisition of WireImage will enable us to develop new products and services, including podcasts, editorial video, multimedia, mobile, consumer offerings and exclusive imagery. We are confident that the proposed acquisition will help us expand our global entertainment and celebrity imagery business, allowing us to satisfy growing customer demand in the U.S. and abroad." Under the agreement, WireImage's founding photographers and key executives have signed long term agreements to remain with WireImage and Getty Images following the acquisition. The acquisition will bring together two leading innovators within the entertainment imagery category. Getty Images has made entertainment and celebrity imagery accessible to a growing global entertainment marketplace through its industry-leading Web site, featuring search in local languages and purchase in local currencies, and leads the industry in delivery speed, service and international distribution. WireImage has built a reputation for depth and breadth of entertainment coverage and has an innovative and customer-friendly Web site. Several of the companies' product offerings complement each other. For example, Getty Images' Exclusive by Getty Images offering, launched in 2006, and MediaVast's Contour Photos will combine to give customers unprecedented access to celebrity portraiture and compelling editorial features. The business of entertainment imagery has grown significantly in recent years, and like the many other players in the space, Getty Images has benefited. The company has targeted this category for continued growth, especially in non-English speaking countries, and the acquisition of WireImage is expected to help the company expand the entertainment and celebrity imagery segment. Getty Images plans to maintain MediaVast's three brands: WireImage, FilmMagic, and Contour Photos, and its Web sites. WireImage's team and Getty Images will continue to generate new imagery for their respective collections and make it available for online distribution, both in the U.S. and globally. "We are very excited to be joining Getty Images," said Jason Nevader, co-founder and CEO of MediaVast. "Under the Getty Images umbrella our customers will be able to take advantage of Getty Images' global, localized e-commerce platform. Getty Images' breadth of products and services, including their vast archival collections, will give our customers more choice and richer, more accessible content." The company estimates, on a preliminary basis, that the acquisition will be neutral to earnings per share, excluding amortization, in 2007 and accretive to earnings per share on a GAAP basis in 2008. WireImage's portfolio includes an online archive of over 8.5 million images. The company has about 230 employees and offices in New York, Los Angeles, Miami, Atlanta, Las Vegas, London, Hamburg, Tokyo, Shanghai, Sydney, Madrid, and Amsterdam. About Getty Images Getty Images Inc. (NYSE: GYI) -- http://gettyimages.com/-- creates and distributes visual content and the first place creative professionals turn to discover, purchase and manage imagery. The company's award-winning photographers and imagery help customers create inspiring work which appears every day in the world's most influential newspapers, magazines, advertising campaigns, films, television programs, books and Web sites. Headquartered in Seattle, WA and serving customers in more than 100 countries, Getty Images believes in the power of imagery to drive positive change, educate, inform, and entertain. HCP ACQUISITION: S&P Junks Rating on Proposed $171.2 Mil. Sr. Loan ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating to holding company HCP Acquisition Inc. HCP is wholly owned by Harbinger Capital Partners, a U.S.-based private equity firm. Standard & Poor's also assigned its 'B-' senior secured debt rating and '2' recovery rating to HCP's $427.9 million senior secured first-lien loan due 2014 and its 'CCC' rating and '5' recovery rating to HCP's proposed $171.2 million senior secured second-lien loan due 2015. The outlook is stable. "The ratings are largely driven by HCP's very aggressive debt financing and significant asset concentration," said Standard & Poor's credit analyst Nicole Martin. "Furthermore, the relatively new assets have exhibited lower-than-average operating performance," Ms. Martin added. The two key cash-flow generating assets are located in Canada and are supported by long-term tolling agreements with creditworthy, government-owned, counterparties. In its analysis, Standard & Poor's ascribed no value to a material contingent asset related to the claim filed by Calgary Energy Centre against Calpine Energy Services Canada Partnership and parent Calpine Corp. Proceeds from the claim, if successful, are expected to be used to pay down debt. The 'B-' debt rating and the '2' recovery rating reflect the expectation of 80%-100% recovery of principal in the event of a payment of default. HCP will use the proceeds of the first- and second-lien loans to partially finance its acquisition of Calpine Power Income Fund. Harbinger will contribute about $215 million in equity toward the purchase price. HCP's assets include 100% ownership of 678 MW of gas-fired combined cycle facilities in British Columbia, Alberta, and California. The fund also has an indirect interest in Calpine Canada Whitby Holding Co., which owns 50% of a 50-MW gas-fired combined-cycle cogeneration unit in Ontario. HCP expects to receive cash interest payments from a loan outstanding to CCWH, a bankruptcy remote affiliate of Calpine. The stable outlook indicates that, absent any material debt reduction, the ratings should remain at the 'B-' level. There is limited leeway for the contracted electricity generation facilities to be more or less profitable. Standard & Poor's do not expect the 100% mandatory cash sweep is to be sufficient to materially improve the financial profile within a two-year timeframe; hence, a positive outlook is not warranted. Standard & Poor's has ascribed no value to a contingent asset related to the claim filed by Calgary Energy Centre against Calpine Energy Services Canada and parent Calpine. A material reduction in debt could result in a positive rating action. HOLLINGER INC: Ontario Court to Hear Black Entities' Appeal Today ----------------------------------------------------------------- The Court of Appeal for Ontario will hear today, February 26, 2007, the appeals filed by Conrad M. Black and Conrad Black Capital Corporation regarding the decision of the Ontario Superior Court of Justice approving a recent plea agreement entered into between RSM Richter Inc. and the United States Department of Justice; and by Peter G. White and Peter G. White Management Limited. As reported in the Troubled Company Reporter on Jan. 30, 2007, RSM Richter Inc. in its capacity as Receiver of The Ravelston Corporation Limited and its debtor-affiliates sought approval of a plea agreement negotiated with the U.S. Attorney's office in respect of indictments laid in the United States against Ravelston. The motion was supported by Hollinger Inc. and Sun- Times Media Group Inc. and was opposed by Conrad Black Capital Corporation, Peter G. White and Peter G. White Management Limited. On Jan. 22, 2007, Hollinger and its wholly owned subsidiary Domgroup Ltd. served a motion in the insolvency proceedings regarding The Ravelston Entities. In the motion, Hollinger and Domgroup sought an order confirming the secured obligations owed by Ravelston to the company and Domgroup and declaring that the applicable security agreements are valid, perfected and enforceable in accordance with their terms. Sun-Times Media has advised that it intends to bring a motion to stay the motion. In the motion, Hollinger and Domgroup claim that the secured obligations owing by Ravelston total more than $25,000,000. Payments Report On February 15, 2007, the Ontario Superior Court of Justice issued a decision permitting the Receiver to file "a payments report" once it is finalized. The payments report will report on and analyze the monies received by and distributions made by The Ravelston Corporation Limited during the period of January 3, 2002 to April 20, 2005, by Ravelston Management Inc. during the period of July 3, 2002, to April 20, 2005, and by Argus Corporation Limited during the period of January 1, 1999, to April 30, 2005. Ravelston Receivership and CCAA Proceedings On April 20, 2005, the Ontario Court issued two orders by which Ravelston and RMI were: (i) placed in receivership pursuant to the Bankruptcy & Insolvency Act and the Courts of Justice Act; and (ii) granted protection pursuant to the Companies' Creditors Arrangement Act. RSM Richter Inc. was appointed receiver and manager of all of the property, assets and undertakings of Ravelston and RMI. Ravelston holds approximately 16.5% of the outstanding Retractable Common Shares of Hollinger. On May 18, 2005, the Court further ordered that the Receivership Order and the CCAA Order be extended to include Argus and its five subsidiary companies, which collectively own, directly or indirectly, 61.8% of the outstanding Retractable Common Shares and approximately 4% of the Series II Preference Shares of Hollinger. On June 12, 2006, the Court appointed RSM Richter Inc. as receiver and manager and interim receiver of all the property, assets and undertaking of Argent News Inc., a wholly owned subsidiary of Ravelston. The Ravelston Entities own, in aggregate, approximately 78% of the outstanding Retractable Common Shares and approximately 4% of the Series II Preference Shares of Hollinger. The Court has extended the stay of proceedings against the Ravelston Entities to June 8, 2007. About Hollinger Inc. Based in Toronto, Ontario, Hollinger Inc. (TSX: HLG.C)(TSX: HLG.PR.B) -- http://www.hollingerinc.com/-- owns approximately 70.1% voting and 19.7% equity interest in Sun-Times Media Group Inc. (formerly Hollinger International Inc.), a newspaper publisher with assets, which include the Chicago Sun-Times and a large number of community newspapers in the Chicago area. Hollinger also owns a portfolio of commercial real estate in Canada. Litigation Risks Hollinger Inc. faces various court cases and investigations: (1) a consolidated class action complaint filed in Chicago, Illinois; (2) a class action lawsuit that was filed in the Saskatchewan Court of Queen's Bench on Sept. 7, 2004; (3) a $425,000,000 fraud and damage suit filed in the State of Illinois by International; (4) a lawsuit seeking enforcement of a Nov. 15, 2003, restructuring proposal to uphold a Shareholders' Rights Plan, a declaration that corporate by-laws were invalid and to prevent the closing of a certain transaction; (5) a lawsuit filed by International seeking injunctive relief for the return of documents of which it claims ownership; (6) a $5,000,000 damage action commenced by a lessor of an aircraft lease, in which Hollinger was the guarantor; (7) an action commenced by the United States Securities and Exchange Commission on Nov. 15, 2004, seeking injunctive, monetary and other equitable relief; and (8) investigation by the enforcement division of the OSC. INTERSTATE BAKERIES: Court Okays Ninth Amendment to DIP Agreement ----------------------------------------------------------------- The United States Bankruptcy Court for the Western District of Missouri has granted Interstate Bakeries Corporation's request to enter into the Ninth Amendment to their DIP Credit Agreement with JPMorgan Chase Bank, as administrative agent and collateral agent for the Lenders, extending the loan's maturity date to Feb. 9, 2008. Moreover, Judge Venters ruled that: (a) any credit extended and loans made to the Debtors, pursuant to the Amended DIP Credit Agreement, will be deemed to have been extended by the DIP Lenders and their affiliates in good faith, and will be entitled to the full protection of Section 364(e) of the Bankruptcy Code; and (b) as required by the Amended DIP Credit Agreement, the Debtors will deliver a copy of the strategic business plan for the exclusive use of the counsel and financial advisors of the Official Committee of Unsecured Creditors and the Official Committee of Equity Security Holders. As reported in the Troubled Company Reporter on Jan. 31, 2007, The DIP financing facility is currently set to expire on June 2, 2007. J.P. Morgan Chase Bank, agent for the DIP financing facility during the bankruptcy cases, will continue to act as agent and syndicate the extended financing facility. IBC said that it is optimistic that it will receive the support of the lenders that are party to the DIP financing facility to extend the facility through Feb. 9, 2008, as well as the consent of the prepetition lenders to such transactions; however, there can be no assurances that such lenders will agree to the extended DIP financing facility on the terms and conditions currently contemplated by the proposed amendment or that alternative lenders or sources of financing will be available in the event no agreement to extend is reached with such lenders. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due Aug. 15, 2014, on Aug. 12, 2004) in total debts. The Debtors' exclusive period to file a chapter 11 plan expires on June 2, 2007. (Interstate Bakeries Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). INEX PHARMA: Wants Protiva Declared Bankrupt On Unpaid Invoices --------------------------------------------------------------- Inex Pharmaceuticals Corporation said Friday that it has submitted a petition for filing in the Supreme Court of British Columbia seeking to have Protiva Biotherapeutics Inc. declared bankrupt and that a bankruptcy order be made in respect of the property of Protiva. Under agreements between INEX and Protiva, Protiva is to reimburse INEX for certain patent costs incurred by INEX. Protiva has not paid INEX, as per the agreements, since June 2006. The total amount owed to INEX from July 2006 to December 2006 is $71,882.89, not including interest. INEX has been told that there are other creditors of Protiva whose invoices have not been paid when due. About INEX Pharma Based in Vancouver, Canada, Inex Pharmaceuticals Corporation (NASDAQ: HNAB) (TSX: IEX) -- http://www.inexpharma.com/-- is a biopharmaceutical company developing and commercializing proprietary drugs and drug delivery systems to improve the treatment of cancer. At Sept. 30, 2006, Inex Pharmaceuaticals disclosed total assets of $8,915,832 and total liabilities of $8,982,462, resulting in a $66,630 deficit. Shareholders' deficit was $3,878,468 at June 30, 2006. INFOR GLOBAL: Increased Debt Prompts S&P's Stable Outlook --------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B-' corporate credit rating on Alpharetta, Georgia-based Infor Global Solutions Holdings Ltd. At the same time, Standard & Poor's revised its ratings outlook on the company to stable from positive. Standard & Poor's also lowered its bank loan and recovery ratings on Infor's first-lien senior secured debt to 'B-' with a '2' recovery rating, reflecting Standard & Poor's expectation for substantial recovery of principal in the event of a payment default. Standard & Poor's affirmed its 'CCC' rating and '5' recovery rating on Infor's second-lien senior secured term loan. "The revision of the outlook to stable follows the company's decision to increase debt balances to fund a $500 million dividend to shareholders," said Standard & Poor's credit analyst Ben Bubeck. To fund the transaction, which will be completed as part of the previously rated refinancing of Infor's senior subordinated bridge facility, Infor will add an additional $175 million to its first-lien term loan and $100 million to its second-lien term loan. A new $235 million senior PIK term loan will also be included in the financing. Pro forma for the proposed transaction, the company will have approximately $4.3 billion in total funded debt outstanding. The ratings reflect Infor's limited track record following a very aggressive acquisition strategy, its high debt leverage, and a very aggressive financial policy. These factors are only partially offset by the company's leading presence in its selected mid-market niche, a largely recurring revenue base, and a broad and diverse customer base. INNOPHOS INC: Likely Debt Reduction Cues S&P's Positive Outlook --------------------------------------------------------------- Standard & Poor's Ratings Services revised the outlook on Innophos Inc. to positive from stable. The rating agency affirmed the 'B' corporate credit and other ratings on the company. Standard & Poor's also raised the bank loan rating to 'B+' from 'B' and revised the recovery rating to '1' from '4'. The bank loan rating is one notch higher than the corporate credit rating. This and the '1' recovery rating indicate the expectation for full recovery of principal in a payment default. The revised outlook reflects improving internal funds generation and prospects for further debt reduction during the next two years. "We expect management's leverage policies to remain supportive of the key funds from operations to total debt ratio, which should continue to strengthen during the next several years," said Standard & Poor's credit analyst Wesley E. Chinn. The ratings of Cranbury, New Jersey-based Innophos, a specialty chemical manufacturer 49% owned by affiliates of Bain Capital LLC, reflect strengthening cash flow protection measures that benefited in part from debt reduction using proceeds from a November 2006 IPO. Credit quality also incorporates a moderate sales base of over $535 million, a narrow product line in a niche, mature market, aggressive debt leverage, and litigation related to Mexican tax claims and compliance with wastewater discharge limits at a plant in Mexico. These negatives overshadow the company's solid position in the production of specialty phosphates, good operating margins, improving earnings, and prospects for additional debt reduction from discretionary cash flows. JACK IN THE BOX: Earns $37.4 Million in Quarter Ended January 21 ---------------------------------------------------------------- Jack in the Box Inc. reported increased earnings of $37.4 million for the first quarter ended Jan. 21, 2007, compared with $25.2 million, a year earlier. The company's January 21 balance sheet showed a $1.5 billion in total assets, and $0.9 billion in total liabilities, with a $0.6 billion total stockholders' equity. "The outstanding first-quarter performance reflects continued execution of [the company's] strategic initiatives to profitably grow the company, expand franchising and reinvent the Jack in the Box brand," said Linda A. Lang, chairman and chief executive officer. New Credit facility The company secured a new $625 million credit facility in the first quarter, which includes a $150 million revolving credit facility and a $475 million term loan. Proceeds from the new credit facility were used to retire the $268 million term debt outstanding and fund a modified "Dutch auction" tender offer in the first quarter. In December 2006, the company reported that it accepted for purchase approximately 2.3 million shares of its common stock, about 6% of the shares then outstanding, for a total cost of $143.1 million. At Jan. 21, 2007, the company had letters of credit outstanding under this agreement of $41.8 million, which were collateralized by approximately $47.8 million of cash and cash equivalents and plans to continue this arrangement. The company, however, has the option to terminate the cash-collateralized letter of credit agreement, which eliminates the restrictions and cash equivalents. A full-text copies of Jack in the Box's regulatory filing is available for free at http://ResearchArchives.com/t/s?1a43 Headquartered in San Diego, Ca., Jack in the Box Inc. (NYSE: JBX) -- http://www.jackinthebox.com/-- operates and franchises Jack in the Box(R) restaurants, with more than 2,000 restaurants in 17 states. The company also operates a proprietary chain of convenience stores called Quick Stuff(R), with more than 50 locations, each built adjacent to a full-size Jack in the Box restaurant and including a major-brand fuel station. Additionally, through a wholly owned subsidiary, the company operates and franchises Qdoba Mexican Grill(R), with more than 300 restaurants in 40 states. * * * As reported in the Troubled Company Reporter on Dec. 11, 2006, Standard & Poor's Ratings Services assigned its 'BB-' rating to Jack in the Box Inc.'s $475 million term loan due 2012 and $150 million revolver due 2011. The rating is equal to the 'BB-' corporate credit rating, which was affirmed. The outlook is negative. As reported in the Troubled Company Reporter on Dec. 6, 2006, Moody's Investors Service lowered the corporate family rating to Ba3 from Ba2 on Jack in the Box and its probability of default rating to B1 from Ba3. The outlook for the ratings is stable. JANUSZ SLUPECKI: Case Summary & Three Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Janusz Slupecki Zofia Slupecki 7312 South Seeley Road Cadillac, MI 49601 Bankruptcy Case No.: 07-01139 Chapter 11 Petition Date: February 19, 2007 Court: Western District of Michigan (Grand Rapids) Debtors' Counsel: Perry G. Pastula, Esq. Dunn Schouten & Snoap PC 2745 DeHoop Avenue Southwest Wyoming, MI 49509 Tel: (616) 538-6380 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtors' Three Largest Unsecured Creditors: Entity Claim Amount ------ ------------ mBANK $997,450 130 South Cedar Street Secured value: Manistique, MI 49854 $902,550 Choice Hotels International, Inc. $68,753 10750 Columbia Pike Silver Springs, MD 20901 Bank of America $1,482 P.O. Box 15726 Wilmington, DE 19886-5726 KAHUKU HOSPITAL: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Kahuku Hospital 56-117 Pualalea Street Kahuku, HI 96731 Bankruptcy Case No.: 07-00176 Type of Business: The Debtor is a non-profit organization that operates a hospital and medical center at Kahuku, Hawaii. The hospital has been financially struggling for the past years due to the small population of its immediate community where it is operating. Chapter 11 Petition Date: February 23, 2007 Court: District of Hawaii (Honolulu) Judge: Robert J. Faris Debtor's Counsel: Don Jeffrey Gelber, Esq. Gelber Gelber Ingersoll & Klevansky 745 Fort Street, Suite 1400 Honolulu, HI 96813 Tel: (808) 524-0155 Fax: (808) 531-6963 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Hawaiian Electric Company, Inc. Electricity $343,088 P.O. Box 3978 Honolulu, HI 96812-3978 Queen's Medical Center Lanudry Service $172,529 1301 Punchbowl Street Prior 2002 Honolulu, HI 96813 Clinical Laboratories of Lab Services $140,041 Hawaii LLP P.O. Box 1300 Honolulu, HI 96807-1300 Continental Pacific LLC Lease Rent and $128,483 P.O. Box 1350 Property Tax Santa Rosa Beach, FL 32459 Payments Mark Robinson, M.D. Anesthesia Services $104,258 P.O. Box 205 Kahuku, HI 96731 Diagnostic Laboratory Lab Services $67,166 Services, Inc. DVI Financial Services, Inc. CAT Scan Equipment $59,004 American Healthnet/Nelson Data Withheld Software $54,625 Services Olympus America Inc. Equipment Leasing $41,449 Financial Services Charge HILL-ROM Accessories and $32,725 Supplies Cardinal Health Lab & Medical $24,809 Supplies Pan Pacific Pathologists, Inc. $21,026 KCI USA - The Clinical Advantage $20,590 United Laundry Services, Inc. Laundry Services $11,555 Radiology Associates, Inc. X-Ray Services $11,227 Koolauloa Health and Staffing Costs $6,360 Wellness Center Reimbursement GE Healthcare X-Ray Machine $5,869 Repairs Kapiolani Medical Center $5,487 Board of Water Supply Water Utility $4,775 State Director of Finance Collection Kits $4,700 LANCER MANAGEMENT: Inks Settlement Pacts with Receiver & Zi Corp. ----------------------------------------------------------------- Marty Steinberg, solely in his capacity as court appointed receiver of Lancer Management Group LLC, Lancer Management Group, II, LLC, Lancer Offshore, Inc., Omnifund, Ltd., LSPV, LLC, LSPV, Inc., G.H. Associates, LLC, and Alpha Omega Group, Inc. and as the person in control of Lancer Partners, LP and Zi Corporation (TSX: ZIC) (NASDAQ: ZICA), as issuer, jointly disclosed Friday that they have entered into an agreement to settle any and all outstanding claims and issues. The settlement is conditioned upon the Receiver securing orders from the U.S. District Court for the Southern District of Florida and the U.S. Bankruptcy Court for the Southern District of Florida, authorizing the Receiver to execute the Settlement Agreement on behalf of the Lancer Entities. The settlement is also conditioned upon the Alberta Securities Commission dismissing with prejudice the Issuer's pending action against the Receiver, which dismissal is not expected to be contentious. The date of receipt of such orders and dismissal will be the effective date of the Settlement Agreement. The Effective Date must occur within 120 days of the date of execution of the Settlement Agreement. Pursuant to the Settlement Agreement, as at the Effective Date, the Receiver and the Issuer have agreed to immediately discontinue, with prejudice, all litigation and regulatory proceedings of any kind. In addition, as of the Effective Date, the Receiver, the Issuer and the current and certain former directors of the Issuer have agreed to deliver mutual releases. The Issuer also acknowledges as of the Effective Date that the Receiver has the power and authority to exercise, on behalf of the Lancer Entities, all rights and privileges with respect to all of the shares in the Issuer held by the Receiver. The Issuer, the Receiver and Michael Lobsinger (who is also a party to the Settlement Agreement) have agreed on a process for nominating directors to be elected at the 2007 Annual General Meeting of the Issuer. T he Receiver will be entitled to designate two persons as director nominees and Michael Lobsinger will be entitled to designate two persons as director nominees for election at the 2007 annual general meeting, and continuing through to the nominations for the 2008 Annual General Meeting. These nomination rights could end earlier if share ownership positions of the Receiver or Michael Lobsinger respectively, fall below certain thresholds. Not less than five and not more than six directors will be proposed for election at the 2007 annual general meeting. The current directors designated for the purposes of the Settlement Agreement as the Receiver's nominees to the board are Donald Moore and Robert Stefanski, and the current directors that are designated for purposes of the Settlement Agreement as Mr. Lobsinger's nominees are Richard Tingle and Donald Hyde. Notwithstanding these designations for the purposes of the Settlement Agreement, each of these directors continues to act as independent directors. Mr. Lobsinger will resign as a director of the Issuer and all of its subsidiaries on the Effective Date, but will remain as a consultant of the Issuer until December 31, 2007, although he has agreed to provide such services without significant remuneration. It is intended that the Receiver will make application immediately to obtain the Court orders in order to give full effect to the Settlement Agreement. Upon information and belief, the Receiver has control or direction over an aggregate 18,718,000 common shares of the Issuer which, upon further information and belief, represents approximately 40.1% of a total of 46,688,624 Common Shares issued and outstanding as of November 20, 2006 as disclosed in the Management Information Circular prepared by the Issuer in connection with its annual meeting of shareholders on December 22, 2006. Due to the incompleteness and potential inaccuracy of the books and records available to the Receiver, the Receiver expressly disclaims knowledge as to the completeness and the accuracy of the information contained in this news release regarding the number of Common Shares over which the Receiver has control or direction. The Receiver is still in the process of exploring whether the any of the Lancer Entities or any other brokers or nominees are holding additional Common Shares, with respect to which the Receiver may be deemed the beneficial owner or over which the Receiver may exercise control or direction. Similarly, the Receiver is still in the process of determining whether any of the Lancer Entities have entered into any type of agreement, contract, trust or other arrangement pursuant to which the Receiver may be deemed the beneficial owner of or exercise control or direction over more or fewer Common Shares than indicated herein. The issuing of this news release shall not be construed as an admission that the Receiver or any of the Lancer Entities is, for the purposes of applicable securities laws, the beneficial owner of any securities referred to in this news release. The issuing of this news release shall not be construed as an admission that any of the entities in receivership or Lancer Partners, Limited Partnership are joint actors with each other. The purpose of the appointment of the Receiver as receiver and "person in control" was to administer and/or hold the assets of the Lancer Entities. In the course of the administration of the assets of the Lancer Entities, the Receiver has hired an investment manager and has charged its investment manager generally with the task of proposing strategies for maximizing the net present value obtainable from the assets of the Lancer Entities over a five year period. The Receiver may from time to time seek to sell or transfer a limited amount of the Common Shares held by the Lancer Entities in the private or public markets based on its evaluation of the business prospects of the Issuer and upon other factors, including but not limited to, general economic and business conditions and stock market conditions. The Settlement Agreement with the Issuer brings to a mutually favorable close a difficult and complex issue. It is the Receiver's hope that the Settlement Agreement facilitates Issuer's negotiations for new business or financing alternatives and allows Issuer to devote more of management's time and the Issuer's resources to the tasks required to grow its business. The address of the Receiver is c/o Hunton & Williams, LLP, 1111 Brickell Avenue, Suite 2500, Miami, Florida 33131. LAND O'LAKES: Sells California Operations to Saputo for $216 Mil. ----------------------------------------------------------------- Land O'Lakes Inc. entered into an agreement with Saputo Cheese USA Inc. for the sale of its Cheese & Protein International operations in Tulare, California, for approximately $216 million. The company said that the transaction includes a long-term milk supply agreement, under which Land O'Lakes will be the full milk supplier to the CPI facility. The sale includes substantially all of CPI's cheese manufacturing operations and cut-and-wrap operations, formally known as Golden Valley Dairy Products. It is anticipated that the transaction will close, subject to regulatory review, in April 2007. "We are very pleased to have found a strategic buyer for these facilities, as well as to have secured a long-term milk supply agreement for our members' milk production," said Chris Policinski ,Land O'Lakes President and Chief Executive Officer. "[The company] heritage for more than 85 years has been to add value to its members' milk production primarily through the marketing of branded, value-added dairy products. At the same time, we have maintained our commitment to providing a secure outlet for member milk, supported by appropriate investments and partnerships in manufacturing. This sale and milk supply agreement are consistent with that heritage and our business strategy." The company will continue to operate cheese manufacturing facilities in Tulare and Orland, Calif., Melrose, Minn., Denmark and Kiel, Wisconsin, and a cheese processing facility in Spencer, Wisconsin. Land O'Lakes Inc. -- http://www.landolakesinc.com/-- is a national farmer-owned food and agricultural cooperative, marketing dairy-based consumer, foodservice and food ingredient products. Land O'Lakes does business in all 50 states, as well as more than 50 countries. LAND O'LAKES: Saputo Agreement Prompts S&P's Positive Outlook ------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Arden Hill, Minnesota-based Land O'Lakes Inc. to positive from stable, and affirmed its 'BB-' corporate credit rating and other ratings on the company. "The outlook revision follows the company's recent announcement that it had entered into an agreement with Saputo Cheese USA Inc. to sell its Cheese & Protein International operations for about $216 million," said Standard & Poor's credit analyst Jayne Ross. Standard & Poor's expects the proceeds of the transaction will be used to reduce debt in the near term. "The outlook revision also reflects the continued improved operating performance of Land O'Lakes and the related improvement in its financial performance," added Ms. Ross. Land O'Lakes is a national, farmer-owned dairy and agricultural marketing and supply cooperative. The 'BB-' rating on Land O'Lakes reflects the inherent cyclical nature and seasonality of many of the cooperative's agricultural-based businesses, low margins, and a somewhat leveraged financial profile. These factors are somewhat mitigated by the strength of many of the cooperative's brands, its moderate discretionary cash flow, and an experienced management team. LEATHERWOOD RESORT: Case Summary & 7 Largest Unsecured Creditors ---------------------------------------------------------------- Debtors: Ronnie Lynn Nelson and Caroline Lou Nelson dba Leatherwood Resort & Marina 753 Leatherwood Bay Road Dover, TN 37058 Bankruptcy Case No.: 07-01224 Type of Business: The Debtors operates a fishing resort on Leatherwood Creek of Kentucky Lake. See http://www.leatherwoodresort.com/ Chapter 11 Petition Date: February 21, 2007 Court: Middle District of Tennessee (Nashville) Judge: Marian F. Harrison Debtor's Counsel: Steven L. Lefkovitz, Esq. Law Offices Lefkovitz & Lefkovitz 618 Church Street, Suite 410 Nashville, TN 37219 Tel: (615) 256-8300 Fax: (615) 250-4926 Total Assets: $2,584,250 Total Debts: $1,635,042 Debtor's 7 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Beach Oil Co. $28,000 631 Highway 76 Clarksville, TN 37043 Chase Credit Card $14,304 800 Brooksedge Westerville, OH 43081 Capital One Credit Card $14,050 P.O. Box 85520 Richmond, VA 23285 Direct Merchants Bank $10,593 P.O. Box 21550 Tulsa, OK 74121 Bank of America/MBNA $10,241 P.O. BOX 17322 Baltimore, MD 21297 Vanderbilt Medical #4545 $4,241 Department AT40211 #3655 $1,960 Atlanta, GA 31192 Gateway Medical Center $3,621 P.O. Box 403765 Atlanta, GA 30384 LISBON INN: Bankruptcy Filing Halts Auction of Property ------------------------------------------------------- Lisbon Hospitality Group, Inc., dba Lisbon Inn, filed for chapter 11 protection with the U.S. Bankruptcy Court for the Northern District of Ohio on Feb. 22, 2007. As a result of the bankruptcy filing, parties hoping to acquire the hotel will have to wait since the auction has been cancelled, Salem News reports. The scheduled inspections on the property has also been cancelled. Salem News further reports that the filing has stayed American National Bank's foreclosure case. Salem News relates that the sale of the hotel was due to a foreclosure granted to American National against the Debtor for nearly $2.4 million. The property was set to be sold at a minimum price of $1,416,666 with three parcels appraised at $2,125,000. A private auction company was conducting the sale, Salem News relates. LISBON INN: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Lisbon Hospitality Group, Inc. dba Lisbon Inn 40952 State Route 154 Lisbon, OH 44432 Bankruptcy Case No.: 07-40373 Type of Business: The Debtor operates a hotel. Chapter 11 Petition Date: February 22, 2007 Court: Northern District of Ohio (Youngstown) Judge: Kay Woods Debtor's Counsel: James H Beck, Esq. Olde Courthouse Building Seven Court Street Canfield, OH 44406-1407 Tel: (330) 533-2601 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Village Of Lisbon Withholding and $45,500 City Hall Bed taxes Lisbon, OH 44432 Withholding Columbiana Co. Water & Utility $42,000 Sewage 39563 Wellsville Avenue Lisbon, OH 44432 Advanceme Inc. Loan Advance $34,000 245 Town Park Drive, Northwest, Suite 400 Kennesaw, GA 30144 Ohio Edison Utility $14,500 Columbia Gas of Ohio Utility $10,500 Ohio Department of Job & Taxes $9,500 Family Services Lamar - Youngstown Advertising $9,200 First Place Insurance Insurance $8,900 Olsavsky Jaminet Architect $5,937 American Hotel Register Co. Supplies $4,789 Adams Excavating Co. Construction $4,000 Advantage Pages Yellow Pages $3,156 Ohio Logo Non-Interstate Advertising $2,400 ADT Security Services Security $1,200 Bullseye Telecom Phone $1,200 Time Warner Cable-Northeast Utility $1,200 Waste Management WV Utility $950 Goodman Mfg. Co. A/C Units $806 ALCO Supplies $800 M&L Supply Supplies $742 M/I HOMES: Weak Performance Cues S&P's Negative Outlook ------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on M/I Homes Inc. to negative from stable. Concurrently, the 'BB' corporate credit and senior unsecured debt ratings were affirmed. The rating actions affected $200 million of senior unsecured notes. "The outlook revision follows weak fourth-quarter operating performance and expectations for challenging market conditions throughout 2007," explained Standard & Poor's credit analyst Tom Taillon. "Reduced sales in depressed Midwest and Florida homebuilding markets have pressured M/I's operating results and could ultimately result in a violation of the company's financial covenants tied to its revolving credit facility." Considerations for affirming the existing ratings at this time include M/I's tenured management team, which has historically maintained a moderate financial policy, and the company's current focus on the prudent reduction of inventory and debt levels. Market conditions are expected to remain challenging in 2007, and M/I is likely to underperform due to its more concentrated business. Strained operating performance will continue to weigh on already weaker cash flow. Standard & Poor's will lower the rating by one notch if this cyclical downturn results in sales volumes and profitability levels that are inadequate to comfortably service debt interest payments while maintaining the existing leverage profile. Conversely, Standard & Poor's will consider revising the outlook to stable at the existing rating level if conditions begin to improve in key Florida markets and the mid-Atlantic grows into a larger component of the business. MARCAL PAPER: Panel Brings In Bridge Associates as Fin'l. Advisor ----------------------------------------------------------------- The United States Bankruptcy Court for the District of New Jersey gave the Official Committee of Unsecured Creditors in Marcal Paper Mills Inc.'s chapter 11 case authority to retain Bridge Associates LLC as its financial advisor, nunc pro tunc to Jan. 10, 2007. The Committee expects Bridge Associates to provide financial professional services. Specifically, the firm will: a) review all financial information prepared by the Debtor or its consultants; b) monitor the Debtor's activities regarding cash expenditures, receivable collections, asset sales and projected cash requirements; c) attend at meetings involving the Committee, the Debtor, creditors, their attorneys and consultants, federal and state authorities, if required; d) review the Debtor's periodic operating and cash flow statements; e) review the Debtor's books and records for related party transactions, potential preferences, fraudulent conveyances and other potential prepetition investigations; f) investigate with respect to prepetition acts, conducts, property, liabilities and financial condition of the Debtor, its management, creditors, including the operation of its business, and as appropriate, avoidance actions; g) review any business plans prepared by the Debtor or the Debtor's approved consultant; h) review and analyze proposed transactions for which the Debtor seeks Court approval; i) assist in a sale process of the Debtor, if any; j) assist the Committee in developing, evaluating, structuring and negotiating the terms and conditions of all potential plans of liquidation; k) provide expert testimony on the results of any findings; l) analyze potential divestitures of the Debtor's operations; and m) assist the Committee in developing alternative plans, including contacting potential plan sponsors of appropriate. The firm's professionals charge these hourly rates for their services: Designation Hourly Rate ----------- ----------- Managing Directors, Directors $350 - $500 or Senior Consultants Principals, Senior Associates $250 - $375 or Consultants Associates or Consultants $200 - $300 Paraprofessionals $90 - $150 Anthony H.N. Schnelling, Esq., a managing director at Bridge Associates, assures the Court that his firm is a "disinterested person" as that term is defined in Sec. 101(14) of the Bankruptcy Code. Bridge Associates LLC -- http://www.bridgellc.com/-- is a national financial consulting firm which maintains offices at Suite 32A, 747 Third Avenue, in New York. The firm provides a broad range of corporate and financial advisory services to its clients including, without limitation, services pertaining to corporate restructuring and corporate finance. Headquartered in Elmwood Park, New Jersey, Marcal Paper Mills Inc. -- http://www.marcalpaper.com/-- produces over 160,000 tons of finished paper products, including bath tissue, kitchen towels, napkins and facial tissue, distributed to retail outlets for home consumption and to distributors for away-from-home use in hotels, restaurants, hospitals offices and factories. Marcal, founded in 1932, is a privately-held, fourth generation family business. It employs over 900 people in its Elmwood Park, New Jersey and Chicago, Illinois manufacturing operations. The Debtor filed for chapter 11 protection on Nov. 30, 2006 (Bankr. D. N.J. Case No. 06-21886). Gerald H. Gline, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard P.A. represent the Debtor. Kenneth Rosen, Esq., and Mary E. Seymour, Esq., at Lowenstein Sandler PC represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. MARCAL PAPER: Seeks July 28 Exclusive Plan Filing Deadline ---------------------------------------------------------- Marcal Paper Mills Inc. asks the United States Bankruptcy Court for the District of New Jersey to further extend its exclusive periods to: a) file a plan until July 28, 2007; b) solicit acceptances to that plan until Sept. 26, 2007. The Debtor's exclusive period to file a plan expires on March 30, 2007. Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A. tells the Court that since its bankruptcy filing, the Debtor and its professionals have devoted significant efforts to the critical tasks relating to operating as a debtor-in- possession, while seeking to reduce overhead and reinforce relationships with its vendors and customers. In connection with its Chapter 11 filing, Mr. Sirota relates that the Debtor also has expended a substantial amount of time negotiating and obtaining postpetition financing, preparing and filing detailed schedules and statements of financial affairs, preparing for the first meeting of creditors pursuant to Section 341(a) of the Bankruptcy Code, preparing and filing monthly operating reports, and addressing a myriad of other complex matters inherent in any large Chapter 11 case. "These duties, coupled with the relative infancy of the Debtor's case, have made it difficult at this early stage for the Debtor to develop a definitive plan for emerging from Chapter 11," Mr. Sirota explains. The Debtor and its counsel have been working closely with JH Cohn LLP, its financial advisors; NatCity Investments, its investment bankers; and other retained professionals to develop an effective reorganization strategy. The Debtor has been exploring various potential restructuring alternatives. However, the Debtor needs additional time to closely examine all alternatives and, simultaneously, commence a dialogue with its creditor constituents. Until the process is completed, the Debtor says it would be difficult to begin to propose a plan of reorganization. The Debtor assures the Court that it is not seeking an extension of the exclusivity periods to delay creditors or force them to accede to its reorganization demands. Mr. Sirota confirms that the Debtor is keenly aware of the need to involve all parties-in-interest in this case. The Debtor and its professionals consistently have conferred with the Official Committee of Unsecured Creditors, the debtor-in-possession financing lenders, the United States Trustee and other parties-in- interest on all major substantive and administrative matters in this case, he adds. DIP Financing On Jan. 5, 2007, the Debtor obtained Court approval to borrow up to $84.5 million in postpetition financing from Highland Financial Corporation, including an immediate availability of a $20 million revolving credit facility. The Debtor says that the financing package will allow it to use all of its cash balances and provide it with greater liquidity to fund normal business operations during the restructuring process. The Court will convene a hearing at 10:00 a.m. on March 16, 2007, to consider the Debtor's request. Headquartered in Elmwood Park, New Jersey, Marcal Paper Mills Inc. -- http://www.marcalpaper.com/-- produces over 160,000 tons of finished paper products, including bath tissue, kitchen towels, napkins and facial tissue, distributed to retail outlets for home consumption and to distributors for away-from-home use in hotels, restaurants, hospitals offices and factories. Marcal, founded in 1932, is a privately-held, fourth generation family business. It employs over 900 people in its Elmwood Park, New Jersey and Chicago, Illinois manufacturing operations. The Debtor filed for chapter 11 protection on Nov. 30, 2006 (Bankr. D. N.J. Case No. 06-21886). Gerald H. Gline, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard P.A. represent the Debtor. Kenneth Rosen, Esq., and Mary E. Seymour, Esq., at Lowenstein Sandler PC represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. MARCAL PAPER: Wants Lease Decision Period Extended Until June 28 ---------------------------------------------------------------- Marcal Paper Mills Inc. asks the United States Bankruptcy Court for the District of New Jersey to further extend the period within which it can assume or reject unexpired leases of nonresidential real property through and including June 28, 2007. The Debtor's time to assume or reject unexpired leases expires on March 30, 2007. Since its bankruptcy filing, the Debtor has been conducting its operations from including, but not limited to, the facilities leased pursuant to the unexpired commercial property leases identified in a full list available for free at: http://researcharchives.com/t/s?1a4f The unexpired leases relate to the Debtor's office, manufacturing and warehousing space. The Debtor assures the Court that it is, and will continue to be, current on its postpetition obligations under the unexpired leases in accordance with Section 365(d)(3) of the Bankruptcy Code. Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A. tells the Court that the unexpired leases represent important assets of the Debtor's estate. Given the relative infancy of this case, however, the Debtor has not had sufficient opportunity to determine precisely how the unexpired leases will tie into its reorganization efforts, he explains. Hence, Mr. Sirota says, extending the period to assume or reject the unexpired leases will provide the Debtor the time and flexibility it needs to coordinate the assumption or rejection of its unexpired leases with the formulation of its Chapter 11 plan. Mr. Sirota warns that if the requested extension is not granted, the Debtor will be compelled either to assume, in some instances, large, long-term liabilities, thereby potentially creating substantial administrative expense claims at any early stage in this cases, or forfeit leases prematurely, impairing its ability to operate and preserve the going concern value of its business. The Court will convene a hearing at 10:00 a.m. on March 16, 2007, to consider the Debtor's request. Headquartered in Elmwood Park, New Jersey, Marcal Paper Mills Inc. -- http://www.marcalpaper.com/-- produces over 160,000 tons of finished paper products, including bath tissue, kitchen towels, napkins and facial tissue, distributed to retail outlets for home consumption and to distributors for away-from-home use in hotels, restaurants, hospitals offices and factories. Marcal, founded in 1932, is a privately-held, fourth generation family business. It employs over 900 people in its Elmwood Park, New Jersey and Chicago, Illinois manufacturing operations. The Debtor filed for chapter 11 protection on Nov. 30, 2006 (Bankr. D. N.J. Case No. 06-21886). Gerald H. Gline, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard P.A. represent the Debtor. Kenneth Rosen, Esq., and Mary E. Seymour, Esq., at Lowenstein Sandler PC represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. MERITAGE MORTGAGE: DBRS Reviews BB Rating on $7.8 Million Certs. ---------------------------------------------------------------- Dominion Bond Rating Service placed two classes under review with negative implications from two Meritage Mortgage Loan Trust Transactions: -- $7,800,000 Asset-Backed Certificates, Series 2005-2, Class B-1, currently rated BB (high) -- $5,982,000 Asset-Backed Certificates, Series 2005-3, Class B-2, currently rated BBB (low) MERRILL LYNCH: S&P Cuts Rating on Class B-3 Certificates to B ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class B-3 certificates from Merrill Lynch Mortgage Investors Trust Series 2003-HE1 to 'B' from 'BB'. The rating remains on CreditWatch negative, where it was placed Nov. 22, 2006. Concurrently, the 'BBB' rating on the class B-2 certificates was placed on CreditWatch with negative implications. At the same time, the ratings on the remaining seven classes from this transaction were affirmed. The lowered rating and negative CreditWatch placements reflect monthly losses that have continuously exceeded excess interest. During the previous six remittance periods, monthly losses have exceeded excess interest by approximately 4.04x. As of the January 2007 distribution date, serious delinquencies represented 8.93% of the current pool principal balance. Cumulative realized losses represented 1.36% of the original pool principal balance. Standard & Poor's will continue to monitor the performance of this transaction. If delinquencies continue to translate into realized losses that outpace excess spread, Standard & Poor's will take further negative rating actions. Conversely, if losses are covered by excess spread and overcollateralization builds toward its target balance, S&P will affirm the ratings and remove them from CreditWatch. The affirmations are the result of actual and projected credit support that is sufficient to maintain the current ratings. The collateral supporting this transaction consists of 30-year fixed- and/or adjustable-rate mortgage loans secured by first and/or second liens on one- to four-family residential properties. Rating Lowered And Remaining On Creditwatch Negative Merrill Lynch Mortgage Investors Trust Series 2003-HE1 Rating ------ Class To From ----- -- ---- B-3 B/Watch Neg BB/Watch Neg Rating Placed On Creditwatch Negative Merrill Lynch Mortgage Investors Trust Series 2003-HE1 Rating ------ Class To From ----- -- ---- B-2 BBB/Watch Neg BBB Ratings Affirmed Merrill Lynch Mortgage Investors Trust Series 2003-HE1 Class Rating ----- ------ A-1, A-2B, S AAA M-1 AA+ M-2 A+ M-3 A B-1 BBB+ MITTAL STEEL: Ordered to Sell Sparrows Point Plant in Baltimore --------------------------------------------------------------- The U.S. Department of Justice ordered Mittal Steel Co. to sell its Sparrows Point steel plant in Baltimore, Md., Paul Glader writes for the Wall Street Journal. The order came because of antitrust concerns about competition brought about by the deal that created Arcelor Mittal, the world's largest steel company. According to WSJ, the ruling could draw bids from: -- India's JSW Steel Ltd., -- India's Ispat Industries Ltd., -- Russia's Evraz Group, -- Russia's OAO Severstal Grou, -- China's Wuhan Steel Corp., -- China's Anshan Iron & Steel Group Corp., -- Germany's ThyssenKrupp AG, -- Brazil's Companhia Siderurgica Nacional, and -- USA's Hampshire Steel Investments. According to Mittal Steel USA Inc., a Mittal Steel Co. subsidiary, the Sparrows Point plant is one of the largest and most efficient blast furnaces in North America and is capable of producing 3.9 million tons of raw steel annually. The fully integrated steel-making facility is located on the Chesapeake Bay. Sparrows Point is the former Bethlehem Steel plant and has stood on its site since 1887. Mittal Steel USA Inc. Mittal Steel USA Inc. is the largest steel producer in the United States and is a major supplier to the North American automotive industry as well as to the broader transportation sector, serving customers in the trucking, off-highway, agricultural-equipment, and railway industries. Mittal Steel USA also has a strong customer base in the appliance, office furniture, electrical motors, packaging, industrial machinery, and other manufacturing sectors, as well as the distribution and service-center industry. Mittal Steel USA operates some of the most modern and efficient steel plants in North America. Major steel producing sites are located in East Chicago and Burns Harbor, Ind.; Cleveland, Ohio; Weirton, W.V.; Sparrows Point, Md.; Steelton, Pa.; Georgetown, S.C.; and Riverdale, Ill. Value-added plate markets are served from the company's Conshohocken and Coatesville, Pa., facilities, as well as from operations in Indiana. The company also has finishing facilities in Hennepin, Ill.; Lackawanna, N.Y.; Newton, N.C.; and Columbus, Ohio. As part of its partnership with Nippon Steel Corporation, the company also operates two state-of-the-art steel-finishing plants near New Carlisle, Ind.: I/N Tek, a continuous cold rolling plant that produces sheet steel of unmatched quality and consistency, and I/N Kote, a plant comprising both hot-dip and electrogalvanising lines for flat-rolled steel. Mittal Steel also owns iron ore mines in Minnesota as well as coal properties in Pennsylvania and a direct-reduced-iron facility in Trinidad, and a coke-making facility in Warren, Ohio. * * * As reported in the Troubled Company Reporter on Aug. 10, 2006, Moody's Investors Service confirmed Mittal Steel U.S.A. Inc.'s Ba1 senior unsecured rating. MORTGAGE LENDERS: U.S. Trustee Appoints Seven-Member Committee -------------------------------------------------------------- Pursuant to Section 1102(a)(1) of the Bankruptcy Code, the United States Trustee for Region 3 appointed seven creditors to serve on the Official Committee of Unsecured Creditors for Mortgage Lenders Network USA, Inc.'s Chapter 11 case: 1. Merrill Lynch Mortgage Lending, Inc. Attn: Cynthia Smiros 4 World Financial Center North Tower, New York, NY 10080 Phone: 212-449-5893, Fax: 212-449-7722 2. Lehman Brothers Bank, FSB Attn: Lloyd Matthew Winans 745 Seventh Avenue, New York, NY 10019 Phone: 212-526-7000, Fax: 646-758-5221 3. Wachovia Bank, N.A. Attn: Jill W. Akre One South Broad Street, 8 Floor Philadelphia, PA 19107 Phone: 267-321-6663, Fax: 267-321-6903 4. Duffy White Construction, LLC Attn: Brad White/Mike Duffy, PO Box 838 Ardmore, PA 19003 Phone: 610-906-1913, Fax: 610-450-4301 5. MTM Technologies, Inc. Attn: John F. Kohler 1200 High Ridge Rd., Stamford, CT 09605 Phone: 203-975-3775, Fax: 201-558-7453 6. Workstage, LLC Attn: Joseph Peters 4700 60 St., Grand Rapids, MI 49512 Phone: 616-455-3024, Fax: 616-455-3044 7. David D. Hagburg 14 Blue Heron Lane Bayville, NJ 08721 Phone: 201-572-6717, Fax: 732-608-6445 Mark S. Kenny, Esq., is assigned as trial attorney to the Mortgage Lenders' case. 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 Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). MORTGAGE LENDERS: Hires Trumbull as Claims and Noticing Agent ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Mortgage Lenders Network USA, Inc., authority to employ The Trumbull Group, doing business as Wells Fargo Trumbull, as its official notice, claims and balloting agent in its Chapter 11 case. Mitchell L. Hefferman, president and chief executive officer of Mortgage Lenders, notes that with over 7,000 creditors, potential creditors, and other parties-in-interest, the Debtor must retain a claims noticing agent. According to Mr. Hefferman, Trumbull is a data processing firm specializing in noticing, claims processing, disbursement and other administrative tasks in bankruptcy cases, which is highly qualified to provide the services and assistance needed by the Debtor. Trumbull has provided substantially similar services in other Delaware bankruptcy cases, Mr. Hefferman adds. At the request of the Debtor or the Office of the Bankruptcy Clerk, Trumbull will: (a) prepare and serve required notices in the Debtor's bankruptcy case, including: -- a notice of commencement of the Debtor's Chapter 11 cases and the initial meeting of creditors under Section 341(a) of the Bankruptcy Code; -- a notice of the claims bar date; -- notices of objections to claims; -- notices of any hearings on a disclosure statement and the confirmation of any plan of reorganization; and -- any miscellaneous notices deemed necessary by the Debtor or the Court; (b) file with the Clerk's office an affidavit of service within three business days after the service of a particular notice, which will include: -- a copy of the notice served, -- an alphabetical list of persons on whom the notice was served, along with their addresses, and -- the date and manner of service; (c) maintain copies of all proofs of claim and proofs of interest filed in the Debtor's Chapter 11 cases; (d) maintain the official claims register in the case by docketing all filed proofs of claim in a claims database that includes: -- the name and address of the claimant or his agent; -- the date the proof of claim or proof of interest was received by Trumbull or the Court; -- the claim number assigned to the proof of claim or proof of interest; and -- the asserted amount and classification of the claim; (e) implement necessary security measures to ensure the completeness and integrity of the claims registers; (f) transmit to the Clerk's Office a copy of the claims registers on a weekly basis, unless requested to do so in a more or less frequent basis; (g) make an up-to-date mailing list of the persons who filed proofs of claim and make it available to the Clerk's Office or any party-in-interest; (h) make the proofs of claim and proofs of interest accessible to the public for examination without charge during regular business hours; (i) record all transfers of claims and provide notice of transfers if required by the Court; (j) comply with applicable federal, state, municipal and local statutes and other requirements; (k) promptly comply with further services as the Debtor or the Clerk's office will request; (l) provide other claims processing, noticing, balloting, and related administrative services at the Debtor's behest; and (m) act as balloting agent, particularly: -- print ballots including shareholder and specific ballots; -- prepare voting results; -- coordinate the mailing of ballots, copies of the disclosure statement and plan to all voting and non- voting members and provide an affidavit of service; and -- receive ballots at a post office box, inspect them for conformity to voting procedures, date stamp and number ballots, and tabulate and certify results. The Debtor will pay to Trumbull the costs with respect to providing the Bankruptcy Processing Services pursuant to the fee schedule provided in the parties' engagement agreement. A copy of the fee schedule is available for free at: http://ResearchArchives.com/t/s?1a57 Trumbull's professionals bill: Professional Hourly Rates ------------ ------------ Administrative Support $55 Data Specialist $65 - $80 Case Manager $85 - $135 Automation Consultant $140 - $175 Operations Manager $110 - $185 Consultant $225 - $295 Ronda K. Collum, vice president of Trumbull, assures the Court that her firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Trumbull does not hold or represent any interest adverse to the Debtor's estate, Ms. Collum adds. 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 Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). NATIONAL BEDDING: S&P Rates $210 Million Second-Lien Facility at B ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its loan and recovery ratings on National Bedding Co. LLC's proposed senior secured credit facilities, following the report that the company will increase the first-lien facility by $25 million. Pro forma for the increased add-on portion, the senior secured credit facilities will total $685 million, comprising $475 million of first-lien facilities and a $210 million second-lien facility. The first-lien facilities are rated 'BB-' with a recovery rating of '1', indicating a high expectation for full recovery of principal in the event of a payment default. The second-lien facility is rated 'B' with a recovery rating of '3', indicating the expectation for meaningful recovery of principal in the event of payment default. Proceeds from these facilities, in conjunction with cash on hand, will be used to redeem a portion of the company's preferred stock outstanding and to refinance all existing indebtedness. The ratings on the existing bank facilities will be withdrawn at the close of the transaction. These ratings are based on preliminary terms and are subject to review upon final documentation. Ratings List: *AOT Bedding Holdings Corp. -- Corporate Credit Rating at B+/Negative/ * National Bedding Co. LLC -- $475 Million First-Lien Secured at BB-; Recovery Rating: 1 -- $210 Million Second-Lien Secured at B; Recovery Rating: 3 NORTH AMERICAN: Major Stockholder Wants J. Christian as Director ---------------------------------------------------------------- North American Technologies Group, Inc.'s Board of Directors of expanded the number of positions on its Board of Directors to seven members. Sponsor Investments, LLC, the holder of a majority of the company's common stock, proposed that Joseph W. Christian be elected by the Board to serve as the new director. Mr. Christian was elected Feb. 14, 2007 to serve as a Class II director until the third Annual Meeting of Shareholders after his election or until his successor is elected and qualified. Mr. Christian currently serves as a Manager of Facilities for Perot Systems and is responsible for plant infrastructure, including plant maintenance, repair, purchasing, and upgrades. Before assuming his position in 2001 with Perot Systems, Mr. Christian previously served as manager of Production Control for Beal Aerospace Technologies. Mr. Christian attended the University of Texas at Arlington and served in the United States Marine Corps from 1975 to 1987. About North American North American Technologies Group Inc., (OTCBB: NATK) -- http://www.natk.com/ -- through its TieTek subsidiary manufactures and sells composite railroad crosstie known as TieTek(TM) made from recycled composite materials that is a direct substitute for wood crossties, but with a longer life and with several environmental advantages. Going Concern Doubt KBA Group LLP, in Dallas, Texas, expressed substantial doubt about North American Technologies Group Inc.'s ability to continue as a going concern after auditing the company's financial statements for the nine-month period ended Oct. 1, 2006. The auditing firm pointed to the company's recurring losses from operations and use of significant cash flows in operating activities. NEW YORK RACING: Wants Exclusive Plan-Filing Period Extended ------------------------------------------------------------ The New York Racing Association Inc. asks the United States Bankruptcy Court Southern District of New York to extend, until Jan. 15, 2008, its exclusive period to file a chapter 11 plan of reorganization. The Debtor also asks the Court to extend, until March 14, 2008, its exclusive period to solicit acceptances of that plan. The Debtor tells that Court that many necessary issues remain to be resolved in its chapter 11 case before formulation and confirmation of a plan may proceed. Awarding of the Franchise The Debtor reminds the Court that its franchise to conduct racing and operating pari-mutual wagering on its Racetracks is scheduled to expire on Dec. 31, 2007. On June 13, 2006, the State's Ad Hoc Committee on the Future of Racing released a request for proposals to solicit bids from entities interested in conducting racing and operating pari-mutual wagering at the Racetracks under the franchise. The Debtor and a number of other groups, each of the other groups a for-profit organization, submitted proposals for the Franchise. On Nov. 21, 2006, the Ad Hoc Committee recommended the franchise be awarded to Excelsior Racing Associates, LLC. The Debtor says however that this recommendation has been cast aside. The Debtor contends that until it learns the fate of the franchise, the proposition of a viable chapter 11 plan is difficult. The Debtor remains hopeful that it will be awarded the franchise and able to pursue its goal of opening a video lottery terminal facility. The Debtor says that it plans to base a chapter 11 plan on the projected income of the video terminal facility if it is awarded the franchise. Determination of Title to the Racetracks The Debtor reminds the Court that on Dec. 12, 2006, it filed a complaint commencing an adversary proceeding, in order to, among other things, challenge the constitutionality of Section 202-2 of the New York State Racing Law. Section 202-2 provides, in pertinent part, that, upon expiration of the franchise, the assets of the franchisee "will be assigned, transferred and conveyed and distributed by the governor then in office." The Debtor has argued that it currently owns the racetracks. Various parties however have taken actions that infringed upon the Debtor's quiet enjoyment of the Racetracks due to their belief that the Racetracks not only become property of the State of New York upon the expiration of the Franchise but also, that the State maintains an amorphous interest currently. The Debtor relates that in order to propose a feasible chapter 11 plan, a determination of its ownership of the Racetracks upon the expiration of the franchise must be made. The Debtor believes that, until the dispute regarding the future ownership of the Racetracks is resolved, it would be extremely difficult to have meaningful negotiations about a plan. Postpetition Financing. The Debtor tells the Court that it had previously filed a motion for an order: (a) approving postpetition financing from General Electric Capital Corporation and GE Capital Markets, (b) authorizing satisfaction of postpetition financing previously provided by the State, and (c) related relief. The Debtor says that several parties filed objections to their request for a DIP financing. The Debtor discloses that after negotiations with the State, it had the DIP hearing deferred to March 16, 2007. The Debtor contends that without this financing, it will not be in a position to formulate a consensual chapter 11 plan of reorganization as it will most likely have to close the Racetracks. The Debtor relates that the postpetition financing would allow it to stabilize business operations and enable it to concentrate on the plan process. Adjudication of the State's Motion To Dismiss As previously reported in the Troubled Company Reporter, the State of New York and the New York State Non-Profit Racing Association Oversight Board asked the Court to dismiss the Debtor's chapter 11 case citing that the Debtor was ineligible to file for bankruptcy under the definitions set in the Bankruptcy Code. The Debtor says that The New York Thoroughbred Horseman's Association, Inc., Lien Games Racing, LLC, and Excelsior, have filed motions to join the Motion to Dismiss. The Debtor argues that although it believes the motion has no merit, it would be difficult to commence meaningful negotiations with creditor constituencies bent on derailing its chapter 11 proceedings. The motion is scheduled to be heard by the Court on March 16, 2007. 29. Accordingly, until the issue is resolved or progress is made, the Debtor will be unable to propose a confirmable plan. About NYRA Based in Jamaica, New York, The New York Racing Association Inc. aka NYRA -- http://www.nyra.com/-- operates racing tracks in Aqueduct, Belmont Park and Saratoga. The company filed a chapter 11 petition on November 2, 2006 (Bankr. S.D.N.Y. Case No. 06-12618) Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP represents the Debtor in its restructuring efforts. Edward M. Fox, Esq., Eric T. Moser, Esq., Jeffrey N. Rich, Esq., at Kirkpatrick & Lockhart Preston Gates Ellis LLP, represent the Official Committee of Unsecured Creditors. When the Debtor sought protection from its creditors, it listed more than $100 million in total assets and total debts. The Debtor's exclusive period to file a chapter 11 plan is set to expire on March 2, 2007. NOVASTAR FINANCIAL: Expects GAAP Profitability in Coming Years -------------------------------------------------------------- NovaStar Financial Inc. responded Wednesday in a regulatory filing with the Securities and Exchange Commission to misstatements in the media regarding the company's expectations for taxable income in the future. Some reports, the company said, erroneously stated that the company does not expect to be profitable in the period of 2007 to 2011. Scott Hartman, the company's chief executive officer, commented: "Some news stories mistakenly assert that NovaStar does not expect to report profits the next several years. In our earnings release and conference call on Tuesday, we stated that we expect to recognize little, if any, taxable income during the period 2007 through 2011. Taxable income involves a calculation for tax returns filed under the IRS requirements for Real Estate Investment Trusts. This figure differs significantly from net income under General Accepted Accounting Principles, known as GAAP earnings." "Our belief is that NovaStar generally will be profitable on a GAAP basis over the next several years, as it was in 2006. Over time, GAAP tends to reflect the economics of our business. Because of the REIT structure and accounting rules for securitizations, taxable income exceeded GAAP earnings in recent years, and we expect taxable income to be less than GAAP earnings over the next several years. Our comments about 2007 to 2011 related to taxable income, as part of our discussion of a potential change in NovaStar's REIT status." 2006 Fourth Quarter & Year-End Results For the quarter ended Dec. 31, 2006, NovaStar reported a net loss available to common shareholders of $14.4 million. In the fourth quarter of 2005, net income available to common shareholders was $26.4 million. Full-year 2006 net income available to common shareholders was $66.3 million. That full-year result compares with 2005 net income available to common shareholders of $132.5 million. "The credit performance of our portfolio, and specifically our 2006 originations, deteriorated during the fourth quarter, resulting in impairments on mortgage securities and additional loss provisions for loans held-in-portfolio in the REIT. Also, our gains upon securitization were reduced during the quarter because of lower whole loan prices. Furthermore, during the fourth quarter, we experienced a greater level of loan repurchase requests due to early payment defaults than we have historically. However, we believe our current reserves are adequate to cover the repurchase risk for all loans sold to date," Mr. Hartman said. Additional 2006 and Fourth-Quarter Highlights * Portfolio of loans under management was $16.3 billion at year-end. Portfolio return on assets was 1.21 percent for 2006 (0.94 percent in the fourth quarter). * Nonconforming loan originations were $11.2 billion in 2006, up 21 percent from 2005. Fourth-quarter originations were $2.6 billion, up 20 percent from the same quarter in 2005. * Cost of production for 2006 was reduced by 34 basis points, to 2.03 percent, compared to 2005. Fourth-quarter cost of production was 1.87 percent. * NovaStar expanded its retail division with an asset purchase resulting in 19 new branches, adding a market channel for low-cost originations that it expects will serve as a platform for future growth. Information Relating to 2007 Dividends NovaStar declared $5.60 per share in dividends to common shareholders in 2006, consistent with guidance provided early in the year. For 2007, NovaStar's management expects to meet the REIT distribution requirements of distributing at least 90 percent of undistributed 2006 taxable income during 2007. The timing and amount of dividends will be determined by NovaStar's Board of Directors. In addition, the Board declared a quarterly dividend of $.55625 per share on NovaStar's 8.90% Class C Cumulative Redeemable Preferred Stock, payable April 2, 2007, to holders of record as of March 5, 2007. Estimated 2006 taxable income available to shareholders was $187 million, and approximately $17 million in dividends declared and paid in 2006 were applicable to 2006 taxable income. As of Oct. 31, 2006, NovaStar had 36,995,202 common shares outstanding. As of Dec. 31, 2006, NovaStar had 37,261,252 common shares outstanding. Greg Metz, the company's senior vice president and chief financial officer, noted: "As we have discussed in prior conference calls, taxable income from our REIT mortgage securities portfolio will normally exceed GAAP earnings during the early life of the portfolio due to the accelerated income recognition provisions of the tax code. Generally, this timing difference is created because of the different income accrual methods prescribed for the computation of GAAP and tax income. However, over the life of the portfolio, GAAP and tax income will be equal; therefore, in the later life of the portfolio GAAP income will be greater than taxable income. The reversal in timing differences between the recognition of GAAP income and taxable income is occurring and will accelerate as our older vintage securitizations mature. As a result, during the period 2007 through 2011, we expect to recognize little, if any, taxable income. Given this outlook, management is currently evaluating whether it is in shareholders' best interest to retain the company's REIT status beyond 2007 given the asset, income and other REIT related restrictions the company must operate within." Portfolio Management Loans under management were $16.3 billion at Dec. 31, 2006, up 17 percent from a year earlier but down from the third quarter, due in part to fourth-quarter whole loan sales. NovaStar securitized $1.8 billion in nonconforming loans in the fourth quarter ($8.6 billion for the year). Return on assets in the portfolio was 0.94 percent in the fourth quarter (1.21 percent for the year). On Feb. 8, 2007, NovaStar closed a $375 million collateralized debt obligation. The assets collateralizing the obligation include securities created through past NovaStar securitizations, as well as mortgage backed securities purchased in the secondary market. The company retained the class D notes and subordinated notes, together representing $43.5 million in principal value. "This CDO accomplishes two things for NovaStar. First, we were able to reduce funding costs on lower-tranche bonds from recent securitizations and second, we tapped an additional opportunity to benefit from our portfolio management capabilities. We believe that investing in higher rated mortgage securities will continue to provide good, risk-adjusted returns for the portfolio. During 2007, we may commit additional equity to purchase or retain mortgage securities. These securities are rated higher in the capital structure than our traditional residual investments and we intend to finance these securities with CDO debt," said Mike Bamburg, the company's senior vice president and chief investment officer. Mortgage Banking Fourth-quarter loan production was $2.6 billion, up 20 percent from a year earlier (full-year originations were $11.2 billion, up 21 percent over 2005). Wholesale production represented 85 percent of fourth-quarter originations, retail 9 percent (with new branches included only in December), and correspondent/bulk 6 percent. Average cost of production was 1.87 percent in the quarter, down from 2.15 percent a year earlier and was 2.03 percent for 2006, down from 2.37 percent in 2005. "NovaStar originated 21 percent more loans in 2006 and made progress on reducing costs. The nonprime market remains very competitive, but we see potential for a more rational business environment as several competitors have withdrawn or put themselves up for sale," said Lance Anderson, the company's president and chief operating officer. Mr. Anderson added, "The key area of focus for our mortgage banking operation is to ensure that the 2007 originations perform better than 2006 and in line with our expectations. In this regard, we have taken several steps which include: 1) Tightening of our underwriting guidelines; 2) Limiting the number of exceptions to our underwriting guidelines policy; 3) Enhancing our appraisal review process; 4) Implementing the use of NovaStar's Risk Assessment Score to identify loans with unacceptable levels of risk." Liquidity and Borrowing Capacity As of Dec. 31, 2006, NovaStar had borrowing capacity of $4.25 billion from major lenders. Cash and available liquidity totaled $154 million. Shares Fall 40% After Loss Announced Bill Rochelle of Bloomberg News reported Thursday that following NovaStar's announcement of its $14.4 million fourth-quarter loss, the company's shares fell 42.5% to a 52-week low. The company's stock closed at $10.10 in New York Stock Exchange composite trading, the source said. "NovaStar's announcement wasn't the only sign of weakness related to the subprime market. The cost to insure $10 million in BBB- rated bonds secured by subprime mortgages written in the last half of 2006 rose to $1.1 million a year from $389,000 one month ago," Mr. Rochelle added. About NovaStar Financial Based in Kansas City, Mo., NovaStar Financial Inc. (NYSE: NFI) -- http://www.novastarmortgage.com/-- is a specialty finance company that originates, purchases, invests in and services residential nonprime loans. The company specializes in single- family mortgages, involving borrowers whose loan size, credit details or other circumstances fall outside conventional mortgage agency guidelines. A Real Estate Investment Trust founded in 1996, NovaStar has lending operations nationwide. NSG HOLDINGS: S&P Assigns BB Rating on $286 Million Senior Loan --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'BB' ratings to NSG Holdings LLC's $286 million senior secured term loan facility maturing seven and one quarter years from closing, $32.5 million senior secured synthetic LOC facility, and $514 million senior secured notes due 2025. At the same time, Standard & Poor's assigned its '3' recovery rating to the term loan facility, the synthetic LOC facility, and the notes. The outlook is stable. NSGH is a 100% wholly owned subsidiary of Northern Star Generation LLC that owns or has beneficial interest in 12 generation facilities with a combined capacity of about 2,100 MW or 1,451 MW. The predictable cash flow from project distributions supports a stable outlook. Standard & Poor's views the cash flow predictability as a key-rating factor. "The diversification of the portfolio with no one project contributing more than 28% of the cash flows bolsters the stable outlook," said Standard & Poor's credit analyst David Bodek. The rating or outlook could be lowered if any of the large projects experience a sustained operating issue that precludes payments under the PPAs and tolling agreements. "However, there is little room for an upgrade, given the contracted, expected stable performance of the portfolio," Mr. Bodek continued. OCWEN FINANCIAL: Gets $45.9 Mil. Capital Sharing from BMS Holdings ------------------------------------------------------------------ Ocwen Financial Corp. reported its receipt of a $45.9 million capital distribution from BMS Holdings, Inc., which was equal to Ocwen's original investment in BMS Holdings. The Board of Directors of BMS Holdings declared a dividend payable to its stockholders on Feb. 14, 2007 from the proceeds of its private placement of $150 million aggregate principal amount of Floating Rate Senior PIK Notes due in 2012. Interest on the notes will be payable semi-annually in arrears and will accrue at a floating rate equal to six-month LIBOR plus a spread, which will be 700 basis points and will increase by 50 basis points on Aug. 15, 2008 and by an additional 50 basis points on Aug. 15, 2009. BMS Holdings may pay interest in cash, additional notes, or a combination of 50% in cash and 50% in additional notes. In addition to the declaration of a dividend to its stockholders, BMS Holdings may use the proceeds of the private placement to pay additional dividends in the future, fees and expenses related to the offering and for general corporate purposes. The notes will be redeemable, in whole or in part, beginning on Aug. 15, 2007 at the option of BMS Holdings. The redemption price will be based on a percentage of the principal amount of the notes plus accrued and unpaid interest to the date of redemption. About Ocwen Financial Headquartered in West Palm Beach, Florida, Ocwen Financial Corp. (NYSE:OCN) -- http://www.ocwen.com/-- is a provider of servicing and origination processing solutions to the loan industry with offices in Orlando, Florida, Downers Grove, Illinois and Atlanta, Georgia and global operations in Canada, Germany, India and Taiwan. The company makes its clients' loans worth more by leveraging its superior processes, innovative technology and high- quality, cost-effective global human resources. * * * Ocwen Financial's 3-1/4% Contingent Convertible Senior Unsecured Notes due 2024 carry Standard & Poor's B- rating. OLIN BRYANT JR: Case Summary & 12 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Olin W. Bryant, Jr. 1320 Prather Road Lexington, KY 40502 Bankruptcy Case No.: 07-50319 Chapter 11 Petition Date: February 21, 2007 Court: Eastern District of Kentucky (Lexington) Debtor's Counsel: Robert V. Sartin, Esq. Frost Brown Todd LLC Lexington Financial Center 250 West Main, Suite 2700 Lexington, KY 40507-1749 Tel: (859) 231-0000 Fax: (859) 231-0011 Total Assets: $427,907 Total Debts: $2,246,583 Debtor's 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Fifth Third Bank Pledge of interest $750,000 250 West Main Street in: LTD Systems, Suite 100 Inc.,; Coastal Lexington, KY 40507 Properties, LLC; Madeira Beach, LLC; CRG Holding, LLC; Haverstick Consulting, LLC; LTC Investors Olin W. Bryant Personal Loan $125,000 100 Deer Path Lane Paducah, KY 42001 The Bank of Harlan Commercial Loan $100,000 P.O. Box 919 Harlan, KY 40831 National City Bank Line of Credit $98,104 The Bank of Harlan Commercial Loan $81,520 National City Bank Line of Credit $77,392 Elizabeth S. Bryant Unsecured loan $35,000 Century Bank Commercial Loan $33,211 Donald E. Maguire Personal Loan $30,000 Bank of America Revolving Credit $17,482 Huntington National Bank Vehicle Lease Unknown Integra Bank Installment Loan Unknown OPTIMAL GEOMATICS: Oct. 31 Balance Sheet Upside Down by CDN$17.2MM ------------------------------------------------------------------ Optimal Geomatics Inc. reported a net loss of CDN$1.2 million on CDN$16 million of revenues for the fiscal year ended Oct. 31, 2006, compared to a net income of CDN$1.2 million on CDN$10 million of revenues for the same period in 2005 The company's balance sheet for FY 2006 showed CDN$12.8 million in total assets, and CDN$30 million in total liabilities, resulting in a $17.2 million stockholders' deficit. "The delay in signing new contracts in our North American and UK markets, coupled with a strong Canadian dollar, has adversely impacted our results for the fourth quarter as well as our fiscal year targets. We continued to experience a slow down in new contract wins in the fourth quarter," stated Colum Caldwell, President & CEO of Optimal Geomatics. "Our revenue and financial targets for 2006 were not achieved due to these delays in customer contract signings. Despite the delays in signings, Optimal remains of the view that these results are a part of the normal volatility in our business and do not reflect a change in our future prospects. "We are obviously disappointed in our financial results for 2006 in what was otherwise an excellent year for strategic progress." About Optimal Geomatics Inc. Headquartered in Vancouver, Canada, Optimal Geomatics specializes in the science and technology of gathering, analyzing, interpreting, distributing and using geographic information. Optimal applies the disciplines of surveying, mapping, remote sensing, geographic information systems, and global positioning system to provide solutions for engineering and geospatial professionals. OWNIT MORTGAGE: Picks Credit-Based Asset Servicing as Lead Bidder ----------------------------------------------------------------- Ownit Mortgage Solutions Inc. has selected a $4 million offer from Credit-Based Asset Servicing and Securitization LLC to be the lead bidder, or stalking horse, at Thursday's auction sale of its mortgages, Bill Rochelle of Bloomberg News reports. As reported in the Troubled Company Reporter on Feb. 20, 2007, Ownit Mortgage sought authority from the U.S. Bankruptcy Court for the Central District of California to sell 54 residential fixed and adjustable rate first or second lien mortgage loans. The mortgage loans are secured by a mortgage, deed of trust or other security instrument creating a first or second priority lien on residential dwellings located in various jurisdictions. Details on the mortgage loans were not available in the documents the Debtor filed with the Court. The Debtor decided to sell those loans because it urgently needs to raise additional funds to pay for its operational and other expenses, including administrative rents for its various leased locations which must be paid by Monday, Feb. 26, 2007. Headquartered in Agoura Hills, California, Ownit Mortgage Solutions Inc. is a subprime mortgage lender, which specializes in making loans to borrowers with poor credit or limited incomes. The Debtor filed for chapter 11 protection on Dec. 28, 2006 (Bankr. C.D. Calif. Case No. 06-12579). No Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for bankruptcy, it estimated assets between $1 million to $50 million and debts with more than $100 million. The Debtor's exclusive period to file a chapter 11 plan expires on April 27, 2007. PALMDALE HILLS PROPERTY: S&P Withdraws Ratings on Facilities ------------------------------------------------------------ Standard & Poor's Ratings Services withdrew its ratings on Palmdale Hills Property LLC following the successful refinancing of balances outstanding under a $200 million senior secured first-lien credit facility and a $75 million senior secured second-lien facility. Standard & Poor's was not engaged to rate the new loan. Palmdale Hills is a single-purpose entity formed to acquire, develop, and market the 10,625-acre Ritter Ranch master-planned community in northern Los Angeles County. The company is an affiliate of unrated SunCal Cos. Irvine, Calif.-based SunCal Cos. was founded in 1873 and is the largest private developer of master-planned communities in California. Ratings Withdrawn Palmdale Hills Property LLC Rating ------ To From -- ---- Issuer credit NR B-/Watch Neg First-lien NR B/Watch Neg Second-lien NR CCC+/Watch Neg PARK PLACE: DBRS Reviews Low-B Ratings on Two Class Certificates ---------------------------------------------------------------- Dominion Bond Rating Service placed these two classes under review with negative implications: -- $64,500,000 Asset-Backed Pass-Through Certificates, Series 2004-WHQ2, Class M-10, currently rated BB (high) -- $30,400,000 Asset-Backed Pass-Through Certificates, Series 2005-WCH1, Class M-10, currently rated BB (high) PREDIWAVE CORPORATION: Court Denies New World's Dismissal Plea -------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California denied New World TMT Limited's request to dismiss the involuntary chapter 11 petitions filed against PrediWave Corp.'s affiliates. On Jan. 8, 2007, employees filed involuntary petitions against CyberLancet, CyberNova, TechStock, WarpEra, Visionaire and Athena. New World obtained a $2.8 million judgment against some of the Debtor's affiliates and upon receipt of the judgment, levied on the bank account of the affiliates. New World however took care not to levy on any of the Debtor's accounts consistent with the terms if the Court's lift stay order. New World had asked the Court to dismiss the affiliates involuntary petitions contending that employees were not allowed to file involuntary petitions under Section 303(b)(2) of the Bankruptcy Code. New World told the Court that the petitions in CyberLancet, CyberNova, TechStock, and Athena were defective under any standard. Specifically: * the CyberLancet petition was filed by only one "creditor", not the three petitioning creditors required by Section 303(b)(1); and * in the CyberNova, TechStock and Athena petitions, an unspecified element of each "creditors'" petition is a claim for severance. Headquartered in Fremont, Calif., PrediWave Corporation -- http://www.prediwave.com/-- provides cable and satellite operators with end-to-end digital broadcast platforms, and offers products like Video On Demand, Digital Video Recording, interactive video shopping, and subscription services. The Debtor filed for chapter 11 protection on April 14, 2006 (Bankr. N.D. California Case No. 06-40547). Robert A. Klyman, Esq., at Latham & Watkins, LLP, and Jonathan S. Shenson, Esq., at Klee, Tuchin, Bogdanoff & Stern LLP represent the Debtor in its restructuring efforts. John D. Fiero, Esq., at Pachulski, Stang, Ziehl, Young and Jones represents the Official Committee Of Unsecured Creditors. The Debtor's Schedules of Assets and Liabilities showed $145,282,246 in total assets and $773,033,371 in total liabilities. PRIME MORTGAGE: S&P Assigns Default Rating to 2004-CL1 B-5 Certs. ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on the class B-1 and B-2 certificates from Prime Mortgage Trust 2003-1. Concurrently, ratings were lowered on four classes from Prime Mortgage Trust 2004-CL1 and PRIME 2004-CL1A. Of these, the ratings on the class B-3 certificates from both series remain on CreditWatch, where they were placed with negative implications on April 26, 2006, while the rating on class B-4 from series 2004-CL1 was removed from CreditWatch negative. In addition, classes 1-B-4 and 1-B-5 from series 2005-5 were placed on CreditWatch with negative implications. Lastly, the ratings on 168 classes from 12 Prime Mortgage Trust transactions and PRIME 2004-CL1A were affirmed. The upgrades are due to projected credit support that is at least 1.71x the original credit support associated with the higher rating levels. As of the January 2007 distribution date, total delinquencies represented 1.22% of the current pool balance, while cumulative losses represented 0.00% of the original pool balance. The lowered ratings and CreditWatch placements reflect reduced projected credit support due to high delinquencies and adverse collateral performance. Projected credit support reflects annual credit support less projected losses on present-day delinquencies. Serious delinquencies for the transactions with downgrades or CreditWatch placements range from 2.71% to 6.18% of the current pool balances. When delinquencies translate into losses, credit enhancement is eroded. Cumulative realized losses on these transactions range from 0.00% to 0.13% of the original pool balance. Standard & Poor's will continue to monitor the performance of these transactions. If credit support continues to be reduced, Standard & Poor's will likely take additional negative rating actions. Conversely, if realized losses no longer outpace monthly excess interest and the level of overcollateralization rebuilds toward its target balance, Standard & Poor's will affirm the ratings and remove them from CreditWatch. The lowering of the rating on the class B-3 certificate from series 2004-CL1A reflects the downgrade of the underlying certificates, classes B-3 and B-4 from series 2004-CL1, which support series 2004-CL1A. The certificates issued from Prime Mortgage Trust 2004-CL1A represent a portion of the undivided ownership interests in a trust fund consisting of series 2004-CL1's class B-1, B-2, and B-3 pass-through certificates. On each distribution date, certificateholders are entitled to receive monthly distributions of principal and interest received on the related underlying certificates. The rating on class B-4 from series 2004-CL1 was removed from CreditWatch negative because it was lowered below 'B-'. 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 current ratings. Ratings Raised Prime Mortgage Trust Rating ------ Series Class To From ------ ----- -- ---- 2003-1 B-1 AA+ AA 2003-1 B-2 A+ A Rating Lowered And Removed From Creditwatch Negative Prime Mortgage Trust Rating ------ Series Class To From ------ ----- -- ---- 2004-CL1 B-4 CCC B/Watch Neg Rating Lowered Prime Mortgage Trust Rating ------ Series Class To From ------ ----- -- ---- 2004-CL1 B-5 D CCC Ratings Lowered And Remaining On Creditwatch Negative Prime Mortgage Trust Rating ------ Series Class To From ------ ----- -- ---- 2004-CL1 B-3 BB/Watch Neg BBB/Watch Neg Prime 2004-Cl1a Rating ------ Series Class To From ------ ----- -- ---- 2004-CL1A B-3 BB/Watch Neg BBB/Watch Neg Ratings Placed On Creditwatch Negative Prime Mortgage Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-5 1B-4 BB/Watch Neg BB 2005-5 1B-5 B/Watch Neg B Ratings Affirmed Prime Mortgage Trust Series Class Rating ------ ----- ------ 2003-1 A-2, A-3, A-4, A-5, A-7, A-8, AAA 2003-1 A-9, A-11, A-14, A-15, X, PO AAA 2003-1 B-3 BBB 2003-1 B-4 BB 2003-1 B-5 B 2003-2 I-A-1, I-A-2, I-A-3, I-A-4, I-A-5 AAA 2003-2 I-A-6, I-A-7, I-A-8, I-A-9, I-A-10 AAA 2003-2 I-A-11, I-PO, II-A-1, II-A-2, AAA 2003-2 II-PO, II-IO AAA 2003-2 B-1 AA 2003-2 B-2 A 2003-2 B-3 BBB 2003-2 B-4 BB 2003-2 B-5 B 2003-3 A-1, A-2, A-3, A-4, A-5, A-6, A-7 AAA 2003-3 A-8, A-9, PO AAA 2003-3 B-1 AA 2003-3 B-2 A 2003-3 B-3 BBB 2003-3 B-4 BB 2003-3 B-5 B 2004-1 I-A-1, I-A-2, I-A-3, I-A-4, I-A-5 AAA 2004-1 I-A-6, I-A-7, I-A-8, I-PO, II-A-1 AAA 2004-1 II-A-2, II-A-3, II-PO, II-X-1 AAA 2004-1 B-1 AA 2004-1 B-2 A 2004-1 B-3 BBB 2004-1 B-4 BB 2004-1 B-5 B 2004-CL1 I-A-1, I-A-2, I-A-3, I-A-4, AAA 2004-CL1 II-A-1, II-A-2, II-A-3, III-A-1 AAA 2004-CL1 B-1 AA 2004-CL1 B-2 A 2004-CL2 A, XB AAA 2004-CL2 B-1 AA 2004-CL2 B-2 A 2004-CL2 B-3 BBB 2004-CL2 B-4 B 2004-CL2 B-5 CCC 2005-1 I-A-1, I-A-2, I-A-3, I-A-4, I-A-5 AAA 2005-1 I-A-6, I-A-7, I-A-8, I-PO, II-A-1 AAA 2005-1 II-A-2, II-A-3, II-A-4, II-A-5 AAA 2005-2 II-A-1, II-X, II-R-1 AAA 2005-2 II-B-1, II-XB AA 2005-2 II-B-2 A 2005-2 II-B-3 BBB 2005-2 II-B-4 BB 2005-2 II-B-5 B 2005-4 I-A-1, I-A-2, I-A-3, I-A-4, I-A-5 AAA 2005-4 I-A-6, I-A-7, I-PO, I-X, I-R AAA 2005-4 II-A-1, II-A-2, II-PO, II-X AAA 2005-4 II-A-7, II-A-8, II-A-9, II-A-10 AAA 2005-4 II-A-11, II-A-12 AAA 2005-4 I-B-1, II-B-1 AA 2005-4 I-B-2, II-B-2 A 2005-4 I-B-3, II-B-3 BBB 2005-4 I-B-4, II-B-4 BB 2005-4 I-B-5, II-B-5 B 2005-5 I-A-1, I-A-2, I-A-3, II-A-1, AAA 2005-5 II-A-2, II-A-3, II-A-4 AAA 2005-5 I-B-1, I-XB, II-B-1 AA 2005-5 I-B-2, II-B-2 A 2005-5 I-B-3, II-B-3 BBB 2005-5 II-B-4 BB 2005-5 II-B-5 B 2006-1 I-A-1, II-A-1, II-A-2, II-A-3, AAA 2006-1 II-A-4, II-A-5, II-A-6, II-A-7, AAA 2006-1 II-A-8, II-A-9, III-A-1, III-A-2 AAA 2006-1 X, PO, R-1 AAA 2006-1 B-1 AA 2006-1 B-2 A 2006-1 B-3 BBB 2006-1 B-4 BB 2006-1 B-5 B 2006-CL1 A-1, A-2 AAA 2006-CL1 M-1 AA 2006-CL1 M-2 A 2006-CL1 M-3 A- 2006-CL1 M-4 BBB+ 2006-CL1 M-5 BBB 2006-CL1 M-6 BBB- PRIME 2004-CL1A Series Class Rating ------ ----- ------ 2004-CL1A B-1 AA 2004-CL1A B-2 A 2004-CL1A XB BBB PRUDENTIAL SECURITIES: S&P Lifts Rating on Class J Certs. to BB+ ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on six classes of commercial mortgage pass-through certificates from Prudential Securities Secured Financing Corp.'s series 1998-C1. Concurrently, ratings were affirmed on six classes from the same series. The raised and affirmed ratings reflect the stable performance of the seasoned pool and increased credit enhancement levels resulting from loan payoffs, which provide adequate support through various stress scenarios. As of the Feb. 16, 2007, remittance report, the collateral pool consisted of 171 loans with an aggregate trust balance of $566.0 million, down from 271 loans with an aggregate principal balance of $1,148.7 million at issuance. KeyBank Real Estate Capital, the master servicer, reported full- year 2005 and interim 2006 information for 98.3% of the pool, which excludes the defeased collateral. Based on this information, Standard & Poor's calculated a current weighted average debt service coverage of 1.48x, up from 1.41x at issuance. All of the loans in the pool are current, and no loans are with the special servicer. To date, the trust has experienced seven losses totaling $13.1 million. The top 10 exposures in the pool have an aggregate outstanding balance of $120.3 million (21.3%). The weighted average DSC for the top 10 is 1.34x, which is flat from issuance. The fourth-, sixth-, and 10th-largest exposures in the pool are on the master servicer's watchlist and are discussed below. The largest exposure and the third-, seventh- and eighth-largest exposures mature within the next nine to 14 months. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 loans, and all were characterized as "good". KeyBank reported a watchlist of 33 loans. The largest loan on the watchlist is part of the fourth-largest exposure in the pool, Aberfeldy Portfolio-A of $12.8 million (2.3%), which is secured by seven office and retail properties located throughout Texas. The properties were built between 1982 and 1987 and have a combined net rentable area of 371,516 sq. ft. This exposure was placed on the watchlist due to a low DSC resulting from a combination of weak rent growth and increased expenses. As of Sept. 30, 2006, the combined DSC was 0.55x and occupancy was 89%. The sixth-largest loan, Aberfeldy Portfolio-B of $10.9 million (1.9%), also was placed on the watchlist due to weak rent growth and increased expenses. The loan is secured by nine office and retail properties located around Fort Worth, Texas. The properties were built between 1982 and 1987 and have a combined NRA of 322,877 sq. ft. As of Sept. 30, 2006, the DSC was 0.33x and occupancy was 87%. The 10th-largest loan, Frontier Village Phase II of $9.3 million (1.6%), is secured by a 210,108-sq.-ft. anchored retail property built in 1994 in Prescott, Arizona. The loan was placed on the watchlist due to low DSC after two tenants vacated the premises at the end of their lease terms. The DSC and occupancy at year-end 2005 were 0.94x and 80%, respectively. The remaining loans on the watchlist have low occupancy, lease expirations, or low DSC levels. Standard & Poor's stressed various loans on the watchlist and other loans with credit issues as part of its analysis. The analysis also considered the potential near-term refinance risk associated with 37% of pool that is maturing within the next four to 17 months. The expected losses and resultant credit enhancement levels adequately support the raised and affirmed ratings. Ratings Raised Prudential Securities Secured Financing Corp. Commercial Mortgage Pass-Through Certificates Series 1998-C1 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ D AAA AA 24.08% E AAA A+ 21.04% F A+ BBB+ 16.47% G A- BBB- 11.39% H BBB BB+ 9.87% J BB+ BB 7.80% Ratings Affirmed Prudential Securities Secured Financing Corp. Commercial Mortgage Pass-Through Certs Series 1998-C1 Class Rating Credit enhancement ----- ------ ------------------ A-1B AAA 56.05% A-2MF AAA 56.05% B AAA 45.90% C AAA 34.74% K B+ 4.80% A-EC AAA N/A N/A -- Not applicable. RICHARD WOOD: Case Summary & 10 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Richard D. Wood 204 Shooting Star Drive Sylva, NC 28779 Bankruptcy Case No.: 07-20023 Chapter 11 Petition Date: February 20, 2007 Court: Western District of North Carolina (Bryson City) Judge: George R. Hodges Debtor's Counsel: D. Rodney Kight, Jr., Esq. Kight Law Office 9 Southwest Pack Square, Suite 200 Asheville, NC 28801 Tel: (828) 255-9881 Fax: (828) 255-9886 Total Assets: $1,517,000 Total Debts: $877,155 Debtor's 10 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ IRS 1040 $50,028 P.O. Box 21126 12-31-2002 Philadelphia, PA 19114 Greene Brothers Well & Pump Business debt $13,000 P.O. Box 724 Canton, NC 28716 Jerry Brown Consumer debt $13,000 Barkers Creek Whittier, NC 28789 IRS 1040 $12,127 P.O. Box 21126 12-31-2001 Philadelphia, PA 19114 Laura Lore Funderburk Personal loan $10,000 Lowes Business debt $10,000 Ward Plumbing and Heating Business debt $8,000 Clearwood Logs Consumer debt $6,000 Nathan Farmer Business debt $6,000 Cd R Block + Business debt $4,000 ROBERT DAVIS: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Robert Michael Davis aka Robert Davis aka Davis Bob -- and -- Ruth Ann Davis aka Ruth Ann Deafenbaugh aka Ruth Davis aka Ruth A. Davis 2110 Park Chesapeake Drive Lubsy, MD 20657 Bankruptcy Case No.: 07-11613 Chapter 11 Petition Date: February 21, 2007 Court: District of Maryland (Greenbelt) Judge: Thomas J. Catliota Debtors Counsel: John Douglas Burns, Esq. The Burns Law Firm 6303 Ivy Lane, Suite 102 Greenbelt, MD 20770 Tel: (301) 441-8780 Estimated Assets: $10,000 to $100,000 Estimated Debts: $1 Million to $100 Million The Debtors did not file a list of their 20 Largest Unsecured Creditors. SANDISK CORP: Cost Cutting Plan to Reduce Workforce by 10% ---------------------------------------------------------- SanDisk Corporation's Board of Directors approved a plan to reduce operating costs, which includes a worldwide reduction in force of up to 10% of the company's headcount, or approximately 250 employees. The company expects to incur a restructuring charge in connection with the Plan in the range of $15 million to $20 million, with the majority of the expense occurring in the first quarter of 2007. The Board said that cash payments associated with the Plan will be approximately half of the total restructuring charge, with the remainder comprised of share-based compensation charges resulting primarily from acceleration of certain equity awards as per terms of the msystems acquisition. The workforce reduction will impact functions related to operations, engineering, sales and marketing and administration within the company, and will primarily be based in the United States and Israel, and to a lesser degree, other international locations. The Board further said that the Plan is expected to be completed by the third quarter of fiscal 2007. Total annualized operating cash cost savings related to the reduction-in-force and other cost saving measures, excluding severance costs, are expected to be approximately $30 million to $35 million, including cash savings from the reduction-in-force of approximately $20 million to $25 million. In addition, the reduction-in-force is expected to result in a decrease in share-based compensation expense of approximately $10 million on an annualized basis. Headquartered in Milpitas, Calif., SanDisk Corp. (NASDAQ:SNDK) -- http://www.sandisk.com/-- manufactures various formats of flash memory cards for use in consumer electronics products, including digital cameras, mobile phones, and game systems. The company also produces devices such as USB drives and MP3 music players. * * * In May 2006, Standard & Poor's Ratings Services assigned its 'BB-' rating to Sunnyvale, California-based SanDisk Corp.'s proposed issue of $1 billion of senior unsecured convertible notes due 2013. The 'BB-' corporate credit rating on SanDisk was affirmed. The rating outlook is stable. SEMCO ENERGY: Cap Rock Deal Cues Moody's Developing Outlook ----------------------------------------------------------- Moody's Investors Service changed the outlook on SEMCO ENERGY, Inc., to developing from stable. The company's Corporate Family Rating and senior unsecured ratings remain at Ba2. The rating action follows SEMCO's report that it had entered into a definitive agreement with Cap Rock Holding Corporation, which will acquire SEMCO's common stock and preferred stock for cash, subject to shareholder and regulatory approvals. Cap Rock is a utility holding company owned by the private equity firm Lindsay Goldberg & Bessemer. The developing outlook reflects considerable uncertainty over the next 12 months to 18 months as to the ultimate ownership, capitalization, and regulatory treatment of the company. Under the terms of its agreement with Cap Rock, SEMCO will undergo a "go-shop" period, during which a competing bid may be accepted. The company must then get shareholder approval. The transaction also requires a number of state and federal regulatory clearances, including the approval of the Regulatory Commission of Alaska, which the Cap Rock agreement provides for lasting into late 2008. Moody's notes that SEMCO has suffered some setbacks in the Alaska jurisdiction in recent years, including a short-lived investment by another private equity firm and a failed attempt to sell its pipeline subsidiary. Cap Rock has offered to buy for cash all of SEMCO's common stock for $8.15 per share and its Series B preferred stock, which will convert to common stock if this change of control occurs. Additionally, a change of control would trigger a change of control put that would require SEMCO to offer to redeem $350 million of the $440 million long-term debt outstanding. It is Moody's understanding that Cap Rock has obtained sufficient capital commitments from Lindsay Goldberg & Bessemer to fund the stock purchases, the tender of the debt, and retirement of SEMCO's $120 million credit facility. It is unknown how Cap Rock plans to recapitalize the company. Cap Rock's offer is at about a 37% premium to yesterday's closing stock price of $6 and values SEMCO's enterprise value at roughly $800 million, about 9x EBITDA. Moody's will monitor the progress of this transaction and will take rating action as appropriate. The outlook could turn positive or negative depending on the final terms of this transaction if it goes forward, the permanent financing plan, or the regulatory response. Based in Port Huron, Michigan, SEMCO ENERGY, Inc., is a natural gas utility company. SHERYL BERGMAN: Case Summary & 15 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Sheryl K. Bergman, Esq. P.O. Box 655 New Market, MD 21774 Bankruptcy Case No.: 07-11347 Type of Business: Chapter 11 Petition Date: February 12, 2007 Court: District of Maryland (Greenbelt) Judge: Thomas J. Catliota Debtor's Counsel: Stephen K. Carper, Esq. Clapp and Carper One West Church Street, 2nd Floor Frederick, MD 21701 Tel: (301) 694-9700 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of America Trade debt $24,987 P.O. Box 15726 Wilmington, DE 19886 Chase Trade debt $9,950 P.O. Box 15153 Wilmington, DE 19886 Chase Trade debt $9,602 P.O. Box 15153 Wilmington, DE 19886 American Express Trade debt $8,952 Bank of America Trade debt $8,641 Capital One Trade debt $7,381 Discover Trade debt $5,149 Bank of America Trade debt $5,026 American Express Trade debt $4,361 Discover Trade debt $3,209 Chase Trade debt $2,857 Exxon/Mobil Trade debt $2,346 Kohl's Trade debt $1,570 Saks Trade debt $1,063 Shell Trade debt $515 SHILOH INDUSTRIES: Moody's Holds Corporate Family Rating at Ba3 --------------------------------------------------------------- Moody's Investors Service affirmed the ratings for Shiloh Industries, Inc.: -- Corporate Family, Ba3; and -- Probability of Default, B1. Moody's also affirmed the ratings of the company's guaranteed first lien senior secured credit facility, Ba2, LGD2, 24%. The outlook remains stable. The Ba3 Corporate Family rating considers the increased financial leverage resulting from the recent payment of a $41 million special dividend to shareholders, but continues to reflect Shiloh's steady performance amidst challenging conditions in the North American automotive industry. While OEM production declines and product launch delays reduced the company's operating results in 2006, Shiloh continued to generate free cash and reduce debt levels. The recent dividend payment releverages the company's balance sheet, but operating trends suggest that the company should be able to meet increased debt service while reducing debt over the near term. Shiloh's performance is credited to the growth of its engineered welded blanks product line, successful implementation of manufacturing cost reduction initiatives, and ability to pass through fluctuations in steel costs. The stable outlook reflects Moody's expectation that industry softness will pressure improvements in Shiloh's credit metrics. Given the company's significant concentrations with North American Big-3 OEMs, production declines anticipated for 2007 are expected to negatively impact Shiloh's top line and operating margins. However, the company's performance in 2007 will benefit from the elimination of certain one-time expenses in 2006, restructuring initiatives, and new program growth. While Shiloh has demonstrated financial performance in the higher ranges of its rating category, Moody's expects that the near-term trend in the company's credit metrics should remain consistent with the Ba3 rating level. These ratings were affirmed: * Ba3, Corporate Family Rating * B1, Probability of Default Rating * Ba2 rating, with the LGD assessment changed to LGD2, 24% from LGD2, 23% for the guaranteed senior secured credit facilities, consisting of; -- $125 million revolving credit facility due 2010 -- $50 million senior secured term loan due 2009 For the 12-month period ended Oct. 31, 2006, Debt/EBITDA was 1.8x, and EBIT/Interest approximated 3.5x. Free cash flow was approximately $15 million. Notably, the company funded a $41 million dividend in January 2007 through its revolving credit facility. While this payout modestly increased Shiloh's leverage, the company's financial metrics remain solidly within the Ba3 rating category. Future events that could potentially drive Shiloh's ratings or outlook lower include further erosion of the company's operating performance resulting from disruptions or slowdowns in production from key automotive customers, or further shareholder initiatives that would increase leverage. Developments that could lead to a negative outlook or lower ratings include EBIT/Interest coverage deteriorating below 2x, negative free cash flow generation, or debt/EBITDA multiples exceeding 4x. Future events that could favorably affect the company's rating or rating outlook include debt reduction to levels below that which existed before the recent special dividend, combined with improvement in operating metrics. Moreover, actions that would offer potential stability to operations such as development of a broadened product line or a more diversified customer base, including transplants and foreign automotive OEM's as well as non-automotive companies, would be viewed favorably. Shiloh, headquartered in Cleveland, Ohio, is a leading manufacturer of blanks, engineered welded blanks, engineered stampings and modular assemblies for the automotive and heavy truck industries. The company's stock is publicly traded, but controlling ownership of Shiloh is held by MTD Holdings, Inc. Shiloh's annual revenues currently approximate $640 million. SHREVEPORT DOCTORS: Has Interim Access to Cash Collateral --------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Texas gave Shreveport Doctors Hospital 2003, Ltd., interim approval to use the cash collateral securing payment of its debts to SVH. The Debtor told the Court it needs to use cash and the proceeds of existing accounts receivable and other collateral to maintain the operation of its business and to preserve the value as a going concern. The Debtor has no other primary source of working capital. Specifically, the Debtor will use the cash collateral to pay any prepetition operating and other expenses approved by the Court, the postpetition operations of its business, and all administration costs and expenses. The Debtor will grant adequate protection to SVH in the form of a replacement first priority security interest and lien on postpetition accounts. Shreveport Doctors Hospital 2003, Ltd., filed for chapter 11 protection on Feb. 21, 2007, (Bankr. E.D. Tex. Case No. 07-40329). Deborah D. Williamson, Esq., and Mark E. Andrews, Esq., at Cox Smith Matthews, represent the Debtor. When it filed for protection from its creditors, the company listed estimated assets and debts between $1 million to $100 million. The Debtor's exclusive period to file a chapter 11 plan expires on June 21, 2007. SOUNDVIEW HOME: DBRS Reviews BB Rating on $5.6 Mil. Certificates ---------------------------------------------------------------- Dominion Bond Rating Service placed this class from one Soundview Home Loan Trust transaction under review with negative implications: $5,640,000 Asset-Backed Certificates, Series 2005-3, Class B-3, currently rated BB The class was placed under review with negative implications as a result of the increased 90+ day delinquency pipeline relative to the available level of credit enhancement. The mortgage loans consist of adjustable-rate first-lien mortgage loans. The mortgage loans in the Underlying Trusts were purchased by Soundview Home Loan Trust from a variety of originators. STAT AMBULANCE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Stat Ambulance Service, Inc. P.O. Box 393 Gilbert, WV 25621-0393 Bankruptcy Case No.: 07-20071 Type of Business: The Debtor offers a full range of medical transportation, including emergency and non- emergency services. The Debtor serves the areas of West Virginia and Kentucky See http://www.statambulanceservice.com/ Chapter 11 Petition Date: January 25, 2007 Court: Southern District of West Virginia (Charleston) Judge: Ronald G. Pearson Debtor's Counsel: Joseph W. Caldwell, Esq. Caldwell & Riffee P.O. Box 4427 Charleston, WV 25364-4427 Tel: (304) 925-2100 Fax: (304) 925-2193 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Palmetto GBA Repayment Claim $2,800,000 P.O. Box 182932 (Medicare) Columbus, OH 43218-2932 Oleta & Bill Buzzo Saving Bond Loan $400,000 P.O. Box 602 Pineville, WV 24874 Department of Health and Repayment of Claim $180,000 Human Services DHHR BMS 350 Capital Street, Room 251 Charleston, WV 25301 Bert Wolfe Ford Parts and Service $74,233 Alltel Cell Phones $30,956 Viking Office Furniture $21,503 Cellular One Cell Phones $20,020 Verizon Directories Corp. Phonebook $17,541 Skaggs Uniforms $15,663 RDJ Specialties, Inc. Advertising $13,345 Merchandise Advance Auto Parts Parts $13,028 MAMSI Life & Helath Employee Insurance $10,844 (Cancelled) John W. Clark Oil Company Fuel $10,722 Ortivus, Inc. Software Support $10,125 Yellow Book USA Phonebook $9,091 Advertising EMSAR Cot Repair $8,733 ACC Office Phones $8,146 Concept Seating Dispatch Chairs $7,940 Marlinton Electric Company Fuel $7,225 MEDTECH EMS Supplies $6,802 STATION CASINOS: Accepts $5.5 Bil. Offer from Management-Led Deal ----------------------------------------------------------------- Station Casinos Inc. has accepted a revised offer of $90 per share or $5.5 billion from a group that includes its Chairman and Chief Executive Frank Fertitta III; his brother, the company's President, Lorenzo Fertitta; their sister and brother-in-law Delise and Blake Sartini, and Fertitta Colony Capital LLC, the Wall Street Journal reports citing people familiar with the situation. The group will also assume about $3.4 billion in debt, making the deal total up to $8.9 billion, WSJ adds. Station Casinos will become a private company after the deal is consummated, and it might solicit higher bids for the next 30 days, WSJ says citing its sources. Station Casinos Inc. -- http://www.stationcasinos.com/-- provides gaming and entertainment to the residents of Las Vegas, Nevada. Station owns and operates Palace Station Hotel & Casino, Boulder Station Hotel & Casino, Santa Fe Station Hotel & Casino, Wildfire Casino, and Wild Wild West Gambling Hall & Hotel in Las Vegas, Nevada, Texas Station Gambling Hall & Hotel and Fiesta Rancho Casino Hotel in North Las Vegas, Nevada, and Sunset Station Hotel & Casino, Fiesta Henderson Casino Hotel, Magic Star Casino and Gold Rush Casino in Henderson, Nevada. Station also owns a 50% interest in Green Valley Ranch Station Casino, Barley's Casino & Brewing Company and The Greens in Henderson, Nevada and a 6.7% interest in the Palms Casino Resort in Las Vegas, Nevada. In addition, Station manages Thunder Valley Casino near Sacramento, Calif., on behalf of the United Auburn Indian Community. * * * As reported in the Troubled Company Report on Dec. 6, 2007, Moody's Investors Service placed the ratings of Stations Casinos Inc.'s Ba2 corporate family rating, Ba2 probability of default rating, Ba2 senior unsecured note rating, and Ba3 senior subordinated note rating on review for possible. SWEETWATERS OF HAUPPAUGE: Voluntary Chapter 11 Case Summary ----------------------------------------------------------- Debtor: Long Island Restaurant Concepts, Inc. dba Sweetwaters of Hauppauge 470 Wheeler Road Hauppauge, NY 11788 Bankruptcy Case No.: 07-70550 Type of Business: The Debtor operates a restaurant. Chapter 11 Petition Date: February 21, 2007 Court: Eastern District of New York (Central Islip) Debtor's Counsel: Marc A Pergament, Esq. Weinberg Gross & Pergament LLP 400 Garden City Plaza Garden City, NY 11530 Tel: (516) 877-2424 Total Assets: $76, 560 Total Debts: $2,817,947 The Debtor did not file a list of its 20 Largest Unsecured Creditors. TXU CORP: KKR, TPG & Goldman Sachs Offering $32 Billion for Firm ---------------------------------------------------------------- A group of investors that include Kohlberg, Kravis, Roberts & Co., Texas Pacific Group, and the private-equity arm of Goldman Sachs Group Inc. offers $69 per share to $70 per share, at least $32 billion, for TXU Corp., plus more than $12 billion in debt, the Wall Street Journal reports. TXU will drop plans to build eight of the 11 coal-fired power plants in Texas and abide by the U.S. limits on power-plant pollution, Bloomberg reports citing a statement from the Natural Resources Defense Council. "The new owners don't want to be your grandfather's power company," Natural Resources' Climate Center Director, David G. Hawkins, said in a phone interview with Bloomberg. They will "turn instead to cleaner sources of energy," he added. The group of investors will also back a legislation that would require carbon dioxide reductions and set up a system for managing reductions, WSJ notes. About TXU Corp. Headquartered in Dallas, Texas, TXU Corp. (NYSE: TXU) -- http://www.txucorp.com/-- is an energy company that manages a portfolio of competitive and regulated energy businesses in North America. In TXU Corp.'s unregulated business, TXU Energy provides electricity and related services to 2.5 million competitive electricity customers in Texas, more customers than any other retail electric provider in the state. TXU Power has over 18,300 megawatts of generation in Texas, including 2,300 MW of nuclear and 5,837 MW of lignite/coal-fired generation capacity. TXU Corp.'s 6.55% Senior Notes due 2034 carry Moody's Investors Service's Ba1 rating and Standard & Poor's BB+ rating. TXU CORP: KGS Asks Investors to Participate in Deal Investigation ----------------------------------------------------------------- Kahn Gauthier Swick, LLC, encourages investors to now participate in its ongoing investigation into the fairness and adequacy of the anticipated bid for TXU Corp. by private-buyout firms Kohlberg Kravis Roberts & Co. and Texas Pacific Group. Recent news reports, quoting anonymous sources, state that TXU's board was meeting over the weekend to consider an offer to purchase the utility company for $69 per share to $70 per share -- or at least $32 billion. TXU is the largest producer of electric power in Texas with some 2.3 million customers. The initial stages of KGS' investigation indicate that the anticipated private equity offer may substantially undervalue the price of TXU shares. Investors are now encouraged to assist in the KGS investigation. Investors with knowledge regarding the undervaluation of the buyout offer, or with knowledge of facts that demonstrate the unfairness of the bidding or evaluation process, are encouraged to contact KGS, as soon as possible, without obligation or cost to you. Kahn Gauthier Swick, LLC: Investigations Bureau Lewis Kahn, President, 1-866-467-1400, ext. 100 lewis.kahn@kgscounsel.com About TXU Corp. Headquartered in Dallas, Texas, TXU Corp. (NYSE: TXU) -- http://www.txucorp.com/-- is an energy company that manages a portfolio of competitive and regulated energy businesses in North America. In TXU Corp.'s unregulated business, TXU Energy provides electricity and related services to 2.5 million competitive electricity customers in Texas, more customers than any other retail electric provider in the state. TXU Power has over 18,300 megawatts of generation in Texas, including 2,300 MW of nuclear and 5,837 MW of lignite/coal-fired generation capacity. TXU Corp.'s 6.55% Senior Notes due 2034 carry Moody's Investors Service's Ba1 rating and Standard & Poor's BB+ rating. TXU CORP: Ceres Investor Coalition Issues Report on Financial Risk ------------------------------------------------------------------ Amid recent reports that TXU Corp. will be acquired by a private equity firm and will scale back its plan to build 11 new coal- fired power plants in Texas, the Ceres investor coalition has issued a new report about wide-ranging financial risks that TXU investors face from the company's original proposal. The report concludes that TXU's investors -- whether as public shareholders or private investors -- will face a multitude of financial risks if the company moves forward with its plans to build 9,000 megawatts of pulverized coal-fired capacity. The report cites construction cost over-runs, burdensome regulatory costs as climate regulations take hold and a slowing of power demand in Texas as state legislators aggressively push energy efficiency and other energy-saving programs. "We are encouraged by recent news that TXU's potential buyers are focused on mitigating these financial risks and scaling the project back," said Mindy S. Lubber, president of Ceres and director of the $3.7 trillion Investor Network on Climate Risk. "It doesn't matter who owns TXU, the 11-plant proposal, if it proceeded, would undermine revenues, profits, and long-term share value." "If private equity investors buy TXU, it opens a new era in which private equity firms must evaluate climate risk just as public investors have been," said David Gardiner, whose firm, David Gardiner & Associates, authored the report. "Our report suggests those risks are substantially greater than TXU and other analysts have previously suggested." The 11 coal plants that TXU proposed to build are among more than 150 coal-fired power plants currently proposed across the United States. As with TXU, most of these generating facilities would be built with no technologies or controls for capturing carbon dioxide, a primary contributor to global warming. The report, TXU's Expansion Proposal: A Risk for Investors, says all coal-fired power plants present wide-ranging financial risks for investors, including to shareholders of power companies as well as to banks financing the projects. But the TXU proposal, which planned to add more coal-fired electricity capacity than has been built in the entire U.S. in the past 10 years, is considered especially risky for investors due to the project's sheer magnitude and because TXU operates in a deregulated market, where risks are borne primarily by shareholders and other investors instead of ratepayers. The report highlights various financial risks that the TXU proposal has not accounted for, including: * Unrealistic Cost Assumptions TXU's estimated $10 billion price tag is unrealistically low. Recent construction cost figures from NRG Energy, which has more experience in building coal-fired power plants than TXU and which is proposing a similar but smaller expansion in Texas, indicate that the total cost of TXU's project could rise by more than 35% to $13.6 billion. Similarly, Duke Energy recently announced that building a new coal-fired power plant in North Carolina will be 50% more expensive than planned because of rising materials and labor costs. The same economic forces will affect TXU's project, possibly pushing overall project costs to increase to as much as $15 billion. * Underestimated Regulatory Costs National climate regulations are inevitable and high carbon emitters like TXU will be at a disadvantage when they must pay for their carbon emissions. Although TXU promises to make its new facilities "carbon capture ready," it has not provided any clear timeline or costs for those technologies. Therefore, TXU will need to purchase CO2 credits until such technologies are commercially available and cost competitive. It is likely that the baseline for GHG reductions established in the national regulations will be set prior to construction of these plants (i.e., they will not be 'grandfathered'), which means TXU will have to pay its emissions. Assuming TXU has to pay for 100% of its emissions from the expansion and 25% of its existing emissions under national regulations, the company's costs will likely range from $917 million to nearly $2.3 billion annually, or 9% to 23% of its estimated cost for the entire project. These additional costs will reduce the company's profits and erode shareholder returns. * Impact of Energy Efficiency Measures Electricity demand growth in Texas may be lower than TXU's aggressive projections. This means TXU may experience lower revenues due to unused capacity. Numerous legislative proposals are currently under consideration in the Texas legislature to dramatically boost energy efficiency. A recent analysis, done by Optimal Energy, found that aggressive investments in efficiency and other energy-saving programs would have a $38 billion net economic benefit for Texas while reducing peak electric demand by 4,000 megawatts by 2011 and 18,500 megawatts by 2021. * Competition from Renewable Energy Electric power from renewable sources is becoming increasingly cost-competitive with power generated from fossil fuels. Texas is already the nation's largest producer of wind power and the state has mandated that wind generation nearly double by 2015 and nearly double again by 2025. With mandates like that and costs that are competitive -- $23/MWh to $59/MWh for wind vs. $56/MWh to $83/MWh for coal (including potential costs for controlling CO2) -- wind power is a growth area that could cut into demand for some of TXU's power. While wind resources are intermittent and therefore not a baseload generation source, wind's cost competitiveness enables it to compete with coal, especially during off-peak hours. * Reputation Harm & Litigation Risk Two-thirds of Texans oppose new coal-fired power plants in the state and three of four would rather rely first on energy efficiency and conservation. Several lawsuits have already been filed against TXU regarding the project's environmental impacts and the Texas legislature is considering several proposals that could adversely impact the project. All of these trends will increase the project's costs and potentially undermine customer attraction and retention in Texas's deregulated electric power market. About Ceres Ceres -- http://www.ceres.org/-- is a coalition of investors, environmental groups, and other public interest organizations working with companies to address sustainability challenges such as global climate change. Ceres also directs the Investor Network on Climate Risk, a network of more than 50 institutional investors with assets totaling $3.7 trillion. About David Gardiner & Associates David Gardiner & Associates -- http://www.dgardiner.com/-- provides innovative environmental and sustainability services to clients in the private and public sectors, helping organizational leaders make critical decisions by providing thorough research, clear analysis, and astute implementation guidance. The firm has core expertise in climate change, clean energy, corporate responsibility, investor services, business and non-profit management, and sustainable development. About TXU Corp. Headquartered in Dallas, Texas, TXU Corp. (NYSE: TXU) -- http://www.txucorp.com/-- is an energy company that manages a portfolio of competitive and regulated energy businesses in North America. In TXU Corp.'s unregulated business, TXU Energy provides electricity and related services to 2.5 million competitive electricity customers in Texas, more customers than any other retail electric provider in the state. TXU Power has over 18,300 megawatts of generation in Texas, including 2,300 MW of nuclear and 5,837 MW of lignite/coal-fired generation capacity. TXU Corp.'s 6.55% Senior Notes due 2034 carry Moody's Investors Service's Ba1 rating and Standard & Poor's BB+ rating. VINCENT PETRAGLIA: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Vincent Petraglia 816 Church Hill Road Finleyville, PA 15332 Bankruptcy Case No.: 07-20449 Chapter 11 Petition Date: January 23, 2007 Court: Western District of Pennsylvania (Pittsburgh) Judge: Bernard Markovitz Debtor's Counsel: Robert O Lampl, Esq. 960 Penn Avenue, Suite 1200 Pittsburgh, PA 15222 Tel: (412) 392-0330 Fax: (412)-392-0335 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. XEROX CORPORATION: Increases Share Repurchase Program ----------------------------------------------------- Xerox Corporation's board of directors, on Feb. 15, 2007, authorized the company to repurchase another $500 million in Xerox stock. This increases the company's stock buyback program to $2.5 billion since it launched in October 2005. In that time, Xerox to date has repurchased about 108 million shares, totaling $1.6 billion. "Expanding our share repurchase program is consistent with Xerox's steady progress in generating strong cash flow," said Lawrence A. Zimmerman, Xerox senior vice president and chief financial officer. "Last year, we generated $1.6 billion in operating cash and we expect continued solid performance this year. We're using the cash to deliver value for shareholders by buying back stock and investing in growth through acquisitions, innovation and a services-led approach to winning in the marketplace." About Xerox Corp. Headquartered in Stamford, Connecticut, Xerox Corporation (NYSE: XRX) -- http://www.xerox.com/-- develops, manufactures and markets document processing systems and related supplies and provides consulting and outsourcing document management services. * * * As reported in the Troubled Company Reporter on Jan. 31, 2007, Standard & Poor's Ratings Services revised its rating outlook on Stamford, Connecticut-based Xerox Corp. to positive from stable. Ratings on the company, including the 'BB+' long-term and 'B-1' short-term corporate credit ratings, were affirmed. * BOND PRICING: For the week of February 19 -- February 23, 2007 ---------------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- Acme Metals Inc 10.875% 12/15/07 0 Amer & Forgn Pwr 5.000% 03/01/30 65 Amer Tissue Inc 12.500% 07/15/06 1 Antigenics 5.250% 02/01/25 67 Anvil Knitwear 10.875% 03/15/07 72 At Home Corp 0.525% 12/28/18 1 At Home Corp 4.750% 12/15/06 0 Autocam Corp. 10.875% 06/15/14 28 Bank New England 8.750% 04/01/99 9 Bank New England 9.500% 02/15/96 15 Bank New England 9.875% 09/15/99 8 Better Minerals 13.000% 09/15/09 75 Burlington North 3.200% 01/01/45 58 Budget Group Inc 9.125% 04/01/06 0 Calpine Corp 4.000% 12/26/06 64 Cell Therapeutic 5.750% 06/15/08 69 Collins & Aikman 10.750% 12/31/11 3 Color Tile Inc 10.750% 12/15/01 0 Comcast Corp 2.000% 10/15/29 41 Dana Corp 7.000% 03/01/29 75 Dana Corp 9.000% 08/15/11 72 Decode Genetics 3.500% 04/15/11 75 Delco Remy Intl 9.375% 04/15/12 28 Delco Remy Intl 11.000% 05/01/09 31 Delta Air Lines 2.875% 02/18/24 59 Delta Air Lines 7.700% 12/15/05 60 Delta Air Lines 7.900% 12/15/09 63 Delta Air Lines 8.000% 06/03/23 62 Delta Air Lines 8.300% 12/15/29 64 Delta Air Lines 9.000% 05/15/16 64 Delta Air Lines 9.250% 12/27/07 61 Delta Air Lines 9.250% 03/15/22 61 Delta Air Lines 9.750% 05/15/21 62 Delta Air Lines 10.000% 08/15/08 63 Delta Air Lines 10.125% 05/15/10 61 Delta Air Lines 10.375% 02/01/11 59 Delta Air Lines 10.375% 12/15/22 64 Delta Mills Inc 9.625% 09/01/07 14 Deutsche Bank NY 8.500% 11/15/16 72 Dov Pharmaceutic 2.500% 01/15/25 70 Dura Operating 8.625% 04/15/12 31 Dura Operating 9.000% 05/01/09 6 E.Spire Comm Inc 10.625% 07/01/08 0 E.Spire Comm Inc 12.750% 04/01/06 0 E.Spire Comm Inc 13.000% 11/01/05 0 E.Spire Comm Inc 13.750% 07/15/07 0 Eagle Food Center 11.000% 04/15/05 2 Encysive Pharmacy 2.500% 03/15/12 69 Exodus Comm Inc 10.750% 12/15/09 0 Exodus Comm Inc 11.625% 07/15/10 0 Falcon Products 11.375% 06/15/09 1 Fedders North AM 9.875% 03/01/14 62 Federal-Mogul Co. 7.500% 01/15/09 58 Federal-Mogul Co. 8.330% 11/15/01 68 Federal-Mogul Co. 8.370% 11/15/01 73 Finova Group 7.500% 11/15/09 28 GB Property Fndg 11.000% 09/29/05 57 Global Health Sc 11.000% 05/01/08 4 Gulf States Stl 13.500% 04/15/03 0 Home Prod Intl 9.625% 05/15/08 31 Insight Health 9.875% 11/01/11 32 Insilco Hldg Co 14.000% 08/15/08 0 Iridium LLC/CAP 10.875% 07/15/05 25 Iridium LLC/CAP 11.250% 07/15/05 25 Iridium LLC/CAP 13.000% 07/15/05 27 Iridium LLC/CAP 14.000% 07/15/05 25 IT Group Inc. 11.250% 04/01/09 0 JTS Corp 5.250% 04/29/02 0 Kaiser Aluminum 9.875% 02/15/02 22 Kaiser Aluminum 12.750% 02/01/03 3 Kellstrom Inds 5.500% 06/15/03 4 Kellstrom Inds 5.750% 10/15/02 4 Key3Media Group 11.250% 06/15/11 0 Kmart Corp 9.780% 01/15/20 0 Kmart Corp 9.350% 01/02/20 12 Kmart Funding 8.800% 07/01/10 27 Kmart Funding 9.440% 07/01/18 15 Liberty Media 3.750% 02/15/30 62 Liberty Media 4.000% 11/15/29 67 LTV Corp 8.200% 09/15/07 0 Macsaver Financl 7.400% 02/15/02 0 Merisant Co 9.500% 07/15/13 66 MRS Fields 9.000% 03/15/11 68 National Steel Corp 8.375% 08/01/06 0 National Steel Corp 9.875% 03/01/09 0 New Orl Grt N RR 5.000% 07/01/32 71 Northern Pacific RY 3.000% 01/01/47 57 Northern Pacific RY 3.000% 01/01/47 57 NorthPoint Comm 12.875% 02/15/10 0 Northwest Airlines 8.970% 01/02/15 25 Northwest Airlines 9.179% 04/01/10 31 Northwst Stl&Wir 9.500% 06/15/01 0 Nutritional Src 10.125% 08/01/09 63 Oakwood Homes 7.875% 03/01/04 11 Oakwood Homes 8.125% 03/01/09 6 Oscient Pharm 3.500% 04/15/11 68 Outboard Marine 7.000% 07/01/02 0 Outboard Marine 9.125% 04/15/17 3 Outboard Marine 10.750% 06/01/08 6 Pac-West Telecom 13.500% 02/01/09 23 Pac-West Telecom 13.500% 02/01/09 32 Pegasus Satellite 9.625% 10/15/49 9 Pegasus Satellite 12.375% 08/01/08 9 Pegasus Satellite 13.500% 03/01/07 0 Piedmont Aviat 10.250% 01/15/49 0 Piedmont Aviat 10.250% 01/15/49 8 PCA LLC/PCA FIN 11.875% 08/01/09 3 Polaroid Corp 6.750% 01/15/02 0 Polaroid Corp 7.250% 01/15/07 0 Polaroid Corp 11.500% 02/15/06 0 Primus Telecom 3.750% 09/15/10 40 Primus Telecom 8.000% 01/15/14 58 PSINET Inc 10.000% 02/15/05 0 PSINET Inc 11.500% 11/01/08 0 Radnor Holdings 11.000% 03/15/10 0 Railworks Corp 11.500% 04/15/09 1 Read-Rite Corp 6.500% 09/01/04 5 RJ Tower Corp. 12.000% 06/01/13 15 S3 Inc 5.750% 10/01/03 0 Tom's Foods Inc 10.500% 11/01/04 9 Transtexas Gas 15.000% 03/15/05 0 Tribune Co 2.000% 05/15/29 71 Trism Inc 12.000% 02/15/05 0 United Air Lines 8.700% 10/07/08 42 United Air Lines 9.020% 04/19/12 58 United Air Lines 9.200% 03/22/08 53 United Air Lines 9.210% 01/21/17 11 United Air Lines 9.300% 03/22/08 57 United Air Lines 9.350% 04/07/16 41 United Air Lines 9.560% 10/19/18 58 United Air Lines 9.760% 12/31/49 4 United Air Lines 10.020% 03/22/14 54 United Air Lines 10.110% 02/19/49 53 United Air Lines 10.125% 03/22/15 57 United Air Lines 10.850% 02/19/15 53 Universal Stand 8.250% 02/01/06 0 Chic East Ill RR 5.000% 01/01/54 71 US Air Inc. 10.250% 01/15/49 6 US Air Inc. 10.250% 01/15/49 1 US Air Inc. 10.300% 07/15/49 1 US Air Inc. 10.550% 01/15/49 0 US Air Inc. 10.750% 01/01/49 0 US Air Inc. 10.800% 01/01/49 0 US Air Inc. 10.900% 01/01/49 0 US Air Inc. 10.900% 01/01/49 0 USAutos Trust 2.212% 03/03/11 8 Venture Holdings 12.000% 06/01/09 0 Vesta Insurance Group 8.750% 07/15/25 4 Werner Holdings 10.000% 11/15/07 7 Westpoint Steven 7.875% 06/15/08 0 Wheeling-Pitt St 5.000% 08/01/11 75 Wheeling-Pitt St 6.000% 08/01/10 75 Winstar Comm Inc 12.750% 04/15/10 0 Winstar Comm 14.000% 10/15/05 0 ********* 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 ***