/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/070313.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, March 13, 2007, Vol. 11, No. 61 Headlines AINSWORTH LUMBER: S&P Junks Corp. Credit Rating with Neg. Outlook ALFREDO'S TILE: Voluntary Chapter 11 Case Summary ALLIANCE PHARMA: Dec. 31 Balance Sheet Upside Down by $11.3 Mil. AMERICAN BIOPHYSICS: Selling Propriety and Inventory Assets AMERICAN CELLULAR: Moody's Cuts Sr. Debt's Rating to B1 from Ba2 AMORTIZING RESIDENTIAL: S&P Cuts Rating on Class M-1 & M-2 Certs. AMR CORP: Dec. 31 Balance Sheet Upside-Down by $606 Million AMTROL INC: Seeks Court OK to Merge Water Soft Into New Unit ANDREW CORP: S&P Holds Ratings and Removes Positive CreditWatch APPALACHIAN REGIONAL: Improved Liquidity Cues S&P's Stable Outlook ARMSTRONG WORLD: S&P Holds BB Rating & Says Outlook is Developing ATLANTIC MARINE: S&P Holds B+ Rating on Proposed $210 Million Loan BABSON CLO: S&P Places BB Rating on $4 Mil. Class D-2 Certificates BANC OF AMERICA: Moody's Affirms Low-B Ratings on 12 Cert. Classes BAUSCH & LOMB: U.S. Operations Likely to be Unprofitable BITHORN TRAVEL: Voluntary Chapter 11 Case Summary CADMUS COMMS: S&P Withdraws BB- Corporate Credit Rating CATHOLIC CHURCH: Pachulski Stang OK'd as Davenport Panel's Counsel CATHOLIC CHURCH: Ct. OKs San Diego Interim Postpetition Financing CATHOLIC CHURCH: Ct. Okays Spokane's Amended Disclosure Statement CENTENE CORP: S&P Rates $175 Million Senior Notes Offering at BB CHARLES RIVER: Incurs $55.7 Million Net Loss in Year Ended Dec. 31 CLAYTON HOLDINGS: Moody's Lifts Corp. Family Rating to Ba3 from B1 CLAYTON HOLDINGS: Good Performance Cues S&P's Positive Outlook COLLINS & AIKMAN: Wants Stipulation with Wachovia Bank Approved COLLINS & AIKMAN: Auction on Williamston Assets Set for March 14 CREDIT SUISSE: Moody's Holds B3 Rating on $4 Mil. Class O Certs. CREDIT SUISSE: Fitch Affirms Low-B Ratings on Three Cert. Classes CREDIT SUISSE: S&P Junks Rating on Two Certificate Classes CUMMINS INC: Net Earnings Increase to $715 Million in Fiscal 2006 CUNNINGHAM LINDSEY: Weak Earnings Cue S&P to Lower Ratings CVS CORP: Chancery Court Allows Vote on Caremark Merger to Proceed CVS CORPORATION: Moves Shareholders' Meeting Until Late March 2007 CVS CORPORATION: Earns $1.35 Billion in Fiscal 2006 DAIMLERCHRYSLER AG: Shareholders Want Chrysler Deal Investigated DAIMLERCHRYSLER AG: Sells EUR2 Billion 4.375% Bonds Due March 2010 DALRADA FINANCIAL: Incurs $679,000 Net Loss in Qtr. Ended Dec. 31 DANA CORP: Retirees Panel Objects to Unilateral Termination Motion DANA CORP: Panel Wants Retiree Benefits Modified DANIEL WEBSTER: Moody's Affirms B1 Rating on 1999 and 2001 Bonds DELHPI CORP: InPlay Sells $7.5 Million Settlement Claim DELPHI CORP: Plan Investors Extend Termination Deadline DELPHI CORP: Seeks Approval of Valeo/Metcalf Transaction DENBURY RESOURCES: Earns $202.5 Million in Year Ended December 31 DENT MANUFACTURING: Case Summary & 10 Largest Unsecured Creditors DEP MARKETING: Voluntary Chapter 11 Case Summary DEXTER DISTRIBUTING: Case Summary & 22 Largest Unsecured Creditors DIAMOND OFFSHORE: Moody's Puts Ratings on Review and May Upgrade DOBSON CELLULAR: Moody's Holds Ba2 Rating on $75 Mil. Sr. Facility DOBSON COMMS: Moody's Holds Junk Rating on Sr. Unsecured Notes DOMINO'S PIZZA: $273.6 Million of 8-1/4% Senior Notes Tendered DURA AUTOMOTIVE: Wants Allied Motion Consigned Stock Pact Assumed DURA AUTOMOTIVE: Can Make Interim Payments to Junior KMIP Members EAST WEST MORTGAGE: Moody's Places Ba3 Rating on Class M Certs. ECHOSTAR COMM: Dec. 31 Balance Sheet Upside-Down by $219 Million ENCORE ACQUISITION: Closes Big Horn Basin Purchase for $400MM Cash ENCORE ACQUISITION: Inks New $1.25 Billion Senior Credit Facility ENERGY PARTNERS: Launches Tender Offer for 8-3/4% Senior Notes ENERGY PARTNERS: Board Okays Self-Tender Offer for 22% of Shares ENTEGRA TC: S&P Assigns Initial B+ Rating to $480 Mil. Facilities EUROTUNNEL GROUP: Balance Sheet Upside Down by GBP1.32 Billion FORD MOTOR: Inks Pact to Sell Aston Martin for $925 Million GENERAL CABLE: Moody's Rates Proposed $325 Mil. Senior Notes at B1 GENERAL CABLE: High Leverage Prompts S&P to Affirm BB- Rating GENERAL MOTORS: Will Release of 2006 Financial Results on Tomorrow GENERAL MOTORS: May Incur $1 Bil. Charge from Bad Mortgage Loans GREAT PLAINS: Earns $127.6 Million in Year Ended December 31 HARRAH'S ENTERTAINMENT: Earns $47 Million in Quarter Ended Dec. 31 HEALTH CARE: Moody's Lifts Pref. Stock's Rating to Baa3 from Ba1 HEALTHSOUTH: Dec. 31 Balance Sheet Upside-Down by $2.184 Billion HOME PRODUCTS: Court Confirms Second Amended Reorganization Plan IRIDIUM OPERATING: Court Moves Excl. Plan Filing Period to July 14 KANSAS CITY SOUTHERN: Earns $108.9 Million in Year Ended Dec. 31 KMART CORP: Settles with FTC Over Gift Card Sales Practices LE-NATURE'S INC: Creditors File Joint Chapter 11 Liquidation Plan LE-NATURE'S INC: Disclosure Statement Hearing Set for April 17 LSI Logic: Earns $59 Million in Fourth Quarter Ended December 31 M/I HOMES: S&P Rates $100 Mil. 9.75% Preferred Stock Offering at B MAGNOLIA ENERGY: Court Approves Refinancing Transaction MALDEN MILLS: Wants Cases Converted to Chapter 7 Liquidation MATTRESS HOLDING: Planned Acquisition Spurs S&P's Negative Watch MERIDIAN AUTOMOTIVE: Trustee Wants Beneficiary Record Date Fixed MERIDIAN AUTOMOTIVE: EPA Wants $9 Mil. in Clean Air Act Penalties MOVIE GALLERY: Loan Revision Cues Moody's to Lift Rating to B1 MSX INT'L: Moody's Rates Proposed $200 Million Senior Notes at B2 NEW CENTURY: Default Cues Morgan Stanley to Discontinue Financing NEW CENTURY: Repays Outstanding Citigroup Global Obligations NEW CENTURY: May Not Be Able to File 2006 Form 10-K by March 16 NEW CENTURY: Lenders Accelerate Repurchase of Mortgage Loans NEW CENTURY: DBRS Further Cuts Rating on Discontinued Financing NEW CENTURY: Obligations Violations Prompt S&P's Default Rating NEWCOMM WIRELESS: Court OKs $103.2 Mil. Asset Sale to PR Wireless NEWCOMM WIRELESS: Panel Hires Falkenberg as Financial Advisors NORD RESOURCES: Inks Settlement with Platinum of Failed Merger NORTHWEST AIRLINES: Issues Notice Regarding Claims Trading PACIFIC LUMBER: Scopac Gets Interim Nod to Employ Blackstone Group PINNACLE FOODS: Peak Finance Inks $1.3 Billion Credit Facilities PINNACLE FOODS: Moody's Junks 8.25% Sr. Subordinated Notes' Rating PLAQUEMINES PARISH: S&P Lifts Revenue Debt Rating to BBB- from B PLATFORM LEARNING: Wants $600,000 in Additional DIP Financing PLATFORM LEARNING: Committee May Withdraw Support on Proposed Plan PT HOLDINGS: Disclosure Statement Hearing Scheduled for March 29 RAMBUS INC: Gets NASDAQ's Second Notice of Non-Compliance RAMP SERIES 2007-RZ1: Moody's Rates Class B Certificates at Ba2 RASC SERIES 2007-KS2: Moody's Rates Class M-10 Certificates at Ba1 RALI: Fitch Lifts Series 2002-QS1 Class B-2 Certs.' Rating to B+ REFCO INC: Administrators Want Claims Bar Date Extended to Apr. 30 REFCO INC: Crisis Managers Want $7.4 Mil. in Success Fees Paid ROCK PRAIRIE: Case Summary & 23 Largest Unsecured Creditors SAINT VINCENTS: Court Approves $300 Million Exit Financing SANDRIDGE ENERGY: S&P Rates Proposed $1 Billion Senior Loan at B SG MORTGAGE: S&P Holds BB Rating on Class M13 Certificates SIERRA HEALTH: Agrees to Sell Assets to UnitedHealth for $2.6 Bil. SMALL HYDRO: Case Summary & 17 Largest Unsecured Creditors SMARTIRE SYSTEMS: Completes $1.8 Mil. Convertible Debentures Sale SMARTIRE SYSTEMS: Sells $782,000 Conv. Debenture to Xentenial SMURFIT-STONE: DBRS Holds B (high) Senior Unsecured Debt's Rating SOLO CUP: Moody's Holds Ratings and Revises Outlook to Negative SOLUTIA INC: Selling Dequest to Thermphos Trading for $67 Million SPILSBURY PUZZLE: Assignee To Auction Assets on Friday STRUCTURED ASSET: Moody's Cuts Ratings on Class B-3 Loans to Ba1 SYNAGRO TECH: S&P Junks Rating on $150 Million 2nd-Lien Term Loan TEMBEC INC: Moody's Holds Junk Corporate Family Rating TERWIN MORTGAGE: S&P Puts Default Ratings on Six Cert. Classes TK ALUMINUM: Gets Requisite Consents for Notes Indenture Amendment TOWER AUTOMOTIVE: Exclusive Plan-Filing Period Extended to Mar. 21 TOWER AUTOMOTIVE: Posts $65 Mil. Net loss in Qtr. Ended Sept. 30 TRITON CBO: Moody's Cuts Rating on $45 Mil. Class A-3 Notes to B2 TRUMP ENTERTAINMENT: Taps Merrill Lynch to Assess Business Options TRUMP ENT: Merrill Lynch Engagement Cues S&P's Developing Watch UNICAPITAL: Poor Performance Prompts Fitch's Ratings' Withdrawal US AIRWAYS: S&P Rates $1.6 Billion Secured Credit Facility at B USEC INC: Increases Revenues to $1.84 Billion in Yr. Ended Dec. 31 VARIG SA: Bankruptcy Court to Hear Permanent Injunction Plea VERTRUE INC: Moody's Affirms Corporate Family Rating at B1 WACHOVIA BANK: S&P Rates $29 Million Class N Certificates at BB- WASHINGTON MUTUAL: Moody's Holds B3 Rating on $1MM Class O Certs. WINN-DIXIE STORES: Wants Final Decree Entered on 23 Cases WORLDSPAN LP: S&P Affirms Junk Rating on $250MM Debt & Holds Watch YUKOS OIL: Russia Raids PwC Office as Part of Criminal Probe ZAIS INVESTMENT: Moody's Lifts Ratings on $84 Mil. Notes to Ba1 * Cadwalader's Charles Banoun Receives Charles R. English Award * Gerald Shapiro Joins Corporate Revitalization's New York Office * Large Companies with Insolvent Balance Sheets ********* AINSWORTH LUMBER: S&P Junks Corp. Credit Rating with Neg. Outlook ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered the long-term corporate credit and senior unsecured debt ratings on Vancouver, British Columbia-based Ainsworth Lumber Co. Ltd. to 'CCC+' from 'B'. At the same time, the ratings were removed from CreditWatch with negative implications, where they were placed Nov. 10, 2006. The outlook is negative. "Ainsworth has experienced a significant cash drain as market conditions for oriented strand board, its primary product, remain very weak and the company continues to expand its Grande Prairie, Alta., mill," said Standard & Poor's credit analyst Donald Marleau. Furthermore, the company's liquidity has deteriorated in the past year, especially in the most recent quarter. "In addition, Ainsworth has generated consecutive quarters of negative EBITDA and faces poor market conditions," Mr. Marleau added. Ainsworth's first-quarter 2006 EBITDA will likely be significantly negative, thereby consuming more cash, along with a small seasonal investment in working capital. Nevertheless, the rating agency does not expect the company's EBITDA to deteriorate significantly from fourth-quarter 2006 levels. Ainsworth's 2007 fixed charges consist of quarterly interest payments of about CDN$20 million plus CDN$10 million-CDN$15 million per quarter for capital expenditures, most of which are front-weighted and will be consumed by the Grande Prairie expansion project. The company's existing assets are generally large and modern, and require maintenance capital expenditures of a low CDN$5 million-CDN$10 million per year. Oriented strand board market conditions are surprisingly weak, and show few signs of improving as consumption has dropped along with the decline in North American residential housing construction. Further exacerbating this weak demand profile are unfavorable supply dynamics, where output continues to outstrip consumption as several new mills ramp up despite market conditions. The industry could add 15% of new capacity amid weaker demand through 2008. The outlook is negative. Ainsworth's ability to fund its debt-service obligations through late 2007 and early 2008 depends heavily on an improvement in North American OSB prices and volumes, and the company's ability to adjust its capital expenditures. At this point in the cycle, Ainsworth has extremely high leverage to volatile OSB prices, whereby a small US$10 per thousand square foot improvement could boost annual cash flow by a meaningful CDN$30 million, although only a sustained improvement in its operating cash flow that could help arrest the decline in liquidity will prompt an upward rating action. ALFREDO'S TILE: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Alfredo's Tile, Inc. 707 West Ferguson Pharr, TX 78577 Bankruptcy Case No.: 07-70107 Type of Business: The Debtor offers tile flooring services. Chapter 11 Petition Date: Southern District of Texas (McAllen) Court: March 5, 2007 Judge: Richard S. Schmidt Debtor's Counsel: John Kurt Stephen, Esq. Cardena Whitis and Stephen LLP 100 South Bicentennial Boulevard McAllen, TX 78501-7050 Tel: (956) 631-3381 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. ALLIANCE PHARMA: Dec. 31 Balance Sheet Upside Down by $11.3 Mil. ---------------------------------------------------------------- Alliance Pharmaceuticals Corp. filed its quarterly financial statements for the three-month period ended Dec. 31, 2006. At Dec. 31, 2006, the company's balance sheet showed $2,140,000 in total assets, $13,501,000 in total liabilities, and $11,361,000 in stockholders' deficit. At Sept. 30, 2006, stockholders' deficit stood at $11,201,000. Since inception, the company has funded its operations primarily through the sale of equity securities, payments from its collaboration agreements, and debt financing. From inception to the current period, the company had received $243 million in net proceeds from sales of its equity securities, $260.8 million in payments from collaboration agreements and $74.3 million in debt financing of which $37.8 million of such debt has been converted into equity and $25.9 million of such debt has been retired through the restructuring of various agreements and the issuance of warrants to purchase our common stock. At Dec. 31, 2006, the company approximately had $2 million in cash, cash equivalents compared to $3.6 million at June 30, 2006. The decrease resulted primarily from net cash used in operations of $1.7 million. At December 31, 2006, the company had a working capital deficit of $10.8 million, compared to working capital deficit of $9.6 million at June 30, 2006. The deficit increase was principally due to the net cash used in operations, a net increase of $329,000 in accounts payable and accrued expenses and $490,000 in accrued interest on the Senior Notes, partially offset by the reduction of fair value of the derivative liability of $357,000, the reclassification of the derivative liability of $484,000 to additional paid-in capital and the conversion of $438,000 of Senior Notes. The company's operations to date have consumed substantial amounts of cash and are expected to continue to do so for the foreseeable future. The company reported a $758,000 net loss on zero revenues for the quarterly period ended Dec. 31, 2006, compared to a net loss of $502,000 on total revenues of $53,000 in the same period of 2005. The company's revenue for last year's quarter consisted of royalties from products other than its Imagent(R) product. A full-text copy of the company's financial statements for the quarterly period ended Dec. 31, 2006, is available for free at: http://researcharchives.com/t/s?1b30 Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 10, 2006, Corbin & Company LLP expressed substantial doubt about Alliance Pharmaceutical Corp.'s ability to continue as a going concern after auditing the company's financial statements for the year ended June 30, 2006. The auditing firm pointed to the insufficiency of the company's working capital to fund operations through the fiscal year ending June 30, 2007. About Alliance Pharma Alliance Pharmaceutical Corp., is focused on developing its lead product, Oxygent. Alliance is currently the only company that has advanced a synthetic perfluorochemical emulsion-based oxygen therapeutic into late-stage multi-center international clinical trials in both Europe and North America. Alliance is developing Oxygent as an intravascular oxygen therapeutic, based on its proprietary PFC and surfactant technologies. AMERICAN BIOPHYSICS: Selling Propriety and Inventory Assets ----------------------------------------------------------- American Biophysics Corp. is selling its assets including propriety technology, US and international patents, inventory, machinery, equipment, computer systems, and customer database. Interested parties may contact the receiver at: Jonathan N. Savage, Receiver Shechtman, Halperin, Savage, LLP 1080 Main Street Pawtucket, RI 02860 Tel: (410) 272-1400 Fax: (401) 272-1403 http://www.shslawfirm.com Headquartered in North Kingstown, Rhode Island, American Biophysics Corp. -- http://www.ambiocorp.com/-- manufactures mosquito magnet. Also, the company is a research-based company that studies the behavior of biting insects. At present, the company employs approximately 70 people at its headquarters. AMERICAN CELLULAR: Moody's Cuts Sr. Debt's Rating to B1 from Ba2 ---------------------------------------------------------------- Moody's Investors Service affirmed the B2 corporate family, B2 probability of default, Caa1 senior unsecured and SGL-1 speculative grade liquidity ratings of Dobson Communications Corporation, lowered the senior secured rating of American Cellular Corporation to B1 from Ba2 and affirmed ACC's B3 senior unsecured rating. At the same time, Moody's affirmed the Ba2 first lien senior secured ratings of Dobson Cellular Systems, Inc. and raised DCS' second lien senior secured rating to B1 from B2. Finally, Moody's said it would withdraw the B3 senior unsecured rating assigned to ACC's previously planned $425 million senior unsecured notes issue and stated that ACC's senior secured ratings on its existing $250 million bank debt would be withdrawn once the proposed bank facility is complete and existing facilities are repaid. Related LGD assessments are noted below. The outlook for all ratings remains stable. The rating action follows ACC's report earlier this week that it would no longer issue $425 million in senior unsecured notes to partially fund the full redemption of its $900 million 10% senior unsecured notes issue, but would instead increase the size of its planned senior secured bank facility by $200 million, to $1.05 billion, and leave approximately $225 million of the 10% senior unsecured notes outstanding. The increase in ACC's initial senior secured leverage to roughly 4.75x has caused Moody's to apply a 50% deficiency claim to its senior secured debt in the loss given default waterfall, reflecting the significant disparity between the first lien asset coverage of ACC and DCS. The upgrade to DCS' 2nd lien senior secured debt to B1 reflects the application of the deficiency claim to ACC's senior secured debt, which has reduced the amount of debt deemed to be prior ranking. Ratings Affirmed: * Dobson Communications Corporation -- Corporate family rating at B2 -- Probability of default rating at B2 -- Senior unsecured notes at Caa1, LGD 5, 89% -- $150 million senior floating rate notes due 2012 -- $160 million senior convertible debentures due 2025 -- $420 million 8 7/8% senior notes due 2013 -- Speculative Grade Liquidity Rating at SGL-1 * Dobson Cellular Systems, Inc. -- $75 million senior secured revolving facility at Ba2, LGD 1, 0% -- First priority senior secured notes at Ba2, LGD2, 14% from LGD2, 20% -- $250 million 8 3/8% due 2011 -- $250 million series B 8 3/8% due 2011 * American Cellular Corporation -- $225 million 10% Senior unsecured notes due 2011 at B3 LGD4, 63% from LGD 4, 58% and amount to be reduced from $900 million Ratings Upgraded: * Dobson Cellular Systems, Inc. -- $325 million second priority secured notes to B1, LGD3, 40% from B2, LGD4, 54% Ratings Lowered: * American Cellular Corporation -- Senior secured bank facility to B1 LGD 3, 39% from Ba2, LGD 2, 20% -- $75 million revolving facility due 2012 -- $900 million term facility due 2014 (amount increased from $700 million) -- $75 million delayed draw term facility due 2014 Ratings to be Withdrawn (now): * American Cellular Corporation -- $425 million senior unsecured notes due 2015 B3, LGD5, 70% Ratings to be Withdrawn (after proposed debt issues close): * American Cellular Corporation -- $250 million senior secured bank facility currently Ba3, LGD 1, 9% AMORTIZING RESIDENTIAL: S&P Cuts Rating on Class M-1 & M-2 Certs. ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on classes M-1 and M-2 from Amortizing Residential Collateral Trust's series 2001-BC5. Concurrently, the class M-1 rating was placed on CreditWatch with negative implications. The class M-2 rating remains on CreditWatch with negative implications, where it was originally placed on Sept. 14, 2006. In addition, the ratings on the other two classes from this series are affirmed due to adequate actual credit support. The lowered ratings reflect the continued erosion of credit support for these classes. Overcollateralization (O/C) has been significantly depleted, to $538,430 (0.09%), compared with a target of $1,448,110 (0.25%). The decline in O/C is due to losses that have exceeded excess interest, most significantly during the January and February 2007 remittance periods, when losses were $571,646 and $296,178, respectively. For this transaction, severe delinquencies (90-plus day, foreclosure, and REO) are 23.61% of the current pool balance, and the pool factor is 4.51%. Standard & Poor's will continue to closely monitor the performance of the classes with ratings on CreditWatch. If losses decline to a point at which they no longer outpace excess interest, and the level of O/C has not been further eroded, Standard & Poor's will affirm the ratings and remove them from CreditWatch. Conversely, if losses continue to outpace excess interest, Standard & Poor's will take further negative rating actions. The collateral backing this transaction consists of conventional, residential, adjustable- and fixed-rate mortgage loans on one- to four-family homes. At issuance, the seller acquired primary mortgage insurance policies for approximately 96% of the noninsured mortgage loans to reduce the risk to an amount equal to 60% of the appraised value or the purchase price of the property. Rating Lowered And Placed On Creditwatch Negative Amortizing Residential Collateral Trust Rating ------ Series Class To From ------ ----- -- ---- 2001-BC5 M-1 BB/Watch Neg AA Rating Lowered And Remaining On Creditwatch Negative Amortizing Residential Collateral Trust Rating ------ Series Class To From ------ ----- -- ----- 2001-BC5 M-2 B/Watch Neg BBB/Watch Neg Ratings Affirmed Amortizing Residential Collateral Trust Series Class Rating ------ ----- ------ 2001-BC5 A-1, A-2 AAA AMR CORP: Dec. 31 Balance Sheet Upside-Down by $606 Million ----------------------------------------------------------- AMR Corp. reported net earnings for the year ended Dec. 31, 2006, of $231 million, compared with net loss of $857 million for the previous year. The company's 2006 results reflected an improvement in revenues somewhat offset by fuel prices and certain other costs that were higher in 2006, compared to 2005. The company's total operating revenues were $22.56 billion, which consisted of $17.86 billion in revenues from American Airlines, $2.5 billion in revenues from Regional Affiliates, $827 million cargo revenues, and $1.37 billion in other revenues, for the year ended Dec. 31, 2006. The company had total operating revenues of $20.71 billion for the year ended Dec. 31, 2005. As of Dec. 31, 2006, the company's balance sheet showed $29.14 billion in total assets, $29.75 in total liabilities, resulting to $606 million in stockholders' deficit. The company's December 31 balance sheet also showed strained liquidity with $6.9 billion in total current assets available to pay $8.5 billion in total current liabilities. Unrestricted cash and short-term investments held by the company as of Dec. 31, 2006, was $121 million and $4.59 billion, respectively, as compared with cash of $138 million and $3.67 billion, respectively, as of Dec. 31, 2005. AMR Corp.'s working capital deficit decreased by $505 million, from $2.11 billion at Dec. 31, 2005 to $1.6 billion at Dec. 31, 2006. AMR Corp. continues to recapitalize its balance sheet and in May 2006, issued 15 million shares of common stock for net proceeds of $400 million. On Jan. 26, 2007, it issued an additional 13 million shares of common stock for net proceeds of $497 million. Credit Facility American Airlines, Inc. has a fully drawn $740 million credit facility which consists of a fully drawn $295 million senior secured revolving credit facility, with a final maturity on June 17, 2009, and a fully drawn $445 million term loan facility, with a final maturity on Dec. 17, 2010. American's obligations under the Credit Facility are guaranteed by AMR Corp. The Credit Facility contains a covenant requiring American to maintain, as defined, unrestricted cash, unencumbered short term investments and amounts available for drawing under committed revolving credit facilities of not less than $1.25 billion for each quarterly period through the life of the Credit Facility. The required ratio was 1.2 to 1 for the four-quarter period ending Dec. 31, 2006, and will increase gradually for each four-quarter period ending on each fiscal quarter thereafter until it reaches 1.5 to 1 for the four-quarter period ending June 30, 2009. A full-text copy of the company's annual report for 2006 is available for free at http://ResearchArchives.com/t/s?1b0e About AMR Corp. Forth Worth, Tex.-based AMR Corp., operates with its principal subsidiary, American Airlines, Inc., -- http://www.aa.com/-- a worldwide scheduled passenger airline. At the end of 2006, American provided scheduled jet service to approximately 150 destinations throughout North America, the Caribbean, Latin America, Europe and Asia. American is also a scheduled airfreight carrier, providing freight and mail services to shippers throughout its system. Its wholly-owned subsidiary, AMR Eagle Holding Corp., owns two regional airlines, American Eagle Airlines, Inc. and Executive Airlines, Inc. and does business as "American Eagle." American Beacon Advisors, Inc., a wholly-owned subsidiary of AMR, is responsible for the investment and oversight of assets of AMR's U.S. employee benefit plans, as well as AMR's short-term investments. AMTROL INC: Seeks Court OK to Merge Water Soft Into New Unit ------------------------------------------------------------ Amtrol Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware for permission to merge Water Soft Inc. into a newly created, wholly owned subsidiary. The Debtors also seek the Court's authority to permit Amtrol Inc. to create Water Soft LLC, a Delaware limited liability company, the surviving entity of the merger with Water Soft Inc. After the proposed merger, all the assets and liabilities of Water Soft Inc. will become the assets and liabilities of Water Soft LLC. In addition, Water Soft Inc.'s voluntary petition will be deemed amended to reflect that Water Soft LLC has replaced Water Soft Inc. as the Debtor. The Joint Plan of Reorganization and Disclosure Statement filed on March 1, 2007, as they relate to Water Soft Inc., will be deemed to have been proposed by Water Soft LLC. Amtrol Inc. will hold all of the interests in a newly created, wholly owned subsidiary, Amtrol Water Technology LLC, a single member Delaware limited liability company and Water Soft LLC will become a wholly owned subsidiary of Amtrol Water Technology LLC. The Debtors explain that the merger and the corporate restructuring set forth in their Chapter 11 Plan will organize the reorganized Debtors' businesses upon emergence from bankruptcy in a manner that reflect the product manufacturing, sales and marketing divisions. The merge and the corporate restructuring will also preserve certain tax attributes that are important to the Debtors' business going forward. Headquartered in West Warwick, Rhode Island, Amtrol Inc. -- http://www.amtrol.com/-- manufactures and markets water storage and pressure control products, water heaters and cylinders. The company's major products include pressure tanks used in well water, hydronic heating and potable hot water applications, indirect-fired water heaters, and both LPG and disposable refrigerant gas cylinders. The company and three of its affiliates filed for chapter 11 protection on Dec. 18, 2006 (Bankr. D. Del. Lead Case No. 06-11446). Douglas Gray, Esq., Stuart J. Brown, Esq., and William E. Chipman Jr., Esq., at Edwards Angell Palmer & Dodge LLP, represent the Debtors. The Debtors' financial advisor is Miller Buckfire & Co., LLC. Kara Hammond Coyle, Esq., and Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP, represent the Official Committee of Unsecured Creditors. As of Apr. 1, 2006, the Debtors' consolidated financial condition showed $229,270,000 in total assets and $235,802,000 in total debts. The Debtors' exclusive period to file a chapter 11 reorganization plan expires on April 17, 2007. ANDREW CORP: S&P Holds Ratings and Removes Positive CreditWatch --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' corporate credit and other ratings on Westchester, Illinois-based Andrew Corp. and removed the ratings from CreditWatch, where they originally were placed with positive implications on May 31, 2006. The outlook is stable. The CreditWatch implications were revised several times as a proposed friendly merger with Andrew and a subsequent hostile takeover bid for Andrew both failed. "[Thurs]day's action reflects our belief that Andrew will maintain a financial profile similar to its current profile, and that it will not pursue transformational acquisitions or aggressive share repurchases," said Standard & Poor's credit analyst Bruce Hyman. The action also anticipates that that near-term business conditions likely will be softer than earlier expectations. The ratings reflect Andrew's good second-tier position in the communications equipment industry, low technology risk, and moderate capitalization, offset by its limited diversity and relatively weak operating profitability. Andrew designs and manufactures cable, antennas and related products for wireless network infrastructure, microwave backbones, and satellite communications. Andrew expects to continue its practice of acquiring small- to mid-size operations to supplement existing products or extend its range into adjacent markets. In calendar year 2006, Andrew acquired Skyware Radio Systems GmbH, Precision Antenna Ltd., CellSite Industries, and EMS Wireless, for a total of $96 million in cash. Sales in the fiscal year ended September 2006 were $2.1 billion, up 9% year over year, including a 19% gain in Antenna and Cable Products, and 13% growth of base station subsystems. EBITDA was $170 million, or 8% of sales, compared with 9% in 2005, reflecting rising copper price levels and the ending of some higher-profit programs, such as E-911. APPALACHIAN REGIONAL: Improved Liquidity Cues S&P's Stable Outlook ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its rating outlook on the Kentucky Economic Development Finance Authority's series 1997 bonds, issued for Appalachian Regional Healthcare, to stable from negative, reflecting improved liquidity levels and stronger management attention to core operations. In addition, Standard and Poor's affirmed its 'BB-' rating on ARH's debt. "We expect that Appalachian Regional Healthcare will produce sufficient cash flow to cover its operating expenses and debt service payments as it has done in the past," said Standard & Poor's credit analyst Anita Varghese. "ARH's most significant challenge will be managing capital needs system-wide while continuing to build its balance sheet strength." ARH filled leadership vacancies system-wide in 2006, and now that past challenges related to a previous workers compensation carrier and financial reporting issues have been resolved, management has renewed its focus on addressing operating weaknesses through various strategic measures. The 'BB-' rating reflects ARH's ongoing challenges, many of which are inherent to its mission of serving a rural and declining population base in central Appalachia, including a weak payor mix, increased uncompensated care, volume declines, and physician recruitment. Union contract negotiations present further challenges in 2007. The 'BB-' rating further reflects ARH's operating losses in fiscal 2006 and the first half of fiscal 2007 after historically posting operating surpluses; adequate maximum annual debt service coverage of 2.0x in fiscal 2006 and 1.5x in interim fiscal 2007; high average age of plant, indicating future capital needs at ARH's various facilities; and self-insurance exposure, particularly for medical malpractice and professional liabilities. A lower rating is precluded by ARH's geographic diversity and leading or dominant market share in the majority of its service areas; improved liquidity, highlighted by 41 days' cash on hand as of Dec. 31, 2006 (unaudited), primarily due to onetime cash settlements; a manageable debt burden of 2.9% of total operating revenues; and stronger management oversight and internal controls over financial reporting. "Continued deterioration in operating performance and an unfavorable outcome of union negotiations could negatively pressure the rating or outlook," added Ms. Varghese. The rating outlook revision affects $77.3 million in rated debt. ARMSTRONG WORLD: S&P Holds BB Rating & Says Outlook is Developing ----------------------------------------------------------------- Standard & Poor's Ratings Service revised its outlook to developing from stable for Armstrong World Industries Inc. At the same time, Standard & Poor's affirmed the 'BB' corporate credit and senior secured ratings for the Lancaster, Pennsylvania- based company. "The outlook change reflects Armstrong's retention of an advisor for a review of its strategic alternatives," said Standard & Poor's credit analyst John Kennedy. The developing outlook indicates that the rating agency could raise, lower, or affirm the rating, based on the outcome of the review and any related transactions. Armstrong is a leading producer of ceiling systems, wood and vinyl flooring, and cabinets, with 43 manufacturing plants worldwide. "We expect this business to remain strong, given the turnaround in the commercial construction activity," Mr. Kennedy said. "However, production in this segment is energy intensive, and if energy prices ramp up again, margins could thin without a successful passthrough of price increases to customers." ATLANTIC MARINE: S&P Holds B+ Rating on Proposed $210 Million Loan ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its ratings, including the 'B+' corporate credit rating, on Atlantic Marine Holding Co. At the same time, Standard & Poor's affirmed its 'B+' bank loan rating and '2' recovery rating on the company's proposed $210 million secured amended credit facility, which is being increased to fund the redemption of preferred stock and a dividend. The outlook is stable. "The ratings on Atlantic Marine reflect high debt leverage, a modest revenue base [around $200 million-$225 million], especially compared with some competitors in the government sector, and growth dependent on the more competitive and cyclical nonmilitary and marine fabrication segments," said Standard & Poor's credit analyst Christopher DeNicolo. "These factors are offset by the high barriers to entry in the marine repair industry and the company's fairly good diversity of vessels serviced." As Atlantic Marine has performed better than expected when acquired by J.F. Lehman & Co., a private equity firm, in August 2006, JFL is proposing to use $69.4 million of additional bank borrowings and cash on hand to fund the redemption of preferred stock and a dividend. Debt to EBITDA in fiscal 2006 was around 3x, which was below initial expectations of 3.7x but would deteriorate to 4.2x pro forma for the proposed dividend. Other credit protection measures also decline, but are likely to be appropriate for the rating, with EBITDA interest coverage of 2.5x and funds from operations to debt around 15%. Modest free cash flows are expected to be used to reduce debt. Jacksonville, Florida-based Atlantic Marine provides maintenance, repair, overhaul, and conversion services for military and commercial vessels, as well as manufacturing ship modules and subsections for other shipyards. The MROC industry has high barriers to entry due to the need for a coastal location, with a deep draft and unobstructed access, and large, expensive assets such as drydocks. The company operates out of three locations: Mobile, Alabama (about 56% of revenues), on the Gulf coast, Jacksonville (32%) on the Atlantic, and Naval Station Mayport near Jacksonville (12%), which primarily services the U.S. Navy. Steady demand in key market segments and good profitability should result in modest revenue and earnings growth and allow for some debt reduction. Overall, the company is expected to maintain a credit profile consistent with current ratings in the intermediate term. The outlook could be revised to negative if demand or profitability in growth areas, mega-yachts and marine fabrication, falls significantly below expectations or if leverage increases materially to fund acquisitions or further dividends. Standard & Poor's don't expect to revise the outlook to positive. BABSON CLO: S&P Places BB Rating on $4 Mil. Class D-2 Certificates ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its ratings to Babson CLO Ltd. 2007-I/Babson CLO Inc. 2007-I's $708 million notes. The transaction is a CLO backed primarily by secured loans. The ratings are based on: -- The adequate credit support provided in the form of overcollateralization, subordination, and excess spread; -- The characteristics of the underlying collateral pool, which consists primarily of senior secured and second-lien loans; -- The scenario default rates of 52.68% for classes A-1, A- 2a, and A-2b; 49.93% for class A-3; 47.51% for classes B-1 and B-2; 42.98% for class C; and 37.03% for classes D-1 and D-2; and the break-even loss rates of 58.18% for classes A-1, A-2a, and A-2b; 55.21% for class A-3; 48.69% for classes B-1 and B-2; 44.78% for class C; and 38.30% for classes D-1 and D-2; -- The weighted average rating of 'B+'; -- The weighted average maturity for the portfolio of 8.859 years; -- An S&P default measure (DM) of 3.72%; -- An S&P variability measure (VM) of 2.67%; -- An S&P correlation measure (CM) of 2.85; and -- The rated overcollateralization (ROC) of 110.44 for classes A-1, A-2a, and A-2b; 110.58% for class A-3; 102.49% for classes B-1 and B-2; 104.18% for class C; and 103.43% for classes D-1 and D-2. Interest on the class B-1, B-2, C, D-1, and D-2 notes may be deferred up until the legal final maturity date in January 2021 without causing a default under these obligations. The ratings on those notes, therefore, address the ultimate payment of interest and principal. Ratings Assigned Babson CLO Ltd. 2007-I Babson CLO Inc. 2007-I Class Rating Amount ----- ------ ------ A-1 AAA $298,000,000 A-2a AAA $220,000,000 A-2b AAA $55,000,000 A-3 AA $42,500,000 B-1 A $36,500,000 B-2 A $6,000,000 C BBB $25,000,000 D-1 BB $21,000,000 D-2 BB $4,000,000 Income notes NR $59,700,000 NR -- Not rated. BANC OF AMERICA: Moody's Affirms Low-B Ratings on 12 Cert. Classes -------------------------------------------------------------- Moody's Investors Service upgraded the ratings of two classes and affirmed the ratings of 36 classes of Banc of America Commercial Mortgage Inc., Commercial Mortgage Pass-Through Certificates, Series 2004-3: - Class A-1A, $274,502,978, Fixed w WAC cap, affirmed at Aaa - Class A-2, $31,150,342, Fixed, affirmed at Aaa - Class A-3, $125,000,000, Fixed, affirmed at Aaa - Class A-4, $110,000,000, Fixed, affirmed at Aaa - Class A-5, $414,397,485, WAC, affirmed at Aaa - Class X, Notional, affirmed at Aaa - Class B, $28,879,200, WAC, upgraded to Aa1 from Aa2 - Class C, $11,551,680, WAC, upgraded to Aa2 from Aa3 - Class D, $24,547,319, WAC, affirmed at A2 - Class E, $11,551,680, WAC, affirmed at A3 - Class F, $15,883,560, WAC, affirmed at Baa1 - Class G, $11,551,680, WAC, affirmed at Baa2 - Class H, $15,883,560, WAC, affirmed at Baa3 - Class J, $4,331,880, Fixed w WAC cap, affirmed at Ba1 - Class K, $5,775,840, Fixed w WAC cap, affirmed at Ba2 - Class L, $5,775,840, Fixed w WAC cap, affirmed at Ba3 - Class M, $4,331,880, Fixed w WAC cap, affirmed at B1 - Class N, $2,887,920, Fixed w WAC cap, affirmed at B2 - Class O, $2,887,920, Fixed w WAC cap, affirmed at B3 - Class CC-A, $1,943,085, Fixed, affirmed at Baa1 - Class CC-B, $4,316,416, Fixed, affirmed at Baa2 - Class CC-C, $3,647,676, Fixed, affirmed at Baa3 - Class CC-D, $6,079,460, Fixed, affirmed at Ba2 - Class CC-E, $4,255,621, Fixed, affirmed at Ba3 - Class CC-F, $3,861,990, Fixed, affirmed at B1 - Class SS-A, $3,219,052, Fixed, affirmed at Baa3 - Class SS-B, $2,300,945, Fixed, affirmed at Ba1 - Class SS-C, $3,451,417, Fixed, affirmed at Ba2 - Class SS-D, $4,601,889, Fixed, affirmed at Ba3 - Class UH-A, $11,557,209, Fixed, affirmed at Aa1 - Class UH-B, $8,430,863, Fixed, affirmed at Aa2 - Class UH-C, $2,956,937, Fixed, affirmed at Aa3 - Class UH-D, $9,087,152, Fixed, affirmed at A1 - Class UH-E, $4,817,635, Fixed, affirmed at A2 - Class UH-F, $5,965,628, Fixed, affirmed at A3 - Class UH-G, $6,078,461, Fixed, affirmed at Baa1 - Class UH-H, $4,817,635, Fixed, affirmed at Baa2 - Class UH-J, $16,149,779, Fixed, affirmed at Baa3 As of the Feb. 12, 2007, distribution date, the transaction's aggregate certificate balance has decreased by approximately 3.1% to $1.2 billion from $1.3 billion at securitization. The Certificates are collateralized by 96 mortgage loans ranging in size from less than 1.0% to 9.4% of the pool, with the top 10 loans representing 43.4% of the pool. The pool includes three investment grade shadow rated loans, which comprise 22.8% of the pool. Four loans, representing 5.7% of the pool, have defeased and are collateralized with U.S. Government securities. There have been no realized losses since securitization and currently there is one loan, representing less than 1.0% of the pool, in special servicing. Moody's estimates a loss of approximately $800,000 from this specially serviced loan. Fifteen loans, representing 14.4% of the pool, are on the master servicer's watchlist. Moody's was provided with full-year 2005 and partial-year 2006 operating results for 98.0% and 72.0%, respectively, of the pool. Moody's loan to value ratio for the conduit component is 95.3%, compared to 102.2% at securitization. Moody's is upgrading Classes B and C due to improved overall pool performance and increased subordination levels. The largest shadow rated loan is the U-Haul Portfolio Loan of $104.8 million (9.4%), which is secured by 78 properties operated as U-Haul storage or rental centers. The properties total 4.0 million square feet and are located in 24 states with concentrations in Texas (20.8%), Florida (16.0%) and Arizona (10.4%). The portfolio is also encumbered by a $69.9 million junior participation loan which is the collateral for non-pooled Classes UH-A, UH-B, UH-C, UH-D, UH-E, UH-F, UH-G, UH-H and UH-J. The loan was structured with a 25-year amortization schedule and has amortized by approximately 4.3% since securitization. The loan sponsor is W.P. Carey, an investment firm specializing in sale-leaseback transactions. Moody's current shadow rating of the pooled portion of the loan is Aaa, the same as at securitization. The second largest shadow rated loan is the Calpine Center Loan of $75.0 million (6.7%), which is secured by a 690,000 square foot Class A office building located within the Houston, Texas CBD. The property, which is 100.0% leased compared to 91.3% at securitization, is largely tenanted by firms in the energy industry. The largest tenants are Burlington Resources Inc. and Calpine Corporation. Calpine filed for Chapter 11 bankruptcy protection in December 2005. Calpine's lease has been confirmed under their bankruptcy plan and it is expected that the tenant will remain in occupancy for the full lease term. The property is also encumbered by a $24.1 million junior participation loan which is the collateral for non-pooled Classes CC-A, CC-B, CC-C, , CC-D, CC-E and CC-F. The loan sponsor is Hines Real Estate Holdings LP and Rafiq Al-Hariri. Moody's current shadow rating of the pooled portion of the loan is A3, the same as at securitization. The third largest shadow rated loan is the 17 State Street Loan of $75.0 million (6.7%), which is secured by a 532,000 square foot office building located within the Financial District submarket of New York City. The property is 99.3% occupied, compared to 94.8% at securitization. The largest tenants are AXA Reinsurance and Shareholder Communication Inc. The property is also encumbered by a $35.7 million junior participation loan which is the collateral for non-pooled Classes SS-A, SS-B, SS-C and SS-D. Moody's current shadow rating of the pooled portion of the loan is Baa2, the same as at securitization. The top three conduit loans represent 17.1% of the outstanding pool balance. The largest conduit loan is the SUN Communities -- Scio Farm Loan of $40.9 million (3.7%), which is secured by a 913-pad manufactured housing community located in Ann Arbor, Michigan. The property was 97.3% occupied as of September 2006, compared to 99.6% at securitization. The sponsor is Sun Communities, a manufactured housing REIT. Moody's LTV is 103.3%, compared to 105.4% at securitization. The second largest conduit loan is the SUN Communities Portfolio 9 Loan of $37.3 million (3.3%), which is secured by a four manufactured housing communities totaling 1,235 pads. The properties are located in Michigan (3) and Florida. The portfolio was 98.0% occupied as of September 2006, essentially the same as at securitization. Moody's LTV is 102.4%, compared to 105.6% at securitization. The third largest conduit loan is the Quarters at Memorial Loan of $34.5 million (3.1%), which is secured by a 380-unit multifamily property located in Houston, Texas. The property was 92.6% occupied as of September 2006, compared to 91.8% at securitization. Moody's LTV is 96.8%, compared to 98.1% at securitization. The pool's collateral is a mix of multifamily (33.5%), office (28.3%), self storage (16.5%), retail (12.8%), U.S. Government securities (5.7%), industrial (2.0%) and lodging (1.2%). The collateral properties are located in 37 states. The highest state concentrations are Texas (19.2%), New York (8.9%), Michigan (8.6%), Florida (7.9%) and California (7.9%). All of the loans are fixed rate. BAUSCH & LOMB: U.S. Operations Likely to be Unprofitable -------------------------------------------------------- Bausch & Lomb Inc. reported certain preliminary and unaudited financial results for the full year and fourth quarter ended Dec. 30, 2006. Due to the considerable time and effort that it had to devote to completing the recently completed financial restatement and filing of its 2005 10-K, the company has not been able to timely complete its financial close process for 2006. As a result, there can be no assurance that the amounts reported will not differ, including materially, from those reported when the company files its 2006 10-K. Bausch & Lomb currently expects to file its 2006 10-K by April 30, 2007. Net Sales and Income Because the company has not yet completed its year-end financial close process, including the calculation and review of income taxes, Bausch & Lomb is unable to estimate net earnings or earnings per share at this time. However, as a result of lower lens care sales and costs associated with the MoistureLoc recall, the company expects its U.S. operations to be unprofitable. The company expects to report income before income taxes and minority interest of approximately $70 million in 2006, compared to $246.4 million in 2005. For the fourth quarter of 2006, the company expects to report income before income taxes and minority interest of approximately $25 million, compared to $84.3 million a year ago. Bausch & Lomb expects to report consolidated full-year net sales of approximately $2.293 billion in 2006, down 3% compared to $2.354 billion in 2005, mainly due to lower sales of vision care products. Sales comparisons are also impacted by acquisition and divestiture activities. In the third quarter of 2005, the Company divested Woehlk, a German contact lens business, and in the fourth quarter of 2005 it acquired CT Freda, a Chinese ophthalmic pharmaceuticals company. Bausch & Lomb expects to report consolidated net sales of approximately $598.5 million for the fourth quarter of 2006, compared to $626.4 million in the same period in 2005. That represents a decline of 5%, or 7% on a constant-currency basis, and mainly reflects lower sales of vision care products. Because the company has not yet completed its year-end financial close process, including the calculation and review of income taxes, Bausch & Lomb is unable to estimate net earnings or earnings per share at this time. However, as a result of lower lens care sales and costs associated with the MoistureLoc recall, the company expects its U.S. operations to be unprofitable. The company expects to report income before income taxes and minority interest of approximately $70 million in 2006, compared to $246.4 million in 2005. For the fourth quarter of 2006, the company expects to report income before income taxes and minority interest of approximately $25 million, compared to $84.3 million a year ago. Bausch & Lomb also expects to report these liquidity metrics: * cash and investments of approximately $500 million as of Dec. 30, 2006 compared to $720.6 million at the end of 2005; * total debt of approximately $835 million at the end of 2006, compared to $992.5 million at the end of 2005; and * full-year cash flows from operating activities of approximately $125 million in 2006, and capital spending of approximately $105 million. "In 2006, we were confronted with two challenges that significantly impacted our financial performance and hindered our positive momentum," Bausch & Lomb Chairman and Chief Executive Officer Ronald L. Zarrella said. "Having confronted both those challenges, we're now focused on rebuilding that momentum with specific emphasis on the areas of our business most affected by the MoistureLoc recall, so that 2007 can serve as a springboard for renewed growth." Expectations for 2007 Bausch & Lomb projects 2007 sales of approximately $2.5 billion based on current exchange rates, or approximately 8% growth compared to 2006 sales prior to MoistureLoc charges. These overall growth projections take into consideration expected market trends, the anticipated benefit from several new products, and assume the company is successful in regaining modest market share in the lens care category. Bausch & Lomb expects sales of contact lenses to grow 8% to 10% in 2007. The company currently projects income before income taxes and minority interest of approximately $220 million in 2007. Those expectations are based on these assumptions: * gross margin percentages approaching pre-2006 levels, due to improved sales mix from the launch of higher-margin new products and anticipated growth in lens care; * selling, administrative and general expenses of slightly more than 40% of sales, reflecting continued brand rebuilding efforts and new product launch support, stock-based compensation expense, and legal expenses associated with product liability and shareholder lawsuits; * research and development expense of approximately 8% of sales; and * net financing expenses of approximately $45 million. The company's income projections do not include a benefit from the anticipated reversal of interest and penalties associated with a previously recorded Brazilian tax assessment. As previously disclosed, Bausch & Lomb has applied for, and expects to be granted, amnesty from the state government of Sao Paulo as to a portion of the penalties and interest associated with one such assessment that was recorded as part of the financial restatement. The company expects to reverse approximately $20 million of penalties and interest when it receives formal notification by the state government of Sao Paulo. From a liquidity perspective, Bausch & Lomb expects to generate cash flow from operations of between $240 million and $260 million and to incur approximately $100 million of capital expenditures. About Bausch & Lomb Headquartered in Rochester, New York, Bausch & Lomb Inc. -- http://www.bausch.com/-- develops, manufactures, and markets eye health products, including contact lenses, contact lens care solutions, and ophthalmic surgical and pharmaceutical products. The company is organized into three geographic segments: the Americas; Europe, Middle East, and Africa; and Asia (including operations in India, Australia, China, Hong Kong, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand). In Latin America, the company has operations in Brazil and Mexico * * * On Feb. 2, 2007, Moody's Investors Service downgraded Bausch & Lomb Inc.'s senior unsecured debt to Ba1 and continues to review all ratings for possible downgrade. Moody's also assigned the company a Ba1 Corporate Family Rating. BITHORN TRAVEL: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Bithorn Travel Corp. 33 Resolution Street, Suite 601 Doral Bank Plaza San Juan, PR 00902 Bankruptcy Case No.: 07-01191 Type of Business: The Debtor is a travel agent. See http://www.bithorn.com/ Chapter 11 Petition Date: March 8, 2007 Court: District of Puerto Rico (Old San Juan) Debtor's Counsel: Carlos Rodriguez Quesada, Esq. P.O. Box 9023115 San Juan, PR 00902-3115 Tel: (787) 724-2867 Fax: (787) 724-2463 Total Assets: $4,740,403 Total Debts: $8,040,451 The Debtor did not file a list of its 20 largest unsecured creditors. CADMUS COMMS: S&P Withdraws BB- Corporate Credit Rating ------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'BB-' corporate credit rating on Cadmus Communications Corp., following the report that the purchase of the company by Cenveo Inc. closed [Thurs]day. Rating on Cadmus' $125 million senior subordinated notes will remain on CreditWatch with negative implications until the tender offer for the notes is completed, after which Standard & Poor's expects to withdraw our rating on the issue. CATHOLIC CHURCH: Pachulski Stang OK'd as Davenport Panel's Counsel ------------------------------------------------------------------ The Honorable Lee M. Jackwig of the U.S. Bankruptcy Court for the Southern District of Iowa authorizes the Official Committee of Unsecured Creditors appointed in the Diocese of Davenport's Chapter 11 case to retain Hamid R. Rafatjoo, Esq., and Gillian M. Brown, Esq., of Pachulski Stang Ziehl Young Jones and Weintraub LLP as its counsel, effective as of Jan. 4, 2007. Pachulski Stang will not to seek reimbursement from the members of the Official Committee of Creditors should the Court disallow any expenses related to the Firm reimbursing members expenses incurred under Section 503(b)(3)(F) of the Bankruptcy Code. As reported in the Troubled Company Reporter on Feb. 5, 2007, Committee Co-Chairman Michl Uhde stated that the legal services required of the attorneys are: (a) to advise and represent the Committee in its consultations with Davenport regarding the administration of the case; (b) to advise and represent the Committee in analyzing Davenport's assets and liabilities, investigating the extent and validity of liens, and participating in and reviewing any proposed asset sales, any asset dispositions, financing arrangements and cash collateral stipulations or proceedings; (c) to advise and represent the Committee in any manner relevant to reviewing and determining Davenport's rights and obligations under leases and other executory contracts; (d) to advise and represent the Committee in investigating the acts, conduct, assets, liabilities and financial condition of Davenport, the operation of Davenport's business, and the desirability of the continuance of any portion of the business, and any other matters relevant to the case or to the formulation of a plan; (e) to assist, advise and represent the Committee in its participation in the negotiation, formulation and drafting of a plan of liquidation or reorganization; (f) to provide advice to the Committee on the issues concerning the appointment of a trustee or examiner under Section 1104 of the Bankruptcy Code; (g) to assist, advise and represent the Committee in the performance of all its duties and powers under the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure and in the performance of other services as are in the interests of those represented by the Committee; (h) to assist, advise and represent the Committee in the evaluation of claims and on any litigation matters; and (i) to provide other services to the Committee as may be necessary in the case. Furthermore, Mr. Uhde said, the primary purpose for retaining the attorneys is to attempt to maximize the amount of money that will be made available to be distributed to Davenport's personal injury and tort claimants. The terms of employment agreed to by the Committee, subject to Court approval, are: (a) no retainer will be paid to Pahulski Stang; (b) neither the Committee nor any of its members will be liable for any fees or costs incurred by Pachulski Stang; (c) Pachulski Stang has agreed to charge a blended rate of $400 per hour for partners and of counsel attorneys, $275 per hour for associates, and $150 per hour for paralegal services; (d) Pachulski Stang will not bill the estate for non-working travel time incurred for traveling to hearings or Committee meetings; and (e) Pachulski Stang will seek reimbursement of expenses at its cost or as otherwise allowed by the Court. All fees and expenses are subject to Court approval. Mr. Rafatjoo, Esq., assured the Court that neither he nor his firm represent interests adverse to the Committee, Davenport, or the estate, in the matters upon which it is to be engaged; and his firm is "disinterested" within the meaning of Section 101(14) of the Bankruptcy Code. The Diocese of Davenport in Iowa filed for chapter 11 protection (Bankr. S.D. Ia. Case No. 06-02229) on October 10, 2006. Richard A. Davidson, Esq., at Lane & Waterman LLP, represents the Davenport Diocese in its restructuring efforts. Hamid R. Rafatjoo, Esq., and Gillian M. Brown, Esq., of Pachulski Stang Zhiel Young Jones & Weintraub LLP represent the Official Committee of Unsecured Creditors. In its schedules of assets and liabilities, the Davenport Diocese reported $4,492,809 in assets and $1,650,439 in liabilities. (Catholic Church Bankruptcy News, Issue No. 77; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Ct. OKs San Diego Interim Postpetition Financing ----------------------------------------------------------------- The Honorable Louise DeCarl Adler of the U.S. Bankruptcy Court for the Southern District of California in San Diego authorizes The Roman Catholic Bishop of San Diego to incur postpetition financing, on an interim basis pursuant to Section 364(c) of the Bankruptcy Code, from the ALSAM Foundation, a Utah Trust with Northern Trust Company. San Diego also sought authority to borrow under the ALSAM Loan Documents on the same terms as the ALSAM Prepetition Financing, and to obtain immediate funds from ALSAM to avoid immediate and irreparable harm to the estate pending a final hearing on the request. ALSAM Loan As part of its mission to provide spiritual and other support to Catholic education within the territory of the Diocese of San Diego, The Roman Catholic Bishop of San Diego began a Secondary Education Initiative for the construction of schools, including Mater Dei Catholic High School. The Initiative will deal with the needs of the population growth within the Diocese and surrounding areas, and ensure access to all students desiring a Catholic education, related Gerald P. Kennedy, Esq., at Procopio, Cory, Hargreaves & Savitch LLP, San Diego, California, San Diego's proposed bankruptcy counsel. To finance the construction of Mater Dei, San Diego entered into a loan agreement with the ALSAM Foundation, a Utah Trust with Northern Trust Company, on Aug. 15, 2005. ALSAM agreed to provide a $50,000,000 construction loan secured by a deed of trust encumbering, among other properties, the real property and improvements being constructed, and the land and buildings underlying Marian Catholic High School. The loan is non-interest bearing. With the closure of the ALSAM Loan, San Diego executed documents, including an ALSAM Loan Agreement, a Promissory Note Secured By Deed of Trust, a UCC Financing Statement, and a "Deed of Trust with Absolute Assignment of Rents, Security Agreement, and Fixture Filing." Mr. Kennedy explained that the UCC Statement identifies the collateral as the improvements, fixtures, and personal property located at the Marian and Mater Dei real properties. The Note matures four years after the completion of construction at Mater Dei at which time all amounts become fully due and payable. Postpetition Financing Mater Dei will open in the fall of 2007, and prospective students have already enrolled. As of the Diocese's bankruptcy filing, ALSAM had lent $35,920,500 to San Diego. To complete the construction and open Mater Dei as scheduled, San Diego must continue to draw on the ALSAM Loan, Mr. Kennedy asserted. He added that continued draws are required to keep the contractors on the job, and failure to continue the construction will result in a default by San Diego that will give ALSAM the right to complete construction. San Diego has filed a budget for the construction of Mater Dei on a monthly basis, Mr. Kennedy said. A full-text copy of the budget is available for free at: http://ResearchArchives.com/t/s?1b1f Mr. Kennedy said that San Diego satisfies the procedures for authorization to obtain postpetition financing according to Rule 4001(c) of the Federal Rules of Bankruptcy Procedure. He explained that the Postpetition Financing would merely continue the prepetition financing provided by ALSAM. Moreover, the ALSAM loan is favorable to the estate because it has no interest and a four-year maturity date, in contrast to obtaining additional financing on an unsecured super-priority basis. Mr. Kennedy informed the Court that the proposed financing will not prejudice San Diego's creditors because it is subject to the same liens as the prepetition obligations. Completing the construction on ALSAM's terms are better for creditors than if ALSAM were to obtain stay relief and complete the construction, Mr. Kennedy added. Besides, he said, no additional collateral will be provided to ALSAM with respect to the Postpetition Financing. Parties Respond Counsel for creditors holding claims for childhood sexual abuse against San Diego, Raymond P. Boucher, Esq., at Kiesel, Boucher Larson LLP, in Beverly Hills, Calif., asserted that the request must denied until critical information is provided. According to Mr. Boucher, San Diego characterizes Mater Dei as an "operating asset" without any supporting information as to how this asset adds value to the estate. In addition, he said, San Diego's suggestion that failure to complete the High School could diminish the estate is without any factual or legal analysis. Steven Jay Katzman, the U.S. Trustee for Region 15, requested that the hearing on San Diego's request be continued to a date upon which a committee can be appointed, and upon which the committee will be provided with sufficient time to evaluate the substance of the request. He said he does not oppose the financing on an interim basis to accommodate any construction expenditures necessary to maintain the construction schedule. However, Mr. Katzman noted that the funding must not exceed the stated budget. About San Diego Diocese Roman Catholic Diocese of San Diego in California -- http://www.diocese-sdiego.org/-- employs approximately 3,000 people in various areas of work. The Diocese filed for Chapter 11 protection just before commencement of the first of court proceedings for 140 sexual abuse lawsuits filed against the Diocese. Authorities of the San Diego Diocese said they were not in favor of litigating their cases. The San Diego Diocese filed for chapter 11 protection on Feb. 27, 2007 (Bankr. S.D. Calif. Case No. 07-00939). Gerald P. Kennedy, Esq., at Procopio, Cory, Hargreaves and Savitch LLP, represents the Diocese. In its schedules of assets and liabilities, the Diocese listed total assets of $152,510,888 and total liabilities of $72,754,092. The Diocese's exclusive period to file a chapter 11 plan of reorganization expires on June 27, 2007. (Catholic Church Bankruptcy News, Issue No. 82; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Ct. Okays Spokane's Amended Disclosure Statement ----------------------------------------------------------------- The Honorable Patricia C. Williams of the U.S. Bankruptcy Court for the Eastern District of Washington approved a First Amended Disclosure Statement explaining the Diocese of Spokane and other plan proponents' Second Amended Joint Plan of Reorganization, at a hearing held March 8, 2007. Judge Williams ordered counsel for the Tort Claimants' Committee, Joseph Shickich, Jr., Esq., at Riddell Williams P.S., in Seattle, Wash., to revise, and submit to the Court for signature, the Plan Proponent's proposed disclosure statement order. Spokane and the other Plan Proponents filed the Amended Disclosure Statement and Plan on March 7, 2007, to address and resolve the sole objection to the Disclosure Statement filed by Ilene J. Lashinsky, the United States Trustee for Region 14. Specifically, the Second Amended Plan and Disclosure Statement provide, among other things: * a revised allocation of the $48,000,000 pool of funds; * the deletion of the provision for "unmarked ballots"; * a provision for substantial consummation; and * the inclusion of a liquidation analysis, a budget, and plan funding projection in the Plan exhibits. Fund Allocation Under the Second Amended Plan, approximately $40,000,000 of the $48,000,000 pool of funds will be paid to Tort Claimants while $7,000,000 will be allocated for unpaid Professional Fees. The remaining $1,000,000 will be paid to the Plan Trust Costs and Expenses incurred in determining Tort Claims. In addition, the Diocese will provide insurance for -- and certain Parishes in Future Tort Claims Parish Groups 1 and 2 will pay -- certain Allowed Future Tort Claims. The Second Amended Plan further provides that Plan Trust Costs and Expenses could equal or exceed $1,000,000. The Plan Proponents, however, note that the Costs and Expenses are unlikely to exceed $1,000,000 and might well be no more than $500,000. They further estimate that unpaid Professional Fees as of Dec. 31, 2006, and future Professional Fees will total $7,000,000. This includes approximately $1,800,000 paid by the Diocese on Jan. 31, 2007, which will be deducted from the $48,000,000 amount payable by the Diocese. $48 Million Note On the effective date of the Plan, a $48,000,000 Diocese's Note payable in installments of $37,000,000 on or before Oct. 1, 2007; $10,000,000 on or before Dec. 31, 2007; and $1,000,000 on or before Oct. 1, 2009, and secured by the Diocese's Collateral, which is substantially all of the assets of the Reorganized Debtor, will be delivered to the Plan Trust. The Collateral will include: (a) a $10,000,000 Parishes' Note 1; (b) a $5,000,000 Parishes' Note 2; (c) a $1,000,000 Parish Note 3; (d) $6,400,000 in Cash and other property from the Participating Catholic Entities; and (3) approximately $19,800,000 plus accruing interest in Insurance Settlements. Estate Fund On the Joint Plan's Effective Date, the Participating Catholic Entities will purchase all of the Diocese's interest on certain properties and the Guse Trust for $5,657,500 that will be allocated to the Estate Fund. This includes $382,500 to be paid by Morning Star Boys' Ranch. The $14,000,000 Estate's Portion of Parishes Note, and payments of approximately $5,550,000 from the Diocese's property and future income will likewise be allocated to the Estate Fund. Allowed Administrative Expense Claims for Professional Fees incurred on or before the Plan Effective Date, which were unpaid on Sept. 14, 2006, now estimated to be $7,000,000, will be deducted before the amounts are allocated to the Estate Fund. The Estate Fund is estimated to be approximately $18,207,500 Release Fund The Participating Catholic Entities will pay an additional $742,500 that will be allocated to the Release Fund, for the Tort Claimants who elect to receive funds for Releases of Claim. This includes $67,500 to be paid by Morning Star Boys' Ranch. The Insurers will also pay approximately $19,800,000 in Insurance Settlements to be allocated to the Release Fund. The Release Fund is estimated to be approximately $22,542,500. Use of Collateral Upon receipt by the Reorganized Debtor of full or partial payment of the Diocese's Collateral, the payments or proceeds, which is the net of a reserve for Allowed Administrative Expense Claims for Fees of the Tort Claim Reviewer and Professional Persons employed on or before Sept. 14, 2006, will be immediately paid in the form received to the Plan Trustee and will be applied as a partial payment of the Diocese's Note. The Plan Trust After the Plan Trust has paid all Allowed Convenience Tort Claims; Allowed Compromise Tort Claims; Allowed Settled Compromise Tort Claims; Allowed Settled Matrix Tort Claims; Allowed Matrix Tort Claims; Allowed Litigation Tort Claims; Allowed Non-Releasing Litigation Tort Claims; Plan Trust costs and expenses with respect to the Claims; Allowed Professional Fees; and funding of the Future Claims Fund, any balance due on the Diocese's Note when paid and any sums then held in Funds except the Future Claims, will be distributed pro rata to holders of the Claims. Summary of Assets and Liabilities Under the Second Amended Plan, the Diocese provides a revised summary of its assets and liabilities: ASSETS Diocese Real Property $25,200,000 Cash 2,410,249 Parish Loans 2,831,417 Insurance Policy Limits (pending resolution of the insurance coverage disputes) 19,814,290 Equipment and other personal property 484,834 ------------ TOTAL ASSETS $50,740,790 ============ LIABILITIES Tort Claims more than $40,000,000 Other Creditors 4,705,484 Priest Retirement 4,500,000 Administrative Expenses (includes accrued but unpaid plus remaining estimated) 7,003,777 ------------ TOTAL LIABILITIES more than $56,209,261 ============ The Diocese states that as of Dec. 31, 2006, it reported holding $2,410,249 in Cash. However, $1,823,935 of the Cash is subject to restrictions, which prevent its use for payment of Claims. The Plan Proponents note that projections and underlying assumptions concerning the Diocese's operations are set forth in a Budget, which shows that the Diocese will be able to perform its obligations under the Plan. A full-text copy of the Budget is available for free at http://ResearchArchives.com/t/s?1b19 The Plan Proponents have also prepared a Plan Funding Projection for the period starting January 2007 to October 2009. A full- text copy of the Projection is available for free at http://ResearchArchives.com/t/s?1b1a Liquidation Analysis The Liquidation Analysis under the Second Amended Plan shows the Liquidation Value of the Diocese as of December 31, 2006, as: Cash and cash equivalents $2,410,249 Accounts receivable (DLF Loans) 2,625,288 Other accounts receivable 103,065 Office equipment 121,209 Insurance settlements 7,764,000 Interest of Debtor in Declaratory Relief Action 8,329,290 Interest of Bishop in Catholic Entities 1,000,000 Interest of Bishop in Other Corporations - Undisputed real property 3,734,000 Disputed real property 10,000,000 ------------- Total $36,087,101 Less: Real property closing costs (384,000) Costs of Chapter 7 (2,082,000) Costs of Chapter 11, net after Chancery (50,000) Postpetition payables (5,165,000) Restricted cash (1,823,935) Secured debt (44,625) ------------- Total ($9,549,560) ------------- Total Amount Available to Pay Unsecured Creditors $26,537,541 ============= The Plan Proponents believe that the Second Amended Plan satisfies the requirements of the best interests of creditors standard because each class of creditors will receive, on account of the Plan payments, equal to or greater than what would be received in a hypothetical Chapter 7 liquidation. Accordingly, they anticipate that the Court will find that the Plan satisfies the standard at the time of the hearing on Confirmation. A full-text copy of the Spokane's Liquidation Analysis is available for free at http://ResearchArchives.com/t/s?1b1b Plan Modification The Plan Proponents may modify the Joint Plan before the Confirmation Date in accordance with Section 1127 of the Bankruptcy Code, provided that an acceptance of the Joint Plan by holder of an impaired claim constitutes an acceptance of subsequent modifications of the Joint Plan, which the Court has determined not to adversely affect or impair the interests of the creditors. Substantial Consummation The Plan Proponents note the Second Amended Plan will be deemed substantially consummated on the Closing Date if the Diocese has performed all obligations provided by the Joint Plan. On the Closing Date, the Reorganized Debtor and the Plan Trustee will execute and commence implementing the Plan. Moreover, exercise of the Court's continuing jurisdiction of matters related to the Plan Trust Agreement after the bankruptcy case has been closed will not require that Spokane's Chapter 11 case be reopened. A full-text copy of Spokane's First Amended Disclosure Statement is available for free at http://ResearchArchives.com/t/s?1b1c A full-text copy of Spokane's Second Amended Plan is available for free at http://ResearchArchives.com/t/s?1b1d The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. The Diocese of Spokane, the Tort Claimants Committee, the Future Claims Representative, and the Executive Committee of the Association of Parishes delivered an Amended Plan of Reorganization, and a Disclosure Statement describing that Plan to the Court on Feb. 1, 2007. The Honorable Patricia C. Williams approved the disclosure statement on March 8, 2007. (Catholic Church Bankruptcy News, Issue No. 77; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CENTENE CORP: S&P Rates $175 Million Senior Notes Offering at BB ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' counterparty credit rating to Centene Corp. Standard & Poor's also said that the outlook on Centene is negative. At the same time, Standard & Poor's assigned its 'BB' senior debt rating to Centene's planned seven-year, $175 million senior notes offering due 2014, which is to be issued via private placement. The proceeds will be used to refinance bank debt outstanding under its five-year revolver and to enhance holding-company liquidity. As of Dec. 31, 2006, on a pro forma basis, debt to capital and debt to EBITDA were 37% and 2.1x, respectively. "The rating on Centene reflects its diverse market presence, good cash-flow profile, and good financial flexibility," said Standard & Poor's credit analyst Joseph Marinucci. "Offsetting factors include a narrow market-segment scope, an acquisition-oriented growth strategy, and a recently diminished earnings profile." Membership is expected to decline moderately in 2007 because of the absence of members in Kansas and Missouri. Barring acquisitions, Standard & Poor's expects enrollment to be 1.10 million-1.13 million by year-end 2007. The rating agency expects total revenue and pretax income to be $2.7 billion-$2.8 billion and $100 million-$120 million (a 3.5%-4.5% ROR), respectively, for the same period. The outlook could be revised to stable if operating results through the second quarter of 2007 were to reflect performance consistent with full-year expectations while also demonstrating sustained earnings-profile diversity and a willingness and capacity to manage capital prudently according to Standard & Poor's capital model. Conversely, a material shortfall in operating performance relative to expectations, a more concentrated earnings profile, or a significant reduction in statutory capitalization could lead to a one- or two-notch downgrade. CHARLES RIVER: Incurs $55.7 Million Net Loss in Year Ended Dec. 31 ------------------------------------------------------------------ Charles River Laboratories International, Inc. reported a net loss of $55.78 million for the fiscal year ended Dec. 31, 2006, compared with net income of $141.99 million for the fiscal year ended Dec. 31, 2005. It generated total net sales of $1.05 billion and $993.32 million for the years ended Dec. 31, 2006, and 2005, respectively. The 2006 annual loss was largely due to the loss from discontinued businesses, net of tax, which totaled $181 million. The company posted an operating income of $188.17 million in 2006, as compared with $184.69 million in 2005. The company's balance sheet as of Dec. 31, 2006, showed total assets of $2.55 billion, total liabilities of $953.11 million, and minority interests of $9.22 million, resulting to total stockholders' equity of $1.59 billion. Cash and cash equivalents as of Dec. 31, 2006, totaled $175.38 million, as compared with $114.82 million a year earlier. Discontinued Operations in 2006 During the first quarter of fiscal 2006, the company initiated actions to sell Phase II-IV of the Clinical business. On May 9, 2006, the company disclosed that it entered into a definitive agreement to sell Phase II-IV of the Clinical Services business for $215 million in cash as part of a portfolio realignment, which would allow the company to capitalize on core competencies. During 2006, the company closed its Interventional and Surgical Services business, which was formerly included in the Preclinical Services segment. It performed an impairment test on the long- lived assets of the ISS business and based on that analysis, the book value of the ISS assets exceeded the future cash flows of the business. Accordingly, the company recorded an impairment charge of $1.07 millin during 2006. For the year-end Dec. 30, 2006, the discontinued businesses recorded a loss from operations of $181 million, which included a $546 loss from the sale of the Phase II-IV Clinical business. As a direct result of the sale, the Company realized a significant tax gain resulting in additional tax expense of $37.83 million, all of which has been paid by the end of fiscal year 2006. Northwest Kinetics Acquisition On Oct. 30, 2006, the company acquired all of the capital stock of privately held Tacoma, Washington based Northwest Kinetics for $29.5 million in cash. Northwest Kinetics runs clinical trials, primarily in Phase I, in a 150-bed facility with a focus on high- end clinical pharmacology studies. The final price allocation of the Northwest Kinetics acquisition, including transaction costs of $265,000 and net of $812,000 of cash acquired, was $28.81 million. Long-term Liabilities On July 31, 2006, the company amended and restated its then- existing $660 million credit agreement to reduce the current interest rate, modify certain restrictive covenants and extend the term. The now $428 million credit agreement provides for a $156 million U.S. term loan facility, a $200 million U.S. revolving facility, a CAD57.8 million term loan facility and a CAD12 million revolving facility for a Canadian subsidiary, and a GBP6 million revolving facility for a U.K. subsidiary. As of Dec. 30, 2006, there was no outstanding balance on the revolving facility. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1b13 About Charles River Laboratories Charles River Laboratories International, Inc., headquartered in Wilmington, MA, (NYSE: CRL) -- http://www.criver.com/-- provides research tools and integrated support services for drug and medical device discovery and development. The company's business segments are Research Models and Services, which involves the commercial production and sale of animal research models; and Pre- clinical, which involves the research, development and safety testing of drug candidates. * * * As reported in the Troubled Company Reporter on Dec. 27, 2006, Moody's affirmed its ratings on Charles River Laboratories International, Inc. with a negative outlook, Corporate Family Rating, Ba1; Probability of Default Rating, Ba1; Loss Given Default Assessment, LGD4, 50%; Senior Secured U.S. Revolving Credit Facility ($200 million face), Baa3, LGD2, 23%; and Senior Secured U.S. term loan facility ($156 million face), Baa3, LGD2, 23%. CLAYTON HOLDINGS: Moody's Lifts Corp. Family Rating to Ba3 from B1 ------------------------------------------------------------------ Moody's Investors Service upgraded Clayton Holdings senior secured term loan, senior secured revolver and corporate family rating to Ba3 from B1 with a stable outlook. The loan is guaranteed by its domestic subsidiaries and is secured by 100% of the capital stock of all subsidiaries and all domestic real and intangible property. This rating action reflects Clayton's strong margins, and ROAA of 16% in 2006, as well as growth reflecting a developing franchise. In addition, the company maintains low debt levels and generates ample free cash flow. These positive attributes are offset by earnings concentration in its due diligence business, which though improving remains high at 54% of total revenues. In addition, Clayton operates in a fragmented market, and its principal customers are large financial institutions with significant pricing power. Further ratings improvement is dependent on Clayton's ability to further develop its mortgage franchise diversifying its business including developing new business lines. Specifically, upward rating pressure is predicated on revenue diversification continuing to improve, such that the due diligence business contributes less than half of overall revenue with EBITDA margin in the high teens. A downgrade could result from declines in operating performance including fixed charge coverage below 2x or EBITDA margin under 15%. An increase in leverage above 4x would also pressure the rating. These ratings were upgraded: * Clayton Holdings, Inc. -- Senior secured term loan at Ba3; -- senior secured revolver at Ba3; -- corporate family rating at Ba3. Clayton Holdings, Inc. is based in Shelton, Connecticut, USA, provides outsourced services, information-based analytics and specialty consulting for buyers and sellers of, and investors in, mortgage-related loans and securities and other debt instruments. CLAYTON HOLDINGS: Good Performance Cues S&P's Positive Outlook -------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Shelton, Connecticut-based Clayton Holdings Inc. to positive from stable following the company's improved financial performance and credit metrics. The corporate credit rating is affirmed at 'B+'. "The rating reflects the company's narrow business profile, exposure to macroeconomic factors that affect mortgage origination and securitization, and noncontractual revenue streams," said Standard & Poor's credit analyst David Tsui. These factors partly are offset by long-standing relationships with top MBS originators, good competitive position, and conservative leverage levels for the rating. Clayton is a service provider to buyers and sellers of, and investors in, non- conforming loans and nonagency mortgage backed securities. Sales have grown rapidly in the past three years, from $85 million in 2003 to $239 million in 2006, reflecting robust organic growth in nonconforming mortgage origination, increased securitization rates and expansion of service offerings. Originations and nonagency MBS issuance experienced declines during 2006. Despite that, Clayton has been able to expand its revenue base and improve its profitability. The company's EBITDA margin improved to about 22% in the December quarter, up from a temporary dip at about 13% in the March quarter, largely a result of reduced compensation costs and increasing utilization of the company's central underwriting facilities to perform services which reduces reimbursable travel expenses that are also included as part of revenues. EBITDA margin from previous years was in the 17% area. COLLINS & AIKMAN: Wants Stipulation with Wachovia Bank Approved --------------------------------------------------------------- Collins & Aikman Corp. and its debtor-affiliates ask the Honorable Steven W. Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan to approve a stipulation with Wachovia Bank and Trust Company, N.A. Before filing for bankruptcy, the Debtors established a trust for paying supplemental retirement benefits to a former chief executive officer. The agreement underlying the C&A Rabbi Trust provides for certain actions to be taken by the trustee, Wachovia Bank and Trust Company, N.A., upon written notice of insolvency of the Debtors. The Debtors have asserted claims against Wachovia for alleged failure to take the actions required by the Trust Agreement. The Trust Asset Claim includes a demand for the return of the C&A Rabbi Trust property, and a claim of $35,215 plus interest related to the distribution of certain Trust Assets to the sole beneficiary of the C&A Rabbi Trust after the trustee's alleged receipt of the notice of insolvency. During the course of negotiations to resolve the outstanding issues, the parties identified certain fundamental disagreements regarding the liability of Wachovia for its actions as trustee as well as disagreement over the effectiveness of the service of the notice of insolvency. To avoid the costs and uncertainty of litigation, the parties decided to compromise and entered into a stipulation. The Debtors and Wachovia agreed that, among other things: * Wachovia will turn over the Trust Assets to the Debtors; * Wachovia will provide an accounting of the Trust Assets; * Wachovia will pay the Debtors an additional $5,000 to resolve all disputes associated with respect to the C&A Rabbi Trust; * the parties release each other from any and all claims, damages, actions, rights or allegations arising from and related to the Trust Agreement, the breach claim, the transfer of Trust Assets, and termination of the Trust; and * the Trust is terminated. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). COLLINS & AIKMAN: Auction on Williamston Assets Set for March 14 ---------------------------------------------------------------- Collins & Aikman Corp. and its debtor-affiliates intend to sell certain of their assets including all rights, title, interests and goodwill to all assets, properties and rights used in the operation of their facilities located at: (a) 1560 Noble Road, Williamston, Michigan 48895 and (b) 845 Progress Court, Williamston, Michigan 48895. The Debtors have agreed to sell the Williamston Assets to Williamston Products, Inc., for $2,900,000, absent higher and better offers for the property. Sale Agreement with Williamston Products Debtor Collins & Aikman Plastics, Inc., and Williamston Products entered into an asset purchase agreement for the Williamston Assets on Feb. 15, 2007. Pursuant to the sale agreement, Collins & Aikman Plastics will assign to Williamston Products its rights, title and interest under the lease to the premises at Progress Court, at which it conducted business, the leases to certain equipment, and other contracts. C&A Plastics will be responsible for any cure payments required under Section 365 of the Bankruptcy Code to be made in connection with the assumption and assignment to Williamston Products of the assumed Leases and Contracts. C&A Plastics will also take the necessary steps, at its expense, to convey title to the designated Equipment to the purchaser free and clear of liens, claims, interests and encumbrances, subject only to permitted encumbrances and the assumed obligations, and the Designated Equipment. Among the assets excluded in the sale are the rights under the Purchase Agreement, claims, counterclaims, demands and causes of action of C&A Plastics; all or portions of accounts receivable, as of the Closing; any and all intellectual property; any and all excluded records, tax refunds for periods ended before the Closing Date, cash and cash equivalents; and all rights under the Debtors' insurance policies and warranties or representations made by third parties. The sale also excludes these liabilities: -- environmental costs and liabilities existing on or before the Closing Date, regardless of whether it was discovered or was capable of being discovered on or before the Closing Date; -- any liability or obligation incurred by C&A Plastics on or after the Closing Date; -- all trade payables; and -- the Debtors' obligations under all employee benefit plans, and retired and inactive employees. Williamston Products will purchase the Williamston Assets for $2,900,000, payable as: -- an earnest money deposit of $145,000 to be paid upon execution of the Purchase Agreement, and held pursuant to the Sale Procedures; -- $2,555,000 to be paid on the Closing Date by wire transfer of immediately available funds; and -- $200,000 payable to C&A Plastics. A copy of the Purchase Agreement is available for free at: http://ResearchArchives.com/t/s?1b25 Competing Bids Pursuant to the Court-approved procedures for disposing of certain assets, the Debtors will entertain competing bids for the Williamston Assets through an auction. The Debtors have designated Williamston Products as the stalking horse bidder. As a result, the Debtors agree to pay Williamston Products a break-up fee of $125,000 upon the occurrence of an "alternative transaction," which terminates the Williamston Purchase Agreement. The Debtors have also agreed to set certain overbid protections: -- a competing bidder, if any, for all or a substantial part of the Williamston Assets must submit an initial minimum overbid of $200,000 more than the purchase price; and -- subsequent bids must be in minimum increments of at least $100,000. The auction with respect to the sale of the Williamston Assets will be held at Collins & Aikman Corp., 26533 Evergreen Road, Suite 900, Southfield, Michigan, on March 14, 2007, at 10:00 a.m., Eastern Time. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CREDIT SUISSE: Moody's Holds B3 Rating on $4 Mil. Class O Certs. ---------------------------------------------------------------- Moody's Investors Service affirmed the ratings of 22 classes of Credit Suisse First Boston Commercial Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2004 C5: -- Class A-1, $36,891,786, Fixed, affirmed at Aaa -- Class A-2, $241,510,000, Fixed, affirmed at Aaa -- Class A-3, $101,000,000 Fixed, affirmed at Aaa -- Class A-4, $575,728,000, Fixed, affirmed at Aaa -- Class A-AB, $78,557,000, Fixed, affirmed at Aaa -- Class A-1-A, $422,425,478, Fixed, affirmed at Aaa -- Class A-J, $100,348,000, Fixed, affirmed at Aaa -- Class A-X, Notional, affirmed at Aaa -- Class A-SP, Notional, affirmed at Aaa -- Class B, $58,342,000, Fixed, affirmed at Aa2 -- Class C, $16,336,000, Fixed, affirmed at Aa3 -- Class D, $32,671,000, Fixed, affirmed at A2 -- Class E, $25,671,000, Fixed, affirmed at A3 -- Class F, $23,336,000, Fixed, affirmed at Baa1 -- Class G, $18,670,000, Fixed, affirmed at Baa2 -- Class H, $25,670,000, Fixed, affirmed at Baa3 -- Class J, $4,668,000, Fixed, affirmed at Ba1 -- Class K, $11,668,000, Fixed, affirmed at Ba2 -- Class L, $9,335,000, Fixed, affirmed at Ba3 -- Class M, $7,001,000, Fixed, affirmed at B1 -- Class N, $9,335,000, Fixed, affirmed at B2 -- Class O, $4,667,000, Fixed, affirmed at B3 As of Feb. 15, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 2.0% to $1.83 billion from $1.87 billion at securitization. The Certificates are collateralized by 225 mortgage loans secured by commercial and multifamily properties. The loans range in size from less than 1.0% to 17.5% of the pool, with the top 10 loans representing 36.9% of the pool. The pool includes two shadow rated loans, representing 3.7% of the pool. Two loans, representing 0.8% of the pool, have defeased and have been replaced with U.S. Government securities. There have been no loans liquidated from the trust and therefore no realized losses. Twenty-four loans, representing 7.2% of the pool, are on the master servicer's watchlist. Two loans, representing 0.3% of the pool, are in special servicing. Moody's has not estimated any losses at this time for the specially serviced loans. Moody's was provided with year-end 2005 and partial-year 2006 operating for 99.6% and 95.0%, respectively, of the performing loans. Moody's loan to value ratio ("LTV") for the conduit component is 98.8%, compared to 94.7% at securitization. The largest shadow rated loan is the East Gate Mall Loan of $51.8 million (2.8%), which is secured by the borrower's interest in an 849,000 square foot (557,000 square feet of collateral) regional mall located in Cincinnati, Ohio. Built in 1998, the property is anchored by Dillard's (35.0% GLA; lease expiration January 2022) and Kohl's (17.0% GLA; lease expiration July 2015). The property is also shadow anchored by J.C. Penney and Sears. As of September 2006 the property was 96.0% leased, the same as at securitization. Overall performance has declined due to decreased revenue. The loan sponsor is CBL & Associates Properties, Inc. Moody's current shadow rating is Ba1, compared to Baa3 at securitization. The second largest shadow rated loan is the Pleasant Hill Square Loan of $17.1 million (0.9%), which is secured by the borrower's interest in a 287,000 square foot retail center located in Duluth, Georgia. Built in 1997, the property is anchored by J.C. Penney (18.0% GLA; lease expiration August 2007). As of March 2006 the property was 98.0% leased, the same as at securitization. The loan is interest only for its entire term. Moody's current shadow rating is Aa3, the same as at securitization. The top three conduit exposures represent 24.5% of the outstanding pool balance. The largest conduit loan is the Time Warner Retail Loan of $320.0 million (17.5%), which is secured by a 343,000 square foot retail center located at Columbus Circle between West 58th and West 60th Street in New York City. Built in 2004, the major tenants include Whole Foods (17.0% GLA; lease expiration January 2024), Equinox (12.0% GLA; lease expiration February 2019) and Borders Books (8.0% GLA; lease expiration February 2019). As of September 2006 the property was 90.0% leased, compared to 95.0% at securitization. The loan sponsor is Related Companies LP and Apollo Real Estate Advisors. The loan matures in December 2014 and is interest only through December 2007. Moody's LTV is 97.9%, compared to 95.0% at securitization. The second largest conduit loan is the 275 Madison Ave., Loan of $71.0 million (3.9%), which is secured by a 306,000 square foot office building located in New York City. The building was constructed in 1931 and renovated in 2004. As of October 2006 occupancy was of 94.0% compared to 95.0% at securitization. The largest tenant is Valley National Bank. Increased expenses have resulted in a reduced net cash flow since securitization. The loan matures in November 2011 and is interest only through November 2007. Moody's LTV is in excess of 100.0% compared to 98.6% at securitization. The third largest conduit loan is the AT&T Consumer Services (Kemble Plaza) Loan of $58.0 million (3.2%), which is secured by a 387,000 square foot office building located in Morris Township, New Jersey. The building was constructed in 1979 and renovated in 2004. The property serves as the corporate headquarters of AT&T Consumer Services and is leased through September 2014. The loan is interest only for its entire term. Moody's LTV is in excess of 100.0%, the same as at securitization. The pool's collateral is a mix of retail (42.6%), multifamily and manufactured housing (28.0%), office and mixed use (22.6%), industrial and self storage (5.5%), lodging (1.3%) and U.S. Government securities (0.8%). The collateral properties are located in 37 states and the District of Columbia. The highest state concentrations are New York (24.0%), California (13.0%), Texas (8.7%), Florida (5.8%), and Indiana (5.3%). All of the loans are fixed rate. CREDIT SUISSE: Fitch Affirms Low-B Ratings on Three Cert. Classes ------------------------------------------------------------------ Fitch Ratings has taken rating actions on CSFB Mortgage Securities Corp.'s transactions: Series 2002-5 G1 through 3: -- Class IA affirmed at 'AAA'; -- Class CB1 affirmed at 'AAA'; -- Class CB2 affirmed at 'AAA'; -- Class CB3 affirmed at 'AAA'; -- Class CB4 upgraded to 'AA+' from 'AA'; and -- Class CB5 upgraded to 'AA-' from 'A'. Series 2002-26 G1 -- Class IA affirmed at 'AAA'; -- Class IB1 affirmed at 'AAA'; -- Class IB3 affirmed at 'AAA'; -- Class IB4 affirmed at 'AAA'; and -- Class IB5 upgraded to 'AA+' from 'AA'. Series 2006-1 G1 -- Class 1A, 2A, 5A affirmed at 'AAA'; -- Class DB1 affirmed at 'AA'; -- Class DB2 affirmed at 'A'; -- Class DB3 affirmed at 'BBB'; -- Class DB4 affirmed at 'BBB-'; -- Class DB5 affirmed at 'BB'; and -- Class DB6 affirmed at 'B'. Series 2006-1 G2 -- Class 3A, 4A affirmed at 'AAA'; -- Class CB1 affirmed at 'AA'; -- Class CB2 affirmed at 'A'; -- Class CB3 affirmed at 'BBB'; and -- Class CB4 affirmed at 'BB'. The upgrades reflect an improvement in the relationship of credit enhancement to future loss expectations and affect approximately $5.36 million of outstanding certificates. The affirmations, affecting approximately $907.5 million of outstanding certificates, are due to CE and collateral performance generally consistent with expectations. The mortgage loans consist of fixed-rate, 15- and 30-year mortgages extended to Prime and AltA borrowers and are secured by first liens, primarily on one- to four-family residential properties. As of the January 2007 distribution date, the transactions are seasoned from a range of 12 months to 59 months, and the pool factors range from 6% to 94%. The mortgage loans are being serviced by various entities and the depositor is Credit Suisse First Boston. Fitch will continue to monitor these deals. CREDIT SUISSE: S&P Junks Rating on Two Certificate Classes ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 15 classes of mortgage pass-through certificates from 12 CSFB transactions. The ratings remain on CreditWatch with negative implications. Concurrently, the ratings on four other classes from four series were lowered and placed on CreditWatch with negative implications. In addition, the ratings on two classes from two series were lowered to 'CCC' and removed from CreditWatch negative. Furthermore, the ratings on five classes from five series were placed on CreditWatch with negative implications. Lastly, the ratings 49 classes from these 13 series were affirmed. The downgrades and negative CreditWatch placements reflect deterioration of the credit support to the respective classes as the transactions continue to realize losses that far exceed monthly excess interest cash flows, thereby eroding overcollateralization (O/C). For series 2001-HE20, O/C has been completely eroded, while O/C is less than half of the 0.50% target for eight of the 13 series and below that target for the remaining four series. Furthermore, cash flow projections indicate that net losses will continue to exceed excess interest cash flows. In addition, 10 of these 13 transactions have paid down to below 10% of their original pool balances, while the remaining three have paid down to below 15% of their original pool balance. Total delinquencies for these transactions range from approximately 33% for series 2003-5 to just over 51% for series 2001-HE16. Moreover, severe delinquencies for these transactions average roughly 20% of the current pool balances. Cumulative realized losses range from approximately 1.64% for series 2003-3 to approximately 4.72% for series 2001-HE20. Standard & Poor's will continue to closely monitor the performance of these transactions. If losses decline to a point at which they no longer exceed excess interest, and the level of O/C has not been further eroded, Standard & Poor's will affirm the ratings and remove them from CreditWatch. Conversely, if losses continue to exceed excess interest and further erode O/C, Standard & Poor's will take additional negative rating actions. Standard & Poor's removed the ratings on the two classes that were downgraded to 'CCC' from CreditWatch because Standard & Poor's surveillance practices state that ratings lower than 'B-' on classes of certificates or notes from RMBS transactions are not eligible to be on CreditWatch negative. The affirmed ratings reflect adequate actual and projected credit support percentages and the shifting interest structure of the transactions. Credit support for these transactions is provided by subordination, O/C, and excess interest cash flow. The collateral consists of 30-year, fixed- and adjustable-rate, first- and second-lien subprime mortgage loans secured by one- to four-family residential properties. Ratings Lowered And Remaining On Creditwatch Negative Credit Suisse First Boston Mortgage Securities Corp. Mortgage-Backed Pass-Through Certificates Series 2003-17 Rating ------ Class To From ------ -- ---- D-B-4 B/Watch Neg BB/Watch Neg CSFB Home Equity Asset Trust Home Equity Pass-Through Certificates Rating ------ Series Class To From ------ ----- -- ---- 2002-1 B-1 B/Watch Neg BB/Watch Neg 2002-2 B-1 B/Watch Neg BB/Watch Neg 2002-3 B-1 B/Watch Neg BB/Watch Neg 2002-5 B-1 B/Watch Neg BB/Watch Neg 2003-1 B-2 BB/Watch Neg BBB/Watch Neg 2003-2 B-1 BB/Watch Neg BBB+/Watch Neg 2003-3 B-2 B/Watch Neg BB/Watch Neg 2003-3 B-3 B-/Watch Neg BB-/Watch Neg 2003-5 B-2 BB/Watch Neg BBB/Watch Neg 2003-5 B-3 B/Watch Neg BB-/Watch Neg 2003-6 B-3 BB-/Watch Neg BBB-/Watch Neg CSFB ABS Trust Mortgage Pass-Through Certificates Rating ------ Series Class To From ------ ----- -- ----- 2001-HE16 M-2 BBB/Watch Neg A/Watch Neg 2001-HE16 B B/Watch Neg BB/Watch Neg 2001-HE20 M-2 BB/Watch Neg BBB/Watch Neg Ratings Lowered And Placed On Creditwatch Negative CSFB Home Equity Asset Trust Home Equity Pass-Through Certificates Rating ------ Series Class To From ------ ----- -- ---- 2003-1 B-1 BB+/Watch Neg BBB+ 2003-3 B-1 BB/Watch Neg BBB+ 2003-2 M-3 BBB/Watch Neg A 2003-5 B-1 BB+/Watch Neg BBB+ Ratings Lowered And Removed From Creditwatch Negative CSFB Home Equity Asset Trust Home Equity Pass-Through Certificates Rating ------ Series Class To From ------ ----- -- ---- 2003-1 B-3 CCC B/Watch Neg 2003-2 B-2 CCC B/Watch Neg Ratings Placed On Creditwatch Negative Credit Suisse First Boston Mortgage Securities Corp. Mortgage-Backed Pass-Through Certificates Series 2003-17 Rating ------ Class To From ----- -- ---- D-B-3 BBB-/Watch Neg BBB- CSFB Home Equity Asset Trust Home Equity Pass-Through Certificates Rating ------ Series Class To From ------ ----- -- ---- 2002-1 M-2 A+/Watch Neg A+ 2002-4 B-1 BBB+/Watch Neg BBB+ 2003-3 M-3 A-/Watch Neg A- 2003-6 B-2 BBB/Watch Neg BBB Ratings Affirmed Credit Suisse First Boston Mortgage Securities Corp. Mortgage-Backed Pass-Through Certificates Series 2003-17 Class Rating ----- ------ III-A-1, III-A-2, III-A-3, III-A-4, III-A-5 AAA III-A-6, III-A-7, III-X, III-P AAA D-B-1 AA D-B-2 A- CSFB ABS Trust Mortgage Pass-Through Certificates Series Class Rating ------ ----- ------ 2001-HE16 A AAA 2001-HE16 M-1 AA+ 2001-HE20 A-1, A-IO, M-1 AAA CSFB Home Equity Asset Trust Home Equity Pass-Through Certificates Series Class Rating ------ ----- ------ 2002-1 A-2, A-3, A-4 AAA 2002-2 A-2, A-3, A-4 AAA 2002-2 M-1 AA+ 2002-2 M-2 A+ 2002-3 A-2, A-4, A-5 AAA 2002-3 M-1 AA+ 2002-3 M-2 A 2002-4 M-1 AA+ 2002-4 M-2 A 2002-5 M-1 AA 2002-5 M-2 A 2003-1 M-1 AA 2003-1 M-2 A+ 2003-1 M-3 A 2003-2 M-1 AA 2003-2 M-2 A+ 2003-3 M-1 AA 2003-3 M-2 A 2003-5 A-1, A-2 AAA 2003-5 M-1 AA 2003-5 M-2 A 2003-5 M-3 A- 2003-6 M-1 AA 2003-6 M-2 A 2003-6 M-3 A- 2003-6 B-1 BBB+ CUMMINS INC: Net Earnings Increase to $715 Million in Fiscal 2006 ----------------------------------------------------------------- Cummins, Inc. reported results for the full year 2006 with the Securities and Exchange Commission. Net sales for the year ended Dec. 31, 2006, were $11.36 billion, compared with $9.91 billion for the year ended Dec. 31, 2005. The company had net earnings of $715 million in 2006, compared with $550 million in 2005. As of Dec. 31, 2006, the company listed total assets of $7.46 billion, total liabilities of $4.4 billion, minority interests of $254 million, resulting to total stockholders' equity of $2.8 billion. Its net cash flow from operating activities was $840 million, net cash flow used in investing activities was $277 million, and its net cash used in financing was $508 million, which resulted to cash and cash equivalents of $840 million as of Dec. 31, 2006, up from $779 million in cash and cash equivalents as of Dec. 31, 2005. The company's marketable securities were $95 million and $61 million for the years 2006 and 2005, respectively. A full text copy of the company's annual report for the year ended Dec. 31, 2006, is available for free at http://ResearchArchives.com/t/s?1b17 Business Expansions In January 2006, the company signed a joint venture agreement with KAMAZ, Inc., a vehicle manufacturer in Russia, to produce B Series engines under the name ZAO Cummins Kama. After a feasibility study, the company signed an agreement in October 2006 with Beiqi Foton Motor Co. to form a 50/50 joint venture, Beijing Foton Cummins Engine Co., to produce two families of Cummins light-duty, high performance diesel engines in Beijing. The parties are awaiting approval of the joint venture by the Chinese government. In July 2006, the company disclosed that it had reached agreement with a major automotive manufacturer serving the North American market to produce and market a light-duty, diesel-powered engine. In October 2006, the company said it would use an existing facility for production of this new engine platform and that DaimlerChrysler was its significant customer. The first vehicles with this engine are expected to be ready for market by the end of the decade. In August 2006, the company's first technical center in China was opened in Wuhan City. The East Asia Technical Center, a 55/45 consolidated joint venture between Cummins and Dongfeng Cummins Engine Company Ltd., will provide engineering and technical development services for the full range of Cummins products built in China. Sale of SEG GmbH On Sept. 22, 2006, the company said it had reached an agreement to sell its SEG GmbH subsidiary based in Kempen, Germany to Woodward Governor Co. The sale closed in the fourth quarter for about $35 million and resulted in a pre-tax gain of approximately $9 million. Total sales of SEG were about $51 million and $72 million, for the ten months ended Oct. 31, 2006, and for the year ended Dec. 31, 2005, respectively. Financing Matters On May 8, 2006, the Board of Directors approved a plan to redeem all of the 7% convertible quarterly income preferred securities that the company issued in June 2001. On May 9, 2006, the company gave the trustee a formal irrevocable notification of its intent to redeem the preferred securities. As a result, substantially all of the related $300 million of 7% convertible subordinated debentures outstanding were converted into shares of the company's common stock. During the second quarter of 2006, the company completed its previously announced $100 million share repurchase program. During the third and fourth quarters, the company purchased 500,000 shares for about $59 million. In addition, the Board also voted in July to increase the quarterly cash dividend per share by 20 percent to $0.36 per share. The company's level of debt at Dec. 31, 2006, has decreased by $556 million since Dec. 31, 2005 and its debt-to-capital ratio has improved to 22.4 percent at Dec. 31, 2006, from 42.3 percent at Dec. 31, 2005. The company repaid its $250 million 9.5% notes in December 2006, the first call date for the debt. During 2006, the company made contributions of around $266 million to its pension plans. As of the end of 2006, its global pension funding was around 88.5 percent of its obligation. About Cummins, Inc. Headquartered in Columbus, Indiana, Cummins Inc. (NYSE: CMI) -- http://www.cummins.com/-- designs, manufactures, distributes, and services engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Cummins serves customers in more than 160 countries through its network of 550 Company- owned and independent distributor facilities and more than 5,000 dealer locations. * * * The company's Junior Convertible Subordinated Debentures carry Fitch's 'BB' rating with a stable outlook. CUNNINGHAM LINDSEY: Weak Earnings Cue S&P to Lower Ratings ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit rating on Cunningham Lindsey Group Inc. to 'B-' from 'B'. The outlook is negative. "The downgrade reflects LIN's weak earnings and cash flow, liquidity dependant on support from Fairfax Financial Holdings Ltd. (Fairfax, 75% equity owner), and sizeable debt obligations maturing in 2008," said Standard & Poor's credit analyst Damien Magarelli. "Also, LIN has undergone further operational changes and restructurings in 2006 that have increased expenses without generating increased revenues." Total obligations to total capital decreased in 2006 to about 67% from 72% in 2005, but this is still viewed as high leverage and is not expected to decrease significantly further in 2007. Interest coverage is expected to remain low at 1.2x in 2006, below previous expectations of 1.7x. Lastly, the rating reflects a high degree of exposure to currency fluctuations that creates volatility in the financial statements. LIN is a global claims services company with operations in Canada, the U.S., the U.K., Europe, the Far East, Latin America, and the Middle East. Fairfax owns more than 75% of LIN's equity and has been providing financial support and liquidity to LIN. The negative outlook reflects that LIN will be unable to service its maturing debt obligations in 2008 without external support, either from Fairfax or through refinancing. Fairfax is supporting LIN's bank facility obligations explicitly, but if it is determined that Fairfax will not continually extend its support to LIN, the rating would immediately decrease one notch. Also, if LIN is unable to initiate a clear plan toward refinancing its senior debt and bank facility obligations, the rating will fall another notch. If LIN is able to refinance its debt obligations, and remove near-term liquidity concerns, a stable outlook is possible. However, a sustainable track record of positive earnings and cash flow would also be a main consideration of a stable outlook. Standard & Poor's expects that LIN will likely measure a small net profit in 2007, less than CDN$1 million before any tax related benefits, asset sales, or currency related benefits. The company is not expected to measure profits near 2005 levels as that year benefited from high catastrophe events as well as tax recoveries. CVS CORP: Chancery Court Allows Vote on Caremark Merger to Proceed ------------------------------------------------------------------ In response to the decision by the Delaware Chancery Court to deny the motions of Express Scripts, Inc. and the class plaintiffs to postpone the Caremark RX Inc. shareholder meeting, CVS Corp. issued this statement: "We are extremely pleased that the decision by Chancellor Chandler will allow Caremark's shareholders' voices to be heard. "In his decision, Chancellor Chandler described the class plaintiffs' motion for contempt as "theatrical and absurd" and dismissed it "out of hand." In addition, the court noted that further delay will cause uncertainty and be disruptive to Caremark's business. Finally and most importantly, the court noted that one is left to wonder why Express Scripts has not made an unconditional bid. "CVS looks forward to receiving Caremark shareholder approval for our transformational combination next week and closing our merger shortly thereafter. About Caremark Rx Caremark Rx Inc. (NYSE: CMX) -- http://www.caremark.com/-- provides comprehensive prescription benefit management services to over 2,000 health plans, including corporations, managed care organizations, insurance companies, unions and government entities. Caremark operates a national retail pharmacy network with over 60,000 participating pharmacies, seven mail service pharmacies, and nine call centers, which have been recognized for customer satisfaction excellence by J.D. Power & Associates. Caremark also has 21 specialty pharmacies accredited by the Joint Commission on Accreditation of Healthcare Organizations, and 21 disease management programs through Accordant(R) accredited by the National Committee for Quality Assurance. About Express Scripts Headquartered in St. Louis, Missouri, Express Scripts, Inc. -- http://www.express-scripts.com/-- provides integrated PBM services to over 50 million members, including network-pharmacy claims processing, home delivery services, benefit-design consultation, drug-utilization review, formulary management, disease management, and medical- and drug-data analysis services. The Company also distributes a full range of injectable and infusion biopharmaceutical products directly to patients or their physicians, and provides extensive cost-management and patient- care services. Express Scripts serves thousands of client groups, including managed-care organizations, insurance carriers, employers, third-party administrators, public sector, and union- sponsored benefit plans. About CVS Corp. CVS Corp. (NYSE: CVS) -- http://www.cvs.com/-- is America's largest retail pharmacy, operating approximately 6,200 retail and specialty pharmacy stores in 43 states and the District of Columbia. With more than 40 years in the retail pharmacy industry, CVS serves the healthcare needs of all customers through its CVS/pharmacy stores; its online pharmacy, CVS.com; its retail- based health clinic subsidiary, MinuteClinic; and its pharmacy benefit management, mail order and specialty pharmacy subsidiary, PharmaCare. * * * As reported in the Troubled Company Reporter on March 8, 2007, Moody's Investors Service confirmed the Ba1 rating of CVS Corporation's $125 million Series A-2 lease obligations. CVS CORPORATION: Moves Shareholders' Meeting Until Late March 2007 ---------------------------------------------------------------- CVS Corp. intends to once again delay to a much later date in March 2007, a shareholders' special meeting to approve the company's merger plans with Caremark Rx, Inc. in light of a Delaware court's ruling on Feb. 23, 2007. The company had previously disclosed that its special meeting of shareholders for the same purpose had been adjourned to March 9, 2007. The company on Nov. 1, 2006, had entered into a definitive agreement and plan of merger with Caremark Rx, Inc. The agreement is structured as a merger of equals under which Caremark shareholders will receive 1.67 shares of common stock, par value $0.01 per share, of CVS for each share of common stock of Caremark, par value $0.001 per share, issued and outstanding immediately prior to the effective time of the merger. On Jan. 16, 2007, CVS and Caremark announced that Caremark shareholders would receive a special one-time cash dividend of $2 per share upon or promptly after closing of the transaction. On Feb. 13, 2007, CVS and Caremark announced that the special one-time cash dividend payable to Caremark shareholders upon or promptly after closing of the transaction would be increased to $6 per share. On the same date, the Court of Chancery of the State of Delaware determined that, to permit additional time for dissemination to Caremark shareholders of certain newly filed information, the Caremark special meeting of shareholders to approve the merger must be postponed to a date not earlier than March 9, 2007. On Feb. 23, 2007, the Court of Chancery of the State of Delaware further delayed the Caremark shareholder vote until twenty days after Caremark makes supplemental disclosures regarding Caremark shareholders' right to seek appraisal and the structure of fees to be paid by Caremark to its financial advisors. The supplemental disclosures were mailed to Caremark shareholders on Feb. 24, 2007, at which time Caremark announced that its special meeting of shareholders to approve the merger had been adjourned to March 16, 2007. Changes in the Board of Directors At the effective time of the merger, the CVS/Caremark board of directors will consist of an equal number of directors designated by each the parties and will have an audit committee, a management planning and development committee, a nominating and corporate governance committee and an executive committee. Also, the chairman of the audit committee will be designated by former Caremark directors that are members of the new set of board of directors. The chairman of each of the committee will be designated by former CVS directors that are members of the new set of board of directors. At the effective time of the merger, the executive committee will consist of four members namely, E. Mac Crawford, Thomas M. Ryan, one member appointed by the former CVS directors and one member appointed by the former Caremark directors. E. Mac Crawford will be the chairman and Thomas M. Ryan will be the chief executive officer of CVS/Caremark and a director. In addition, senior management will also include Howard A. McLure as president of the company's pharmacy services business. About Caremark Rx, Inc. Caremark Rx, Inc. (NYSE: CMX) -- http://www.caremark.com/-- is a pharmaceutical services company in the U.S. The company offers pharmacy benefit management services that involve the design and administration of programs for prescription drug use. About CVS Corp. CVS Corp. (NYSE: CVS) -- http://www.cvs.com/-- is a retail pharmacy in the U.S. and operates approximately 6,200 retail and specialty pharmacy stores in 43 states and the District of Columbia. With more than 40 years in the retail pharmacy industry, CVS serves the healthcare needs of all customers through its CVS/pharmacy stores; its online pharmacy, CVS.com; its retail- based health clinic subsidiary, MinuteClinic; and its pharmacy benefit management, mail order and specialty pharmacy subsidiary, PharmaCare. * * * As reported in the Troubled Company Reporter on March 8, 2007, Moody's Investors Service confirmed the Ba1 rating of CVS Corp.'s $125 million Series A-2 lease obligations. CVS CORPORATION: Earns $1.35 Billion in Fiscal 2006 --------------------------------------------------- CVS Corp. reported net revenues of $43.81 billion for the year ended Dec. 31, 2006, compared with net revenues of $37 billion for the year ended Dec. 31, 2005. Net earnings for 2006 were $1.35 billion, up from $1.21 billion a year earlier. As of Dec. 31, 2006, the company had total assets of $20.56 billion, total liabilities of $10.65 billion, resulting to total stockholders' equity of $9.91 billion. Cash and cash equivalents in 2006 were $530.7 million, as compared with $513.4 million in 2005. Credit Facilities and Notes The company maintains a $675 million, five-year unsecured back-up credit facility, which expires on June 11, 2009 and a $675 million five-year unsecured backup credit facility, which expires on June 2, 2010. In preparation for the consummation of the acquisition of the Standalone Drug Business, the company entered into a $1.4 billion, five-year unsecured back-up credit facility, which expires on May 12, 2011. As of Dec. 30, 2006, the Company had no outstanding borrowings against the credit facilities. The weighted average interest rate for short-term debt was 5.3% and 3.3% as of Dec. 30, 2006 and Dec. 31, 2005, respectively. On Aug. 15, 2006, the Company issued $800 million of 5.75% unsecured senior notes due Aug. 15, 2011 and $700 million of 6.125% unsecured senior notes due Aug. 15, 2016. Net proceeds from the Notes were used to repay a portion of the outstanding commercial paper issued to finance the acquisition of the Standalone Drug Business. Acquisition of a Standalone Drug Business On June 2, 2006, CVS acquired for $4 billion the assets and liabilities of Albertson's, Inc., including the latter's 700 standalone drugstores and a distribution center. CVS financed the acquisition of the Standalone Drug Business by issuing commercial paper and borrowing $1 billion from a bridge loan facility. During the third quarter of 2006, CVS repaid a portion of the commercial paper used to finance the acquisition with the proceeds received from the issuance of $800 million of 5.75% unsecured senior notes due Aug. 15, 2011 and $700 million of 6.125% unsecured senior notes due Aug. 15, 2016. During the fourth quarter of 2006, CVS sold a substantial portion of the acquired real estate through a sale-leaseback transaction, the proceeds of which were used in retiring the bridge loan facility. Merger with Caremark Rx The company on Nov. 1, 2006, had entered into a definitive agreement and plan of merger with Caremark Rx, Inc. The agreement is structured as a merger of equals under which Caremark shareholders will receive 1.67 shares of common stock, par value $0.01 per share, of CVS for each share of common stock of Caremark, par value $0.001 per share, issued and outstanding immediately prior to the effective time of the merger. Currently, the company intends to once again delay to a much later date in March 2007, a shareholders' special meeting to approve the company's merger plans with Caremark Rx, Inc. in light of a Delaware court's ruling on Feb. 23, 2007. The company had previously disclosed that its special meeting of shareholders for the same purpose had been adjourned to March 9, 2007. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1b0b About CVS Corp. CVS Corp. (NYSE: CVS) -- http://www.cvs.com/-- is a retail pharmacy in the U.S. and operates approximately 6,200 retail and specialty pharmacy stores in 43 states and the District of Columbia. With more than 40 years in the retail pharmacy industry, CVS serves the healthcare needs of all customers through its CVS/pharmacy stores; its online pharmacy, CVS.com; its retail- based health clinic subsidiary, MinuteClinic; and its pharmacy benefit management, mail order and specialty pharmacy subsidiary, PharmaCare. * * * As reported in the Troubled Company Reporter on March 8, 2007, Moody's Investors Service confirmed the Ba1 rating of CVS Corp.'s $125 million Series A-2 lease obligations. DAIMLERCHRYSLER AG: Shareholders Want Chrysler Deal Investigated ---------------------------------------------------------------- DaimlerChrysler AG shareholders Ekkehard Wenger and Leonhard Knoll are calling for special audits that could lead to damage claims against the company's supervisory board, in a new sign of friction between investors and management of the German-U.S. car maker, Matthias Krust of The Wall Street Journal reports. The two investors, WSJ says, have succeeded in amending the agenda of the company's April 4 annual shareholders meeting to include a motion that, if successful, would require an audit of the 1998 takeover of the former Chrysler Corp. by the former Daimler-Benz AG. According to the report, Messrs. Wenger and Knoll say company officials did not calculate the companies' value correctly and that DaimlerChrysler management added a 30% premium to the market value of the Chrysler shares when determining the exchange ratio used for the merger of both companies. In response, DaimlerChrysler said in a statement cited by WSJ that there is no reason for the requested investigations. As reported in the Troubled Company Reporter on March 8, 2007, the Journal said that DaimlerChrysler Chief Executive Officer Dieter Zetsche confirmed his company is talking to General Motors Corp. about sharing the costs of future sport-utility vehicles, but he and GM's CEO stayed mum about whether GM could try to buy its Chrysler arm outright. According to that report, Mr. Zetsche reiterated that the auto maker is considering "all options" for Chrysler, including a possible sale, which move came amid rising investor frustration over the division's losses. Lower February Sales As reported in the Troubled Company Reporter on Mar. 2, 2007, DaimlerChrysler AG's Chrysler Group reported sales for February 2007 of 174,506 units; down 8% compared with February 2006 with 190,367 units. All sales figures are reported unadjusted. "In a generally soft market environment in February, the Chrysler Group had good traffic and solid customer interest especially for our newly launched, fuel efficient models like the Dodge Avenger, Dodge Caliber, and Jeep(R) Compass. Also, the Jeep Wrangler had its best February ever," Chrysler Group Vice President for Sales and Field Operations Steven Landry said. 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 company's worldwide locations are located in: Canada, Mexico, United States, Argentina, Brazil, Venezuela, China, India, Indonesia, Japan, Thailand, Vietnam and Australia. The Chrysler Group segment offers cars and minivans, pick-up trucks, sport utility vehicles, and vans under the Chrysler, Jeep, and Dodge brand names. It also sells parts and accessories under the MOPAR brand. The Chrysler Group is facing a difficult market environment in the United States with excess inventory, non-competitive legacy costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles. At the same time, key competitors have further increased margin and volume pressures -- particularly on light trucks -- by making significant price concessions. In addition, increased interest rates caused higher sales & marketing expenses. In order to improve the earnings situation of the Chrysler Group as quickly and comprehensively, measures to increase sales and cut costs in the short term are being examined at all stages of the value chain, in addition to structural changes being reviewed as well. DAIMLERCHRYSLER AG: Sells EUR2 Billion 4.375% Bonds Due March 2010 ------------------------------------------------------------------ DaimlerChrysler AG sold EUR2 billion of 4.375% bonds due March 2010 at a yield premium or a spread of 35 basis points over the mid-swaps rate, the Budapest Business Journal reports citing Bloomberg as its source. Investors earlier demanded the highest risk premiums to hold the company debt in at least a month after a rise in supreme mortgage failures. According to Mahmoud El-Shaer, who helps manage about US$35 billion of fixed-income assets for State Street Investment Management in London, the market is entering into a more normal phase following a period of volatility, BBJ relates. Mr. E-Shaer said speculations that DaimlerChrysler will successfully find a buyer for its unprofitable Chrysler division may have also helped boost demand for the bonds. However, a company spokeswoman refused to disclose details on how the automobile manufacturer intends to use the proceeds of the sale. According to data compiled by Bloomberg, DaimlerChrysler has up to EUR8.3 billion of bonds maturing this year. Commerzbank AG, Royal Bank of Scotland Group Plc and UniCredit SpA is managing the sale of the debt. The company's bonds reported a gain on Feb. 14 after DaimlerChrysler CEO Dieter Zetsche disclosed that his company is keeping all options open, including a sale or possible partnerships, for its loss-making Chrysler division. About DaimlerChrysler Based in Stuttgart, Germany, DaimlerChrysler AG -- http://www.daimlerchrysler.com/-- develops, manufactures, distributes, and sells various automotive products, primarily passenger cars, light trucks, and commercial vehicles worldwide. It primarily operates in four segments: Mercedes Car Group, Chrysler Group, Commercial Vehicles, and Financial Services. The company's worldwide operations are located in: Canada, Mexico, United States, Argentina, Brazil, Venezuela, China, India, Indonesia, Japan, Thailand, Vietnam and Australia. 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. DALRADA FINANCIAL: Incurs $679,000 Net Loss in Qtr. Ended Dec. 31 ----------------------------------------------------------------- Dalrada Financial Corp. disclosed a net loss of $679,000, despite an increase in total revenues of $58.94 million for the second quarter ended Dec. 31, 2006, compared with a net income of $3.42 million on total revenues of $17.83 million for the second quarter ended Dec. 31, 2005. The 2006 second quarter net loss is attributed to the company's higher expenses incurred, which consisted of temporary staffing costs of $29.1 million, professional employer organization services costs of $24.65 million, and products and other costs of $9,000. PEO services costs incurred for the quarter ended Dec. 31, 2005 was much lower at $299,000. In addition, the company also incurred higher interest expense for the current quarter with $1.82 million, as compared with $140,000 for the year-ago quarter. The company's acquisition of All Staffing, Inc. in September 2006 has significantly caused increases in the company's PEO services revenues and expenses for the quarter ended Dec. 31, 2006, compared to the prior-year quarter. For the six months ended Dec. 31, 2006, the company had a net loss of $3.91 million on total revenues of $95.9 million, as compared with a net income of $3.15 million on total revenues of $29.86 million for the same period in 2005. As of Dec. 31, 2006, the company listed $21.83 million in total assets, $46.76 million in total liabilities, and $550,000 in minority interests, resulting to $25.47 million in total stockholders' deficit. The company's Dec. 31, 2006, balance sheet also showed strained liquidity with $13.53 million in total current assets available to pay $42.04 million in total liabilities coming due within the next 12 months. Full-text copies of the company's quarter financials for the period ended Dec. 31, 2006, are available for free at: http://ResearchArchives.com/t/s?1b10 Acquisition of All Staffing, Inc. On Sept. 12, 2006, DFCO acquired all the outstanding stock for All Staffing, Inc., a Tennessee corporation for $500 in cash and note payable and a warrant to purchase 450,000 shares to DFCO's stock, to be valued at $3,000 around 36 months after issuance, subject to adjustment. All Staffing, Inc, established in 1991, is a Professional Employer Organization in Lansford, PA. The company has clients in Pennsylvania, New Jersey and New York. All Staffing provides human resource outsourcing and benefit administration, payroll and tax processing for the benefit of all the Dalrada Financial companies. About Dalrada Financial Headquartered in San Diego, California, Dalrada Financial Corp. (OTCBB: DFCO) -- http://www.dalrada.com/-- provides a number of professional services related to human resources for businesses. Dalrada provides a variety of innovative financial services to businesses, including comprehensive human resource administration, workers' compensation coverage, and extensive employee benefits such as health insurance, HSA savings plans, 125 cafeteria plans, deferred compensation plans, and 401(k) plans. Dalrada also offers debit card payroll accounts and payroll advances. These services enable small to medium-size employers to offer benefits and services to their employees that are generally available only to large companies. Dalrada provides services through its wholly owned subsidiaries and division, SourceOne Group, Inc., Master Staffing and Heritage Staffing. The Solvis Group, Inc., (OTC: SLVG), its 90% owned subsidiary, includes several operating units, including CallCenterHR(TM), Worldwide of California, and M&M Nursing. Solvis also operates Imaging Tech, Inc., whose proprietary product, PhotoMotion(TM), is a patented color medium of multi- image transparencies. DANA CORP: Retirees Panel Objects to Unilateral Termination Motion ------------------------------------------------------------------ The Official Committee of Non-Union Retirees of Dana Corp. and its debtor-affiliates asks the Honorable Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York to deny the Unilateral Termination Motion. As previously reported, the Debtors have asserted that the non- union pension benefits are not "vested" and are subject to termination on contractual grounds and under the Employee Retirement Income Security Act of 1977. The Official Committee of Non-Union Retirees argues that the totality of information the Debtors provided to the non-union retirees mandates a finding that the non-union pension benefits are vested under Second Circuit law. The Debtors relied on incomplete and misleading documents and ignored applicable Summary Plan Descriptions and the historical changes of the applicable pension plans at issue and other written materials routinely provided to their employees, the Retirees Committee contends. Trent P. Cornell, Esq., at Stahl Cowen Crowley, LLC, in Chicago asserts that the Debtors' non-union retirees fall into one of the three Pension Plans and all have vested benefits. As a general rule, retiree welfare plans are not presumed to vest, Mr. Cornell concedes. The Second Circuit, however, has repeatedly held that welfare plans are in fact vested when promised by or offered as lifetime benefits by an employer. The Second Circuit also held that welfare benefits are deemed "vested" when there is writing reflecting the intent, Mr. Cornell notes. In In re Schonholz v. Long Island Jewish Medical Center, 87 F.3d 72, 77 (2nd Cir. 1996), the standard with respect to writings required to establish vesting is that a retiree or employee merely "point to written language capable of reasonably being interpreted as creating a promise to . . . vest . . . benefits." Mr. Cornell informs the Court that since 1983, the Debtors have modified their non-union retirees' pension benefits and inserted unilateral termination languages on the benefit plans. The Debtors have also sent letters and memos to non-union employees that their pension benefits are company expenses, Mr. Cornell adds. The modifications of the benefit plans over the years have resulted to many separate claims asserted by the retirees against the Debtors under ERISA, Mr. Cornell says. The Retirees Committee asserts that the proper standard to use in the Debtors' Unilateral Termination Motion is Section 1114 of the Bankruptcy Code and not Section 363. Section 1114 prohibits a debtor from terminating or modifying any retiree benefits during a Chapter 11 case unless the debtor complies with the procedures and requirements of the Section, regardless of whether the debtor has the contracted right to unilaterally terminate the benefits, Mr. Cornell relates. In addition, Section 1114 contains no carve outs or any exceptions for situations where a debtor has an asserted "contractual" or ERISA-based right to unilaterally terminate benefits. A finding that the non-union benefits plans are vested does not prohibit the Debtors from modifying the plans, Mr. Cornell maintains. A finding of vesting, however, will directly affect the unsecured claim the Retirees will have if the Plans are modified under Section 1114. Under Section 1114, the Retirees can assert an unsecured claim amount equal to any reduction of their benefits. Creditors Committee, et al. Support Debtors The Official Committee of Unsecured Creditors and an ad hoc committee of Dana Corporation noteholders support the Debtors' Unilateral Termination Motion to the extent that it does not result to the existence of a dilutive rejection damages claim from the non-union retirees. The Committees point out that if the non-union pension benefits are terminated, the Debtors' estates will save more than $35,000,000 in 2007 alone. The Creditors Committee asserts that to the extent the Court determines that the Debtors have the unilateral right to terminate the non-union pension benefits, no rejection damages claim can result. On behalf of the Creditors Committee, Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, in New York, notes that the Bankruptcy Code does not provide the non-union retirees with a claim for damages they would not have been entitled to outside of bankruptcy. Debtors Talk Back Corinne Ball, Esq., at Jones Day, in New York, argues that the Debtors have met their burden under Section 363 based on the significant savings to the estates from the termination of the non-pension retiree benefits. Ms. Ball tells the Court that the Retirees Committee has not pointed to any affirmative language in the relevant plan documents that demonstrates a promise to provide benefits for the life of a beneficiary -- a showing that is necessary to establish "vesting" in the Second Circuit. The Debtors maintain that application of the proper legal standard demonstrates that the non-pension retiree benefits of non-union retirees and active employees are not "vested." The Retirees Committee mischaracterized the legal standard for determining whether the welfare benefits vest, Ms. Ball says. The quoted language from In re Schonholz addresses the standard for surviving summary judgment, not for prevailing on the merits of a vesting claim. Thus, when an employee points to language "capable of reasonably being interpreted" as promising vested benefits, he is merely entitled to present his case to a trier of fact. To prevail on a vesting claim, according to Ms. Ball, the employee must prove to the trier of fact by a preponderance of the evidence that the employer intended the benefits to vest. Ms. Ball relates that a claim with respect to lost welfare benefits is preempted by ERISA. Under Section 1132(a)(1)(B) of ERISA, an ERISA plan participant or beneficiary may bring a civil action to recover benefits, enforce rights or clarify rights within an applicable statute of limitations. Because "ERISA does not prescribe a limitations period for actions under Section, the controlling limitations period is that specified in the most nearly analogous state limitations statute." Miles v. New York State Teamsters Conference Pension and Retirement Fund Employee Pension Benefit Plan, 698 F.2d 593, 598 (2d Cir.)(citation omitted), cert. denied, 464 U.S. 829(1983). In the Second Circuit, an ERISA claim accrues on a clear repudiation by the plan that is known, or should be known, to the plaintiff, Ms. Ball adds. The Retirees Committee has conceded that since 1983, various substantial modifications were made to the Brown Book. Hence, the Debtors' employees were on actual notice of the modifications not later than Jan. 1, 1983, Ms. Ball contends. The retirees covered under the Retiree Flex, on the other hand, were notified of the modifications of their benefits on or about Jan. 1, 1993. Hence, Ms. Ball asserts, the Brown Book Retirees' claims became time barred under the applicable six-year statute of limitations no later than Jan. 1, 1989, and the Retiree Flex Retirees' claims became time barred no later than Jan. 1, 1999. Ms. Ball adds that the Debtors may terminate unvested retiree benefits without resort to Section 1114 of the Bankruptcy Code. By its terms, Section 1114(1) merely prevents a debtor from circumventing Section 1114 by terminating benefits during the six months prior to bankruptcy, according to Ms. Ball. Accordingly, the Debtors ask the Court to overrule the Retirees Committee's objection to the Unilateral Termination Motion. About Dana Corp. Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Sept. 30, 2005, the Debtors listed $7,900,000,000 in total assets and $6,800,000,000 in total debts. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. The Debtors' exclusive period to file a plan expires on Sept. 3, 2007. They have until Nov. 2, 2007, to solicit acceptances of that plan. (Dana Corporation Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). DANA CORP: Panel Wants Retiree Benefits Modified ------------------------------------------------ The Official Committee of Unsecured Creditors asks the Honorable Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York to authorize Dana Corp. and its debtor- affiliates to modify the Retiree Benefits, subject to a finding that the resulting damage claim will not dilute creditor recoveries. As previously reported, the Debtors asserted that rejection of their collective bargaining agreements and modification of their retiree benefits will enable them to save $100,000,000 to $150,000,000 in annual cash costs. The Official Committee of Unsecured Creditors contends that the cash savings, while substantial, could be illusory to the extent that it could result in huge and dilutive rejection damage claims against the Debtors' estates. The union and non-union retirees have asserted that their damages claims with respect to the termination of their benefits alone will total more than $1,400,000,000, Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, in New York, points out. The size of a rejection damage claim is relevant in determining whether the conditions for relief under Sections 1113 and 1114 of the Bankruptcy Code have been met, Mr. Mayers contends. While the Creditors Committee generally supports the termination of Retiree Benefits under Section 1114, Mr. Mayers says its support is conditioned on a finding that the resulting claims, if any, will not reduce creditor recoveries. The Creditors Committee suggests that the Debtors provide more evidence as to the amount of the rejection claims, if any, as part of the Section 1114 process. With regard to the Debtors' request to reject their CBAs, the Creditors Committee says it does not have enough information to determine whether or not the request will actually increase creditor recoveries. The Creditors Committee, hence, takes no position at this time on the Section 1113 request, but will develop its position as discovery progresses and after the Debtors and the Unions provide additional information. Unions Reply to Committee's Argument The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America; and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union assert that their efforts to address the Debtors' Section 1113/1114 proposals should not be additionally burdened by the Creditors Committee's insistence on a claims adjudication that would otherwise occur after the Court has granted the Debtors' requests and the Unions have actually calculated and asserted their claims. Babette A. Ceccotti, Esq., at Cohen, Weiss and Simon, LLP, in New York, points out that the Creditors Committee's single-minded focus demonstrates the merits of the Seventh Circuit's ruling In re UAL Corp., 408 F.3d 847, 851 (7th Cir. 2005) that third parties with merely a financial stake in the outcome of a Section 1113 proceeding do not have a standing to participate as "interested parties" at the hearing. The Creditors Committee wanted the Court to embark on what would be a protracted and complex claim litigation designed to purely address its support for the Debtors' request, Ms. Ceccotti notes. The principal goal of Sections 1113 and 1114 to promote negotiated solutions is clearly undermined by an expansion of the litigation as proposed by the Creditors Committee, Ms. Ceccotti avers. The Unions believe that the Creditors Committee only seeks to complicate and exacerbate the already fractious process. Thus, the Unions ask the Court to reject the Creditors Committee's effort to interject itself into the Section 1113/1114 process. Debtors Talk Back None of the objectors disputed the fact that the Debtors' operating structure is not sustainable and that the Section 1113/1114 proposals would generate cash savings of more than $100,000,000 annually, Corinne Ball, Esq., at Jones Day, in New York, points out. The Debtors maintain that they have provided all the information necessary for all interested parties to make an informed evaluation of the Proposals. The Debtors admit that they have not provided their 2008 and beyond financial projections because they are not yet complete. The Debtors assert that it cannot achieve the operating profit margins it needs to compete by repatriating cash from foreign operations: 1. The Official Committee of Non-Union Retirees "projections" of the Debtors' future liquidity neither account for the repayment of the Debtors' $900,000,000 DIP term loan nor the reduction in liquidity that will result upon emergence from Chapter 11, when the Debtors must pay its administrative claims, reclamation claims, contract cure payments, success fees, professional fee hold-backs, and priority and other secured claims. 2. The Debtors' ability to repatriate cash from its foreign operations is severely limited by a number of constraints. 3. Repatriation does nothing to address the core problem that threatens the Debtors' continued viability -- the current cost structure of the consolidated enterprise is simply not sustainable. The Debtors contend that they cannot survive as a viable entity without eliminating their obligations to pay long-term retiree healthcare and welfare benefits. Ms. Ball maintains that the Debtors' Proposals treat all parties fairly and equitably. The Debtors have also negotiated in good faith, Ms. Ball continues. The Debtors have made it clear to the Retirees Committee that they are ready to negotiate all other aspects of the Proposals, including details and funding of the proposed Voluntary Employees' Benefit Association. The evidence at trial will show that the Debtors have not proposed below-market wages, Ms. Ball avers. There is no merit to the Unions' assertions that the Debtors cannot retain a productive workforce if the Proposals are implemented, Ms. Ball adds. "When the unions and retirees make demands that are not economically feasible and offer no alternatives that would permit the debtor to reorganize successfully, they do not have 'good cause' to reject the debtor's proposal," Ms. Ball asserts. The Unions and the Official Committee of Unsecured Creditors have not proposed any alternatives to the Section 1113/1114 proposals that will generate the cost savings and revenue enhancements that the Debtors need to achieve the operating profit margins required to emerge from bankruptcy and compete as a viable entity in the global marketplace, Ms. Ball tells the Court. The International Association of Machinists and Aerospace Workers have argued that it is entitled to ignore Section 1113 proposals with respect to its CBAs at the facilities in Churubusco, Ind.; Robinson, Ill.; and Manchester, Mo., because the CBAs were extended after their bankruptcy filing, thus making the CBAs postpetition contracts. "Extension of a prepetition contract during the course of a Chapter 11 case, absent other material modifications, does not create a new postpetition contract," Ms. Ball contends. About Dana Corp. Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Sept. 30, 2005, the Debtors listed $7,900,000,000 in total assets and $6,800,000,000 in total debts. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. The Debtors' exclusive period to file a plan expires on Sept. 3, 2007. They have until Nov. 2, 2007, to solicit acceptances of that plan. (Dana Corporation Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). DANIEL WEBSTER: Moody's Affirms B1 Rating on 1999 and 2001 Bonds ---------------------------------------------------------------- Moody's Investors Service has affirmed its B1 rating on Daniel Webster College's Series 1999 and 2001 bonds which were issued through the New Hampshire Health and Educational Facilities Authority. The College has $16.6 million of debt rated by Moody's and $22.3 million of total outstanding debt, including bonds, various capital leases, notes payable, and a line of credit. The College's rating outlook remains negative reflecting Moody's concerns about enrollment declines in fall 2006, continued tight operating performance and debt service coverage, and a lack of financial resources to cushion any unexpected operational challenges. Legal security: Obligations under the loan agreements are a general obligation of College. The bonds are secured by debt service reserve funds, a pledge of the College's gross receipts, and a first priority mortgage on and security interest in substantially all of the College's land, building, and equipment at its Nashua, New Hampshire campus, subject to permitted encumbrances. In addition to the rated bonds, the College had approximately $2.5 million outstanding on a line of credit as of June 30, 2006. The line of credit is annually renewable by the bank, payable on demand by the bank, and is secured by certain accounts receivable and a first security interest in certain aircraft owned by the College. As of the end of FY 2006, Daniel Webster also had $2.9 million of notes payable outstanding which are collateralized by certain aircraft and vehicles. Debt-Related Rate Derivatives: None Strengths: * Resumed growth of net tuition revenue and net tuition per student after two years of declines ($15,155 net tuition per student in FY 2006), a critical credit factor as the College relies on student charges for over 90% of its operating revenue * Increased application volume for fall 2007 admission, with management reporting that applications for the traditional undergraduate day division program at its Nashua, New Hampshire campus exceed the number received at the same point in 2003-2006; however, application volume for the College's aviation flight operations program, which represent over one- third of day enrollment, continues to decline and management is focused on diversifying program enrollment and revenue sources in order to compensate for the declining interest in the aviation programs * Legal structure provides some additional bondholder security, including debt service reserve funds, first priority mortgage, pledge of gross receipts, and rate covenant. Challenges: * Negative financial resource base, excluding plant equity (-$2.6 million of total financial resources in FY 2006). The College's lack of financial resources and reliance on a line of credit for seasonal cash flow needs leave it with little margin for error * Declining enrollment in the College's degree completion (EXCEL) and continuing education programs, contributing to a 10% decline in total full-time equivalent (FTE) enrollment in fall 2006. Daniel Webster's small enrollment size (852 FTE) and heavy dependence on student charges make it very vulnerable to any fluctuations in enrollment. The declines in these specific programs were offset by a nearly 11% increase in the traditional day student population in fall 2006. * Thin operating performance and debt service coverage (-1.9% three-year average operating margin and 1.1x average debt service coverage). Moody's decision to maintain the B1 rating at this time heavily incorporates management's projections for FY 2007 operating performance. Despite the enrollment delcline, management is forecasting breakeven operating performance for FY 2007, compared to -$625,000 and -$500,000 deficits generated in FY 2005 and 2006, respectively. The FY 2007 budget incorporated anticipated enrollment declines and operating expenses were essentially held flat in the current fiscal year. * Significant capital needs and capital intensive program as a result of aviation programs. The College is in the early stages of evaluating different opportunities to work with private developers to construct additional student housing and a student union on campus. Moody's would need to evaluate the sources of payment and legal structure for these proposed projects in order to assess their specific credit impact. Recent Developments: Daniel Webster has been notified of a dispute involving the estate of a major contributor to the College and has been named as a party in the lawsuit. The plaintiff is seeking recovery of approximately $1.7 million in contributions made to the College. Attempts to settle this matter out of court have been unsuccessful to-date, and a court date is set for May 2007. Moody's will continue to monitor the progress and outcome of this lawsuit and will assess the potential credit impact as more information becomes available. Outlook: The negative outlook reflects Moody's concerns about recent enrollment declines and demonstrated weaker interest in the College's flight operations program. The outlook also reflects the College's weak debt service coverage, thin liquidity and reliance on line of credit for seasonal cash flow needs, as well as uncertainty over the resolution and financial impact of the lawsuit proceedings. What could change the rating -- up Significant growth of financial resources coupled with enrollment growth and stronger annual cash flow and debt service coverage. What could change the rating -- down Financial liability related to lawsuit; additional borrowing; further enrollment declines resulting in deepening of operating deficits and weaker cash flow. Key Indicators: * Total Full-Time Equivalent Enrollment: 852 FTE * Total Financial Resources: -$2.6 million * Total Direct Debt: $22.3 million * Expendable Financial Resources to Debt: -0.2x * Expendable Financial Resources to Operations: -0.2x * Three-Year Average Operating Margin: -1.1% * Operating Cash Flow Margin: 10.2% * Three-Year Average Debt Service Coverage: 1.1x Rated Debt: * Series 1999 and 2001: B1 DELHPI CORP: InPlay Sells $7.5 Million Settlement Claim ------------------------------------------------------- InPlay Technologies(R) disclosed Monday that it sold its allowed $7.5 million general unsecured non-priority claim against Delphi Automotive Systems LLC. InPlay sold the claim for a value no less than the face amount of the allowed claim. In February 2007, the U.S. Bankruptcy Court for the Southern District of New York approved a settlement agreement between InPlay and Delphi under which InPlay was granted an allowed general unsecured non-priority claim against Delphi Automotive Systems, LLC in the amount of $7.5 million. InPlay's claim stems from an agreement signed between Duraswitch and Delphi in 2000. Delphi paid a non-refundable payment of $4 million and committed $12 million minimum royalties to Duraswitch through 2007 for exclusive rights to use Duraswitch technologies in the automotive industry. Delphi had paid $3 million of that $12 million commitment to InPlay, with an additional $3 million due in July 2006 and $6 million in July 2007. As part of its bankruptcy filing in October 2005, Delphi filed a motion seeking rejection of this agreement under relevant bankruptcy law. The Court allowed the rejection subject to InPlay's right to claim damages for the breach of the agreement. InPlay subsequently filed a damages claim for the remaining $9 million in minimum royalties. About InPlay Technologies InPlay Technologies -- http://www.inplaytechnologies.com/-- (NASDAQ: NPLA) develops, markets and licenses proprietary emerging technologies. Working with its licensees and OEM customers, InPlay offers technology solutions that enable innovative designs and improved functionality for electronic products. The company's MagicPoint(R) technology is the only digital-based pen-input solution for the rapidly growing tablet PC and mobile computing markets. Its Duraswitch(R) brand of electronic switch technologies couples the friendly tactile feedback of mechanical pushbuttons and rotary dials with the highly reliable, thin profile of membrane switches, making it ideal in a wide range of commercial and industrial applications. InPlay is focused on further commercializing these technologies and seeking additional innovative technologies to enhance its portfolio. About Delphi Troy, Mich.-based Delphi Corporation (OTC: DPHIQ) -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. The Debtors' exclusive plan-filing period expires on July 31, 2007. DELPHI CORP: Plan Investors Extend Termination Deadline ------------------------------------------------------- David M. Sherbin, vice president, general counsel, and chief compliance officer of Delphi Corporation, disclosed in a Form 8-K filing with the Securities and Exchange Commission that Delphi and the Plan Investors entered into an amendment of the Equity Purchase Commitment Agreement on Feb. 28, 2007. The Plan Investors are: -- A-D Acquisition Holdings LLC, an affiliate of Appaloosa Management L.P.; -- Harbinger Del-Auto Investment Co. Ltd., an affiliate of Harbinger Capital Partners Master Fund I, Ltd.; -- Dolce Investments LLC, an affiliate of Cerberus Capital Management, L.P.; -- Merrill Lynch, Pierce, Fenner & Smith Incorporated; and -- UBS Securities LLC. Under the EPCA Amendment, the date by which Delphi, A-D Acquisition Holdings, LLC, or Dolce Investments LLC have the right to terminate the EPCA on account of Delphi not having completed tentative labor agreements with its principal U.S. labor unions and a consensual settlement of legacy issues with General Motors Corporation is extended beyond Feb. 28, 2007, to a future date to be established pursuant to a 14-day notice mechanism among the parties. Delphi, ADAH and Dolce have agreed not to exercise the termination right before March 15, 2007, Mr. Sherbin relates. The EPCA Amendment also extends the deadline to make certain regulatory filings under the federal anti-trust laws in connection with the framework transaction. A full-text copy of the EPCA Amendment is available for free at the Securities and Exchange Commission: http://ResearchArchives.com/t/s?1a90 Troy, Mich.-based Delphi Corporation (OTC: DPHIQ) -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. The Debtors' exclusive plan-filing period expires on July 31, 2007. (Delphi Corporation Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). DELPHI CORP: Seeks Approval of Valeo/Metcalf Transaction -------------------------------------------------------- Delphi Corporation and its debtor-affiliates ask the Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York to authorize an affiliate, Delphi Automotive Systems, LLC, to enter into a Purchase Agreement, Assignment Agreement, Lease, Sublease, and Escrow Agreement, and effectuate the Valeo/Metcalf Transaction. The Purchase Agreement, Assignment Agreement, Lease, Sublease, and Escrow Agreement were negotiated at arm's-length and in good faith, John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago says avers. Moreover, the Debtors' entry into the Transaction will generate $123,000,000 worth of net savings over 10 years, with a one-time capital spending and expenses of approximately $41,000,000 over two years. The Debtors also seek the Court's permission to reject two of their property leases in connection with their entry into and consummation of the Transaction. The Debtors have determined that it would be strategically advantageous to consolidate multiple office and technical sites in Michigan and Illinois into one new location in Michigan. Subsequently, in the latter part of 2006, the Debtors conducted a search for a facility that would allow them to meet their objective. In October 2006, the Debtors located an appropriate site in Auburn Hills, Michigan. The Property comprises approximately of 347,000 square feet of office space and 90,000 square feet of lab space situated on roughly 35 acres of land. The Property will allow the Debtors to locate a single state-of- the-art technical center closer to their major customers like General Motors Corp., Ford, DaimlerChrysler, and Hyundai, Mr. Butler says. After locating the Property, the Debtors proceeded to negotiate a multiparty transaction pursuant to which the Property would be acquired by a third-party investor and leased to Delphi Automotive Systems, LLC. DAS negotiated with the Property's current owner, Valeo Electrical Systems, Inc., to acquire the Property for $33,000,000. Over a period of several months, the Debtors solicited offers from numerous parties for proposals to purchase the Property and lease it to DAS on an initial 10-year lease term, Mr. Butler relates. After reviewing more than 10 offers, the Debtors determined that the Metcalf Family Trust presented the best offer. The agreements that make up the Valeo/Metcalf Transaction include a purchase agreement, an assignment agreement, a lease, a sublease, and an escrow agreement. Purchase Agreement To effectuate the Transaction, DAS executed a Purchase Agreement and immediately assigned the Purchase Agreement to Metcalf under an Assignment Agreement. Once Metcalf closes the transactions contemplated under the Purchase Agreement and attains possession of the Property, the Lease from Metcalf to DAS will commence. The parties have agreed that DAS and Metcalf will have until April 6, 2007, to complete their due diligence of the Property and title. Prior to the expiration of the Due Diligence Period, Metcalf is required to give written notice of its approval of the Property to Valeo. Within three business days of execution of the Purchase Agreement, Metcalf will deposit $825,000 with a title company. After giving the Approval Notice, Metcalf will deposit an additional $825,000 with a title company. Once the Approval Notice is sent to Valeo, the Deposit will be non-refundable. The parties have slated April 30, 2007, as the closing date of the Purchase Agreement. A full-text copy of the Purchase Agreement, with attached copies of the Sublease and the Escrow Agreement, is available for free at http://ResearchArchives.com/t/s?1b28 Assignment Agreement In addition to assigning the Purchase Agreement to Metcalf, the Assignment Agreement provides that if the Lease Transaction is terminated through DAS' direction and through no fault of Metcalf, DAS will compensate Metcalf up to $50,000 for its actual and reasonable expense. Pursuant to the Assignment Agreement, Metcalf will assign to DAS LLC its interest, if any, in any rents collected under the Sublease between DAS and Valeo. A full-text copy of the Assignment Agreement between DAS and Metcalf is available for free at: http://ResearchArchives.com/t/s?1b29 Lease The Lease provides for an initial term of 10 years, with two optional additional terms of five years each. The monthly base rental for the initial 10-year term is $268,125, or $7.35 per square foot, per annum. DAS will be responsible for all operating expenses and real estate taxes. As a result, the effective cost per square foot, including base rent and operating costs, is approximately $19.98 for the first year. DAS relates that its extensive market analysis indicate that the rental rate is within market rates for similar situated properties. A full-text copy of the Lease between DAS and Metcalf is available for free at http://ResearchArchives.com/t/s?1b2a Sublease Under the Sublease, Valeo will sublet a portion of the Property from DAS while it transitions out of the Property. For the first 120 days after the effective date of the Lease, Valeo will sublet 141,800 square feet from DAS. For the succeeding 30 days, Valeo will sublet 57,000 square feet. Prior to the 150th day after the Lease' effectivity, Valeo will completely depart from the Property and the Sublease will terminate by its terms. The total rent for the Sublease term amounts to $780,250, provided that Valeo does not elect to exit the Property before the end of the Sublease, Mr. Butler notes. The Sublease will therefore enable DAS to earn revenue from a portion of the Property while it is transitioning certain operations to the Property. Escrow Agreement As security for the rent due under the Sublease and to protect DAS from any potential damages related to its subtenancy, Valeo will deposit $880,250 into escrow under the terms of an Escrow Agreement. The size of the Property, according to Mr. Butler, will enable the Debtors to consolidate six of their leased office and technical centers in Michigan and Illinois and a portion of one owned site in Flint, Michigan. The facilities that would be moved to the Property or other Delphi facilities and their current lease end dates are: Lease City State Address End Date ---- ----- ------- -------- Brighton MI 12501 East Grand River 06/30/2008 Troy MI 1322 Rankin 04/30/2007 Troy MI 1441 Long Lake Road 04/30/2007 Troy MI 1401 Crooks Road 03/31/2010 Shelby Township MI 51786 Shelby Parkway 07/31/2010 Downers Grove IL 3110 Woodcreek Drive 08/14/2010 Flint MI 1601 North Averill Avenue N/A With respect to the Brighton, Rankin, and Long Lake facilities, the Debtors would vacate those facilities and complete the transition of the functions performed in those facilities to the Property by the end of the current lease terms for each of the facilities. With respect to the Crooks Road property, the Debtors would terminate the lease under its terms by exercising a negotiated termination provision in the lease. Some of the employees in the Flint Technical Center would move to the Property and the Flint Technical Center would await further disposition. As the Debtors sell or wind-down their non-core businesses, they will only be using approximately 76% of their office capacity at the Shelby facility and 33% of their office capacity at the Downers Grove facility, Mr. Butler tells the Court. In conjunction with their financial and real estate advisors, the Debtors have determined that the Shelby Lease and the Downers Grove Lease cannot be profitably assumed and assigned to a third party. With both leases set to expire in 2010, the Debtors need to reject the leases to avoid paying for excess capacity for the remainder of the lease terms, Mr. Butler maintains. The Debtors expect that they will need until Sept. 30, 2007, to vacate the Shelby facility and transition operations to the Property. Similarly, the Debtors expect to vacate the Downers Grove facility by Nov. 30, 2007. Accordingly, the Debtors seek the Court's authority to reject: (i) the Shelby Lease effective as of September 30, 2007; and (ii) the Downers Grove Lease effective as of November 30, 2007. In the event the Debtors are able to vacate the Shelby and Downer's Grove facilities earlier than anticipated, the Debtors seek the Court's permission to reject the Shelby Lease effective as of Aug. 31, 2007, and the Downers Grove Lease effective as of Oct. 31, 2007, upon 10 days' written notice to the lessors of those premises. Troy, Mich.-based Delphi Corporation (OTC: DPHIQ) -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. The Debtors' exclusive plan-filing period expires on July 31, 2007. (Delphi Corporation Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). DENBURY RESOURCES: Earns $202.5 Million in Year Ended December 31 ----------------------------------------------------------------- Denbury Resources Inc. reported net earnings of $202.5 million on total revenues of $731.5 million for the year ended Dec. 31, 2006, compared to net earnings of $166.5 million on total revenues of $560.4 million for the year ended Dec. 31, 2005. The increase was due to a 23% increase in average production levels, combined with slightly higher commodity prices on a BOE basis. Fourth quarter 2006 net income was $55.1 million, slightly less than fourth quarter 2005 net income of $57.2 million, the decrease as a result of significantly lower natural gas prices and higher expenses in the fourth quarter of 2006 (other than non-cash commodity derivative income), partially offset by 16% higher production levels. Cash flow from operations for 2006 was $461.8 million, a record annual amount, as compared to $361.0 million for 2005. While commodity prices were 6% higher on an annual per BOE basis in 2006 as compared to 2005, fourth quarter of 2006 commodity prices on the same basis were 19% lower than in the comparable 2005 period, primarily due to a significant drop in natural gas prices between the two periods. As a result, even with 16% higher production in the 2006 fourth quarter, total revenues during the same period decreased $9.8 million, as compared to total revenues in the fourth quarter of 2005. During both fourth quarters, NYMEX oil prices averaged around $60 per Bbl. However, NYMEX natural gas prices declined 44% between the two periods, averaging approximately $7.20 per Mcf in the fourth quarter of 2006 as compared to a NYMEX average of approximately $12.84 per Mcf in the fourth quarter of 2005. Hedge payments decreased significantly in 2006, with fourth quarter 2006 payments totaling only $100,000 as compared to payments of $10.1 million in the fourth quarter of 2005. The company did recognize a $30.7 million non-cash gain in the fourth quarter of 2006 consisting of a $26.9 million mark-to-market value adjustment on the company's 2007 natural gas swaps acquired in mid-December and a $3.8 million gain on the company's oil swaps, both resulting from the decline in commodity prices during the quarter. There was only a $200,000 non-cash loss on the company's hedges in the fourth quarter of 2005. The company incurred more expenses in almost every category during the fourth quarter of 2006 as compared to the fourth quarter of 2005. Lease operating expenses increased $14.3 million on a gross basis in the fourth quarter of 2006 as compared to levels in the fourth quarter of 2005 primarily as a result of (i) increasing emphasis on tertiary operations with their inherently higher operating costs, (ii) general cost inflation in the industry, (iii) increased personnel and related costs, (iv) higher fuel and energy costs to operate company properties, and (v) additional lease payments for certain tertiary operating facilities. Production taxes and marketing expenses also increased primarily as a result of the increased production. General and administrative expenses increased 12% between the respective fourth quarters on a gross basis, but decreased 3% on a per BOE basis. General and administrative expenses increased as a result of the adoption of SFAS No. 123R relating to stock compensation effective Jan. 1, 2006, adding approximately $1.3 million to expense in the fourth quarter of 2006 as compared to the prior fourth quarter. Expenses have also increased as a result of a 30% increase in total employees during 2006. These increases were partially offset as result of a fourth quarter reduction in the 2006 bonus accrual as bonuses were not granted at the upper end of the range as had been previously accrued, because of the company's overall performance during 2006. During the fourth quarter of 2006, the company capitalized approximately $4.6 million of interest expense primarily related to the unevaluated properties associated with the company's two 2006 acquisitions. This caused interest expense to decline slightly between the respective fourth quarters, even though average debt levels were 79% higher in the fourth quarter of 2006 than in the comparable period of 2005. These higher debt levels were primarily due to the use of debt to partially fund the $250 million acquisition which closed in January 2006, to fully fund the $50 million Delhi acquisition in the second quarter of 2006, and to fully fund the $37.5 million option payment to acquire Hastings Field in the fourth quarter, all acquisitions of future tertiary flood properties. Depletion, depreciation and amortization expenses increased $10.6 million in the fourth quarter of 2006 as compared to depletion, depreciation and amortization expenses in the prior year fourth quarter. At Dec. 31, 2006, the company's balance sheet showed $2.139 billion in total assets, $1.033 billion in total liabilities, and $1.106 billion in total stockholders' equity. The company's balance sheet at Dec. 31, 2006, also showed strained liquidity with $183.3 million in total current assets available to pay $200.4 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the year ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?1b0d Agreement to Acquire Anadarko Seabreeze Complex The company has entered into an agreement with Anadarko Petroleum to acquire their Seabreeze complex, which is composed of five significant fields and a few smaller fields, in the general area of Houston, Texas, for $42 million. The acquisition is expected to close during March and is subject to satisfactory completion of normal and customary due diligence and closing conditions. These fields are currently producing approximately 750 BOE/d and have estimated current conventional proved reserves of between 500 MBOE and 750 MBOE. Certain of these fields are potential CO2 tertiary flood candidates. The company has preliminarily estimated that these fields have net reserve potential of up to 30 to 40 MMBOE from tertiary flood operations. About Denbury Resources Denbury Resources Inc. (NYSE: DNR) -- http://www.denbury.com/-- is a growing independent oil and gas company. The company is the largest oil and natural gas operator in Mississippi, owns the largest reserves of CO2 used for tertiary oil recovery east of the Mississippi River, and holds key operating acreage in the onshore Louisiana and Texas Barnett Shale areas. The company increases the value of acquired properties in its core areas through a combination of exploitation drilling and proven engineering extraction practices. * * * Denbury Resources Inc. carries Moody's Investors Service's Ba3 Corporate Family Rating. DENT MANUFACTURING: Case Summary & 10 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Dent Manufacturing, Inc. 226-236 West 27th Street Northampton, PA 18067 Tel: (610) 262-6701 Bankruptcy Case No.: 07-20372 Type of Business: The Debtor produces a specialized line of custom non-ferrous hardware and castings, commercial refrigeration hardware, and fire-fighting, marine, & mass transit hardware for original equipment manufacturers. See http://www.dent-mfg.com/ Chapter 11 Petition Date: March 5, 2007 Court: Eastern District of Pennsylvania (Reading) Judge: Richard E. Fehling Debtor's Counsel: Dexter K. Case, Esq. Case DiGiamberardino & Lutz, P.C. 845 North Park Road, Suite 101 Wyomissing, PA 19610 Tel: (610) 372-9900 Fax: (610) 372-5469 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 10 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bengal Industries Trade Debt $10,670 11346 53rd Street North Clearwater, FL 33760 GMP Union Pension $9,000 P.O. Box 607 608 East Baltimoirei Pike Media, PA 19063-0607 Lancaster Foundry Supply Trade Debt $8,980 2314 Norman Road Lancaster, PA 17601 Applied Powder Coatings Trade Debt $7,535 Wells Fargo Credit Card $7,027 U.S. Bankcard Manifest Funding Trade Debt $6,788 Manifest Funding Service Trade Debt $5,810 Stratasys Inc. Trade Debt $5,784 John A. Steer Trade Debt $5,368 Compass & Anvil Sales Trade Debt $5,360 PP&L Utility $5,278 DEP MARKETING: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: DEP Marketing, LLC aka Appliance Depot and More aka American Home for Less 6338 South Tamiami Trail Sarasota, FL 34231 Bankruptcy Case No.: 07-01806 Chapter 11 Petition Date: March 9, 2007 Court: Middle District of Florida (Tampa) Judge: Michael G. Williamson Debtor's Counsel: Bernard J. Morse, Esq. Morse & Gomez P.A. 119 South Dakota Avenue Tampa, FL 33606 Tel: (813) 301-1000 Fax: (813) 301-1001 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. DEXTER DISTRIBUTING: Case Summary & 22 Largest Unsecured Creditors ----------------------------------------------------------------- Lead Debtor: Dexter Distributing Corporation 1045 South Edward Drive Tempe, AZ 85281 Bankruptcy Case No.: 07-01017 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- New Castle Megastore Corp. 07-01018 1113 Progress Drive, Medford, L.L.C. 07-01019 Type of Business: The Debtor sells adult books, periodicals, newspaper, adult toys, lingerie & adult videos. Dexter and New Castle previously filed for bankruptcy on March 5, 2003 (Bankr. D. Ariz. Case Nos. 03-03546 & 03-03548). Chapter 11 Petition Date: March 9, 2007 Court: District of Arizona (Phoenix) Judge: Sarah Sharer Curley Debtors' Counsel: Alan A. Meda, Esq. Stinson Morrison Hecker LLP 1850 North Centra Avenue #2100 Phoenix, AZ 85004 Tel: (602) 279-1600 Fax: (602) 240-6925 Estimated Assets Estimated Debts ---------------- --------------- Dexter Distributing Corp. $1 Million to $1 Million to $100 Million $100 Million New Castle Megastore Corp. $1 Million to $1 Million to $100 Million $100 Million 1113 Progress Drive, Less than $10,000 $1 Million to Medford, L.L.C. $100 Million A. 20 Largest Unsecured Creditors of: -- Dexter Distributing Corp. -- New Castle Megastore Corp. Entity Nature of Claim Claim Amount ------ --------------- ------------ ANMP Terms of confirmed $10,000,000 James C. Sell, Receiver 2004 Plan in Dexter 2222 E. Camelback Rd. #110 Phoenix, AZ 85016 Allco Enterprises Lease $450,000 Fairbridge Corporation 412 SW Jefferson Pkwy #201 Lake Oswego, OR 97035 Pulse Distribution LLC Trade Debt $50,880 9640 Owensmouth Chatsworth, CA 91311 California Exotic Novelties Trade Debt $50,620 14235 Ramona Avenue China, CA 91710-5751 Marina Pacific Distributors Trade Debt $46,795 Pipedream Products Trade Debt $45,273 Dreamgirl Lingerie Trade Debt $44,167 Fantasy Lingerie Trade Debt $35,975 California Sunshine Trade Debt $35,170 BodyZone Trade Debt $34,702 Topco Sales Vast Resources Trade Debt $28,449 Inc. Vibratex Inc. Trade Debt $27,239 Kama Sutra Company Trade Debt $23,175 Love Toys Inc. Trade Debt $22,137 Media Products Trade Debt $17,803 Leg Avenue Inc. Trade Debt $16,857 Sin City Video Trade Debt $16,705 Earthly Body Video Trade Debt $16,416 Novelties by Nass-Walk Inc. Trade Debt $13,390 Clear Channel Trade Debt $16,000 B. 1113 Progress Drive, Medford, L.L.C.'s Two Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ ANMP Terms of confirmed Unknown James C. Sell, Receiver 2004 Plan in Dexter Secured: 2222 E. Camelback Rd. #110 Unknown Phoenix, AZ 85016 Senior lien: $1,642,143 Internal Revenue Service Unknown Centralized Insolvency Operations P.O. Box 21126 Philadelphia, PA 19114-0326 DIAMOND OFFSHORE: Moody's Puts Ratings on Review and May Upgrade ---------------------------------------------------------------- Moody's Investors Service placed the ratings for Diamond Offshore Drilling, Inc. on review for possible upgrade. The ratings affected were Diamond's Baa2 senior unsecured notes as well as its Baa3 rated subordinated shelf and the Ba1 preferred shelf. Moody's anticipates that this review will be completed shortly after the release of the company's first quarter results and will likely result in a one-notch upgrade of the current ratings. The ratings review is prompted by the recent conversion of approximately $440 million of debt into equity, reducing Diamond's outstanding debt at Dec. 31, 2006 by 46% to approximately $524 million. The review is further supported by Diamond's contract drilling backlog of $7.4 billion that provides high visibility to the company's earnings and cash flows through at least 2008, and by Loews Corporation's controlling ownership interest which mitigates the event risk concerns that hang over the offshore drilling sector. The ratings review will focus on Diamond's financial policies with regards to future levels of debt, special dividends and liquidity. In addition, Moody's will consider management's strategies regarding the growth of its drilling fleet and expectations of capital expenditures to maintain and upgrade its current fleet. In 2006 and 2007, the company has funded special dividends out of cash balances. The 2006 special dividend of $194 million was relatively modest in comparison to cash and marketable securities of $845 million at Dec. 31, 2005. The 2007 special dividend of approximately $550 million is much more substantial in comparison to cash and marketable securities of $826 million at Dec. 31, 2006 and free cash flow of about $150 million. The lower liquidity from reduced cash balances is partially offset by a $285 million revolving credit facility that the company established last November. Given expected capital growth and maintenance expenditures of $580 million for 2007, Moody's will focus on what parameters the company will set for minimum cash balances, overall liquidity and levels of free cash flow in determining future special dividends. Diamond Offshore Drilling, Inc. is an offshore drilling service contractor headquartered in Houston, Texas. DOBSON CELLULAR: Moody's Holds Ba2 Rating on $75 Mil. Sr. Facility ------------------------------------------------------------------ Moody's Investors Service affirmed the B2 corporate family, B2 probability of default, Caa1 senior unsecured and SGL-1 speculative grade liquidity ratings of Dobson Communications Corporation, lowered the senior secured rating of American Cellular Corporation to B1 from Ba2 and affirmed ACC's B3 senior unsecured rating. At the same time, Moody's affirmed the Ba2 first lien senior secured ratings of Dobson Cellular Systems, Inc. and raised DCS' second lien senior secured rating to B1 from B2. Finally, Moody's said it would withdraw the B3 senior unsecured rating assigned to ACC's previously planned $425 million senior unsecured notes issue and stated that ACC's senior secured ratings on its existing $250 million bank debt would be withdrawn once the proposed bank facility is complete and existing facilities are repaid. Related LGD assessments are noted below. The outlook for all ratings remains stable. The rating action follows ACC's report earlier this week that it would no longer issue $425 million in senior unsecured notes to partially fund the full redemption of its $900 million 10% senior unsecured notes issue, but would instead increase the size of its planned senior secured bank facility by $200 million, to $1.05 billion, and leave approximately $225 million of the 10% senior unsecured notes outstanding. The increase in ACC's initial senior secured leverage to roughly 4.75x has caused Moody's to apply a 50% deficiency claim to its senior secured debt in the loss given default waterfall, reflecting the significant disparity between the first lien asset coverage of ACC and DCS. The upgrade to DCS' 2nd lien senior secured debt to B1 reflects the application of the deficiency claim to ACC's senior secured debt, which has reduced the amount of debt deemed to be prior ranking. Ratings Affirmed: * Dobson Communications Corporation -- Corporate family rating at B2 -- Probability of default rating at B2 -- Senior unsecured notes at Caa1, LGD 5, 89% -- $150 million senior floating rate notes due 2012 -- $160 million senior convertible debentures due 2025 -- $420 million 8 7/8% senior notes due 2013 -- Speculative Grade Liquidity Rating at SGL-1 * Dobson Cellular Systems, Inc. -- $75 million senior secured revolving facility at Ba2, LGD 1, 0% -- First priority senior secured notes at Ba2, LGD2, 14% from LGD2, 20% -- $250 million 8-3/8% due 2011 -- $250 million series B 8-3/8% due 2011 * American Cellular Corporation -- $225 million 10% Senior unsecured notes due 2011 at B3 LGD4, 63% from LGD 4, 58% and amount to be reduced from $900 million Ratings Upgraded: * Dobson Cellular Systems, Inc. -- $325 million second priority secured notes to B1, LGD3, 40% from B2, LGD4, 54% Ratings Lowered: * American Cellular Corporation -- Senior secured bank facility to B1 LGD 3, 39% from Ba2, LGD 2, 20% -- $75 million revolving facility due 2012 -- $900 million term facility due 2014 (amount increased from $700 million) -- $75 million delayed draw term facility due 2014 Ratings to be Withdrawn (now): * American Cellular Corporation -- $425 million senior unsecured notes due 2015 B3, LGD5, 70% Ratings to be Withdrawn (after proposed debt issues close): * American Cellular Corporation -- $250 million senior secured bank facility currently Ba3, LGD 1, 9% DOBSON COMMS: Moody's Holds Junk Rating on Sr. Unsecured Notes -------------------------------------------------------------- Moody's Investors Service affirmed the B2 corporate family, B2 probability of default, Caa1 senior unsecured and SGL-1 speculative grade liquidity ratings of Dobson Communications Corporation, lowered the senior secured rating of American Cellular Corporation to B1 from Ba2 and affirmed ACC's B3 senior unsecured rating. At the same time, Moody's affirmed the Ba2 first lien senior secured ratings of Dobson Cellular Systems, Inc. and raised DCS' second lien senior secured rating to B1 from B2. Finally, Moody's said it would withdraw the B3 senior unsecured rating assigned to ACC's previously planned $425 million senior unsecured notes issue and stated that ACC's senior secured ratings on its existing $250 million bank debt would be withdrawn once the proposed bank facility is complete and existing facilities are repaid. Related LGD assessments are noted below. The outlook for all ratings remains stable. The rating action follows ACC's report earlier this week that it would no longer issue $425 million in senior unsecured notes to partially fund the full redemption of its $900 million 10% senior unsecured notes issue, but would instead increase the size of its planned senior secured bank facility by $200 million, to $1.05 billion, and leave approximately $225 million of the 10% senior unsecured notes outstanding. The increase in ACC's initial senior secured leverage to roughly 4.75x has caused Moody's to apply a 50% deficiency claim to its senior secured debt in the loss given default waterfall, reflecting the significant disparity between the first lien asset coverage of ACC and DCS. The upgrade to DCS' 2nd lien senior secured debt to B1 reflects the application of the deficiency claim to ACC's senior secured debt, which has reduced the amount of debt deemed to be prior ranking. Ratings Affirmed: * Dobson Communications Corporation -- Corporate family rating at B2 -- Probability of default rating at B2 -- Senior unsecured notes at Caa1, LGD 5, 89% -- $150 million senior floating rate notes due 2012 -- $160 million senior convertible debentures due 2025 -- $420 million 8 7/8% senior notes due 2013 -- Speculative Grade Liquidity Rating at SGL-1 * Dobson Cellular Systems, Inc. -- $75 million senior secured revolving facility at Ba2, LGD 1, 0% -- First priority senior secured notes at Ba2, LGD2, 14% from LGD2, 20% -- $250 million 8 3/8% due 2011 -- $250 million series B 8 3/8% due 2011 * American Cellular Corporation -- $225 million 10% Senior unsecured notes due 2011 at B3 LGD4, 63% from LGD 4, 58% and amount to be reduced from $900 million Ratings Upgraded: * Dobson Cellular Systems, Inc. -- $325 million second priority secured notes to B1, LGD3, 40% from B2, LGD4, 54% Ratings Lowered: * American Cellular Corporation -- Senior secured bank facility to B1 LGD 3, 39% from Ba2, LGD 2, 20% -- $75 million revolving facility due 2012 -- $900 million term facility due 2014 (amount increased from $700 million) -- $75 million delayed draw term facility due 2014 Ratings to be Withdrawn (now): * American Cellular Corporation -- $425 million senior unsecured notes due 2015 B3, LGD5, 70% Ratings to be Withdrawn (after proposed debt issues close): * American Cellular Corporation -- $250 million senior secured bank facility currently Ba3, LGD 1, 9% DOMINO'S PIZZA: $273.6 Million of 8-1/4% Senior Notes Tendered -------------------------------------------------------------- Domino's Pizza, Inc., disclosed that the bond tender offer for all of subsidiary Domino's, Inc.'s outstanding 8-1/4% Senior Subordinated Notes due 2011 expired March 9, 2007, at 12:01 a.m., Eastern time, and that Domino's, Inc. has accepted for payment and will purchase all notes validly tendered in the tender offer and not validly withdrawn prior to expiration. Domino's Pizza's separate equity tender offer expired March 9, 2007 at 5:00 p.m., Eastern time. According to The Bank of New York, the depositary for the bond tender offer, approximately $273.6 million in aggregate principal amount of the notes (or 99.9%) were validly tendered and not withdrawn. The holders who tendered their notes prior to 5:00 p.m., Eastern time, on Feb. 23, 2007 will receive $1,048.50 per $1,000 principal amount of the notes, plus accrued interest on the tendered notes up to, but not including, the date of payment of the notes, which is March 9, 2007. Holders who tendered their notes after the consent payment deadline will receive $1,028.50 per $1,000 principal amount of the notes, plus accrued interest on the tendered notes up to, but not including, the date of payment of the notes. The aggregate cost to purchase the notes tendered in the tender offer, including accrued and unpaid interest, will be approximately $291.1 million. Following the purchase of the notes accepted in the tender offer, approximately $300,000 in aggregate principal amount of the notes will remain outstanding, which Domino's, Inc. intends to redeem on July 1, 2007, the first date on which it may redeem the notes. J.P. Morgan Securities Inc., Lehman Brothers Inc. and Merrill Lynch & Co. acted as dealer managers and solicitation agents, Global Bondholder Services Corporation acted as the information agent and The Bank of New York acted as the depositary for the tender offer and the related consent solicitation. Persons with questions regarding the tender offer and consent solicitation should contact: J.P. Morgan Securities Inc. Attention: Liability Management Group Telephone (866) 834-4666 (toll-free) or (212) 834-4077 (collect) About Domino's Pizza Headquartered in Ann Arbor, Michigan, Domino's Pizza Inc. (NYSE:DPZ) -- http://www.dominos.com/-- through its primarily franchised system, operates a network of 8,190 franchised and company-owned stores in the United States and more than 50 countries. Founded in 1960, the company has more than 500 stores in Mexico. The Domino's Pizza(R) brand, named a Megabrand by Advertising Age magazine, had global retail sales of nearly $5 billion in 2005, comprised of $3.3 billion domestically and $1.7 billion internationally. As of Dec. 31, 2006, Domino's Pizza's balance sheet showed a $564.9 million stockholders' deficit compared with a $511 million at Jan. 1, 2006. DURA AUTOMOTIVE: Wants Allied Motion Consigned Stock Pact Assumed ----------------------------------------------------------------- Dura Automotive Systems Inc. and its debtor-affiliates seek authority from the Honorable Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware to assume a consigned stock agreement, as amended, dated March 1998, with Allied Motion/Motor Products, Inc. The Debtors' Atwood Mobile Products division manufactures parts and accessories for recreational and specialty vehicles. Pursuant to the Consigned Stock Agreement, Allied supplies motor parts needed for Atwood's production of furnaces in its Salt Lake City facility. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, relates that after the Debtors' bankruptcy filing, Allied (i) ceased to perform under the Consigned Stock Agreement; and (ii) demanded improved trade terms from the Debtors. The Debtors believe that Allied had breached the Agreement. Since their bankruptcy filing, the Debtors have been justifiably concerned that suppliers could disrupt production at their automotive, and recreational and specialty vehicles operations if they refuse to supply the Debtors with needed parts and equipment, Mr. DeFranceschi tells the Court. Notwithstanding Allied's breach, the Debtors have sought to consensually resolve any concerns that they have in a manner that is in the best interest of their estates. After further negotiations, on Feb. 23, 2006, the Debtors and Allied executed a letter agreement amending the Consigned Stock Agreement, granting the Debtors more favorable trade terms. Due to sensitive pricing and customer-specific terms in the Amendment Agreement, the Debtors filed with the Court a redacted copy of the Amendment Agreement. The terms of the Letter Agreement include: (a) the Debtors will receive a 10% discount on amounts otherwise payable pursuant to Section 365(b)(1)(A) of the Bankruptcy Code, leaving an estimated cure amount of $297,700; (b) each party can terminate the Consigned Stock Agreement upon 60 days' written notice, but only after one year from the assumption of the Consigned Stock Agreement; (c) the Debtors agree to an enhancement of their monthly rolling inventory commitment; and (d) Allied will resume the consigned inventory at the Salt Lake City Facility. Mr. DeFranceschi asserts that assuming the Consigned Stock Agreement, as amended, will allow the Debtors to benefit from the improved trade terms. The Amendment Agreement's minimum term of 10 years will provide the Debtors certainty that, during the pivotal period in their restructuring, Allied will not be able to opt out, Mr. DeFranceschi contends. In the absence of the certainty and the inventory cushion provided by the Consigned Stock Agreement, the debtors face the real risk of a production line shutdown in the event that shipments from Allied are delayed or withheld. A shutdown could jeopardize Atwood's ongoing contractual relationships with its customers and threaten a loss of goodwill, in addition to breach of contract claims that would inflict incalculable harm on the Debtors, Mr. DeFranceschi maintains. The Debtors have provided unredacted copies of the Amendment Agreement to the U.S. Trustee, the Official Committee of Unsecured Creditors and the ad hoc committee of certain of their prepetition second lien secured lenders. About DURA Automotive Systems Inc. Rochester Hills, Mich.-based DURA Automotive Systems Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The Debtors filed for chapter 11 petition on Oct. 30, 2006 (Bankr. D. Delaware Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. The Debtors' exclusive plan-filing period expires on March 21, 2007. (Dura Automotive Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). DURA AUTOMOTIVE: Can Make Interim Payments to Junior KMIP Members ----------------------------------------------------------------- In a stipulation approved by the U.S. Bankruptcy Court for the District of Delaware effective Feb. 21, 2007, Dura Automotive Systems Inc. and its debtor-affiliates, the Official Committee of Unsecured Creditors, and the ad hoc committee of certain of the Debtors' prepetition second lien secured lenders agree that: (a) the Creditors Committee and the Second Lien Committee will not object to certain interim payments of $440,000, in aggregate, approved on Jan. 18, 2007, by the Compensation Committee -- a group of three independent directors who have no direct interest in the KMIP -- to approximately 50 non-senior management KMIP participants; (b) the interim payments to the Junior KMIP Participants will be indefeasible and will not be subject to disgorgement, provided that, the interim payments are without waiver of or prejudice to any future payments; (c) the interim payments for senior management KMIP participants that the Debtors have identified to the Creditors Committee and the Second Lien Committee, and all other future payments under the KMIP will be subject of a further motion; (d) the Debtors will not seek the Court's permission to pay the senior management KMIP participants until after supplying a business plan proposed KMIP to the Creditors Committee and the Second Lien Committee; and (e) All parties reserve all rights with respect to consideration of the KMIP, the scheduled interim payments for Senior KMIP Participants, and all future payment under the KMIP. The U.S. Trustee has consented to the Stipulation. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, asserts that through the Stipulation, the Debtors are not asking the Court to approve the KMIP at this time. Mr. DeFranceschi emphasizes that the Stipulation will permit: (i) the Debtors to present their business plan to the Creditors Committee and Second Lien Committee; (ii) the parties to negotiate a settlement regarding the KMIP that is fair and equitable to all parties-in-interest; and (iii) the Creditors Committee and Second Lien Committee to conduct the necessary due diligence to permit them to properly evaluate the Debtors' business plan and KMIP proposals. Mr. DeFranceschi asserts that the Stipulation, of which the UAW was fully aware several days prior to filing its objection, renders moot the UAW's contention that it is premature for the Court to consider the KMIP. The UAW will have ample opportunity, upon the filing of the Subsequent Motion, to renew its objection as it sees fit. Mr. DeFranceschi further argues that the Interim Payments, as contemplate by the KMIP: (a) are not antithetical to "the basic purpose of a chapter 11 reorganization." They are merely one small part of a broad paradigm shift that the Debtors has embarked upon to restore profitability; (b) do not implicate Section 503(c)(3) of the Bankruptcy Code, but are instead, well within the ordinary course of business, and are the product of a heavily-negotiated settlement among the parties; and (c) do not unfairly discriminate among employees. They are targeted at those employees who are most key to the Debtors' operational restructuring efforts. Accordingly, the Debtors ask the Court to overrule UAW's objection, without prejudice. Objections (1) U.S. Trustee Kelly Beaudin Stapleton, the United States Trustee for Region 3, wanted the key management incentive plan denied due to the Debtors' failure to provide sufficient information that would allow interested parties an opportunity to properly analyze the proposed compensation structure. Under the Key Management Incentive Plan, the Debtors propose payments for approximately 55 management employees who allegedly are involved in implementing the 50 Cubed Plan and the 510 Program. The Debtors have identified four general areas upon which the progress or bonus payments are allegedly based. The request is devoid of facts to support the authorization of the proposed bonus payments, William K. Harrington, trial attorney for the U.S. Department of Justice, stated. The specific milestones to be achieved; the specific identity of the participants; how the performance objectives were established; previous recipients; and the amount of the potential awards for each participant are not disclosed, he pointed out. The Debtors also have not demonstrated that the proposed executive payments are appropriate under Section 503(c) of the Bankruptcy Code, in light of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 to limit payments to a debtor's senior management, Mr. Harrington contended. Pursuant to Section 503(c), the Debtors must demonstrate that the proposed bonuses are "justified by the facts and circumstances of the case" and are necessary to preserve the value of the estate. Mr. Harrington argued that the compensation committee appears to have unlimited and absolute discretion to alter and amend the KMIP plan. The KMIP Plan also has no definitive objective structure and thus, is structured more to ensure that the participants receive their bonuses than for the purpose of preserving value of the state, Mr. Harrington noted. (2) UAW The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America is the exclusive collective bargaining representative of approximately 690 employees of the Debtors at their facilities in Freemont and Mancelona, Michigan, and in LaGrange, Indiana. It is a party, with its locals, to collective bargaining agreements with the Debtors. Susan Kaufman, Esq., at Heiman, Gouge & Kaufman, LLP, in Wilmington, Delaware, related that each employee covered by the KMIP must meet personal targets relating to the achievement of the 50 Cubed Plan and the 510 Program in order to receive his reward, which is a percentage of the employee's direct compensation. However, details regarding the targets and the amounts of rewards have not been provided, she said. The Debtors' reorganization program heavily emphasizes job losses rather than job preservation, Ms. Kaufman noted. A business strategy to move better-paying jobs out of the United States to lower-cost countries creates harsh consequences not only for the affected workers, but for the economy as well, she argued. The Debtors, through the KMIP, seek to reward their executives and management personnel who succeed by eliminating U.S.- and Canada-based jobs through transfers to lower-costs countries. However, the program is counterproductive to any notion the Debtors may have of sustaining employee cooperation during the bankruptcy, Ms. Kaufman told the Court. Section 503(c), which severely restricts payments to insiders for the purpose of inducing them to stay with the company, governs payments under the KMIP, Ms. Kaufman contended. The KMIP unfairly discriminates among its employees as it rewards management employees in part for transferring the jobs of its rank-and-file employees to lower-costs countries, Ms. Kaufman maintained. Ms. Kaufman added it is premature to approve the KMIP based on a reorganization strategy that does not yet have the support of creditors and stakeholders. That the Debtors already promised payments under the KMIP is not determinative, nor indicative that its ultimate strategy will be implemented, Ms. Kaufman asserted. About DURA Automotive Systems Inc. Rochester Hills, Mich.-based DURA Automotive Systems Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The Debtors filed for chapter 11 petition on Oct. 30, 2006 (Bankr. D. Delaware Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. The Debtors' exclusive plan-filing period expires on March 21, 2007. (Dura Automotive Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). EAST WEST MORTGAGE: Moody's Places Ba3 Rating on Class M Certs. --------------------------------------------------------------- Moody's Investors Service assigned ratings to the Class A and Class M mortgage pass-through certificates issued by East West Mortgage Securities Trust 2007-1. These are the rating actions: * East West Mortgage Securities Trust 2007-1 -- $372,562,650 Class A Certificates, rated Aa1 -- $13,849,912 Class M Certificates, rated Ba3 The rating of the Class A certificates is based on the financial guaranty insurance policy issued by Assured Guaranty Corp. whose financial strength rating is Aa1. Support to Assured consists of subordination provided by the Class M certificates, over-collateralization and excess spread available to absorb losses. Credit enhancement to the Class M certificates consists of over-collateralization and excess spread available to absorb losses. In addition, the ratings are based on the quality of the collateral, structural features of the transaction, and the experience of East West Bank as master servicer. The collateral pool consists of 750 multifamily, fully-amortizing mortgage loans secured by first liens on mortgage properties. The average principal balance as of the cut-off date was approximately $527,616; the weighted average LTV at origination was approximately 64.6%. Substantially all the mortgage loans are secured by properties located in California. The notes were sold in a privately negotiated transaction without registration under the Securities Act of 1933 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under Rule 144A. ECHOSTAR COMM: Dec. 31 Balance Sheet Upside-Down by $219 Million ---------------------------------------------------------------- EchoStar Communications Corporation reported total revenue of $2.58 billion for the quarter ended Dec. 31, 2006, a 17% increase compared with $2.2 billion for the corresponding period in 2005. Net income totaled $153 million for the quarter ended Dec. 31, 2006, compared with $133 million during the corresponding period in 2005. For the year ended Dec. 31, 2006, EchoStar reported total revenue of $9.82 billion compared with $8.45 billion for the year ended Dec. 31, 2005, an increase of 16.2 percent. EchoStar's net income for the year ended Dec. 31, 2006, totaled $608 million, compared with $1.51 billion for the year ended Dec. 31, 2005. Net income for the year ended Dec. 31, 2005, includes a non-recurring, non- cash benefit of approximately $593 million to recognize the tax benefits of previously reported tax losses and a $134 million gain related to the settlement of EchoStar IV satellite insurance and related claims. DISH Network(TM) added approximately 350,000 net new subscribers during the quarter ended Dec. 31, 2006, giving the company approximately 13.105 million subscribers as of that date, an increase of 1.065 million subscribers compared to the number of subscribers as of Dec. 31, 2005. At Dec. 31, 2006, the company's balance sheet showed $9.768 billion in total assets and $9.988 billion in total liabilities, resulting in a $219.4 million total stockholders' deficit. Full-text copies of the company's consolidated financial statements for the year ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?1b0f About EchoStar Communications EchoStar Communications Corporation (Nasdaq: DISH) -- http://www.echostar.com/ -- serves more than 13.1 million satellite TV customers through its DISH Network(TM), a pay-TV provider in the country since 2000. DISH Network's services include hundreds of video and audio channels, Interactive TV, HDTV, sports and international programming, together with professional installation and 24-hour customer service. EchoStar has been a leader for more than 25 years in satellite TV equipment sales and support worldwide. * * * As reported in the Troubled Company Reporter on Jan. 29, 2007, Fitch affirmed the 'BB-' Issuer Default Rating assigned to Echostar Communications Corporation. ENCORE ACQUISITION: Closes Big Horn Basin Purchase for $400MM Cash ------------------------------------------------------------------ Encore Acquisition Company's subsidiaries have completed the acquisition of the oil properties in the Big Horn Basin from subsidiaries of Anadarko Petroleum Corporation for $400 million in cash. The company disclosed entering into a purchase and sale agreement with subsidiaries of Anadarko Petroleum Corporation on Jan. 17, 2007. The properties are comprised of the Elk Basin Unit and the Gooseberry Unit in Park County, Wyoming. Encore's internal engineers have estimated that the properties have total proved reserves of approximately 20 million barrels of oil equivalent, which are 97% oil and 90% proved developed producing. Encore estimates that the 2 million BOE of proved undeveloped reserves will require approximately $17 million to develop. The properties currently produce approximately 4,000 net BOE per day with an additional 350 net BOE per day of natural gas liquids produced by the Elk Basin Gas Plant. The producing properties have a shallow one-year proved developed decline rate estimated at 6%. Encore estimates that the properties have a total proved reserves-to- production ratio of approximately 14 years. These properties will be 100% operated by Encore and fit nicely into Encore's long-life portfolio. The acquisition also includes the Elk Basin Gas Plant, which processes natural gas liquids from the produced gas in the Elk Basin Unit and injects waste gases into the field to maintain production. Encore's internal engineers have estimated that the proved developed properties will generate approximately $50 million in cash flow (revenues less direct operating expenses) in each of 2007 and 2008. Lease operating expenses are estimated to be approximately $10.25 per BOE. "The luxury of these properties is that production can be held flat with a relatively modest $7 million annual investment and the remaining $43 million is available to grow production or to reduce debt," Jon S. Brumley Encore's Chief Executive Officer and President stated. "We are comfortable with waterfloods and tertiary recovery projects because they fit into our basket of expertise." In connection with the acquisition, Encore has purchased put contracts on approximately two-thirds of the acquisition's proved developed producing volumes at $65 per barrel for remainder of 2007 and all of 2008. By purchasing puts, the company has mitigated the negative effects of declining commodity prices in 2007 and 2008 with respect to the acquired production, while retaining the benefits of increasing commodity prices. About Encore Acquisition Headquartered in Fort Worth, Texas, Encore Acquisition Company (NYSE: EAC) -- http://www.encoreacq.com/-- is an independent energy company engaged in the acquisition, development and exploitation of North American oil and natural gas reserves. Organized in 1998, Encore's oil and natural gas reserves are in four core areas: the Cedar Creek Anticline of Montana and North Dakota; the Permian Basin of West Texas and Southeastern New Mexico; the Mid Continent area, which includes the Arkoma and Anadarko Basins of Oklahoma, the North Louisiana Salt Basin, the East Texas Basin and the Barnett Shale; and the Rocky Mountains. * * * As reported in the Troubled Company Reporter on Jan. 30, 2007, Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on oil and gas exploration and production company Encore Acquisition Company. The outlook is negative. As reported in the Troubled Company Reporter on Jan. 23, 2007, Moody's Investors Service placed Encore Acquisition's Ba3 corporate family rating and all other existing ratings on review for downgrade upon its announced $400 million acquisition of Anadarko Petroleum's Big Horn Basin (northern Rocky Mountains) assets. ENCORE ACQUISITION: Inks New $1.25 Billion Senior Credit Facility ----------------------------------------------------------------- Encore Acquisition Company has entered into a new five-year $1.25 billion senior secured credit facility with an initial borrowing base of $650 million that matures on March 7, 2012 under which Bank of America will serve as administrative agent. The facility replaces Encore's previous $750 million credit facility, which had a $550 million borrowing base and would have matured in December 2010. The new credit facility is secured by a first- priority lien on certain of the company's proved oil and natural gas reserves. In addition, one of the company's subsidiaries entered into a new five-year, $300 million senior secured credit facility with an initial borrowing base of $115 million that matures on March 7, 2012 under which Bank of America will serve as administrative agent. The new credit facility is secured by a first-priority lien on the subsidiary's proved oil and natural gas reserves and contains a $10 million overadvance feature. About Encore Acquisition Headquartered in Fort Worth, Texas, Encore Acquisition Company (NYSE: EAC) -- http://www.encoreacq.com/-- is an independent energy company engaged in the acquisition, development and exploitation of North American oil and natural gas reserves. Organized in 1998, Encore's oil and natural gas reserves are in four core areas: the Cedar Creek Anticline of Montana and North Dakota; the Permian Basin of West Texas and Southeastern New Mexico; the Mid Continent area, which includes the Arkoma and Anadarko Basins of Oklahoma, the North Louisiana Salt Basin, the East Texas Basin and the Barnett Shale; and the Rocky Mountains. * * * As reported in the Troubled Company Reporter on Jan. 30, 2007, Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on oil and gas exploration and production company Encore Acquisition Company. The outlook is negative. As reported in the Troubled Company Reporter on Jan. 23, 2007, Moody's Investors Service placed Encore Acquisition's Ba3 corporate family rating and all other existing ratings on review for downgrade upon its announced $400 million acquisition of Anadarko Petroleum's Big Horn Basin (northern Rocky Mountains) assets. ENERGY PARTNERS: Launches Tender Offer for 8-3/4% Senior Notes -------------------------------------------------------------- Energy Partners, Ltd., intends to commence a cash tender offer to purchase all of its outstanding 8-3/4% Senior Notes due 2010 in connection with the announced equity self-tender offer to purchase up to 8,700,000 outstanding common shares for $23 per share in cash. The cash tender offer is expected to be commenced within approximately 10 business days. In conjunction with the tender offer, the company will also seek consents to certain proposed amendments to certain provisions of the indenture that governs the Notes. The purpose of the proposed amendments is to eliminate substantially all restrictive covenants and certain event of default provisions of the indenture. The purchase price for the Notes will be based on a fixed spread of 50 basis points over the yield of the relevant U.S. Treasury Note to the earliest redemption date of the Notes (Aug. 1, 2007, at 104.375% of principal amount). The purchase price will be inclusive of a consent payment for holders who validly tender and do not withdraw Notes on or prior to the payment deadline. The consent payment deadline is expected to be the 10th business day following commencement of the tender offer. The tender offer will be conditioned upon, among other things: -- the receipt of consents from the holders of a majority in aggregate outstanding principal amount of the Notes, -- the concurrent closing of the company's equity self-tender offer, and -- consummation of the requisite financing to purchase the Notes. Banc of America Securities LLC is expected to act as dealer manager for the equity self-tender offer and dealer manager for the debt tender offer and related consent solicitation. MacKenzie Partners, Inc., is expected to act as the information agent for both tender offers, and can be contacted at 1-800-322-2885 toll free or at 1-212-929-5500 collect or by e-mail at EPL@mackenziepartners.com About Energy Partners Ltd. Headquartered in New Orleans, La., Energy Partners Ltd. (NYSE: EPL) -- http://www.eplweb.com/-- is an independent oil and natural gas exploration and production company. Founded in 1998, the company's operations are focused along the U. S. Gulf Coast, both onshore in south Louisiana and offshore in the Gulf of Mexico. * * * As reported in the Troubled Company Reporter on Oct. 17, 2006, Standard & Poor's Ratings Services 'B+' corporate credit rating on Energy Partners Ltd. remained on CreditWatch with developing implications. EPL's 8.75% Senior Notes due 2010 carry Moody's Investor Service's B3 rating and Standard & Poor's B+ rating. ENERGY PARTNERS: Board Okays Self-Tender Offer for 22% of Shares ---------------------------------------------------------------- Energy Partners, Ltd.' Board of Directors, after a comprehensive review, has concluded its strategic alternatives process. During the course of this process, the company solicited domestic and international industry participants and private equity sources, but did not receive a definitive offer to purchase the company. The Board, in conjunction with the company's financial advisors and management, has determined to continue with the execution of the company's strategic plan, augmented by a self-tender offer and the divestment of selected properties. The company's Board authorized self-tender offer provides for the repurchase of up to 8,700,000 issued and outstanding common shares for approximately $200 million at $23 per share, which is expected to commence within approximately 10 business days. Assuming the offer is fully subscribed, the company would repurchase approximately 22% of its currently outstanding common shares. The company has received a commitment from Banc of America Securities LLC to provide sufficient funds to: -- finance the self-tender offer, -- refinance the company's bank credit facility, and -- refinance its 8-3/4% senior notes through a concurrent debt tender and consent solicitation offer. In addition, the company plans to divest selected properties for an estimated $125 million to reduce debt following the completion of the self-tender offer. The company also indicated that the Board has authorized additional open market purchases of its common shares up to an aggregate amount of $50 million during the one-year period following the conclusion of the $200 million self-tender offer. The open market share repurchase program, the implementation of which is subject to business and market conditions, will not start prior to 10 business days following completion of the self-tender offer. The company's strategic plan for 2007 and beyond will be focused on achieving disciplined growth through a balanced capital and exploration program that is underpinned by its existing exploratory portfolio. The company reaffirmed its previously announced $300 million capital budget for 2007, which includes a budgeted exploratory program of 23 wells. Richard A. Bachmann, EPL's chairman and chief executive officer, commented, "EPL and its Board conducted an extensive process of exploring strategic alternatives during a period of volatile commodity prices. "We approached 63 potential bidders for the company including 25 domestic oil and gas companies, 23 international oil and gas companies, and 15 financial sponsors. "Of those approached, 14 parties expressed interest and executed a confidentiality agreement with EPL. Nine of those parties received a management presentation and had the opportunity to review additional information in our data room. "However, although preliminary bids were received during a very thorough process, no definitive offers resulted. After carefully reviewing other strategic alternatives, our Board believes that the best option for shareholders is to continue to pursue our current plan, augmented by a repurchase of shares. "The execution of the self-tender offer and the ability for us to repurchase shares on the open market will return value to our shareholders, while our divestitures are expected to provide significant cash to help finance the stock repurchases. As always, we will continue to take actions that we believe are in the best interest of shareholders." Mr. Bachmann continued, "It is important to note that the self-tender offer and authorization for additional open market purchases do not impact our 2007 capital budget of $300 million. "In fact, we have preserved the company's upside, which we continue to believe is significant, and at the same time provided additional liquidity for those desiring it. "We remain rich in exploration opportunities in the deepwater, on the Shelf, and onshore, which have the potential to grow the Company meaningfully. "We will sharpen our focus on the prudent reinvestment of our significant cash flows through the continued exploration and exploitation of our existing asset base and portfolio, and development of our discoveries yet to be brought on line on the Shelf and in the deepwater Gulf of Mexico." The company's self-tender offer will not be subject to any minimum number of shares being tendered. If more than 8,700,000 shares are tendered, the company will purchase the shares tendered on a pro rata basis pursuant to procedures to be specified in the offer to purchase to be mailed to shareholders. The self-tender offer will be subject to a number of conditions, including the receipt of funds pursuant to the commitment letter from Bank of America and the successful completion of the debt tender. The Board of Directors of EPL has approved the self-tender offer. However, neither the company nor its Board of Directors makes any recommendation to shareholders as to whether to tender or refrain from tendering their shares. The company's directors and executive officers have advised the company that they intend to tender at least a portion of their shares in the self-tender offer. Banc of America Securities LLC is expected to act as dealer manager for the equity self-tender offer and dealer manager for the debt tender offer and related consent solicitation. MacKenzie Partners, Inc., is expected to act as the information agent for both tender offers, and can be contacted at 1-800-322-2885 toll free or at 1-212-929-5500 collect. The company has retained Merrill Lynch Petrie Divestiture Advisors to assist in the divestiture of selected properties. About Energy Partners Ltd. Headquartered in New Orleans, La., Energy Partners Ltd. (NYSE: EPL) -- http://www.eplweb.com/-- is an independent oil and natural gas exploration and production company. Founded in 1998, the company's operations are focused along the U. S. Gulf Coast, both onshore in south Louisiana and offshore in the Gulf of Mexico. * * * As reported in the Troubled Company Reporter on Oct. 17, 2006, Standard & Poor's Ratings Services 'B+' corporate credit rating on Energy Partners Ltd. remained on CreditWatch with developing implications. EPL's 8.75% Senior Notes due 2010 carry Moody's Investor Service's B3 rating and Standard & Poor's B+ rating. ENTEGRA TC: S&P Assigns Initial B+ Rating to $480 Mil. Facilities ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'B+' rating and '1' recovery rating to debt issued in conjunction with Entegra TC LLC's planned recapitalization. The recapitalization consists of the formation of a new holding company, Entegra Holdings LLC, which is subordinated to Entegra TC, the new intermediate holding company. The ratings are assigned to the credit facilities at Entegra TC, which consists of a $450 million second-lien senior term loan facility due 2014 and a $30 million synthetic revolving credit facility due 2012. The ratings are based on preliminary terms and conditions, and are subject to review once final documentation is received. The loans sit behind an existing $350 million first-lien LOC facility due 2012, used exclusively for hedging purposes, and ahead of a new $850 million third-lien payment-in-kind (PIK) senior term facility due 2015 (both unrated). Entegra will use the $1.33 billion of new money to refinance its existing $675 million tranche A debt plus accrued interest, pay related transaction expenses, and make a one-time distribution of $545 million to members. The outlook is stable The ratings incorporate these risks: * Exposure to price and quantity volatility in the merchant power market. * Exposure to the SERC's relatively underdeveloped market rules and regulations. * Many vertically integrated utilities in the Southeast do not recover their fixed costs in the market, instead collecting these costs through rate-base, cost-of-service regulation. Weak transmission infrastructure around the Union Power facility results in discriminatory access to transmission in the Southeast markets. Gila River is a transmission wheel away from the relatively liquid Palo Verde hub, and could experience transmission cost increases. Cancellation of the long-term service agreement with the turbine OEM has risks, especially since certain gas turbine parts secured from Pratt & Whitney Power Systems have a limited operating record. However, commercial terms offered by PWPS cap the risk. Cash flow is highly vulnerable to low natural gas prices in the near term, and to overbuilding in the longer term. The company requires the continuation of current market conditions to maintain adequate operating cash cushion and service debt. Standard & Poor's estimates that the company requires around $24 per kilowatt-year in net revenues to achieve cash breakeven, and a further $5 per kW-year to cover major maintenance requirements. Union County's markets are weak. Based on market data, Standard & Poor's stimate the 12-month forward net revenue for a 7,200-BTU-per-kilowatt-hour heat rate CCGT to be about $30 per kW-year. There is refinancing risk for the seven-year revolver and seven- year senior term facility. At maturity of the senior term facility, consolidated leverage, including the PIK term facility, of approximately $505 per kW is high under the company's base case. Exposure to rising interest rates because the company is required to fix only 50% of the new debt during the first three years of the term loan and PIK facilities. These strengths somewhat mitigate the risks at the rating level: * A 100% excess cash sweep designed to repay debt during periods of strong cash flow. While the PIK debt influences Entegra's default risk, some measure of insulation is available to the senior term facility, from the structural subordination of the PIK term facility. * Lack of financial covenants in the PIK term facility loan documents is also favorable for the senior notes. Based on Platt's data, net revenues in the AZ-NM-SNV subregion have improved to over $70 per kW-year in 2007 from $45 per kW-year in 2005. Still, the lack of a pooled market could result in lower net revenues for Gila River than those observed in the market. A new 10-year tolling arrangement with Arizona Public Service Co. points to recovery in the Southwest markets, which could offer further contracting opportunities. There is no construction risk, as the facilities have met commercial operation requirements. Financial and physical hedge contracts with investment-grade counterparties provide cash flow stability for the next two to three years. Although the company has indicated that it will enter into additional hedging agreements on an opportunistic basis, Standard & Poor's does not assume that these hedges will be replaced. Hedging terms are also weaker compared with similarly rated peers. While the abrogation of the long-term service agreement exposes the company to risks, it also offers the potential for large cost savings, which are expected to be in excess of $170 million through 2020. High liquidity availability through the six-month debt service reserve, six-quarter major maintenance reserve, and excess liquidity of about $90 million of cash at closing, which, combined with the low 1% required amortization of the term loan, reduces default risk prior to refinancing. "The stable outlook reflects our view that current expectations of net revenues and the liquidity available to the company will be sufficient to reduce the size of the second lien over the next three years," said Standard & Poor's credit analyst Aneesh Prabhu. However, under a low-gas-price scenario, the project would suffer without the benefit of contracted revenues, and Standard & Poor's could revise the outlook to negative or lower the ratings if spark spreads deteriorate substantially or if loan paydown lags expectations. On the other hand, Standard & Poor's could revise the outlook to positive if market conditions improve and allow Entegra to enter more long-term contracts, and if continuing good operating performance allows the company to repay sufficient debt to ensure that it will substantially reduce the second-lien term loan before maturity. EUROTUNNEL GROUP: Balance Sheet Upside Down by GBP1.32 Billion -------------------------------------------------------------- Eurotunnel Group released its financial results for the year ended Dec. 31, 2006. The group posted a GBP142.88 million net loss on GBP567.6 in revenue for the year ended Dec. 31, 2006, compared with a GBP1.97 billion net loss on GBP541.46 in revenue for the same period in 2005. At Dec. 31, 2006, Eurotunnel's balance sheet showed GBP5.25 billion in total assets, GBP6.56 billion in total liabilities and GBP1.32 billion in shareholders' deficit. Safeguard Plan In 2006, Eurotunnel focused on restructuring the company's operations and negotiating with creditors, initially to find a consensual agreement and, from Aug. 2, 2006 onwards, in the context of a safeguard procedure. The Paris Commercial Court approved Jan. 15, the safeguard plan put forward by company. The Joint Board of Eurotunnel approved March 6, the accounts for 2005 and 2006, on the basis of the Safeguard Plan. The Auditors and Commissaires aux Comptes certified the accounts with matters of emphasis, notably regarding going concern. This depended on the full implementation of the safeguard plan and upon the success of the Exchange Tender Offer. If this will fail, Eurotunnel may be placed in liquidation. "These excellent operating results clearly show that it will only be through the new company, Groupe Eurotunnel SA (GET SA), created as a result of Safeguard and the ETO, relieved of more than half of the current debt and with substantially reduced financial charges, that we will finally be able to remove the specter of bankruptcy which threatened Eurotunnel in 2005," Jacques Gounon, chairman and CEO of Eurotunnel disclosed. A full-text copy of Eurotunnel's 2006 financial analysis and summary accounts is available at no charge at: http://ResearchArchives.com/t/s?1b2e About Eurotunnel Headquartered in Folkestone, United Kingdom and Calais, France, Eurotunnel Group -- http://www.eurotunnel.co.uk/-- operates a fleet of 25 shuttle trains, which carry cars, coaches and trucks. It manages the infrastructure of the Channel Tunnel and receives toll revenues from train operating companies whose trains pass through the Tunnel. The British and French governments have granted Eurotunnel a concession to operate the Channel Tunnel until 2086. Eurotunnel Group files reports in the U.S. Securities and Exchange Commission under the names of Eurotunnel PLC (ETNUF.PK) and Eurotunnel SA (ETTFF.PK). Eurotunnel obtained Aug. 2 an order placing the channel operator under the protection of the Court pursuant to the new safeguard legislation (Procedure de sauvegarde). At end of 2006, the group's creditors and bondholder approved a plan to decrease its GBP6.2 billion debt to GBP2.84 billion. On Jan. 15, the Court approved Eurotunnel's safeguard plan, backed by the court-appointed representatives to the company and to the creditors. FORD MOTOR: Inks Pact to Sell Aston Martin for $925 Million ----------------------------------------------------------- Ford Motor Company has entered into a definitive agreement to sell Aston Martin, its prestigious sports car business, to a consortium comprised of David Richards, John Sinders, Investment Dar and Adeem Investment Co. This transaction is the result of Ford's decision, as announced in August 2006, to explore strategic options for the Aston Martin business as the company restructures its core automotive operations and builds liquidity. The sale is expected to close during the second quarter and is subject to customary closing conditions, including applicable regulatory approvals. The transaction values Aston Martin at GBP479 million ($925 million). As part of the transaction, Ford will retain a GBP40 million ($77 million) investment in Aston Martin. Other terms and conditions specific to the sale are not being disclosed at this time. "The sale of Aston Martin supports the key objectives of the company, to restructure to operate profitably at lower volumes, changed model mix, and to speed the development of new products," Ford President and Chief Executive Officer Alan Mulally said. "From Aston Martin's point of view, the sale will provide access to additional capital, which will allow Aston Martin to continue the growth it has experienced under Ford's stewardship. Today's announcement is good for Ford Motor Company, good for Aston Martin and good for the UK. We wish Aston Martin every possible success for the future." The new owner of Aston Martin is a consortium comprised of: -- David Richards, founder and chairman of Prodrive, a world-leading motorsport and automotive technology company; -- John Sinders, an avid Aston Martin collector and a backer of Aston Martin Racing; and -- Investment Dar and Adeem Investment Co, international investment companies headquartered in Kuwait. About Ford Motor Co. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures and distributes automobiles in 200 markets across six continents. With more than 280,000 employees worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury, and Volvo. Its automotive-related services include Ford Motor Credit Company and The Hertz Corporation. * * * As reported in the Troubled Company Reporter on Dec. 12, 2006, Standard & Poor's Ratings Services affirmed its 'B' bank loan and '2' recovery ratings on Ford Motor Co. As reported in the Troubled Company Reporter on Dec. 7, 2006, Fitch Ratings downgraded Ford Motor Company's senior unsecured ratings to 'B-/RR5' from 'B/RR4'. As reported in the Troubled Company Reporter on Dec. 6, 2006, Moody's Investors Service assigned a Caa1, LGD4, 62% rating to Ford Motor Company's $3 billion of senior convertible notes due 2036. GENERAL CABLE: Moody's Rates Proposed $325 Mil. Senior Notes at B1 ------------------------------------------------------------------ Moody's Investors Service assigned a rating of B1 to the proposed $325 million senior unsecured notes of General Cable Corporation consisting of $125 million of floating rate notes and $200 million fixed rate notes. Concurrently, Moody's affirmed all other ratings for this issuer. The rating outlook remains stable. The proceeds of the senior unsecured notes will be used to refinance the existing senior unsecured notes, pay transaction costs, fund the tender premium with respect to the senior notes due in 2010 and provide additional funds for general corporate purposes. Moody's took these rating actions: Assigned: -- $125 million senior unsecured floating rate notes due 2015, B1, LGD4, 63% -- $200 million senior unsecured notes due 2017, B1, LGD4, 63% Affirmed: -- $355 million senior unsecured convertible notes due 2013, at B1, LGD4, 63% -- $285 million senior unsecured notes due 2010, at B1, LGD4, 63% -- Corporate Family Rating, at Ba3 -- Probability of Default Rating, at Ba3 The outlook is stable. The rating on the $285 million senior unsecured notes due 2010 will be withdrawn upon the successful conclusion of the tender offer. The assignment of a B1 rating to the proposed senior unsecured notes and the affirmation of the Corporate Family Rating at Ba3 continues to reflect: * the company's moderate leverage; * good interest coverage; * low cost operations; and * leading market position in the wire & cable industry and highly diversified end markets and customer base. The stable outlook reflects Moody's expectation that GCC will continue to grow volume, particularly in the electric utility and electrical infrastructure segments as a result of strong demand for its products. Moody's also assumes that the Company will continue to take a conservative approach to acquisitions with consideration paid at or below replacement cost for cash flow accretive operations that will expand the Company's geographic footprint or product breadth. In the event that a major acquisition adds material debt the expectation is that GCC will utilize cash flow to de-lever in its historically disciplined manner. The ratings could come under upward rating pressure if total debt to EBITDA fall below 2.5x on a sustained basis or if demand for the Company's products lead to a sustained level of free cash flow to total debt in excess of 10%. Downgrade pressure could occur if the company makes a major acquisition that leverages the balance sheet and that poses material integration and span-of-control issues. The ratings could also be impaired if total debt to EBITDA increases above 3.7x or if EBIT to interest expense declines below 2.3x on a sustained basis. GCC, headquartered in Highland Heights, Kentucky, is a leading global developer and manufacturer within the wire and cable industry. The Company manufactures, markets and distributes copper, aluminum and fiber optic wire and cable products globally. For the last twelve months ended Dec. 31, 2006, the company reported revenues of $3.7 billion. GENERAL CABLE: High Leverage Prompts S&P to Affirm BB- Rating ------------------------------------------------------------- Standard & Poor's Rating Services affirmed its ratings on Highland Heights, Kentucky-based General Cable Corp., including the BB- corporate credit rating. At the same time, Standard & Poor's assigned a 'B+' to the proposed $325 million senior unsecured notes, which are refinancing the existing $285 million senior unsecured notes. The outlook is stable. "The ratings on General Cable Corp. reflect moderately high leverage and a cyclical operating profile, driven by fluctuating market demand and volatility in raw material pricing that can affect working capital requirements and cash flow," said Standard & Poor's credit analyst Stephanie Crane Merganthaler. These factors are somewhat offset by the company's leading position in a global market for wire and cables, especially in the energy transmission and distribution market, as well as recent increases in profitability, in part because of volume growth and raw material pricing increases passed on to end customers, as well as effective cost cutting and efficiency efforts. General Cable is a leading global supplier in the fragmented $140 billion wire and cable market, supplying power utilities for the electrical grid, industrial and specialty markets, and the telecom market, including land-line telephone and computer data networks. The company's business is subject to somewhat volatile profitability because of the commodity nature of product, fluctuations in market demand, and periodic unfavorable changes in product pricing and input costs. Prices for key raw materials, including copper and aluminum, which account for as much as 50% of manufacturing costs, were at an all time high in 2006. Copper costs have increased dramatically (three-fold) since September 2003, largely because of global supply and demand imbalances, as well as inefficiencies in investment in production. GENERAL MOTORS: Will Release of 2006 Financial Results on Tomorrow ------------------------------------------------------------------ General Motors Corp. has scheduled the release of its 2006 fourth- quarter and calendar year financial results for 7:00 a.m. EDT, Wednesday, March 14, 2007, via PR Newswire and GM Media Online. GM Vice Chairman and Chief Financial Officer Fritz Henderson will conduct a conference call at 9:30 a.m. EDT. A question-and-answer session with financial analysts and media will follow a review of the results. The call is expected to last approximately 120 minutes. Conference Call Information * Dial 1-800-266-1824 or 212-896-6043 for international access. * The conference call will also be webcast live on GM's Investor website http://investor.gm.comin the Calendar/Events section. * Charts will be posted in the Earnings Release section. * The webcast and charts will also be available via a hot link in GM Media OnLine http://media.gm.com * Archive: A taped replay of the call will be made available from 1:00 p.m. EDT March 14, 2007, until 1:00 p.m. EDT March 16, 2007. Dial 1-800-633-8284 (or 402-977-9140 for international access) and enter reservation number 21332769 to access the taped replay. As reported in the Troubled Company Reporter on Mar. 8, 2007, the automaker pushed back the filing of its Annual Report on Form 10-K with the U.S. Securities and Exchange Commission after failing to make the March 1 filing deadline. According to the company, the delay is due to the issues regarding the accounting for deferred income tax liabilities and certain hedging activities under the Statement of Financial Accounting Standards. GM also intends to report restated results for the years ended Dec. 31, 2002, to Dec. 31, 2005, and for the first three quarters of 2006. "As disclosed in prior [SEC] filings, the current estimate of the cumulative impact of the accounting adjustments under SFAS No. 133 to retained earnings, as of September 30, 2006, is an increase of approximately $200 million," the company disclosed in its SEC filing. "In addition, GM previously disclosed that retained earnings as of December 31, 2001 and subsequent periods are understated by a range of US$450 million to US$600 million due to an overstatement of deferred tax liabilities. GM currently estimates that the deferred income tax liability overstatement is approximately $1 billion. This impact is partially offset by an estimated $500 million adjustment to stockholders' equity related to taxation of foreign currency translation, arising primarily prior to 2002, and affects all periods through the third quarter of 2006. The estimate net effect of such tax adjustments results in an understatement of stockholders' equity as of December 31, 2001 and subsequent periods of approximately $500 million," the company said. About General Motors Corp. General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- is the world's largest automaker and has been the global industry sales leader since 1931. Founded in 1908, GM employs about 284,000 people around the world. It has manufacturing operations in 33 countries including Belgium, France, Germany, India, Mexico, and its vehicles are sold in 200 countries. GM sells cars and trucks under these brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, and Vauxhall. * * * As reported in the Troubled Company Reporter on Dec. 15, 2006, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating and other ratings on General Motors Corp. and removed them from CreditWatch with negative implications, where they were placed March 29, 2006. S&P said the outlook is negative. As reported in the Troubled Company Reporter on Nov. 14, 2006, Moody's Investors Service assigned a Ba3, LGD1, 9% rating to the $1.5 billion secured term loan of General Motors Corp. As reported in the Troubled Company Reporter on Nov. 14, 2006, Moody's Investors Service assigned a Ba3, LGD1, 9% rating to the $1.5 billion secured term loan of General Motors Corp. GENERAL MOTORS: May Incur $1 Bil. Charge from Bad Mortgage Loans ---------------------------------------------------------------- General Motors Corp. may take a charge of almost $1 billion to cover bad mortgage loans made by its former home-lending unit, Greg Bensinger of Bloomberg reports, citing a Lehman Brothers Holdings Inc. analyst. According to the report, the company in November sold a 51% stake in General Motors Acceptance Corp. for $14.4 billion to a group led by Cerberus Capital Management LP. Residential Capital LLC, a part of GMAC, relies on loans to people with poor or limited credit records or high debt burdens, for more than three-quarters, or $57 billion, of its loan portfolio, Bloomberg says, citing a research report by Lehman analyst Brian Johnson. Delinquency rates on such subprime loans made last year are at a record high, the report added. The subprime market is "a key factor to see what the earnings power of GM's remaining interest in GMAC is going to be," Mr. Johnson said in an interview with Bloomberg. Mr. Johnson told Bloomberg last month that GM may have to spend as much as $950 million to make up the difference between the original value of the finance unit and any losses for subprime loans made by ResCap. GM spokeswoman Renee Rashid-Merem and GMAC spokeswoman Toni Simonetti both declined to comment on analysts' estimates for the automaker's subprime mortgage exposure, Bloomberg said. Possible Chrysler Tie-Up DaimlerChrysler AG Chief Executive Officer Dieter Zetsche confirmed last week his company is talking to General Motors about sharing the costs of future sport-utility vehicles, but he and GM's CEO stayed mum about whether GM could try to buy its Chrysler arm outright, Stephen Power and Neal E. Boudette of the Wall Street Journal reported. According to the source, Mr. Zetsche reiterated that the auto maker is considering "all options" for Chrysler, including a possible sale, which move came amid rising investor frustration over the division's losses. As reported in the Troubled Company Reporter on Mar. 8, 2007, General Motors Chief Executive Rick Wagoner said he does not expect a consolidation in the U.S. auto industry in the near term despite the intense pressures from fierce competition and excess production capacity, Neal E. Boudette and Stephen Power of The Wall Street Journal reported. The U.S. auto industry has enough plants to produce more vehicles than it sells for at least 10 years, the Journal said, citing Mr. Wagoner as saying in an interview. Reuters' Kevin Krolicki cited Mr. Wagoner's previous statement that escalating costs would mean more industry alliances and mergers. Reuters said in that report that according to Mr. Wagoner, the costs of developing the next generation of automobiles, especially the replacement for the traditional internal combustion engine, meant that the industry would be driven toward deeper collaboration. GM is open to tie-ups with other automakers to develop an all- electric car like the Chevrolet Volt concept that GM unveiled in January, Mr. Wagoner said, as cited by Reuters. Higher February U.S. Sales Despite an expected 6 to 7% decline in its U.S. industry sales, the automaker reported a 3.4% total sales increase last month, due to an 11% retail sales increase. The company lowered its sales forecast for last month following its decision to reduce sales to daily rental fleets. As reported in the Troubled Company Reporter on Mar. 1, 2007, GM reduced discounted fleet sales with the prospect of returning to profitability in North America. The move, according to analysts, allowed the automaker to keep its assembly plants running but eroded the value of its brands. According to Reuters, GM planned to cut its daily rental sales more than 200,000 units this year after a reduction of about 77,000 units in 2006. The planned cuts would take GM's annual rental-related sales below 700,000 units by the end of 2008 from more than 1 million before the effort began. About General Motors Corp. General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- is the world's largest automaker and has been the global industry sales leader since 1931. Founded in 1908, GM employs about 284,000 people around the world. It has manufacturing operations in 33 countries and its vehicles are sold in 200 countries. GM sells cars and trucks under these brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, and Vauxhall. * * * As reported in the Troubled Company Reporter on Dec. 15, 2006, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating and other ratings on General Motors Corp. and removed them from CreditWatch with negative implications, where they were placed March 29, 2006. S&P said the outlook is negative. As reported in the Troubled Company Reporter on Nov. 14, 2006, Moody's Investors Service assigned a Ba3, LGD1, 9% rating to the $1.5 billion secured term loan of General Motors Corp. As reported in the Troubled Company Reporter on Nov. 14, 2006, Moody's Investors Service assigned a Ba3, LGD1, 9% rating to the $1.5 billion secured term loan of General Motors Corp. GREAT PLAINS: Earns $127.6 Million in Year Ended December 31 ------------------------------------------------------------ Great Plains Energy, Inc. reported a net income of $127.63 million on total operating revenues of $2.67 billion for the year ended Dec. 31, 2006, compared with a net income of $162.29 million on total operating revenues of $2.6 billion for the year ended Dec. 31, 2005. Company revenues consisted of revenues from Kansas City Power and Light's increased $1.14 billion in 2006, as compared with $1.13 billion in 2005 due to increased retail revenues; Strategic Energy revenues of $1.53 billion in 2006, as compared with revenues of $1.47 billion in 2005; and other revenues of $2.88 million in 2006, as compared with $2.6 million a year earlier. As of Dec. 31, 2006, the company's balance sheet showed $4.33 billion in total assets, $2.95 billion in total liabilities, resulting to $1.38 billion in total capitalization and shareholders' equity. As of Dec. 31, 2006, the company had $607.5 million in long-term debt, excluding current maturities. The company's December 31 balance sheet also showed strained liquidity with $570.78 million in total current assets available to pay $1.2 billion in total current liabilities coming due within the next 12 months. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1b23 Guarantees Great Plains Energy and certain of its subsidiaries enter into various agreements providing financial or performance assurance to third parties on behalf of certain subsidiaries. Such agreements include, guarantees and indemnification of letters of credit and surety bonds. Great Plains Energy has provided $258.7 million of guarantees to support certain Strategic Energy power purchases and regulatory requirements. At Dec. 31, 2006, guarantees related to Strategic Energy are as follows: -- Great Plains Energy direct guarantees to counter parties totaling $142 million, which expire in 2007; -- Great Plains Energy indemnifications to surety bond issuers totaling $500,000, which expire in 2007; -- Great Plains Energy guarantee of Strategic Energy's revolving credit facility totaling $12.5 million, which expires in 2009; and -- Great Plains Energy letters of credit totaling $103.7 million, which expire in 2007. At Dec. 31, 2006, KCP&L had guaranteed, with a maximum potential of $2.9 million, energy savings under an agreement with a customer that expires over the next three years. A subcontractor would indemnify KCP&L for any payments it made under this guarantee. Credit Facility During 2006, Great Plains Energy entered into a five-year $600 million revolving credit facility with a group of banks. The facility replaced a $550 million revolving credit facility with a group of banks. At Dec. 31, 2006, the company had no cash borrowings and had issued letters of credit totaling $103.7 million under the credit facility as credit support for Strategic Energy. About Great Plains Energy Based in Kansas City, Missouri, Great Plains Energy, Inc. (NYSE:GXP) -- http://www.greatplainsenergy.com/-- is the holding company for Kansas City Power & Light Company, a regulated provider of electricity in the Midwest, and Strategic Energy LLC, a competitive electricity supplier. * * * Great Plains Energy's preferred stock carries Moody's Investors Service's Ba1 rating. HARRAH'S ENTERTAINMENT: Earns $47 Million in Quarter Ended Dec. 31 ------------------------------------------------------------------ Harrah's Entertainment Inc. reported net income of $47.6 million on revenues of $2.43 billion for the fourth quarter ended Dec. 31, 2006, compared with a net loss of $142.2 million on revenues of $2.095 billion for the same period in 2005. Fourth-quarter income from operations was $229.7 million, an increase of 47.4 percent from income from operations of $155.8 million in the year-ago quarter. Income from continuing operations was $39.4 million, compared with a loss of $24.5 million posted in the 2005 fourth quarter. The 2006 and 2005 fourth-quarter results were impacted by $20.7 million and $138.6 million, respectively, in charges to recognize the impairment of certain intangible assets. Fourth-quarter same-store sales at properties that Harrah's has operated for more than 12 months rose 6.8 percent from the year- ago quarter. The comparison excludes properties closed in the prior year period due to hurricane damage sustained in the third quarter of 2005. Harrah's Entertainment Inc. reported net income of $535.8 million on net revenues of $9.673 billion for the year ended Dec. 31, 2006, compared with net income of $236.4 million on net revenues of $7.01 billion in 2005. Full-year 2006 income from operations was $1.556 billion, up 51.3 percent from $1.029 billion in 2005. Income from continuing operations in 2006 was $523.9 million, compared with $316.3 million in 2005. The effective tax rate for the full-year 2006 was 36.1 percent, compared with 41.7 percent in 2005. The 2006 effective tax rates reflect the impact of certain income-tax benefits identified as the company completed its 2005 tax returns and the adjustment to tax reserves due to issues in tax periods that have now been settled. Excluding the impact of these benefits from the tax-rate calculation, the effective tax rates for 2006 would have been 38.6 percent. Fourth-Quarter Highlights Harrah's entered into a definitive agreement with affiliates of Texas Pacific Group (TPG) and Apollo Management L.P. (Apollo) to acquire the company in an all-cash transaction. Under the terms of the agreement, Harrah's stockholders will receive $90 in cash for each outstanding Harrah's share. On Feb. 8, 2007, Harrah's filed a preliminary proxy statement with the Securities and Exchange Commission that provides details regarding the pending sale of the company. In December 2006, Harrah's completed the acquisition of London Clubs, which operates seven casinos in the United Kingdom, two in Egypt and one in South Africa, and has four others under development in the UK. On Oct. 2, 2006, Harrah's announced a definitive agreement to acquire the Barbary Coast, giving the company control of three of the four corners of Las Vegas Boulevard and Flamingo Road. Coupled with previously completed land-purchase agreements, the Barbary Coast transaction will give Harrah's control of about 350 acres at or near the center of the Las Vegas Strip. "During the 2006 fourth quarter, continued robust visitation in the Las Vegas Region, due in large part to completion of the integration of our Total Rewards customer-loyalty program into the Caesars legacy properties, drove revenues to a record level," said Gary Loveman, Harrah's Entertainment chairman, president and chief executive officer. "Development costs and narrower margins in Atlantic City than in the 2005 fourth quarter impacted overall Property EBITDA and, combined with higher interest expenses, affected per-share results." At Dec. 31, 2006, the company's balance sheet showed $22.284 billion in total assets, $16.161 billion in total liabilities, $52.4 million in minority interests, and $6.071 billion in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the year ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?1b14 The company had cash and cash equivalents of $799.6 million at Dec. 31, 2006, compared to $724.4 million at Dec. 31, 2005. About Harrah's Entertainment Harrah's Entertainment (NYSE: HET) -- http://www.harrahs.com/-- is the world's largest provider of branded casino entertainment. The company's properties operate primarily under the Harrah's, Caesars and Horseshoe brand names; Harrah's also owns the London Clubs International family of casinos. * * * As reported in the Troubled Company Reporter on Feb. 16, 2007, Fitch Ratings may downgrade Harrah's Entertainment Inc.'s Issuer Default Rating into the 'B' category from its current 'BB+' rating based on the planned capital structure for its leveraged buyout by Apollo Management and Texas Pacific Group, which was outlined in its preliminary proxy statement. HEALTH CARE: Moody's Lifts Pref. Stock's Rating to Baa3 from Ba1 ---------------------------------------------------------------- Moody's raised Health Care REIT, Inc.'s senior unsecured ratings to Baa2 from Baa3 and the preferred stock ratings to Baa3 from Ba1, concluding its review. The outlook is stable. In September 2006, the company was placed under review for possible upgrade following the REIT's report that it will acquire Windrose Medical Properties Trust. The upgrade reflects the broader health care platform, significant asset type diversification and further operator diversification, which should support greater earnings stability for the REIT. In addition, HCN has demonstrated its ability to grow its portfolio while maintaining sound financial flexibility. Health Care REIT's portfolio will continue to grow in 2007. Moody's expects that HCN's leverage will be reduced closer to 45% of gross assets while overall financial flexibility will remain robust given the company's historically conservative financial profile and commitments to return to a more moderate debt capitalization levels by YE 2007. Secured debt is expected to remain at about 10% of gross assets. Integration risk of the new asset type, medical office buildings, and operating platform is a modest credit concern, but it is mitigated by the strengths of the REIT's management team and internal operating systems. Moody's also notes that the development pipeline is growing in independent and assisted living products, and these asset types have low barriers to entry as well as a history of overbuilding. Moody's will be focused on monitoring the company's development activities. Moody's indicated that any future rating upgrade would depend on reduction in leverage closer to 40%, while reducing secured debt to below 10%. In addition, any future upgrade would require successful integration of the Windrose and Rendina MOB platforms, while decreasing the standard deviation of ROAA post-integration. As the Baa2 rating takes into account the REIT's stated intent to reduced leverage to 45%, failure to reduce leverage closer to 45% over the intermediate term would put downward pressure on the ratings. Another material acquisition within a 12-month period that would strain the current integration progress will place negative pressure on the ratings. Difficulties with the integration of Windrose and Rendina, represented by material decreases in EBITDA margins and a decrease in fixed charge coverage to below 2.25x could result in a downgrade. These ratings were upgraded: * Health Care REIT, Inc. -- Senior secured shelf to Baa1 from Baa2; -- senior unsecured to Baa2 from Baa3; -- senior unsecured shelf to Baa2 from Baa3; -- subordinated shelf to Baa3 from Ba1; -- preferred stock to Baa3 from Ba1; and, -- preferred stock shelf to Baa3 from Ba1. Health Care REIT, Inc. is a real estate investment trust that invests in health care and senior housing properties. At Dec. 31, 2006, the REIT had assets of $4.3 billion, with 578 facilities in 37 states. HEALTHSOUTH: Dec. 31 Balance Sheet Upside-Down by $2.184 Billion ---------------------------------------------------------------- Health South Corp.'s balance sheet at Dec. 31, 2006, showed $3.359 billion in total assets, $4.885 billion in total liabilities, $271.1 million in minority interest, and $387.4 million in convertible perpetual stock, resulting in a $2.184 billion total stockholders' deficit. The company's balance sheet at Dec. 31, 2006, also showed strained liquidity with $880.3 million in total current assets available to pay $1.261 billion in total current liabilities. HealthSouth Corp. reported a net loss of $625 million on net operating revenues of $3 billion for the year ended Dec. 31, 2006, compared with a net loss of $446 million on net operating revenues of $3.117 billion for the year ended Dec. 31, 2005. Loss from continuing operations before income tax expense increased 63.9% to $557.9 million in 2006 from loss from continuing operations before income taxes of $340.4 million in 2005. Loss from continuing operations before income tax expense for 2006 included a $365.6 million loss on early extinguishment of debt related primarily to the private offering of senior notes in June 2006 and a series of recapitalization transactions in the first quarter of 2006, and a $31.2 million reduction in the liability associated with the company's securities litigation settlement. Pre-tax loss from continuing operations for 2005 included a $215 million settlement associated with the securities litigation. Excluding these items, pre-tax loss from continuing operations for 2006 was $223.5 million, compared to a pre-tax loss from continuing operations for 2005 of $125.4 million, resulting in an increase of $98.1 million year over year. Additionally, the company recorded a $30.5 million net gain on lease termination during 2005 associated with the Braintree and Woburn facilities, representing the difference between the $42 million liability that remained under the lease when the lease was terminated and the remaining liability on the date the judgment was entered against the company in 2005. Loss from continuing operations was $599 million in 2006, compared with $378.8 million in 2005. Loss from discontinued operations for 2006 was $26 million, compared with $67.2 million in 2005. The decrease was primarily due to the $34.6 million decrease in loss from discontinued operations in the corporate and other segment. Volume decreases in the company's operating segments was the primary factor that contributed to the declining net operating revenues in 2006. The company's inpatient segment reduced its "non-compliant" case volumes due to the continued phase-in of the 75% Rule. Surgery centers that became equity method investments rather than consolidated entities in 2006 and 2005 as a result of ownership changes, facility closures that did not qualify as discontinued operations, and market competition negatively impacted volumes in the surgery centers segment. Competition from physician-owned similar sites, the nationwide physical therapist shortage, closure of underperforming facilities that did not qualify as discontinued operations, and the annual per beneficiary limitations on Medicare outpatient therapy services that became effective Jan. 1, 2006 continued to negatively impact volumes in the outpatient segment. Competition from physician-owned diagnostic equipment and the closure of underperforming facilities that did not qualify as discontinued operations continued to negatively impact volumes in the diagnostic segment. Full-text copies of the company's consolidated financial statements for the year ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?1b16 Long-term Debt As of Dec. 31, 2006, the company had approximately $3,402,300,000 of long-term debt outstanding, compared with $3,401,900,00 at Dec. 31, 2005. As of Dec. 31, 2006, approximately $170 million was drawn under the $400 million revolving credit facility (excluding approximately $32.3 million utilized under the revolving letter of credit subfacility) due to seasonal borrowing needs, the timing of interest payments, and government settlement payments. About HealthSouth Headquartered in Birmingham, Alabama, HealthSouth Corporation (OTC Pink Sheets: HLSH) -- http://www.healthsouth.com/-- is the largest provider of rehabilitative health care and ambulatory surgery services in the United States, with 978 facilities and approximately 33,000 full- and part-time employees. The company provides these services through a national network of inpatient and outpatient rehabilitation facilities, outpatient surgery centers, diagnostic centers, and other health care facilities. HOME PRODUCTS: Court Confirms Second Amended Reorganization Plan ---------------------------------------------------------------- The Honorable Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware has confirmed the Second Amended Plan of Reorganization filed by Home Products International Inc. and Home Products International - North America Inc. The Court determined that the Plan satisfies the standards for confirmation under Section 1129(a) of the Bankruptcy Code. The Plan, as reported in the Troubled Company Reporter on Feb. 2, 2007, provides that these classes of claims are unimpaired: -- Administrative Claims, -- Priority Tax Claims, -- Class 1 Priority Non-Tax Claims, -- Class 2 Prepetition Lender Secured Claims, -- Class 3 Miscellaneous Secured Claims, -- Class 4 General Unsecured Claims, and -- Class 7 Interests in HPI-NA. Class 5 Noteholder Claims and Class 6 Interests in HPI are impaired classes. At the Debtors' option, holders of Allowed Administrative Claims will be paid: -- in full in cash on the later of the plan effective date or the date the claim is allowed, or -- on terms agreed upon by the holder and the debtors. Holders of Allowed Priority Tax Claims will receive cash payments in equal annual installments starting on the anniversary of the plan effective date, together with interest on the unpaid balance on the later of the plan effective date, the date the claim is allowed, or the date the holder and the Debtors made an agreement. Holders of Allowed Class 1 Priority Non-Tax Claims will received cash on the later of the plan effective date, the date the claim is allowed, or the date the holder and the Debtors made an agreement. Holders of Allowed Prepetition Lender Secured Claims will be allowed in an amount equal to the principal amount outstanding on the plan effective date plus accrued and unpaid interest, costs, attorneys' fees, and expeses through the effective date. Reorganized HPI-NA will pay the allowed claim in cash on the later of the plan effective date or the date the claim became allowed. At the sole option of the Reorganized Debtors, on the plan effective date: -- the legal, equitable, and contractual rights of each holder of Class 3 Allowed Miscellaneous Secured Claims and Class 4 Allowed General Unsecured Claims will remain the same and will not be discharged upon confirmation of the plan, or -- the Reorganized Debtors will provide other treatment as they and the holders agree. Holders of Class 5 Allowed Noteholder Claims will receive: -- their pro rata share on 95% of the New HIP stock on the plan effective date, subject to dilution by the Management Incentive Plan Shares and Option. The holders, however, may elect on the ballot to receive, in lieu of the new stock, cash equal to $22.97 for each $1,000 of Notes held, and -- the right to purchase New Convertible Notes. Holders of Class 6 Allowed Interests in HPI will be cancelled. Holders of Class 7 Allowed Interests in HPI-NA, however, will retain their interests since Old HPI-NA stock will not be cancelled. A full-text copy of Home Product's Second Amended Disclosure Statement is available for free at: http://ResearchArchives.com/t/s?1952 A full-text copy of Home Product's Second Amended Plan of Reorganization is available for free at: http://ResearchArchives.com/t/s?1953 About Home Products Headquartered in Chicago, Illinois, Home Products International, Inc. -- http://www.hpii.com/-- designs, manufactures, and markets ironing boards, covers, and other high-quality, non-electric consumer houseware products. The Debtor's product lines include laundry management products, bath and shower organizers, hooks, hangers, home and closet organizers, and food storage containers. Their products are sold under the HOMZ brand name, and are distributed to hotels, discounters, and other retailers such as Wal-Mart, Kmart, Sears, Home Depot, and Lowe's. The company and its affiliate, Home Products International-North America, Inc., filed for chapter 11 protection on Dec. 20, 2006 (Bankr. D. Del. Case Nos. 06-11457 and 06-11458). Eric D. Schwartz, Esq., at Morris, Nichols, Arsht & Tunnell, represents the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets between $1 million and $100 million and debts of more than $100 million. IRIDIUM OPERATING: Court Moves Excl. Plan Filing Period to July 14 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York approved Iridium Operating LLC and its debtor-affiliates' 27th motion extending the Debtors' exclusive periods. The Bankruptcy Court gave the Debtors until July 14, 2007, to file a chapter 11 plan of reorganization and until Sept. 9, 2007, to solicit acceptances of that plan. The Debtor said they need the extensions to implement a proposed settlement with regards to an ongoing litigation against Motorola Inc. Motorola Litigation In July 2001, the Official Committee of Unsecured Creditors sued Motorola for $8 billion alleging 10 different causes of action. Motorola is the Debtor's principal investor. The lawsuit is still pending. Subsequently, the Debtors signed a settlement with The Chase Manhattan Bank and the rest of their senior secured lenders resolving a suit commenced by the Creditors Committee in the Debtors' behalf, seeking to avoid liens on $154.6 million of the Debtors' assets. The Bankruptcy Court approved the Settlement Agreement. The U.S. District Court for the Southern District of New York affirmed the decision after Motorola appealed the Bankruptcy Court's decision. Motorola brought the issue to the U.S. Court of Appeals for the Second Circuit. Motorola's Appeal Bill Rochelle of Bloomberg News relates that Motorola won in its appeal regarding the Bankruptcy and District Courts' ruling on its long-running dispute with the Debtor's creditors. According to the source, the decision by the U.S. 2nd Circuit Court of Appeals in New York stated that creditors with top priority cannot settle by allowing payments to creditors with low priority while excluding those in the middle. Motorola, the report says, asserted $1.3 billion in priority claims that should be paid after those of senior secured bank creditors, but before claims by unsecured creditors. Of the $130 million in dispute, the settlement gave $92.5 million to the banks and $37.5 million to unsecured creditors. The lawsuit filed by the Committee against Motorola is not directly related to the March 5 appeals court ruling, Mr. Rochelle says. About Iridium Operating Iridium Operating LLC used to develop and deploy global wireless personal communication systems. On August 19, 1999, some holders of Iridium's senior notes filed an involuntary chapter 11 petition (Bankr. S.D.N.Y. Case No: 99-45005) against Iridium and its subsidiary Capital Corp. At that time, the Debtors were highly leveraged with $3.9 billion in secured and unsecured debt. On the same date, Iridium and 7 other subsidiaries filed voluntary chapter 11 petitions in Delaware. They consented to the jurisdiction of the N.Y. Court in Sept. 7, 1999. William J. Perlstein, Esq., and Eric R. Markus, Esq., at Wilmer, Cutler & Pickering represent the Debtors in their restructuring efforts. John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP represent the petitioning creditors: Magten Partners, Wall Financial Investments (USA) Ltd., and Canyon Capital Advisors LLC, as Fund Manager for The Value Realization Fund, L.P. Bruce Weiner, Esq., at Rosenberg, Musso & Weiner LLP, represent the Official Committee of Unsecured Creditors. KANSAS CITY SOUTHERN: Earns $108.9 Million in Year Ended Dec. 31 ---------------------------------------------------------------- Kansas City Southern generated a net income of $108.9 million on revenues of $1.6 billion for the year ended Dec. 31, 2006, compared with a net income of $100.9 million on revenues of $1.3 billion for the year ended Dec. 31, 2005. Operating income increased $242 million in 2006 to $304.3 million, as compared with $62.3 million in 2005. The increase in operating income was driven primarily by increased revenues during the year. The company achieved record revenues in 2006, over revenues in 2005, which was primarily driven by price increases, new and expanding business in both the U.S. and Mexico, and by the continued integration of the consolidated operations results of Kansas City Southern de Mexico, S. de R.L. de C.V. The company's Dec. 31, 2006, balance sheet showed total assets of $4.6 billion, total liabilities of $2.9 billion, and minority interests of $100.3 million, resulting to total stockholders' equity of $1.6 billion. As of Dec. 31, 2006, the company's cash provide by operating activities was $267.5 million, cash used for investing activities was $166 million, and cash used for financing activities was $53.6 million, resulting to $79 million in cash and cash equivalents, a net increase in cash flow of $47.9 million. A full-text copy of the company's annual report for 2006 is available for free at http://ResearchArchives.com/t/s?1b24 Outlook for 2007 Kansas City Southern expects consolidated revenue growth in 2007 to be in line with 2005 and 2006. Price increases and higher volume are expected to be key drivers of growth. With continued productivity increases in operations as well as the projected revenue growth, the full year operating ratio for 2007 is expected to fall below 80 percent. Although, the company believes seasonality of business will have an impact on the current quarter-over-quarter improvement trends in the first half of the year. The company believes that liquidity will continue to improve as will its key credit statistics with anticipated improvements in operating income, continued focus on working capital reduction and other balance sheet opportunities. The company projects cash capital expenditures to maintain the railroad and meet anticipated future demand to be around $270 million in 2007. It also plans to acquire 150 new locomotives through operating lease arrangements at a cost of about $300 million. It is currently projected that U.S. operations will take delivery of 60 locomotives and 90 locomotives will be used in Mexico. Panama Canal Railway, an equity investment of KCS, is also expected to continue strong growth in volumes and cash flow. Credit Facility Waiver On Jan. 31, 2007, Kansas City Southern provided written notice to the lenders under the 2006 Credit Agreement of certain representation and other defaults under the 2006 Credit Agreement arising from the potential defaults, which existed under the Kansas City Southern Railway indentures. These defaults limited KCSR's access to the revolving credit facility. In its notice of default, the company also requested that the lenders waive these defaults. On Feb. 5, 2007 the company received a waiver of such defaults from all of the lenders under the 2006 Credit Agreement. The Company is currently not in default of the 2006 Credit Agreement and has access to the revolving credit facility. About Kansas City Southern Kansas City Southern is a Delaware holding company with principal operations in rail transportation. The company owns and operates domestic and rail operations in North America that are strategically focused on the growing north/south freight corridor connecting key commercial and industrial markets in the central U.S. with major industrial cities in Mexico. The company's rail network extends from the Midwest and Southeastern portions of the U.S. south into Mexico and connects with all other Class I railroads providing shippers with an effective alternative to other railroad routes and giving direct access to Mexico and the southeastern and southwestern U.S. through less congested interchange hubs. The company also owns 50% of the stock of the Panama Canal Railway Company, which holds the concession to operate a 47-mile coast-to- coast railroad located adjacent to the Panama Canal. The railroad handles containers in freight service across the isthmus. Panarail Tourism Company, Panama Canal Railway's wholly owned subsidiary, operates commuter and tourist railway services over the lines of the Panama Canal Railway. * * * As reported in the Troubled Company Reporter on Feb. 12, 2007, Standard & Poor's Ratings Services affirmed its ratings on Kansas City Southern, including the 'B' corporate credit rating, and removed the ratings from CreditWatch, where they were placed Jan. 29, 2007. The 'D' rating on the preferred stock was not on CreditWatch. KMART CORP: Settles with FTC Over Gift Card Sales Practices ----------------------------------------------------------- Kmart Corporation has agreed to settle Federal Trade Commission charges that it engaged in deceptive practices in advertising and selling its Kmart gift card. As part of the settlement, Kmart will implement a refund program and publicize it on its Web site. This is the agency's first law enforcement action involving gift cards. "Consumers have a right to know when gift cards come with strings attached," FTC Chairman Deborah Platt Majoras said. "If fees or restrictions apply, gift card issuers must fully and clearly disclose them." According to the FTC's complaint, Kmart promoted the card as equivalent to cash but failed to disclose that fees are assessed after two years of non-use, and misrepresented that the card would never expire. Kmart has agreed to disclose the fees prominently in future advertising and on the front of the gift card. The FTC's complaint alleges that since 2003, Kmart did not disclose adequately that after 24 months of non-use, a $2.10 "dormancy fee" would be deducted from the card's balance for each month of inactivity, resulting in a $50.40 reduction from the card's value if the card was not used for 24 months. In many instances, the Commission alleges, consumers did not learn of the fee until they attempted to use their cards. According to the complaint, the Kmart gift card was sold bearing inadequate disclosures that appeared in fine print on the backside and that were phrased in legalese. In some instances the disclosures on the card were wholly concealed before sale, and there were no pre-sale disclosures in online sales. The FTC's complaint alleges that since December 2005, Kmart's Web site stated that the gift cards never expire, even though the dormancy fee caused cards valued at $50.40 or less to expire after two years of inactivity. As of May 1, 2006, Kmart stopped charging a dormancy fee on all Kmart gift cards. Under the proposed settlement, which is subject to public comment, Kmart Corporation, Kmart Services Corporation, and Kmart Promotions LLC, will not advertise or sell Kmart gift cards without disclosing, clearly and prominently, any expiration date or fees in all advertising and on the front of the gift card. The proposed settlement further requires Kmart to disclose, clearly and prominently, all material terms and conditions of any expiration date or fee at the point of sale and before purchase. It bars Kmart from misrepresenting any material term or condition of the gift cards, and prohibits Kmart from collecting dormancy fees on any gift card sold before the proposed order is issued. The proposed settlement requires Kmart to reimburse the dormancy fees for consumers who provide an affected gift card's number, a mailing address, and a telephone number. Kmart will publicize the refund program on its Web site, including a toll-free number, e-mail address, and a postal address for eligible consumers to contact Kmart to seek a refund. The FTC has established a Consumer Hotline at (202) 326-3569 for consumers who have questions about the refund program. The Commission vote to accept the proposed consent agreement was 5-0, with Commissioners Pamela Jones Harbour and Jon Leibowitz issuing a separate statement concurring in part and dissenting in part. In their statement, Commissioners Harbour and Leibowitz said they concur in the decision to bring an action against Kmart, but dissent in part from the proposed consent agreement because they believe the remedy should include disgorgement of ill-gotten profits: "Otherwise, Kmart will remain unjustly enriched by a substantial amount of buried 'dormancy fees' while many consumers will have lost the chance for reimbursement because they long ago threw out their seemingly worthless gift cards in frustration." Comments should be addressed to: Federal Trade Commission Office of the Secretary, Room H-135 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580 Copies of the complaint, proposed consent agreement, and an analysis of the agreement to aid in public comment are available from the FTC's Web site at http://www.ftc.gov/and also from: Federal Trade Commission Consumer Response Center Room 130 600 Pennsylvania Avenue, N.W. Washington, D.C. 20580 About Kmart Corp. Headquartered in Troy, Michigan, Kmart Corporation nka KMART Holding Corporation -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The company filed for chapter 11 protection on Jan. 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, 2005, without complaint by the Department of Justice. LE-NATURE'S INC: Creditors File Joint Chapter 11 Liquidation Plan ----------------------------------------------------------------- The Official Committee of Unsecured Creditors, the Ad Hoc Committee of Secured Lenders, and the Ad Hoc Committee of Senior Subordinated Noteholders, filed with the U.S. Bankruptcy Court for the Western District of Pennsylvania their Joint Chapter 11 Plan of Liquidation for Le-Nature's, Inc., and its debtor-affiliates. The Plan Proponents a filed a Disclosure Statement explaining that Plan. Overview of the Plan The Plan Proponents tell the Court that the Plan's primary objectives are to: -- liquidate the Assets of the Estates and prosecute Causes of Action, -- maximize the value of the ultimate recovery to all Creditors on a fair and equitable basis, compared to the value they would receive if the assets of the Debtor was liquidated under chapter 7 of the Bankruptcy Code; and -- settle, compromise or otherwise dispose of certain disputes and Claims. Treatment of Claims Under the Plan, Administrative Claims, Priority Tax Claims, and Fee Claims will be paid in full and in cash. Holders of Priority Non-Tax Claims will be paid 100% of the unpaid amount of their claim in cash. Lenders Secured Claims will receive, in full satisfaction, settlement, release, and discharge of and in exchange for their Claim: (a) a pro-rata share of the Tier One Trust Beneficial Interests; (b) an additional pro-rata share of the Tier One Trust Beneficial Interests, as a result of the disallowance of any Disputed Claim under this Class; and (c) all proceeds distributed pursuant to the terms of the Plan and the Liquidation Trust Agreement. Holders of Other Secured Claims will receive, in full satisfaction of their claims, at the option of the Liquidation Trust: (a) payment in cash from proceeds from the sale or disposition of the collateral securing their claims, to the extent of the value of any holder's Lien on such property; (b) surrender of the collateral securing their claims; or (c) other distributions as that will satisfy the requirements set forth in Section 1129 of the Bankruptcy Code. Holders of Subordinated Litigation Claims will receive: (a) a pro-rata share of the Tier Three Trust Beneficial Interests; (b) additional pro-rate share of the Tier Three Trust Beneficial Interests, as a result of the disallowance of any Disputed Claim in this Class; and (c) all proceeds distributed pursuant to the terms of the Plan and the Liquidation Trust Agreement. Interest Holders will receive: (a) a pro-rata share of the Tier Four Trust Beneficial Interests; (b) additional pro-rate share of the Tier Four Trust Beneficial Interests, as a result of the disallowance of any Disputed Interest in this Class; and (c) all proceeds distributed pursuant to the terms of the Plan and the Liquidation Trust Agreement. Unsecured Claims The Plan Proponents disclose that Unsecured Claims are divided into three sub-classes: * Lenders Unsecured Claims; * General Unsecured Claims; and * Unsecured Subordinated Notes Claims. Under the Plan, Holders of Lenders Unsecured Claim will receive: (a) a pro-rata share of the Tier Two Trust Beneficial Interests; (b) an additional pro-rata share of the Tier Two Trust Beneficial Interests, as a result of disallowance of any Disputed Claim under this class; (c) and additional pro-rata share of the Tier Two Trust Beneficial Interests, as a result of Turnover Enforcement of Unsecured Subordinated Notes Claims distributions; and (d) all proceeds distributed pursuant to the terms of the Plan and the Liquidation Trust Agreement. Creditors holding General Unsecured Claims will receive: (a) a pro-rata share of the Tier Two Trust Beneficial Interests; (b) an additional pro-rata share of the Tier Two Trust Beneficial Interests, as a result of disallowance of any Disputed Claim under this class; (c) all proceeds distributed pursuant to the terms of the Plan and the Liquidation Trust Agreement. Holders of Unsecured Subordinated Notes Claims will receive: (a) a pro-rata share of the Tier Two Trust Beneficial Interests; (b) an additional pro-rata share of the Tier Two Trust Beneficial Interests, as a result of disallowance of any Disputed Claim under this class; (c) all proceeds distributed pursuant to the terms of the Plan and the Liquidation Trust Agreement, provided, however, that the distributions will be deemed reallocated and distributed on account of Lenders Unsecured Claims, as a settlement of potential claims by Lenders for enforcement of contractual subordination provisions in Senior Subordinated Notes Indenture, in accordance with the "Turnover Enforcement." A full-text copy of the Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=070312002018 About Le-Nature's Inc. Headquartered in Latrobe, Pennsylvania, Le-Nature's Inc. -- http://www.le-natures.com/-- makes bottled waters, teas, juices and nutritional drinks. Its brands include Kettle Brewed Ice Teas, Dazzler fruit juice drinks and lemonade, and AquaAde vitamin-enriched water. Four unsecured creditors of Le-Nature's filed an involuntary chapter 7 petition against the company on Nov. 1, 2006 (Bankr. W.D. Pa. Case No. 06-25454). On Nov. 6, 2006, two of Le-Nature's subsidiaries, Le-Nature's Holdings Inc., and Tea Systems International Inc., filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. Judge McCullough converted Le Nature's Inc.'s case to a chapter 11 proceeding. The Debtors' cases are jointly administered. The Debtors' schedules filed with the Court showed $40 million in total assets and $450 million in total liabilities. Douglas Anthony Campbell, Esq., at Campbell & Levine, LLC, represents the Debtors in their restructuring efforts. The Court appointed R. Todd Neilson as Chapter 11 Trustee. Dean Z. Ziehl, Esq., and Debra Grassgreen, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub LLP, represent the Chapter 11 Trustee. David K. Rudov, Esq., at Rudov & Stein, and John K. Sherwood, Esq., Sharon L. Levine, Esq., and Kenneth A, Rosen, Esq., at Lowenstein Sandler PC, represent the Official Committee of Unsecured Creditors. Edward S. Weisfelner, Esq., Robert J. Stark, Esq., and Andrew Dash, Esq., at Brown Rudnick Berlack Israels LLP, and James G. McLean, Esq., at Manion McDonough & Lucas represent the Ad Hoc Committee of Secured Lenders. Thomas Moers Mayer, Esq., and Matthew J. Williams, Esq. at Kramer Levin Naftalis & Frankel LLP, represent the Ad Hoc Committee of Senior Subordinated Noteholders. LE-NATURE'S INC: Disclosure Statement Hearing Set for April 17 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Pennsylvania set a hearing at 3:00 p.m., on April 17, 2007, to consider the adequacy of the Disclosure Statement explaining the Joint Chapter 11 Plan of Liquidation filed by the Official Committee of Unsecured Creditors, the Ad Hoc Committee of Secured Lenders, and the Ad Hoc Committee of Senior Subordinated Noteholders, for Le- nature's, Inc., and its debtor-affiliates. Headquartered in Latrobe, Pennsylvania, Le-Nature's Inc. -- http://www.le-natures.com/-- makes bottled waters, teas, juices and nutritional drinks. Its brands include Kettle Brewed Ice Teas, Dazzler fruit juice drinks and lemonade, and AquaAde vitamin-enriched water. Four unsecured creditors of Le-Nature's filed an involuntary chapter 7 petition against the company on Nov. 1, 2006 (Bankr. W.D. Pa. Case No. 06-25454). On Nov. 6, 2006, two of Le-Nature's subsidiaries, Le-Nature's Holdings Inc., and Tea Systems International Inc., filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. Judge McCullough converted Le Nature's Inc.'s case to a chapter 11 proceeding. The Debtors' cases are jointly administered. The Debtors' schedules filed with the Court showed $40 million in total assets and $450 million in total liabilities. Douglas Anthony Campbell, Esq., at Campbell & Levine, LLC, represents the Debtors in their restructuring efforts. The Court appointed R. Todd Neilson as Chapter 11 Trustee. Dean Z. Ziehl, Esq., and Debra Grassgreen, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub LLP, represent the Chapter 11 Trustee. David K. Rudov, Esq., at Rudov & Stein, and John K. Sherwood, Esq., Sharon L. Levine, Esq., and Kenneth A, Rosen, Esq., at Lowenstein Sandler PC, represent the Official Committee of Unsecured Creditors. Edward S. Weisfelner, Esq., Robert J. Stark, Esq., and Andrew Dash, Esq., at Brown Rudnick Berlack Israels LLP, and James G. McLean, Esq., at Manion McDonough & Lucas represent the Ad Hoc Committee of Secured Lenders. Thomas Moers Mayer, Esq., and Matthew J. Williams, Esq. at Kramer Levin Naftalis & Frankel LLP, represent the Ad Hoc Committee of Senior Subordinated Noteholders. LSI Logic: Earns $59 Million in Fourth Quarter Ended December 31 ---------------------------------------------------------------- LSI Logic Corporation reported fourth quarter 2006 revenues of $524 million, a 3% increase year-over-year compared to the $506 million reported in the fourth quarter of 2005, and up 6% sequentially compared to the $493 million reported in the third quarter of 2006. Fourth quarter 2006 net income was $59 million, compared to fourth quarter 2005 net income of $38 million. Fourth quarter 2006 results compare to third quarter 2006 net income of $44 million. Fourth quarter 2006 net income included $10.9 million of stock- based compensation expense and a net charge of $5.2 million from special items, acquisition-related amortization, restructuring and their related tax effect. Cash and short-term investments totaled $1.01 billion at quarter end, with $272 million in repayment of convertible notes completed during the quarter. "Our solid fourth quarter performance was fueled by the seasonally-strong demand for storage products, with 22% sequential growth and record quarterly revenue in our Engenio systems business," said Abhi Talwalkar, LSI Logic president and chief executive officer. "For the full year, storage semiconductor and system revenues grew at healthy, double-digit rates of 14% and 12% respectively. During the quarter, we also agreed to merge with Agere Systems Inc. to create a storage, networking and consumer powerhouse that we anticipate will better serve our customers, shareholders and employees." LSI recorded full year 2006 revenues of $1.982 billion, a 3% increase compared to $1.919 billion in 2005. The company reported 2006 net profit of $170 million, which includes $47 million of stock-based compensation expense and a net charge of $19.5 million from special items, acquisition-related amortization, restructuring and their related tax effect. Full year 2006 results compare to full year 2005 net loss of $6 million which included a $91 million non-cash charge associated with the sale of the company's former Gresham, Oregon manufacturing facility. "GAAP net income for the quarter grew 35% sequentially and 56% compared to the same quarter in 2005," said Bryon Look, LSI Logic chief financial officer. "Our balance sheet remained strong with a net cash position of $659 million. The company generated operating cash flows of $51 million for the quarter and $247 million for the full year." At Dec. 31, 2006, the company's balance sheet showed $2.852 billion in total assets, $956.2 million in total liabilities, $235,000 in minority interest in subsidiary, and $1.895 billion in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the year ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?1b20 About LSI Logic Based in Milpitas, California, LSI Logic Corporation (NYSE: LSI) -- http://www.lsi.com/-- is a leading provider of silicon-to- systems solutions that are used at the core of products that create, store and consume digital information. LSI offers a broad portfolio of capabilities including custom and standard product ICs, host bus and RAID adapters, storage area network solutions and software applications. * * * As reported in the Troubled Company Reporter on Dec. 5, 2006, Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating and other ratings on LSI Logic Corp. M/I HOMES: S&P Rates $100 Mil. 9.75% Preferred Stock Offering at B ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B' rating to a $100 million 9.75% preferred stock offering by M/I Homes Inc. The rating on this new issuance does not affect the existing 'BB' corporate credit rating on M/I Homes or Standard & Poor's negative outlook. Proceeds from the offering are expected to be used to reduce borrowings under the company's revolving credit agreement. Standard & Poor's view this preferred stock as a costly capital source in relation to the company's average cost of debt; however, the security does receive partial equity consideration. Standard & Poor's treats the preferred stock issuance as having an intermediate level of equity content, which for ratio calculation purposes results in 50% of the security being treated as equity and 50% as debt. Additionally, the preferred stock contains change-of-control language that, under certain circumstances, allows M/I Homes to optionally redeem the preferred stock or accept a 100-basis-point increase to 10.75%. Although this transaction will enhance near-term liquidity and create room under the company's credit facility interest coverage covenant, the rating agency maintains its negative outlook because Standard & Poor's expects market conditions to remain challenging and to pressure already weakened cash flow. MAGNOLIA ENERGY: Court Approves Refinancing Transaction ------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Magnolia Energy L.P. and its debtor-affiliates to enter into a transaction that will refinance their business. The Debtors tell the Court that its indirect equity holder, Kelson Holdings LLC, has been pursuing a potential refinancing of several power plan projects including their facility in Benton County, Mississippi. Mayflower Energy, Inc., a subsidiary of Kelson and also an indirect equity holder in the Debtors, signed an engagement letter with Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Capital Corporation. The Debtors disclose that Merrill Lynch has started a marketing process to refinance various businesses indirectly owned by Kelson, including the Benton County facility. Pursuant to the Refinance Transaction, non-debtor subsidiaries of Kelson will borrow funds sufficient to make a capital contribution to the Debtors to enable the Debtors to repay, among other things, all existing valid secured and unsecured claims against the Debtors and valid expenses of administration of the Debtors' estates. These borrowings will be secured by a pledge of their equity interests in various subsidiaries. The obligations will be guaranteed by various operating subsidiaries, including the Debtors, and will pledge their assets to secure the obligations under the guaranty. The Debtors related to the Court that upon the closing of the refinance transaction, there will be no longer a need for further restructuring efforts in Chapter 11 as funds will be available to pay all creditors in full in accordance with their contractual rights. In this regard, the Court also ordered that upon closing of the refinancing and filing of a certification stating that the closing of the transaction and payment of the claims have occurred, the Debtors' chapter 11 cases will be considered closed. About Magnolia Energy Headquartered in Ashland, Michigan, Magnolia Energy L.P., and three of its affiliates filed for chapter 11 protection on Sept. 29, 2006 (Bankr. D. Del. Case Nos. 06-11069 through 06-11072). Mark D. Collins, Esq., at Richards Layton & Finger, represents the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. The Debtors' exclusive right to file its Chapter 11 Plan will expire on May 29, 2007. MALDEN MILLS: Wants Cases Converted to Chapter 7 Liquidation ------------------------------------------------------------- Malden Mills Industries, Inc., and its debtor affiliates ask the U.S. Bankruptcy Court for the District of Massachusetts to convert their chapter 11 cases to a chapter 7 liquidation proceeding. The Debtors tell the Court that they expect to wind-down their case through chapter 7 and that their Wind-Down request had been granted. The Debtors relates that the Wind-Down Order provides that the actual allowed amounts of: a. all administrative claims incurred through the conversion, and b. other claims as set forth in sections A, B, and C of the Wind-Down Budget incurred through the Closing Date, will be paid. The Order further provided for GECC's consent to the use of cash collateral in the form of Sale proceeds to fund the chapter 11 expenses from the Closing Date through the conversion subject to the Wind-Down Budget. As reported in the Troubled Company Reporter on March 5, 2007, the Debtors obtained authority from the Court to sell its business to Chrysalis Capital Partners LLC for $44 million plus assumed liabilities. The Debtors contend that conversion to chapter 7 is the most effective mechanism to wind-down their estates in an orderly fashion. Headquartered in Lawrence, Massachusetts, Malden Mills Industries, Inc. -- http://www.polartec.com/-- develops, manufactures, and markets Polartec(R) performance fabrics. Polartec(R) products range from lightweight wicking base layers to insulation to extreme weather protection and are utilized by the best clothing brands in the world. In addition, Polartec(R) fabrics are used extensively by all branches of the United States military, including the Army, Navy, Marine Corps, Air Force, and Special Operations Forces. The company also has operations in Germany, Spain, France and the U.K. The company filed for chapter 11 protection on Nov. 29, 2001 (Bankr. Mass. Case No. 01-47214). The Court confirmed the Debtor's plan on Aug. 14, 2003. The company and four of its affiliates filed their second chapter 11 petitions on Jan. 10, 2007 (Bankr. D. Del. Case Nos. 07-10048 through 07-10052). Laura Davis Jones, Esq., and Michael Seidl, Esq., at Pachulski, Stang, Ziehl Young, Jones & Weintraub, PC, represent the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets between $1 million to $100 million and estimated debts of more than $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on May 10, 2007. On Jan. 12, 2007, the Delaware Bankruptcy Court transferred the case to the U.S. Bankruptcy Court for the District of Massachusetts (Case No. 07-40124). MATTRESS HOLDING: Planned Acquisition Spurs S&P's Negative Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including its 'B' corporate credit rating, on Houston, Texas-based Mattress Holding Corp. on CreditWatch with negative implications. These actions followed the company's disclosure that it has signed a letter of intent to acquire Marlboro, Maryland-based Mattress Discounters Corp. for an as yet undisclosed amount. The acquisition would add more than 150 stores to Mattress Holding's existing base of about 350 stores and expand its operations into the Northeastern U.S., a market previously untapped by the company. "The CreditWatch listing will be resolved," said Standard & Poor's credit analyst John Thieroff, "either upon closing of the acquisition or an announcement that the transaction will not be consummated." Key to Standard & Poor's analysis will be the purchase price, method of financing, geographic fit of the acquired operations, and a reassessment of Mattress Holding's growth strategy. "Scant margin existed in the current ratings for additional leverage," added Mr. Thieroff, " and should the acquisition be primarily debt funded, ratings will likely be lowered." MERIDIAN AUTOMOTIVE: Trustee Wants Beneficiary Record Date Fixed ---------------------------------------------------------------- Ocean Ridge Capital Advisors, LLC, the litigation trustee appointed pursuant to the Debtors' confirmed plan of reorganization, asks the Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware to fix a record date for identifying: (a) Prepetition First Lien Claim Beneficiaries, (b) Prepetition Second Lien Claim Beneficiaries, and (c) Prepetition General Unsecured Claim Beneficiaries. Pursuant to the Trust Agreement: -- Prepetition First Lien Claim Beneficiaries means Holders, as of the Effective Date, of the Prepetition First Lien Claim Trust Interests; -- Prepetition General Unsecured Claim Beneficiaries means Holders of General Unsecured Claims as of the Distribution Record Date, to the extent the Claims are Allowed Claims; and -- Prepetition Second Lien Claim Beneficiaries means Holders, as of the Effective Date, of the Prepetition Second Lien Claim Trust Interests. The Litigation Trustee explains that the "Defined Terms" section of the Debtors' Plan establishes the Distribution Record Date as the date of the entry of the order confirming the Plan -- Dec. 6, 2006. The Litigation Trustee, however, points out that pursuant to the "Notice of (I) Entry of Order Confirming the Fourth Amended Joint Plan of Reorganization Proposed by the Debtors; (II) the Bar Date for Certain Administrative Claims; and (III) the Occurrence of the Effective Date of the Plan" the Debtors filed on Jan. 8, 2007, the Effective Date is Dec. 29, 2006. Given the provisions of the Trust Agreement that prohibit the transfer of beneficial interests in or rights to payments to be made under the Trust Agreement, the Litigation Trustee says, it appears that the fixed record dates for the identification of Trust beneficiaries are: (a) December 29, 2006 -- the Effective Date -- for Prepetition First Lien Claims and Prepetition Second Lien Claims; and (b) December 6, 2006 -- the Distribution Record Date -- for Prepetition General Unsecured Claims, to the extent that the Prepetition General Unsecured Claims are allowed claims. The Litigation Trustee also notes that the Trust Agreement contains a subsection titled "Identification of Prepetition General Unsecured Claim Beneficiaries," which requires the Debtors to promptly deliver to the Litigation Trustee a Claims Report showing claims as of the Distribution Record Date, and to provide updated Claims Reports to the Litigation Trustee periodically. The Litigation Trustee notes it is authorized to rely on the Claims Reports for purposes of making distributions to Prepetition General Unsecured Claim Beneficiaries. Given that the Plan and the Trust Agreement contemplate that Prepetition General Unsecured Claims may be disputed as of the Distribution Record Date, and that holders of disputed Prepetition General Unsecured Claims are not Trust beneficiaries, the purpose of the subsequent Claims Reports is presumably to inform the Litigation Trustee of new Prepetition General Unsecured Claim Beneficiaries. To the extent that any disputed Prepetition General Unsecured Claims become allowed in whole or in part after the Distribution Record Date, the holders of the allowed claims will become Trust Beneficiaries and are entitled to distributions as and to the extent provided in the Plan and the Trust Agreement, the Liquidation Trustee tells the Court. In addition, the Trust Agreement indicates that the Litigation Trustee may rely on the Claims Reports for the addresses of the Prepetition General Unsecured Claim Beneficiaries. Prepetition First Lien Claim Beneficiaries and Prepetition Second Lien Claim Beneficiaries are permitted to send written notice of changes of address directly to the Litigation Trustee, but the Trust Agreement contains no provision with respect to Prepetition General Unsecured Claim Beneficiaries, the Litigation Trustee adds. The Litigation Trustee asks Judge Walrath to clarify that: -- the fixed record date for identifying Prepetition First Lien Claim Beneficiaries and Prepetition Second Lien Claim Beneficiaries is Dec. 29, 2006, the Plan Effective Date; -- the fixed record date for identifying Prepetition General Unsecured Claim Beneficiaries is Dec. 6, 2006, the Distribution Record Date, for those holders of Prepetition General Unsecured Claims whose claims are allowed as of Dec. 6, 2006; -- the Litigation Trustee is authorized to rely on the Claims Reports provided to it by the Debtors for the addresses of Prepetition General Unsecured Claim Beneficiaries, for the dollar amount of the claim of each Prepetition General Unsecured Claim, and for information concerning Prepetition General Unsecured Claims that are disputed as of the Distribution Record Date and are subsequently allowed in whole or in part; and -- the Litigation Trustee is authorized to recognize as Trust Beneficiaries and make distributions solely to: (a) holders of Prepetition First Lien Claims and Prepetition Second Lien Claims as of Dec. 29, 2006; (b) holders of allowed Prepetition General Unsecured Claims as of Dec. 6, 2006; and (c) holders of Prepetition General Unsecured Claims that are allowed after Dec. 6, 2006, to the extent the allowance is reflected in the Claims Reports provided to the Trustee and consistent with the Plan and the Trust Agreement. Headquartered in Dearborn, Mich., Meridian Automotive Systems Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. Judge Walrath confirmed the Revised Fourth Amended Reorganization Plan of Meridian and that plan became effective on Dec. 29, 2006. (Meridian Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). MERIDIAN AUTOMOTIVE: EPA Wants $9 Mil. in Clean Air Act Penalties ----------------------------------------------------------------- The United States Environmental Protection Agency asks the U.S. Bankruptcy Court for the District of Delaware to compel Meridian Automotive Systems Inc. and its affiliates to pay civil penalties for violation under the Clean Air Act. Matthew McKeown, Esq., Trial Attorney, Environmental Enforcement Section of Environment and Natural Resources Division of the U.S. Department of Justice, in Washington D.C., states that civil penalties for those violations qualify as administrative expenses under Section 503 of the Bankruptcy Code. From April 26, 2005, until May 24, 2006, volatile organic compound emissions from a Sheet Molding Machine at the Debtors' plant in Jackson, Ohio, exceeded the hourly, daily, and yearly limitations set forth in the Permit to Install and the Title V permit the Debtors obtained. Mr. McKeown says that the Debtors are liable for civil penalties of up to $32,500 per day -- for 279 days -- for each of the violations. Accordingly, the statutory maximum in civil penalties for which the Debtors may be liable for each violation is roughly $9,000,000. Headquartered in Dearborn, Mich., Meridian Automotive Systems Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. Judge Walrath confirmed the Revised Fourth Amended Reorganization Plan of Meridian and that plan became effective on Dec. 29, 2006. (Meridian Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). MOVIE GALLERY: Loan Revision Cues Moody's to Lift Rating to B1 -------------------------------------------------------------- Moody's Investors Service upgraded the rating on Movie Gallery Inc.'s $100 million senior secured credit facility to B1 and affirmed all its other ratings after the companies revision of its new capital structure and change in the terms of the revolving credit facility. The rating outlook remains positive. The upgrade reflects the revolving credit facility now being a "first-out" revolver that will get paid first in the event of a default. In addition, the capital structure changed such that the first lien term loan was increased to $600 million from the original $525 million and the second lien term loan was decreased to $175 million from the original $250 million, as discussed in Moody's press release dated Feb. 20, 2007. The total amount of the debt in the capital structure remains unchanged. This rating is upgraded: * $100 million senior secured revolving credit facility to B1, LGD1,9% from B2, LGD3, 33%. These ratings are affirmed: * Corporate family rating at Caa1; * Probability of default rating at B3; * $25 million synthetic letter of credit facility at B2, with the LGD assessment changed to LGD3-39%; * $600 million senior secured first lien term loan at B2, with the LGD assessment changed to LGD3-39%; * $175 million senior secured second lien term loan at Caa1 LGD4, 66%. * Senior unsecured guaranteed notes at Caa2, with the LGD assessment changed to LGD5-88%; * Speculative grade liquidity rating at SGL-3. This rating is withdrawn: Senior secured credit facilities at B3, LGD3, 41%. The Caa1 corporate family rating reflects the company's continued eroding competitive position of its Hollywood Entertainment subsidiary, its very weak credit metrics and the numerous threats the home video rental industry faces. The rating is also constrained by the company's high seasonality and aggressive financial policies. The company has very little financial flexibility as result of the high leverage it incurred in order to finance its acquisition of Hollywood Entertainment in early 2005. Balancing out these weaknesses is the company's national diversification, credible market position, and its scale with approximately $2.5 billion in annual revenues. The rating outlook is positive. Ratings could be upgraded should the company demonstrate that its internally generated cash flow has stabilized and can fully support, with a moderate cushion, its working capital, video rental library purchases, capital expenditures, and its debt service requirements. Given the positive outlook it is currently unlikely that ratings would be downgraded. However, downward rating pressure would develop should the company's liquidity position deteriorate or should there be further notable erosion in the company's operating income. Movie Gallery, headquartered in Dothan, Alabama, is a leading provider of in-home movie and game entertainment in the United States. It operates over 4,650 stores in the United States, Canada, and Mexico under the Movie Gallery, Hollywood Entertainment, Game Crazy, and VHQ banners. Pro forma revenues for fiscal year 2006 were $2.5 billion. MSX INT'L: Moody's Rates Proposed $200 Million Senior Notes at B2 ----------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to MSX International Inc.'s proposed $200 million in senior secured notes, consisting of: 1) a $65 million strip to be issued by MSX International Business Services France, SAS; 2) a $70 million strip to be co-issued by MSX International UK PLC ("MSX UK"); and, 3) a $65 million strip to be issued by MSX International GmbH ("MSX Germany"). Each of the issuers is an indirect wholly-owned subsidiary of MSX International, Inc., the primary operating company. MSX will be wholly-owned by a newly-formed holding company, MSX-IBS Holdings, Inc. Concurrently, the Corporate Family Rating has been upgraded to B3 from Caa1 and the outlook has been changed to stable from negative. The proceeds of the proposed financing will be used to refinance certain existing indebtedness of MSX and to pay fees and expenses associated with the transaction. These are the rating actions: Assigned: * MSX International Business Services France, SAS, MSX International UK PLC, and MSX International GmbH -- $200 million senior secured notes due 2012, B2, LGD3, 34% Upgraded: -- Corporate Family Rating, upgraded to B3 from Caa1; and -- Probability of Default Rating, upgraded to B3 from Caa1 These ratings have been withdrawn: * MSX International, Inc. -- $65.5 million 11% senior secured notes due 2007, rated B1, LGD2 11%; -- $130 million 11.375% senior subordinated notes due 2008, rated Caa2, LGD5, 75%; * MSX International, Ltd. -- $10 million 11% senior secured notes due 2007, rated B1, LGD2, 11%; The rating outlook is changed to stable from negative. The upgrade in the Corporate Family Rating primarily reflects the elimination of refinancing risk posed by the near-term maturity of roughly $100 million of MSX's term debt. The refinancing of roughly $49 million in mezzanine and fourth lien term loans at the newly-formed holding company, Holdings, materially strengthens the creditworthiness of this issuer because the reissued notes will require no debt service, will mature after the proposed senior secured notes, will be deeply subordinated and, thus, will provide enhanced loss absorption for the senior secured notes. The upgrade in the rating also reflects Moody's belief that the appointment of a new CEO will serve to focus and revitalize the company in its core business, the automotive outsourced business solutions market. It is Moody's understanding that the company is in the process of extending the maturity of its senior secured revolving credit facility concurrently with the issuance of the proposed notes. The stable ratings outlook recognizes that while volume and pricing pressures in each of the firm's lines of business are expected to continue for the foreseeable future, the company's core business will maintain the recent trend of favorable top-line growth. The ratings could move down if growth in revenues and EBITDA in the company's integrated business solutions falters, thereby leading to lower profitability levels, negative free cash flows from operations and impaired liquidity. Moody's does not anticipate any upward movement in the ratings during the next twelve months. If the company is able to realize the free cash flow levels discussed above, the outlook could become positive. MSX International, Inc. is a global provider of outsourced technical business services. Revenues for the twelve months ended Oct. 1, 2006, were $360 million. NEW CENTURY: Default Cues Morgan Stanley to Discontinue Financing ----------------------------------------------------------------- New Century Financial Corporation disclosed in a regulatory filing with the U.S. Securities and Exchange Commission that on March 9, 2007, it received a letter from Morgan Stanley Mortgage Capital Inc. notifying the company: * of certain purported defaults, * that Morgan Stanley was accelerating certain obligations under the Morgan Stanley Agreement, and * Morgan Stanley was discontinuing financing to the company under the Morgan Stanley Agreement. Morgan Stanley Agreement The company and certain of its subsidiaries and Morgan Stanley, on March 8, 2007, entered into an Amendment No. 8 to a certain Master Repurchase Agreement dated December 12, 2005. The amended agreement allowed to company to add new borrowers and pledge additional assets for $265 million in new financing. Subsidiaries include: * New Century Mortgage Corporation, * NC Capital Corporation, * NC Asset Holding, L.P., * Home123 Corporation, * New Century Credit Corporation, * NC Residual III Corporation, and * NC Residual IV Corporation. The Amended Agreement also provides that Morgan Stanley may, in its discretion, elect to discontinue extending financing to the company. A full-text copy of the Morgan Stanley Agreement, as amended, is available for free at http://researcharchives.com/t/s?1b39 About New Century Founded in 1995 and headquartered in Irvine, California, New Century Financial Corporation (NYSE: NEW) -- http://www.ncen.com/ -- is a real estate investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The company offers a broad range of mortgage products designed to meet the needs of all borrowers. NEW CENTURY: Repays Outstanding Citigroup Global Obligations ------------------------------------------------------------ New Century Financial Corporation disclosed that along with its subsidiaries, on March 8, 2007, they repaid their outstanding obligations pursuant to a master repurchase agreement with Citigroup Global Markets Realty Corp. Although the parties to the Citigroup Agreement have not formally terminated the Citigroup Agreement, the company said it does not expect to be able to obtain additional financing under the Citigroup Agreement. The company discloses that under the respective financing arrangements between the company and its lenders, each of the company's lenders have the right to cease providing financing to the company and its subsidiaries during the pendency of an event of default. As of March 9, 2007, all of the company's lenders under its short- term repurchase agreements and aggregation credit facilities had discontinued their financing with the Company or had notified the Company of their intent to do so. Certain of these lenders had also purported to terminate the company's servicing rights under the respective financing arrangement. About New Century Founded in 1995 and headquartered in Irvine, California, New Century Financial Corporation (NYSE: NEW) -- http://www.ncen.com/ -- is a real estate investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The company offers a broad range of mortgage products designed to meet the needs of all borrowers. NEW CENTURY: May Not Be Able to File 2006 Form 10-K by March 16 --------------------------------------------------------------- New Century Financial Corporation reports that although it continues to work diligently to finalize its financial statements for the year ended December 31, 2006, it does not expect to finalize its financial statements, or to file its 2006 Form 10-K, prior to March 16, 2007. The company had disclosed that it would not be able to complete its 2006 Form 10-K until: (i) the Audit Committee of its Board of Directors completes its previously announced internal investigation into the issues giving rise to the company's need to restate its 2006 interim financial statements, as well as issues pertaining to the company's valuation of residual interests in securitizations in 2006 and prior periods, and (ii) the company provides its independent registered public accounting firm, KPMG LLP, with the information that it needs in order to complete its audit of the company's financial statements and internal control over financial reporting. The company says that it doesn't file its 2006 Form 10-K with the SEC on or before March 16, 2007, it will be in violation of Section 203.01 of the New York Stock Exchange's Listed Company Manual and will be subject to the procedures specified in Section 802.01E of the NYSE Listed Company Manual. This section provides that the NYSE will monitor the Company and the filing status of the 2006 Form 10-K. If the Company has not filed its 2006 Form 10-K within six months of the filing due date of the 2006 Form 10-K, the NYSE will determine whether the Company should be given up to an additional six months to file its 2006 Form 10-K. If the NYSE determines that such an additional time period is not appropriate, suspension and delisting procedures would be commenced pursuant to Section 804.00 of the NYSE Listed Company Manual. About New Century Founded in 1995 and headquartered in Irvine, California, New Century Financial Corporation (NYSE: NEW) -- http://www.ncen.com/ -- is a real estate investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The company offers a broad range of mortgage products designed to meet the needs of all borrowers. NEW CENTURY: Lenders Accelerate Repurchase of Mortgage Loans ------------------------------------------------------------ New Century Financial Corporation disclosed Monday in a regulatory filing with the Securities and Exchange Commission all of its lenders under its short-term repurchase agreements and aggregation credit facilities had discontinued their financing with the company or had notified the company of their intent to do so. Certain of the lenders had also purported to terminate the company's servicing rights under the respective financing arrangement. The lenders asserted that the company and its subsidiaries have violated their respective obligations under the financing arrangements and that the violations amount to events of default. Certain of the lenders have further advised the company that they are accelerating the company's obligation to repurchase all outstanding mortgage loans financed under the applicable agreements. Ther company had said that it company relies on short-term repurchase agreements and aggregation credit facilities and an asset-backed commercial paper facility to fund mortgage loan originations and purchases pending the pooling and sale of such mortgage loans. It has been in discussions with its lenders in an effort to obtain waivers for certain of the obligations of the company and its subsidiaries under the financing arrangements. Under the company's respective financing arrangements with its lenders, each of the company's lenders have the right to cease providing financing to the company and its subsidiaries during the pendency of an event of default. The company's financial obligations purported to have been accelerated by the company's lenders as well as a description of additional notices received by the company from its lenders are: Bank of America, N.A. --------------------- * The company has received two letters from Bank of America, each dated March 8, 2007. The letters allege that certain subsidiaries of the company failed to satisfy margin calls under that certain Third Amended and Restated Master Purchase Agreement, dated as of May 13, 2002, amended and restated to and including September 7, 2006, by and among certain subsidiaries of the Company and Bank of America, and that certain Amended and Restated Master Repurchase Agreement, dated as of September 5, 2005, amended and restated to and including September 28, 2006, by and among certain subsidiaries of the company and Bank of America and that as a result Events of Default have occurred. The letters also purport to accelerate the obligation of the Company's subsidiaries to repurchase all outstanding mortgage loans financed under the Bank of America Agreements. Under the Bank of America Agreements, such acceleration would require the immediate repayment of the repurchase obligation. The Company estimates that the aggregate repurchase obligation of its subsidiaries under the Bank of America Agreements was approximately $0.6 billion as of March 9, 2007. The Company is a guarantor under the Bank of America Agreements. In the letters, Bank of America additionally purports to transfer to itself the company's subsidiaries' servicing rights under the Bank of America Agreements and requests that the company and such subsidiaries transfer the relevant servicing records to a party designated by Bank of America. Barclays Bank PLC ----------------- * The company received a Notice of Termination of Servicing from Barclays, dated March 8, 2007, purporting to terminate the right of one of the Company's subsidiaries to service certain loans under that certain Master Repurchase Agreement, dated as of March 31, 2006, by and among the Company, certain of its subsidiaries, Barclays and Sheffield Receivables Corporation. In its notice, Barclays also requested that the Company and its subsidiaries take certain actions to facilitate the transfer of the servicing rights to a party appointed by Barclays. Citigroup Global Markets Realty Corp. ------------------------------------- * The company received a Notice of Maintenance Call from Citigroup, dated March 6, 2007, stating that a margin deficit under that certain Master Repurchase Agreement, dated as of August 1, 2006, among certain subsidiaries of the company, the company, as guarantor, and Citigroup exists, and demanding that such subsidiaries transfer approximately $80.3 million to Citigroup in immediately available funds on or before 5:00 p.m. on March 7, 2007. * The company also received a Notice of Repurchase and Termination of Transactions from Citigroup, dated March 6, 2007, notifying the company that Citigroup was exercising its option under the Citigroup Agreement to require the company and its subsidiaries to satisfy their obligation to repurchase all outstanding mortgage loans financed under the Citigroup Agreement and to pay the amount of such obligation to Citigroup no later than 5:00 p.m. on March 7, 2007. The aggregate amount of this obligation at March 7, 2007 was approximately $717 million. On March 8, 2007, the company used the proceeds of the additional financing under the Morgan Stanley Amendment to satisfy this obligation. * Additionally, the company and one of its subsidiaries received a Notice of Default, dated March 8, 2007, alleging that an Event of Default as defined in that certain Servicer Advanced Financing Facility Agreement between such subsidiary and Citigroup exists as a result of the downgrade, on March 8, 2007, by Fitch Ratings and Moody's Investor Services of such subsidiary's residential primary servicer rating and the company's alleged breach of its covenant to maintain cash and cash equivalents at all times in an amount of not less than $60 million. The Notice of Default states that all amounts and obligations of the company (as guarantor) and such subsidiary in the aggregate principal amount of approximately $31.9 million together with interest, fees, expenses and other charges as provided in the Citigroup Servicer Agreement and the Note are immediately due and payable. The amount remains outstanding as of March 9, 2007. Credit Suisse First Boston Mortgage Capital LLC ----------------------------------------------- * The company received a Notice of Event of Default and Exercise of Remedies, dated March 11, 2007, from CSFBMC alleging that certain Events of Default as defined in that certain Amended and Restated Master Repurchase Agreement, dated as of January 31, 2007, by and among the company, certain of its subsidiaries and CSFBMC have occurred as a result of: i) the alleged failure of such subsidiaries to make certain cash payments; and ii) alleged defaults of the company and its subsidiaries under certain of their other financing arrangements. The March 11, 2007 letter purports to accelerate the obligation of the company's subsidiaries to repurchase all outstanding mortgage loans financed under the CSFBMC Agreement and demands repayment of the aggregate repurchase obligation. Under the CSFBMC Agreement, such acceleration would require the immediate repayment of the repurchase obligation. The company estimates that the aggregate repurchase obligation of its subsidiaries under the CSFBMC Agreement was approximately $0.9 billion as of March 9, 2007. The company is a guarantor under the CSFBMC Agreement. In its notice, CSFBMC additionally purports to terminate the company's subsidiary's servicing rights under the CSFBMC Agreement and requests that the subsidiary take certain actions to facilitate the transfer of the servicing rights to a party appointed by CSFBMC. DB Structured Products ---------------------- * The company received two Reservation of Rights notices from DBSP, each dated March 10, 2007, alleging that certain Events of Default, as defined in that certain Master Repurchase Agreement, dated as of April 14, 2006, by and among certain of the company's subsidiaries, DBSP, Aspen Funding Corp., Newport Funding Corp. and Gemini Securitization Corp., LLC, and the related Loan and Security Agreement, have occurred as a result of: i) the failure of the company and its subsidiaries to satisfy an alleged margin and collateral deficit; ii) alleged defaults of the company's subsidiaries under certain of their other financing arrangements; and iii) an alleged failure of the company to maintain the profitability required by the April 2006 Agreements. DBSP purports in the notices to reserve its rights with respect to the alleged Events of Default and also, among other requested actions, requests that the company and its subsidiaries take certain actions to facilitate the establishment of a back up servicing arrangement with a party appointed by DBSP. * The company received a Reservation of Rights notice from DBSP, dated March 10, 2007, alleging that certain Events of Default, as defined in that certain Master Repurchase Agreement, dated as of September 2, 2005, by and among certain of the company's subsidiaries, DBSP, Aspen Funding Corp., Newport Funding Corp., Tucson Funding LLC and Gemini Securitization Corp., LLC, have occurred as a result of: -- the failure of the company and its subsidiaries to satisfy an alleged margin deficit; -- alleged defaults of the company's subsidiaries under certain of their other financing arrangements; and -- an alleged failure of the company to maintain the profitability required by the DB Agreement. DBSP purports in the notice to reserve its rights with respect to the alleged Events of Default and also, among other requested actions, requests that the company and its subsidiaries take certain actions to facilitate the establishment of a back up servicing arrangement with a party appointed by DBSP. Goldman Sachs Mortgage Company ------------------------------ * The company received notices from GSMC, dated March 7, 2007 and March 8, 2007, respectively, alleging that an Event of Default as defined in that certain Master Purchase Agreement, dated as of February 15, 2006, between the company, as guarantor, one of its subsidiaries and GSMC has occurred due to the failure of such subsidiary to comply with a margin call under the GSMC Agreement. The March 8, 2007 letter purports to accelerate the company's and its subsidiary's obligation to repurchase all outstanding mortgage loans financed under the GSMC Agreement and demands repayment of the aggregate repurchase obligation. Under the GSMC Agreement, such acceleration would require the immediate repayment of the repurchase obligation. The March 8, 2007 letter also purports to terminate the right of the company's subsidiary to service certain loans. The company estimates that the aggregate repurchase obligation of the company and its subsidiary under the GSMC Agreement was approximately $0.1 billion as of March 9, 2007. * The company's subsidiary received an additional notice from GSMC, dated March 9, 2007, in which GSMC purported to offset the mortgage loans held by GSMC (and for which the subsidiary has a repurchase obligation under the GSMC Agreement) against the subsidiary's repurchase obligation to GSMC. In this notice, GSMC states that it will inform the company's subsidiary of the total value credited by GSMC (as a result of this offset) against the company's and the subsidiary's obligation under the GSMC Agreement. IXIS Real Estate Capital, Inc. ------------------------------ * The company received a Notice of Default and Reservation of Rights from IXIS, dated March 8, 2007, alleging that certain Events of Default as defined in that certain Fifth Amended and Restated Master Repurchase Agreement, dated as of November 10, 2006, by and among the company, certain of its subsidiaries and IXIS (the "IXIS Agreement") have occurred as a result of such subsidiaries' alleged failure to: -- deliver certain financial statements of the company and its consolidated subsidiaries; -- keep adequate books and records of account; -- maintain the profitability required by the IXIS Agreement; and -- make certain cash payments. The March 8, 2007 letter purports to accelerate the obligation of the company's subsidiaries to repurchase all outstanding mortgage loans financed under the IXIS Agreement and demands repayment of the aggregate repurchase obligation. Under the IXIS Agreement, such acceleration would require the immediate repayment of the repurchase obligation. The company estimates that the aggregate repurchase obligation of its subsidiaries under the IXIS Agreement was approximately $0.8 billion as of March 9, 2007. The company is a guarantor under the IXIS Agreement. In its notice, IXIS additionally purports to terminate the company's subsidiaries' servicing rights under the IXIS Agreement and requests that the subsidiaries take certain actions to facilitate the transfer of the servicing rights to a party appointed by IXIS. Morgan Stanley Mortgage Capital Inc. ------------------------------------ * The company received a Notice of Event of Default, Acceleration and Exercise of Remedies from Morgan Stanley, dated March 9, 2007, alleging that certain Events of Default have occurred as a result of: -- alleged defaults of the company's subsidiaries under certain of their other financing arrangements; and -- a determination by Morgan Stanley that there has been a material adverse change to the company's subsidiaries or their ability to perform their obligations under the Morgan Stanley Agreement. The March 9, 2007 letter purports to accelerate the obligation of the company's subsidiaries to repurchase all outstanding mortgage loans and securities financed under the Morgan Stanley Agreement and demands repayment of the aggregate repurchase obligation. Under the Morgan Stanley Agreement, such acceleration would require the immediate repayment of the repurchase obligation. The company estimates that the aggregate repurchase obligation of the company's subsidiaries under the Morgan Stanley Agreement was approximately $2.5 billion as of March 9, 2007. In its notice, Morgan Stanley additionally purports to terminate the company's subsidiary's servicing rights under the Morgan Stanley Agreement and requests that the subsidiary take certain actions to facilitate the transfer of the servicing rights to a party appointed by Morgan Stanley. All of the company's financing arrangements with its lenders contain cross default and cross acceleration provisions. Accordingly, each of the company's lenders that have not yet delivered notices of default or acceleration to the company will be permitted to do so under the terms of their applicable financing arrangement with the company. If each of the company's lenders were to accelerate the obligations of the company and its subsidiaries to repurchase all outstanding mortgage loans financed under all of the company's outstanding financing arrangements, the aggregate repayment obligations would be approximately $8.4 billion. Further, under the respective financing arrangements, each of the company's lenders have the right to cease providing financing to the company and its subsidiaries during the pendency of an event of default. As of March 9, 2007, all of the company's lenders under its short- term repurchase agreements and aggregation credit facilities had discontinued their financing with the company or had notified the company of their intent to do so. One of the company's lenders has subsequently indicated to the company that, notwithstanding its written notification to the company of its intention to cease providing financing to the company, it may be willing to continue providing limited financing under its existing agreements with the company, but that such financing may be eliminated by the lender at any time. The company and its subsidiaries do not have sufficient liquidity to satisfy their outstanding repurchase obligations under the company's existing financing arrangements. The company is continuing its discussions with its lenders and other third parties regarding refinancing and other alternatives to obtain adequate liquidity. No assurance can be given that any of these discussions will be successful. If the company and its subsidiaries are not able to satisfy their repurchase obligations, one or more of the company's lenders may seek to liquidate the mortgage loans or other assets financed under the applicable financing arrangement with the company. If this were to occur and if such liquidation was for an amount less than the contractual amount at which the company and its subsidiaries have agreed to repurchase such mortgage loans from the applicable lender, then the lender may seek to recover this deficiency from the company and its subsidiaries. The company and its subsidiaries may not have sufficient resources to satisfy any such deficiency. Ceased Loan Application Acceptance As reported in the Troubled Company Reporter on Mar. 9, 2007, as a result of its current constrained funding capacity, New Century elected to cease accepting loan applications from prospective borrowers effective immediately while the company seeks to obtain additional funding capacity. The company expected to resume accepting applications as soon as practicable, however, there can be no assurance that the company will be able to resume accepting applications. KPMG Warns Going Concern Doubt In the event the company is unable to obtain satisfactory amendments to or waivers of the covenants in its financing arrangements from a sufficient number of its lenders, or obtain alternative funding sources, KPMG informed the Audit Committee that its report on the company's financial statements will include an explanatory paragraph indicating that substantial doubt exists as to the company's ability to continue as a going concern. About New Century Founded in 1995 and headquartered in Irvine, California, New Century Financial Corporation (NYSE: NEW) -- http://www.ncen.com/ -- is a real estate investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The company offers a broad range of mortgage products designed to meet the needs of all borrowers. NEW CENTURY: DBRS Further Cuts Rating on Discontinued Financing --------------------------------------------------------------- Dominion Bond Rating Service downgraded the Issuer Rating of New Century Financial Corporation to C from CCC. The rating remains Under Review with Negative Implications. This rating downgrade follows the company's Mar. 12, 2007 Form 8-K filing stating that as of Mar. 9, 2007, all of the company's lenders under its short- term repurchase agreements and aggregation credit facilities had discontinued their financing with the company, or had notified the company of their intent to do so. The company stated that some of these lenders had also purported to terminate the company's servicing rights under the respective financing arrangement. Moreover, New Century's filing stated that the company has received notices from certain lenders asserting that the company and its subsidiaries have violated their respective obligations under certain financing arrangements and that such violations amount to events of default. Some lenders have further advised the Company that they are accelerating New Century's obligation to repurchase all outstanding mortgage loans financed under the applicable agreements. The rating reflects DBRS's view that New Century is at high risk of defaulting on its financial obligations. According to the 8K filing, New Century and its subsidiaries do not have sufficient liquidity to repurchase all outstanding mortgage loans financed under all of the company's outstanding financing agreements, which may total $8.4 billion, if all lenders were to accelerate the obligations under the existing financing arrangements. Although the company is continuing its discussions with its lenders and other third parties regarding refinancing and other alternatives to obtain adequate liquidity, DBRS believes that New Century's ability to obtain sufficient financing is extremely limited. DBRS also believes that the company's inability to file its Form 10-K and the various legal, regulatory and criminal allegations has significantly eroded investor confidence. This is further exacerbated by the deteriorating market conditions in the residential subprime mortgage industry. DBRS believes that New Century's inability to obtain replacement financing in a timely fashion will have a dire impact on the company's viability. DBRS notes that more negative ratings actions would occur should the Company announce its inability to obtain adequate liquidity to fund its obligations, or should the company default or indicate default on its financial obligations. Previous Downgrade Dominion had previously downgraded the Issuer Rating of New Century to CCC from B and retained it Under Review with Negative Implications. The rating downgrade is based on the intensified liquidity pressure that New Century is experiencing attributed to the large margin calls and the inability to access its funding agreements. Moreover, New Century stated that it has not yet obtained the necessary waivers of the net income covenant from its remaining five financing arrangements. DBRS believes that these factors are exacerbated by the continued uncertainties caused by the delay in filing its Form 10-K, the uncertainties about the company's ability to fund new loans and the deteriorating market conditions in the residential subprime mortgage industry. New Century is under significant liquidity pressure. The company has stated that it has received an aggregate of approximately $150 million of margin calls, of which only approximately $80 million has been satisfied. Accordingly, the Company has approximately $70 million in outstanding margin calls from five lenders. Additionally, New Century has indicated that it has only been able to fund a portion of its loans this week, as its capacity to fund new originations is substantially limited because of its lenders' restrictions or refusals to allow the company to access their financing arrangements. This has constrained funding capacity, causing New Century to cease accepting loan applications from prospective borrowers effective immediately. DBRS believe the actions of the lenders as detailed in the company's press release are an indication that New Century's efforts to obtain the necessary waivers are falling short. The inability to obtain waivers from a substantial number of the lenders or the inability to adequately modify this covenant in its credit facilities is likely to have a dire impact on liquidity and the long-term viability of the company. On Mar.2, 2007, New Century announced that it expects to breach a profitability waiver embedded in 11 of its 16 financing agreements that collectively provide an aggregate of approximately $13 billion of committed and $4.4 billion of uncommitted borrowing capacity to fund mortgage loan originations and purchases. The covenant requires that the company report at least $1 of profitability for any rolling two-quarter period. In addition to obtaining waivers from its lenders, New Century is seeking amendments on certain financing agreements, modifying its rolling two quarter profitability covenant for the remainder of 2007. The company has stated that it has obtained waivers from six of the 11 lenders. DBRS continues to be concerned that the various legal, regulatory and criminal allegations, announced in New Century's March 2, 2007, release, will not only be a distraction for management, but may also have a significant impact on the negotiations with its lenders. Lastly, although New Century is currently still assessing the financial and legal impact of the anticipated restatements and has yet to file its Form 10-K, New Century has stated that it expects to report lower net gain on sales of loans and impairments to the fair value of its residual assets, loans held for sale and loans held for investment. DBRS believes that the results of the aforementioned may have a sizable impact on the company's financial flexibility, but uncertainties remain until the Form 10-K is actually filed. The impact of these uncertainties is exacerbated by the current deteriorating market conditions in the residential subprime mortgage industry. DBRS believes that the fundamentals of the New Century business are under severe stress. Although the company reports some progress in reducing the incidence of early payment defaults, it continues to face high levels of repurchase requests from its lenders. DBRS notes that negative rating action is likely should the Company announce its inability to obtain adaquate liquidity to fund its originations and balance sheet. NEW CENTURY: Obligations Violations Prompt S&P's Default Rating --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit rating on New Century Financial Corp. to 'D' from 'CC'. The ratings on the senior unsecured debt and preferred stock remain on CreditWatch with negative implications. "The rating action reflects New Century's receipt of notices from several of its lenders stating that the violations of its obligations regarding certain financing arrangements amount to events of default," said Standard & Poor's credit analyst Adom Rosengarten. As a result, these lenders have advised that they are accelerating the repurchase of all of New Century's outstanding mortgage loans financed under the respective agreements, making these repayable immediately. The senior unsecured debt rating and preferred stock ratings remain on CreditWatch Negative, and will be lowered when payments are not made on the date due, or upon the filing of a bankruptcy petition, whichever comes first. Previous Downgrade S&P had previously lowered its counterparty credit rating on New Century Financial Corp. to 'CC' from 'CCC' and retained it on CreditWatch with negative implications. "The rating action reflects New Century's inability to continue to originate new loans due to its severely constrained funding capacity," said Standard & Poor's credit analyst Adom Rosengarten. This is largely the result of the company's lender restrictions on access to financing. In addition, the company faces $150 million of lender margin calls, of which it was only able to satisfy $80 million. No information is available regarding the company's ability to meet the remaining $70 million. The rating will remain on CreditWatch with negative implications. At this point, it remains unclear how the company will overcome this stressful situation in terms of its reputation and financial standing. NEWCOMM WIRELESS: Court OKs $103.2 Mil. Asset Sale to PR Wireless ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Puerto Rico authorized NewComm Wireless Services, Inc., to sell substantially all of its assets to PR Wireless, Inc., for $103.2 million, subject to higher and better offers. As reported in the Troubled Company Reporter on Dec. 21, 2006, under the asset purchase agreement, PR Wireless is liable to pay $3 million if it wins the bidding but fails to consummate the sale, while it stands to get $3.3 million break-up fee if it loses to another bidder. Proceeds from the sale will be used to pay NewComm's secured prepetition debt and fund its network upgrade project that would give it a competitive advantage. The sale transaction is expected to close by April 15, 2007. Based in Guaynabo, Puerto Rico, NewComm Wireless Services Inc. is a PCS company that provides wireless service to the Puerto Rico market. The company is a joint venture between ClearComm, L.P. and Telefonica Larga Distancia. The company filed for chapter 11 protection on Nov. 28, 2006 (Bankr. D. P.R. Case No. 06-04755). Carmen D. Conde Torres, Esq., at C. Conde & Assoc. and Peter D. Wolfston, Esq., at Sonnenschein Nath & Rosenthal LLP represent the Debtor in its restructuring efforts. Mark J. Wolfson, Esq. at Foley & Lardner LLP and Sergio A. Ramirez de Arellano, Esq., at Sergio Ramirez de Arrelano Law Office represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it reported assets and liabilities of more than $100 million. NEWCOMM WIRELESS: Panel Hires Falkenberg as Financial Advisors -------------------------------------------------------------- The Official Committee of Unsecured Creditors of Newcomm Wireless Services, Inc., obtained permission from the U.S. Bankruptcy Court for the District of Puerto Rico to retain Falkenberg Capital Corp. as its financial advisors. Falkenberg Capital is expected to: a) advise the Committee regarding the Debtor's proposed upgrade of its existing wireless network, which includes the agreement between the Debtor and Nortel Networks (CALA) Inc., Nortel Networks Limited and Nortel Networks Puerto Rico governing the upgrade; b) evaluate and advise the Committee regarding the Debtor's sale of substantially all of its assets in connection with the bidding procedures already approved by the Bankruptcy Court; and c) assist the Committee in evaluating competing bids to buy the Debtor's assets. George E. Harris, Falkenberg Capital's senior vice president, disclosed that Falkenberg Capital would charge the Debtor a $50,000 flat fee for its work. The first half payment would be due upon the entry of the Court's final order and the remaining $25,000 would be paid after the auction completion of the Debtor's assets on Feb. 28, 2007, but not later than March 9, 2007, Mr. Harris adds. Mr. Harris assured the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Harris can be reached at: Falkenberg Capital Corp. Cherry Creek Plaza, Suite 1108 600 South Cherry Street Denver, CO 80246 Fax: (303) 322-5796 Based in Guaynabo, Puerto Rico, NewComm Wireless Services Inc. is a PCS company that provides wireless service to the Puerto Rico market. The company is a joint venture between ClearComm, L.P. and Telefonica Larga Distancia. The company filed for chapter 11 protection on Nov. 28, 2006 (Bankr. D. P.R. Case No. 06-04755). Carmen D. Conde Torres, Esq., at C. Conde & Assoc. and Peter D. Wolfston, Esq., at Sonnenschein Nath & Rosenthal LLP represent the Debtor in its restructuring efforts. Mark J. Wolfson, Esq. at Foley & Lardner LLP and Sergio A. Ramirez de Arellano, Esq., at Sergio Ramirez de Arrelano Law Office represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it reported assets and liabilities of more than $100 million. NORD RESOURCES: Inks Settlement with Platinum of Failed Merger -------------------------------------------------------------- Nord Resources Corporation's Ronald Hirsch, Chairman of the board of Directors has entered into a settlement agreement with Platinum Diversified Mining Inc. and Platinum Diversified Mining USA, Inc. and PDM Merger Corp., in connection with agreement and plan of merger dated Oct. 23, 2006. Mr. Hirsch said that the Merger Agreement contemplated the acquisition of Nord Resources by PDM in an all-cash merger transaction. The Settlement Agreement sets forth the terms and conditions of the settlement of the dispute and disagreements between Nord Resources and the PDM Parties arising from the failure of the Merger to close. Terms of Settlement Under the Settlement Agreement, the PDM Parties have agreed to pay to Nord Resources an amount of up to $3.6 million in full and final settlement of all claims and disputes between the parties: a. The PDM Parties have agreed to forthwith pay the sum of $1.1 million to Nord, to be paid by way of the release to Nord of the $1 million previously deposited by PDM with American Stock Transfer & Trust Company, as escrow agent, pursuant to the Merger Agreement, with any shortfall to be paid from PDM's working capital; and b. PDM has agreed to pay the sum of $50,000 to Nord Resources each calendar month, beginning on April 1, 2007, until the earlier of: i. the completion of an acquisition by PDM that meets certain prescribed criteria, or ii. the actual liquidation of PDM if it has not entered into a letter of intent or agreement in principle to effect a Qualifying Acquisition, or if it has not completed a Qualifying Transaction, by certain prescribed dates. Nord Resources has received the Initial Payment of $1.1 million. If PDM completes a Qualifying Acquisition, PDM will be required to pay the balance owing on the settlement sum of $3.6 million, net of the Initial Payment and any Monthly Payments actually received by Nord Resources. The Balance of Settlement Funds will be payable to Nord out of certain funds being held in trust as a condition of PDM's listing as a special purpose acquisition corporation on the AIM market of the London Stock Exchange. If there are not sufficient Trust Funds to pay the Balance of Settlement Funds, PDM will be required to pay to Nord the greater of: i. the funds available and ii. $1 million, payable in either case out of the Trust Funds and continue to make Monthly Payments, plus interest, until the Balance of Settlement Funds has been paid. About Nord Resources Based in Tucson, Ariz., Nord Resources Corporation (Pink Sheets: NRDS) -- http://www.nordresources.com/-- is an emerging copper producer, which controls a 100% interest in the Johnson Camp SX-EW copper project in Arizona. Nord's near term objective is to resume mining and leaching operations at the Johnson Camp mine, which has been on care and maintenance status since August 2003. Nord has decided to proceed with its mine plan bases on an updated feasibility study that was completed in October 2005, subject to raising sufficient financing. Going Concern Doubt In August 2006, Mayer Hoffman McCann PC expressed substantial doubt about Nord's ability to continue as a going concern after it audited the company's financial statements for the years ended Dec. 31, 2005 and 2004. The auditing firm pointed to the company's significant operating losses. NORTHWEST AIRLINES: Issues Notice Regarding Claims Trading ---------------------------------------------------------- Northwest Airlines, Inc., has published notice that, pursuant to an Oct. 28, 2005 order by the U.S. Bankruptcy Court for the Southern District of New York, the court supervising the company's bankruptcy proceeding: The Debtors are actively considering whether to utilize Section 382(l)(5) of the Internal Revenue Code and may request, after notice and a hearing, the entry of an order by the Bankruptcy Court approving the issuance of a Sell Down Notice to insure that the requirements of Section 382(l)(5) are satisfied. The complete notice has been published in New York Times and Wall Street Journal on March 9, 2007, and is also available at http://www.nwa-restructuring.com/ About Northwest Airlines Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Feb. 15, 2007, the Debtors filed an Amended Plan & Disclosure Statement. The hearing to consider the adequacy of the Disclosure Statement has been scheduled for March 26, 2007. PACIFIC LUMBER: Scopac Gets Interim Nod to Employ Blackstone Group ------------------------------------------------------------------ Judge Richard S. Schmidt of the United States Court for the Southern District of Texas has granted, on an interim basis, authority to Scotia Pacific Company LLC to employ Blackstone Group L.P. as its financial advisor. The Court will consider the proposed Scopac Restructuring Fee or the Debt Financing Fee at a later date. The Court has set a final hearing on March 15, 2007, to consider Scopac's request. As reported in the Troubled Company Reporter on March 6, 2007, Scotia Pacific Company LLC sought the permission of the Bankruptcy Court to employ The Blackstone Group L.P. as its financial advisor. After considering various alternative candidates, Scopac selected Blackstone to serve as its financial advisor because of the firm's diverse experience and extensive knowledge in the fields of advisory services and bankruptcy. Headquartered in Oakland, California, The Pacific Lumber Company -- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry, including the growing and harvesting of redwood and Douglas-fir timber, the milling of logs into lumber and the manufacture of lumber into a variety of finished products. Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned subsidiaries of Pacific Lumber. Scotia Pacific, Pacific Lumber's largest operating subsidiary, was established in 1993, in conjunction with a securitization transactions pursuant to which the vast majority of Pacific Lumber's timberlands were transferred to Scotia Pacific, and Scotia Pacific issued Timber Collateralized Notes secured by substantially all of Scotia Pacific's assets, including the timberlands. Pacific Lumber, Scotia Pacific, and four other subsidiaries filed for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case Nos. 07-20027 through 07-20032). Jeffrey L. Schaffer, Esq., William J. Lafferty, Esq., and Gary M. Kaplan, Esq., at Howard Rice Nemerovski Canady Falk & Rabkin, A Professional Corporation is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq., Harlin C. Womble, Jr., Esq., and Shelby A. Jordan, Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co- counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead counsel. John F. Higgins, Esq., and James Matthew Vaughn, Esq., at Porter & Hedges LLP, is Scotia Pacific's co-counsel. When Pacific Lumber filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. Scotia Pacific listed total assets of $932,000,000 and total debts of $765,978,335. The Debtors' exclusive period to file a chapter 11 plan expires on May 18, 2007. (Scotia/Pacific Lumber Bankruptcy News, Issue No. 7, http://bankrupt.com/newsstand/or 215/945-7000). PINNACLE FOODS: Peak Finance Inks $1.3 Billion Credit Facilities ---------------------------------------------------------------- Pinnacle Foods Group Inc. disclosed that Peak Finance LLC is expected to enter into a senior secured credit facility consisting of: * a senior secured term loan in an aggregate amount of $1.175 billion and * a senior secured revolving credit facility in an aggregate amount of $125 million. Peak Finance LLC, the borrower under the senior secured credit facility, is expected to merge with and into Pinnacle Foods Finance LLC pursuant to the agreement between Peak Acquisition Corp., an affiliate of The Blackstone Group, and Crunch Holding Corp., the parent of Pinnacle Foods. After the merger, Pinnacle Foods will be a subsidiary of the borrower. The net proceeds from the senior secured term loan, together with other financing, are expected to be used to finance the merger and related transactions. Up to $10 million of the senior secured revolving credit facility may be drawn in connection with the merger. About Pinnacle Foods Group Pinnacle Foods Group Inc. -- http://www.pinnaclefoodscorp.com/-- manufactures and markets branded convenience food products in the United States and Canada. Its product range includes frozen dinners and entrees, frozen seafood, breakfasts, bagels, pickles, peppers and relish, baking mixes and frostings, and syrups and pancake mixes. The company primarily offers its products through its broker network to traditional classes of trade, including grocery wholesalers and distributors, grocery stores and supermarkets, convenience stores, mass and drug merchandisers and warehouse clubs. It also distributes its products through foodservice and private label channels. PINNACLE FOODS: Moody's Junks 8.25% Sr. Subordinated Notes' Rating ------------------------------------------------------------------ Moody's Investors Service lowered the ratings of Pinnacle Food Group Inc., including the company's corporate family rating to B3 from B1, its existing senior secured bank credit agreements to B1 from Ba3 and its 8.25% senior subordinated notes to Caa2 from B3. The rating outlook is stable. These rating actions conclude the review for possible downgrade begun on Feb. 13, 2007. Moody's also assigned ratings, with a stable rating outlook, to the proposed debt of a new intermediate holding company -- Pinnacle Foods Finance LLC -- which will own Pinnacle Food Group Inc. upon the acquisition of Pinnacle by affiliates of The Blackstone Group. Ratings lowered, and to be withdrawn upon the acquisition by Blackstone: * Pinnacle Food Group Inc. -- Corporate family rating to B3 from B1 -- Probability of default to B3 from B1 -- Senior secured revolving credit to B1, LGD3, 32% from Ba3 LGD3, 33% -- Senior secured term loan B to B1, LGD3, 32% from Ba3, LGD3, 33% -- Senior subordinated 8.25% notes to Caa2, LGD5, 84% from B3, LGD5, 85% Ratings assigned: * Pinnacle Foods Finance LLC -- Corporate family rating at B3 -- Probability of default rating at B3 -- $125 million senior secured revolving credit agreement at B2, LGD3, 33% -- $1,175 million senior secured Term Loan B at B2, LGD3, 33% -- $400 million guaranteed senior unsecured notes, co-issued by Pinnacle Foods Finance Corp., at Caa2, LGD5, 81% -- $250 million senior subordinated notes, co-issued by Pinnacle Foods Finance Corp., at Caa2, LGD6, 93% -- Speculative Grade Liquidity rating at SGL2 The downgrade of Pinnacle's ratings is based on the expected deterioration in credit measures when the company is purchased by affiliates of The Blackstone Group for approximately $2.2 billion in cash and the assumption of certain obligations. "Pinnacle's B3 corporate family rating reflects the weak credit metrics that are anticipated upon the acquisition by Blackstone, with leverage likely to be quite high for at least one year post transaction", said Elaine Francolino, Vice President, Senior Credit Officer. Pinnacle's ratings also incorporate the diversification of its brand portfolio and the market share of its leading brands. Moody's analyzes Pinnacle's operations in the context of the Rating Methodology for Global Packaged Goods Companies. Using the 16 factors cited in this methodology and credit metrics for fiscal 2006 -- proforma for the leveraged buyout by Blackstone -- Pinnacle's rating would be B2, one notch higher than the company's actual B3 rating. The actual rating reflects the significant weight that Moody's places on very weak post-transaction credit metrics that are unlikely to rebound in the intermediate term. The speculative grade liquidity rating of SGL2 assigned to Pinnacle Foods Finance LLC reflects Moody's expectation that cash flow generation over the next twelve months will be at levels that are likely to cover major cash uses, and that its proposed new $125 million revolving credit is expected to have ample availability. However, the company may need to borrow under its revolving credit to cover seasonal working capital needs in its third quarter. The stable rating outlook reflects Moody's expectation that free cash flow will be applied to debt reduction and that liquidity will remain solid. Ratings could be lowered if Pinnacle's debt to EBITDA is likely to be sustained above 8 times or if EBIT to interest is likely to be sustained below 1 time one year following the transaction, or if liquidity deteriorates. Given the recent downgrade, there is little upward rating pressure. Over the longer term, an upgrade would require that debt to EBITDA be sustained at under 6.5x and EBIT to interest above 1.5x. The acquisition of Pinnacle will be financed by about $444 million of common equity from the new sponsor; $1,175 million senior secured Term Loan B; $400 million senior unsecured notes; and $250 million unsecured subordinated debt. In addition, the company will have a $125 million senior secured revolving credit agreement. All are expected to be the obligation of Pinnacle Foods Finance LLC. The new public debt will also be an obligation of co-issuer Pinnacle Foods Finance Corp. All current and future direct and indirect domestic subsidiaries of Pinnacle Foods Finance LLC will guarantee the bank debt and public debt. The new term loan and revolving credit agreements are secured by substantially all assets. Moody's notes that the bank facilities will not contain any maintenance financial covenants which -- if present -- could help capture deteriorating financial performance and weakening credit profile. Headquartered in Cherry Hill, New Jersey, Pinnacle Foods Group Inc. manufactures and markets branded convenience food products in the US and Canada. Its brands include Hungry-Man and Swanson Dinners, Vlasic pickles, Mrs. Paul's and Van de Kamp's frozen prepared seafoods, Aunt Jemima frozen breakfasts, Log Cabin and Mrs. Butterworth's syrup and Duncan Hines cake mixes. Net sales for fiscal year ended Dec. 31, 2006 exceeded $1.4 billion. PLAQUEMINES PARISH: S&P Lifts Revenue Debt Rating to BBB- from B ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its underlying rating on Plaquemines Parish, La.'s sales tax revenue debt five notches to an investment-grade 'BBB-' from a speculative-grade 'B' based on the parish's steady sales tax revenue collections in the 18 months following Hurricane Katrina and the restoration of a significant portion of the parish's oil and gas industry. The outlook is now stable. The persistence of a degree of economic dislocation and uncertainty over the restoration of a viable and sustainable economic base preclude a higher rating. Standard & Poor's originally lowered the rating on Plaquemines Parish's sales tax revenue debt to 'B' from 'A-' based on Katrina's economic and financial effect on the parish. "We believe the restoration of oil and gas activity within the parish should support a consistent level of sales tax revenues and provide continued strong debt service coverage on the parish's bonds outstanding," said Standard & Poor's credit analyst Horacio Aldrete. "If reconstruction continues and if the activity in the oil and gas industry returns to historical levels, the rating could be raised further." After a two-month delay due to the interruption of government operations and mail delivery services, the processing of sales tax collections was fully restored. Based on unaudited figures, pledged revenues provided a very strong 5.6x maximum annual debt service coverage in fiscal 2006. Parish officials budgeted for a pledged revenue decline of nearly 35% and a maximum annual debt service coverage of 3.4x for fiscal 2007, which is in-line with historical collections. The parish experienced an increase of 46% in sales tax collections in fiscal 2006, which management attributes, in large part, to a temporary surge in retail sales due to reconstruction and recovery efforts. At this point, it remains unclear what level of long-term retail sales and tax collections the parish will generate. The parish's financial position was very strong with a $70.1 million unreserved general fund balance at fiscal year-end 2005. Prior to the damage caused by Katrina, the economy had been concentrated in oil and gas production and refining, along with some agriculture and tourism. Two large refineries in the northern part of the parish that were originally damaged by the storm and flooding have since resumed operations. Many residents in Belle Chaase have also returned to their homes. The rating action affects roughly $15 million of debt outstanding. PLATFORM LEARNING: Wants $600,000 in Additional DIP Financing ------------------------------------------------------------- Platform Learning Inc. asks the U.S. Bankruptcy Court for the Southern District of New York for authority to obtain up to $600,000 in additional debtor-in-possession financing from Blue Wolf Education Capital LLC. In November 2006, the Debtor obtained Court approval to borrow up to $3 million in DIP Financing from Blue Wolf. Prior to the Blue Wolf DIP Facility, Ascend Ventures II LP and Ascend Ventures NY II LP provided approximately $1.76 million in postpetition financing to the Debtor. That amount remains due and payable as part of the Blue Wolf DIP Facility, and is junior to any amounts funded by Blue Wolf previously or in the future. The Debtor will use the additional financing to fund its operations pursuant to a cash flow projection, a copy of which is available for free at http://researcharchives.com/t/s?1b2b The Debtor explains that it failed to realize its financial projections under the previous DIP Facilities because its actual revenues turned out to be less than projected and that there was delay in the collection of receivables. Based in Broad Street, New York, Platform Learning Inc. -- http://www.platformlearning.com/-- provides supplemental educational services through its Learn-to-Succeed tutoring program to students attending public schools. The Company filed for chapter 11 protection on June 21, 2006 (Bankr. S.D.N.Y. Case No. 06-11391). David M. Bass, Esq., and Eric W. Sleeper, Esq., at Herrick Feinstein LLP represent the Debtor in its restructuring efforts. Edward Joseph LoBello, Esq., at Blank Rome LLP represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $21,026,148, and total debts of $36,933,490. PLATFORM LEARNING: Committee May Withdraw Support on Proposed Plan ------------------------------------------------------------------ The Official Committee of Unsecured Creditors in Platform Learning Inc.'s chapter 11 case served notice last week stating that Platform missed a Feb. 16 deadline for filing a definitive Chapter 11 plan, Bill Rochelle of Bloomberg News reports. In November 2006, the Debtor and the Committee, together with other parties, agreed, in a stipulation approved by the U.S. Bankruptcy Court for the Southern District of New York, to "work together and cooperate to achieve the expedient confirmation of a Plan." According to Mr. Rochelle, while not opposing Platform's motion to extend its exclusive right to file a plan, the Committee reserved its right to terminate its plan support agreement because of the Debtor's failure to timely file a plan. As reported in the Troubled Company Reporter on Feb. 5, 2007, the Debtor sought a Feb. 16, 2007 extension of its exclusive period to file a chapter 11 Plan of reorganization. The Debtor said that the extension will give it additional time to explore development of a Plan that will insure continuity of services to the students it serves. The Debtor reminded the Court that it had already: a. completed its significant downsizing, b. closed and jettisoned unnecessary office leaseholds to the direct benefit of the Debtor's estate, c. worked through a contemplated expedited sale process, d. converted the sale process to new DIP financing and renewed efforts towards a confirmable Plan, and e. maintained operations allowing it to continue providing tutorial services to schoolchildren in the new school year. Based in Broad Street, New York, Platform Learning Inc. -- http://www.platformlearning.com/-- provides supplemental educational services through its Learn-to-Succeed tutoring program to students attending public schools. The Company filed for chapter 11 protection on June 21, 2006 (Bankr. S.D.N.Y. Case No. 06-11391). David M. Bass, Esq., and Eric W. Sleeper, Esq., at Herrick Feinstein LLP represent the Debtor in its restructuring efforts. Edward Joseph LoBello, Esq., at Blank Rome LLP represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $21,026,148, and total debts of $36,933,490. PT HOLDINGS: Disclosure Statement Hearing Scheduled for March 29 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Washington set a hearing at 9:30 a.m., on March 29, 2007, to consider the adequacy of the Disclosure Statement explaining Chapter 11 Plan of Reorganization by PT Holdings Company, Inc., and its two debtor- affiliates, Port Townsend Paper Corporation and PTPC Packaging Co., Inc., and the Informal Committee of Senior Secured Noteholders. Overview of the Plan As reported in the Troubled Company Reporter on March 5, 2007, the Proponents tell the Court that the Plan is designed to: * achieve an equitable and early distribution to creditors of the Debtors, * preserve the value of the Debtors' business as a going concern, and * preserve the jobs of employees. The Proponents believe that any alternative to confirmation of the Plan, such as liquidation or attempts by another party in interest to file a plan, would result in significant delays, litigation and costs, the loss of jobs by the employees or impaired recoveries. Treatment of Claims Under the Plan, Other Secured Claims will, at the election of the Plan Proponents: * be paid in full and in cash; * have their legal and contractual rights reinstated; or * have their collateral returned. Holders of Priority Claims, at the Plan Proponents election, will: * paid in full and in cash; or * paid in the ordinary course when the obligations become due and owing. Secured Notes, estimated at $125 million, will receive a pro rata share of: * 100% of the Noteholders Term Loan Debt; * 100% of New Common Stock subject to dilution of Management Equity Plan and Equity Warrants. General Unsecured Creditors will receive a pro rata share of Senior Notes Claims' distribution. If unsecured creditors reject the plan, they will receive nothing. At the discretion of the Reorganized Debtors, intercompany claims will either be adjusted, continued, or discharged to the extent determined appropriate. The Plan Proponents say that Workers' Compensation Claims are unaltered by the plan. Holders of Subordinated Claims will get nothing under the plan. Holders of PT Holdings' interest will get a pro rata share of the Equity Warrants. If they reject the plan, they will receive no distribution. Interests of Port Townsend Paper Corp. and PTPC Packaging will be retained. A full-text copy of the Plan Proponents Disclosure Statement is available for free at: http://www.researcharchives.com/bin/download?id=070303002138 About PT Holdings PT Holdings Company, Inc., through its wholly owned subsidiary Port Townsend Paper Corporation -- http://www.ptpc.com/-- produces fiber-based lightweight containerboard in the U.S. and corrugated products in western Canada. The Port Townsend Paper family of companies employs approximately 800 people and annually produces more than 320,000 tons of unbleached Kraft pulp, paper and linerboard at its mill in Port Townsend, Washington. The company also operates three Crown Packaging Plants, two BoxMaster Plants, and the Crown Creative Group, located in British Columbia and Alberta. The Debtors' Canadian affiliates are not part of the bankruptcy proceedings. The company and its two affiliates, PTPC Packaging Co. Inc., and Port Townsend Paper Corporation filed for chapter 11 protection on Jan. 29, 2007 (Bankr. W.D. Wash. Lead Case No. 07-10340). Gayle E. Bush, Esq., and Katriana L. Samiljan, Esq., at Bush Strout & Kornfeld, represent the Debtors. Graham & Dunn PC, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed estimated assets of more than $100 million. The Debtors' exclusive period to file a plan expires on May 29, 2007. RAMBUS INC: Gets NASDAQ's Second Notice of Non-Compliance --------------------------------------------------------- Rambus Inc. disclosed that it is unable to timely file its Form 10-K for the period ended Dec. 31, 2006, according to its Form 12(b)-25 filed with the Securities and Exchange Commission. As expected, on March 6, 2007, the company received an additional notice of non-compliance from the Staff of The NASDAQ Stock Market, in accordance with NASDAQ Marketplace Rule 4310(c)(14), due to the delay in the filing of its Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2006. As reported, the company received notices of non-compliance from NASDAQ on Aug. 14, 2006 and Nov. 15, 2006 due to delays in the filing of the company's Quarterly Reports on Forms 10-Q for the quarters ended June 30, 2006 and Sept. 30, 2006, respectively. The company said that the Forms 10-Q and 10-K filing delays are attributable to the fact that Rambus' Audit Committee is conducting an independent review of the company's historical stock option granting practices and related accounting. Initial Response In response to the first notice of non-compliance, the company requested a hearing before the NASDAQ Listing Qualifications Panel. Following the hearing, the Panel granted the company's request for continued listing of its common stock, subject to the requirements that the company provide the Panel with certain information relating to the Audit Committee's review, which was submitted to the Panel, and that the Company file the Forms 10-Q and any necessary restatements by Feb. 9, 2007. On Feb. 6, 2007, the NASDAQ Listing and Hearing Review Council determined it would call the Company's matter for review. The Listing Council also determined to stay the Panel decision that required the Company to file the Forms 10-Q by Feb. 9, 2007. In connection with the call for review, the Listing Council has requested that the company provide an update on its efforts to file the delayed Forms 10-Q by Mar. 30, 2007. NASDAQ has also asked the company to provide a submission addressing the delay in filing the Form 10-K. The Company intends to provide all requested submissions to NASDAQ as promptly as possible. At present, the company is working diligently to complete all necessary filings and thereby demonstrate compliance with all applicable requirements for continued listing on the NASDAQ Global Select Market; however, there can be no assurance that the Listing Council will determine to grant the Company a further extension following its review of the forthcoming submissions. About Rambus Inc. Rambus Inc. (NASDAQ: RMBS) -- http://www.rambus.com/-- is a technology licensing company specializing in the invention and design of high-speed chip architectures. Headquartered in Los Altos, California, Rambus has regional offices in North Carolina, India, Germany, Japan, Korea and Taiwan. Additional information is available at www.rambus.com. * * * Rambus disclosed that on Sept. 8, 2006, it received a notice of purported defaults from the trustee under the indenture governing the Rambus Zero Coupon Convertible Senior Notes due February 1, 2010. The notice asserted that because Rambus was delinquent in its SEC filings, it was in default under the indenture governing the Notes, and such default would ripen into an "Event of Default," as defined in the indenture, on or about Oct. 17, 2006. While Rambus has questioned the legal theories as to whether it was in default under the terms of the indenture, if an "Event of Default" were to occur, the trustee or holders of at least 25% in aggregate principal amount of the Notes then outstanding would have the contractual right to declare all unpaid principal, and any default or additional interest on the Notes then outstanding to be due and payable. If an "Event of Default" were to occur, the noteholders would have a right to accelerate and receive the $160.0 million aggregate principal amount outstanding under the notes, plus any interest which may have accrued. Rambus believes that, if an Event of Default were to occur and the Notes were accelerated, it has adequate financial resources to pay any unpaid principal and any interest due on the Notes. Rambus is evaluating its options with respect to the Notes. RAMP SERIES 2007-RZ1: Moody's Rates Class B Certificates at Ba2 --------------------------------------------------------------- Moody's Investors Service has assigned an Aaa rating to the senior certificates issued by RAMP Series 2007-RZ1 Trust, and ratings ranging from Aa1 to Ba2 to the mezzanine and subordinate certificates in the deal. The securitization is backed by adjustable-rate and fixed-rate high loan-to-value mortgage loans acquired by Residential Funding Corporation. The collateral was originated by Homecomings Financial, LLC, GMAC Mortgage, LLC, and other originators. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization, excess spread, and a swap greeement. Moody's expects collateral losses to range from 5.55% to 6.05%. Primary servicing will be provided by Homecomings Financial, LLC, and GMAC Mortgage, LLC. Residential Funding Company, LLC will act as master servicer. Moody's has assigned Homecomings its top servicer quality rating of SQ1 as a primary servicer of prime loans and a servicer quality rating of SQ2+ as a primary servicer of subprime loans. Furthermore, Moody's has assigned GMAC-RFC its top servicer quality rating of SQ1 as a master servicer. These are the rating actions: * RAMP Series 2007-RZ1 Trust * Mortgage Asset-Backed Pass-Through Certificates, Series 2007- RZ1 Class A-1, Assigned Aaa Class A-2, Assigned Aaa Class A-3, Assigned Aaa Class M-1S, Assigned Aa1 Class M-2S, Assigned Aa2 Class M-3S, Assigned Aa3 Class M-4, Assigned A1 Class M-5, Assigned A2 Class M-6, Assigned A3 Class M-7, Assigned A3 Class M-8, Assigned Baa1 Class M-9, Assigned Baa2 Class M-10,Assigned Baa3 Class B, Assigned Ba2 RASC SERIES 2007-KS2: Moody's Rates Class M-10 Certificates at Ba1 ------------------------------------------------------------------ Moody's Investors Service has assigned an Aaa rating to the senior certificates issued by RASC Series 2007-KS2 Trust, and ratings ranging from Aa1 to Ba1 to the mezzanine certificates in the deal. The securitization is backed by New Century Mortgage Corporation, Homecomings Financial, LLC and other originators originated adjustable-rate and fixed-rate subprime mortgage loans. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization, excess spread, and a swap agreement. Moody's expects collateral losses to range from 5.45% to 5.95%. Primary servicing will be provided by Homecomings Financial, LLC, New Century Mortgage Corporation, and GMAC Mortgage, LLC. Residential Funding Company, LLC will act as master servicer. These are the rating actions: * RASC Series 2007-KS2 Trust * Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series 2007-KS2 Class A-I-1, Assigned Aaa Class A-I-2, Assigned Aaa Class A-I-3, Assigned Aaa Class A-I-4, Assigned Aaa Class A-II, Assigned Aaa Class M-1, Assigned Aa1 Class M-2, Assigned Aa2 Class M-3, Assigned Aa3 Class M-4, Assigned A1 Class M-5, Assigned A2 Class M-6, Assigned A3 Class M-7, Assigned Baa1 Class M-8, Assigned Baa2 Class M-9, Assigned Baa3 Class M-10,Assigned Ba1 RALI: Fitch Lifts Series 2002-QS1 Class B-2 Certs.' Rating to B+ ---------------------------------------------------------------- Fitch Ratings has taken action on Residential Accredit Loan, Inc.'s mortgage-pass through certificates: Series 2001-QS19 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AAA'; -- Class M-2 affirmed at 'AAA'; -- Class M-3 upgraded to 'AA+' from 'AA-'; -- Class B-1 upgraded to 'A-' from 'BB+'; and -- Class B-2 upgraded to 'BB+' from 'B'. Series 2002-QS1 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AAA'; -- Class M-2 affirmed at 'AAA'; -- Class M-3 upgraded to 'AAA' from 'AA+'; -- Class B-1 upgraded to 'AA-' from 'A'; and -- Class B-2 upgraded to 'B+' from 'B'. Series 2002-QS4 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AAA'; -- Class M-2 affirmed at 'AA+'; -- Class M-3 upgraded to 'A+' from 'A-'; -- Class B-1 upgraded to 'BBB+' from 'BB+'; and -- Class B-2 upgraded to 'BB' from 'B'. The affirmations reflect satisfactory credit enhancement (CE) relationships to future loss expectations and affect approximately $74.52 million of outstanding certificates. The upgrades reflect an improvement in the relationship of CE to future loss expectations and affect approximately $6.3 million of certificates. The mortgage loans consist of 30- and 15-year fixed-rate mortgages extended to prime borrowers and are secured by first liens on one- to four-family residential properties. As of the January 2007 distribution date, the transactions are seasoned from a range of 58 to 61 months. The pool factor for series 2001-QS19, 2002- QS1 and 2002-QS4 is approximately 10%, 0.08% and 13%, respectively. GMAC Mortgage Corporation, the servicer for the aforementioned transactions, is rated 'RPS1' as a primary servicer for prime residential mortgage loans by Fitch. Fitch will continue to monitor these deals. REFCO INC: Administrators Want Claims Bar Date Extended to Apr. 30 ------------------------------------------------------------------ RJM, LLC, the duly appointed administrator of Refco Inc.'s case, and Marc S. Kirschner, the duly appointed administrator and Chapter 11 Trustee of Refco Capital Markets, Ltd.'s estate, ask the Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York to extend the Administrative Claims Objection Deadline through and including April 30, 2007. Upon the Effective Date of the Chapter 11 Plan filed by Refco, Inc., and its debtor-subsidiaries, the plan administrators assumed the rights, powers, and duties of the Reorganized Debtors and RCM on the estates' behalf. Under the Plan Confirmation Order, the Court set Jan. 25, 2007, -- 30 days after the Effective Date -- as the deadline to file an administrative expense priority claim. Steven Wilamowsky, Esq., at Bingham McCutchen LLP, in New York, relates that before the expiration of the Administrative Claims Bar Date, over 200 administrative claims have been filed against the Refco estates. On Feb. 9, 2007, the Plan Administrators, on behalf of Refco F/X Associates, LLC, objected to approximately 150 administrative expense claims filed against FXA. Over the course of the Debtors' Chapter 11 cases, a number of administrative expense claims have been resolved by Court order or by consent of the parties, Mr. Wilamowsky notes. The Plan Administrators continue to reconcile the remaining Administrative Claims filed against the Chapter 11 estates. According to Mr. Wilamowsky, the Plan defines "Administrative Claims Objection Deadline" as the last day for filing an objection to any request for the payment of an Allowed Administrative Claim, which will be: (a) the later of 60 days after the Effective Date, or 30 days after filing an Administrative Claim; or (b) other date specified in the Plan or ordered by the Court. Mr. Wilamowsky points out that since the Effective Date occurred on Dec. 26, 2006, the Administrative Claims Objection Deadline is presently Feb. 26, 2007, and not Jan. 25, 2007. The Plan Administrators state that by virtue of filing their request, the Administrative Claims Objection Deadline is automatically extended until entry of an order approving or denying the extension. The Plan Administrators assert that an extension of the Administrative Claims Objection Deadline is appropriate to complete the administrative claims reconciliation process and to help ensure that all non-meritorious administrative claims are appropriately challenged. Furthermore, the Plan Administrators believe that the extension is particularly important to ensure that no unwarranted administrative expense claims are allowed simply by virtue of the passage of time; allowed administrative expense claims are required to be paid in full under the Plan, and, thus have a greater relative impact upon recoveries to prepetition unsecured creditors, who are expected to receive only a fraction of the allowed amounts of their claims. While the need to seek additional extensions is not anticipated, the Plan Administrators reserve the right to seek further extensions of the Administrative Claims Objection Deadline. About Refco Inc. Headquartered in New York, New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its Direct and Indirect Subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates, LLC, on Dec. 15, 2006. That Plan became effective on Dec. 26, 2007. (Refco Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). REFCO INC: Crisis Managers Want $7.4 Mil. in Success Fees Paid -------------------------------------------------------------- AP Services, LLC, and Goldin Associates, LLC, ask the U.S. Bankruptcy Court for the Southern District of New York to compel Refco, Inc., and its debtor-subsidiaries to pay them contingent success fees totaling $7,430,433 for services rendered as crisis managers in the Debtors' Chapter 11 cases. Specifically, APS seeks approval of a $5,000,000 Success Fee consistent with the terms of its Court-approved engagement letter with the Debtors, dated Oct. 18, 2005. Goldin seeks payment of a $2,430,433 Success Fee in connection with its engagement as crisis manager for Refco, including services performed by Harrison J. Goldin, as chief executive officer; David Pauker and Mark Slane, as chief restructuring officers; and Jerry Lombardo, as chief financial officer. The Goldin Success Fee represents a 25% premium to the hourly fees paid to Goldin in connection with its Engagement Letter with the Debtors, dated Jan. 5, 2006. APS and Goldin believe that the exceptional results they achieved in Refco's successful cases in a narrow time frame, as well as their relevant contributions, fully merit the award of the requested Success Fees. APS $5,000,000 Success Fee Sheldon S. Toll, Esq., at Sheldon S. Toll PLLC, in Southfield, Michigan, tells Judge Drain that amid the chaos from the Debtors' bankruptcy filing through the effective date of the Reorganized Debtors' Chapter 11 Plan, APS has expended incredible crisis management efforts around the world to ensure a timely and orderly wrap-up of the Debtors' affairs, while seeking to maximize the cash available to their creditors. According to Mr. Toll, the APS team, working with the other retained firms in the Debtors' cases, led certain key aspects and contributed significantly to the overall success and prompt wind- down of the Refco business by: (1) managing the lengthy and complex post-closing processes of the Man Financial Inc. transaction, which included Refco's largest U.S. operation and related international entities in the United Kingdom, Canada, and Asia; (2) working with management and parties-in-interest to wind down Refco Securities, LLC, out of court, hence, saving substantial direct costs and accelerating the speed of the case; (3) analyzing customer accounts with and assets and liabilities of Refco Capital Markets, Ltd., which effort provided valuable insights to the Debtors and creditors during the customer litigation and RCM customer settlement process, and enabled prompt initial distributions to creditors after the Plan Effective Date; (4) leading intercompany analysis, providing creditors and debtors with valuable insights into the company's intercompany accounts and historical transactions, and providing information necessary for the parties to conduct Plan negotiations; (5) separating information technology function from Man Financial subsequent to the acquisition, and leading the development of an independent estate IT function; and (6) leading the claims analysis and resolution efforts for the Debtors, which led to the resolution to a substantial number of claims before the Effective Date and enabled distribution of over $1,400,000,000 in cash to RCM creditors in December 2006 -- within two days after the Effective Date. Other estate management issues addressed by the APS team include liquidity and cash management; wind-down of fund management business; wind-down of Refco F/X Associates, LLC; human resources and facilities management; and general case management. Mr. Toll asserts that APS has played a key role in worldwide asset sales and orderly liquidations that will result in over $1,000,000,000 in cash to the Debtors' estates. Mr. Toll also points out that the APS role has been key not only to the negotiation of various asset purchase agreements and planning of orderly wind downs, but also key in leading implementation of those initiatives, as well as in the absence of any management structure. In addition, APS has enabled the estate to preserve value through management of complex postpetition negotiations, with estimated proceeds totaling up to $1,283,200,000, he states. Mr. Toll notes that during the Debtors' case, neither APS nor other retained firms were paid on a current basis. Thus, he says, APS and the other firms were effectively uncompensated DIP lenders to the estate. He adds that the estates benefited because they would have had to borrow at rates in excess of 11% if they could have borrowed at all. APS' average monthly unpaid balance from the Debtors' bankruptcy filing through the Effective Date was over $7,000,000, he discloses. Mr. Toll acknowledges other retained firms and individuals who played important roles in the Reorganized Debtors' cases. He maintains, however, that the successful results would not have occurred without the APS team efforts. Mr. Toll insists that the APS Success Fee is appropriate because it was included in the $180,000,000 fee cap computation, and, thus should be approved. Goldin's $2,430,433 Success Fee Steven J. Reisman, Esq., at Curtis, Mallet-Prevost, Colt & Mosle LLP, in New York, states that Goldin played a significant role in organizing a consensual Chapter 11 Plan in the Debtors' cases by providing interim management and restructuring services to the Debtors. Goldin also: (a) orchestrated and led a strategy based on full cooperation with all governmental investigations in connection with the alleged fraud present in the Debtors' cases; (b) led negotiations that successfully resolved all issues concerning RSL distribution; (c) worked for the Reorganized Debtors' overseas operations to ensure distributions of foreign subsidiaries and affiliates; (d) sought to maximize the number of qualified estate personnel regarding the Debtors' human resource activities and functions; and (e) was responsible for overseeing the accounting, financial reporting and related activities. Mr. Reisman notes that Goldin continued to be involved in maximizing future distributions to customers and facilitating orderly resolution of the issues facing RCM, even after the RCM estate came under the separate management of a Court-appointed trustee. Mr. Reisman says Goldin was also involved in formulating and executing numerous strategies to maximize recoveries to Refco from Refco, LLC, by providing extensive resources of the parent company and its professionals to support the activities of Albert Togut, as Chapter 7 Trustee for the Refco LLC estate. Moreover, Mr. Reisman states, Goldin played a key role in representing the interests of the FXA creditors during the Plan negotiations, and actively negotiated to obtain numerous improvements, including increased cash, reduced expenses and interests in a litigation trust. Mr. Reisman further discloses that Goldin minimized the costs to the estates of outside management consultants throughout the bankruptcy proceedings by reducing the combined Goldin/AP Services, LLC, interim management staff from 23 in January 2006, to 12 by December 2006. Through the final quarter of 2006, Goldin was paid $9,721,734 in fees and reimbursed $106,107 in expenses for services rendered during the Debtors' cases, Mr. Reisman states. "Given the extraordinary circumstances presented when Goldin was retained to take over management, a success fee is a normal and expected component of compensation," Mr. Reisman asserts. The Court will convene a hearing on April 11, 2007, at 10.00 a.m. to consider approval of the APS and Goldin Success Fees. About Refco Inc. Headquartered in New York, New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its Direct and Indirect Subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates, LLC, on Dec. 15, 2006. That Plan became effective on Dec. 26, 2007. (Refco Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). ROCK PRAIRIE: Case Summary & 23 Largest Unsecured Creditors ----------------------------------------------------------- Lead Debtor: Rock Prairie Holdings, Ltd. 17330 Penick Road Waller, TX 77484 Bankruptcy Case No.: 07-31580 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Centex Kwik Care, Inc. 07-31577 Type of Business: Chapter 11 Petition Date: March 5, 2007 Court: Southern District of Texas (Houston) Judge: Jeff Bohm Debtors' Counsel: Peter Johnson, Esq. Law Offices of Peter Johnson Suite 2820, Eleven Greenway Plaza Houston, TX 77046 Tel: (713) 961-1200 Fax: (713) 961-0941 Total Assets Total Debts ------------ ----------- Rock Prairie Holdings, Ltd. $1,244,942 $1,327,551 Centex Kwik Care, Inc. $47,317 $185,384 A. Rock Prairie Holdings, Ltd.'s Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Business Loan Center, LLC Deed of Trust Lien $1,107,000 Alvin Pedescleaux Value: 700 North Pearl Street $659,150 Suite 1850 Dallas, TX 75201 Kwik Industries, Inc. (Loan) Loan $138,816 4725 Nall Road Dallas, TX 75244 Brazos County 2006 Tax County & School Tax $17,002 (Rock Prairie) Gerald L. Winn 300 E. W.J. Bryan Bryan, TX 77803 B. Centex Kwik Care, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Business Loan Center, LLC Tex Bus Comm $1,107,000 Alvin Pedescleaux Code Article 9 700 North Pearl Street Suite 1850 Dallas, TX 75201 Kwik Industries, Inc. (Loan) Standby Loan for $138,819 4725 Nall Road 1/2 SBA down Dallas, TX 75244 payment 10% interest Wolpoff & Abramson, L.L.P. Collections for MBNA/ $28,538 Two Irvington Centre Master Card 702 King Farm Blvd Rockville, MD 20850 MBNA America Credit Card $20,823 Tax Ease Funding, LP 2005 Tax Collection $20,000 Tax Brazos County 2006 Tax County & School Tax $17,002 Allen L Adkins & Associates, Judgement for Citi $13,218 P.C. Bank Credit Card Kwik Industries, Inc. Goods for resell $12,994 NCB Management Collections for $11,692 Advanta Bank Hosto & Buchan, P.L.L.C. Collections for $11,313 GM Card Sear's Gold Card Credit Card $11,058 Wolpoff & Abramson, L.L.P. Collections for $10,477 MBNA America Bank State Bank Personal Loan $7,101 for Business Allied Sales Co. Goods for resell $6,833 Sam's Club Credit Card $5,978 AMO Recoveries Collections $2,625 American Express Credit Card $2,100 Centex Environmental Miscellaneous $900 Consultants American Express Credit Card $814 HSBC Business Solutions Credit Card $589 SAINT VINCENTS: Court Approves $300 Million Exit Financing ---------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved a commitment letter between Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates and General Electric Capital Corporation for a $300,000,000 exit financing facility. In addition, the Court authorized the payment of fees, reimbursement of expenses and indemnification in accordance with the terms of a related fee letter agreement. The Debtors had authority to obtain postpetition financing of up to $350,000,000 on a senior secured, super-priority basis, under a certain debtor-in-possession credit agreement between the Debtors and GE Capital, as agent and lender, and certain other financial institutions. The Debtors filed their joint plan of reorganization and related disclosure statement on Feb. 9, 2007. The Plan will only be effective if, among other things, SVCMC obtains exit financing. Frank A. Oswald, Esq., at Togut, Segal & Segal LLP, in New York, related that exit financing is necessary to enable the Debtors to pay Plan obligations, including administrative expenses and outstanding DIP financing, and meet the reorganized Debtors' general corporate and working capital expenditures. GE Capital has agreed to provide reorganized SVCMC with a $300,000,000 credit facility pursuant to the terms of the Commitment Letter. In connection with the execution of the Commitment Letter, the Debtors and GE Capital will also execute the Fee Letter, which obligates the Debtors to pay various fees in consideration for GE Capital's commitment to fund the Exit Facility. Pursuant to the Exit Facility Letters, the Debtors are also obligated to pay GE Capital's reasonable costs and expenses and to provide certain indemnifications. Full-text copies of the Commitment Letter and the Fee Letter are collectively available for free at: http://ResearchArchives.com/t/s?1b31 The Exit Facility is comprised of a $250,000,000 term loan secured primarily by real estate, and a $50,000,000 revolving credit facility secured by receivables. All amounts outstanding under the Exit Facility will bear interest, at SVCMC's option, at the index rate plus the applicable margin or the LIBOR rate plus the applicable margin. The Applicable Margin varies between 1% and 2% for the revolver and 2.0% and 3.0% for the term loan. The Exit Facility will mature seven years from the closing date. The facility will be used, among other things, to meet Plan obligations and provide for the working capital and general corporate purposes of the reorganized Debtors, including the issuance of letters of credit. (A) The Commitment Letter The Commitment Letter provides that to become effective and create a binding commitment by GE Capital, SVCMC must obtain Court approval of: -- the execution and delivery of the Commitment Letter and Fee Letter to GE Capital by Feb. 28, 2007, which has been extended until March 9 by letter dated Feb. 16; and -- the payment of an underwriting fee of $200,000 and a commitment fee of $450,000. $50,000 of the Underwriting Fee was paid upon execution of the Commitment Letter, with the balance to be paid upon approval. The Commitment Fee will be considered fully earned and non- refundable upon its receipt by GE Capital so long as GE Capital does not breach its commitment. SVCMC is obligated to indemnify and hold GE Capital harmless from and against, as and when incurred, all claims, expenses, damages, and liabilities of any kind which may be incurred by, or asserted against, any person in connection with, or arising out of, the Commitment Letter, the Exit Facility and related transactions, any related financing, investigation, litigation, or proceeding. In no event will an indemnified person be entitled to indemnity for any claim or expense to the extent it is found by a final, non-appealable judgment of a court of competent jurisdiction to have resulted directly from the gross negligence, willful misconduct or fraud of that indemnified person. (B) The Fee Letter The Fee Letter provides for payment of: * the Commitment Fee, which will be payable to GE Capital upon approval of the Commitment Letter; * a non-refundable closing fee of 1.5% of the maximum commitment amount, against which will be credited the $450,000 Commitment Fee upon closing; and * a non-refundable administrative and collateral management fee of $150,000 annually. Maximum fees of $4,700,000 will be due and payable to GE Capital prior to or at the closing of the Exit Facility. The Exit Facility Letters obligate the reorganized Debtors to pay the reasonable, documented out of pocket expenses incurred by GE Capital and its affiliates in connection with the Exit Facility and a field examination fee of $925 per person per day plus actual reasonable and documented field audit expenses, but excluding costs and expenses for GE Capital's syndication of the loan. Mr. Oswald tells Judge Hardin that procuring a cost-effective exit financing facility that provides adequate and sufficient liquidity is critical to confirmation. The Exit Financing Letters are products of good faith and arm's-length negotiations between the parties and reflect market rates and competitive terms. GE Capital is the agent for the Debtors' DIP credit facility and will act as agent under the Exit Facility. Because of GE Capital's familiarity with the Debtors' business and its role as agent under the DIP facility, the fees and expenses payable under the Exit Facility Letters are lower than what would be incurred if a different lender was to provide the financing, Mr. Oswald explains. Moreover, Mr. Oswald says the approval of the Exit Facility Letters is necessary at this time to permit GE Capital to proceed with its due diligence and the parties can document the Exit Facility. To secure all obligations of SVCMC, GE Capital, on behalf of itself and the Lenders, will receive a fully perfected first priority lien and security interest in all of the real and personal, tangible and intangible assets of SVCMC, provided that the collateral will not include reimbursements or accounts received by SVCMC pursuant to the Indigent Care Pool and the GME Pool and Excluded Deposit Accounts. All collateral will be free and clear of other liens, claims, and encumbrances, except for: (a) currently existing liens in favor of Commerce Bank, Sun Life, RCG Longview II, L.P., Aptium W. New York, Inc., the Dormitory Authority of the State of New York, and Staten Island Savings Bank currently covering certain property of SVCMC for existing obligations, (b) a second lien in favor of a medical malpractice trust to be created under the Plan of Reorganization covering certain Staff House and Westchester properties, (c) a senior lien created under the Plan in favor of general unsecured creditors covering certain identified property, and (d) other encumbrances reasonably acceptable to GE Capital. Sun Life Objects to Priority of Liens When the Debtors filed for bankruptcy, they owed $78,320,995 to Sun Life Assurance Company of Canada and Sun Life Assurance Company of Canada (U.S.). The Sun Life Claim is secured by first and second priority liens on four properties in New York and their rents, profits and proceeds, including the Westchester Collateral. Eric R. Wilson, Esq., at Kelley Drye & Warren LLP, in New York, noted that the Debtors acknowledged that the Sun Life Liens are valid and duly perfected liens, subject only to the Official Committee of Unsecured Creditors' right to challenge Sun Life's lien on the Westchester Collateral. The Creditors Committee's right to challenge that lien has been extended through June 4, 2007. Mr. Wilson said the proposed Term Sheet is ambiguous because it contemplates first priority liens in favor of GE Capital against collateral, including the Sun Life Collateral, that is subject to existing first and second priority liens in favor of Sun Life. Hence, to clarify the ambiguity, Sun Life had asked the Court to expressly provide in any order granting the Debtors' request that any liens or encumbrances that may be granted to GE Capital are presently subordinate to the Sun Life liens. However, Sun Life withdrew its objection. About Saint Vincents Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 49 Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SANDRIDGE ENERGY: S&P Rates Proposed $1 Billion Senior Loan at B ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to privately held oil and gas exploration and production company SandRidge Energy Inc. At the same time, Standard & Poor's assigned a 'B' rating to the company's proposed $1 billion senior unsecured term loan. The term loan is expected to be exchanged into 144A senior unsecured notes within 412 days of closing. Closing is expected to occur simultaneously with an approximately $300 million private equity infusion. SandRidge will use proceeds to repay an $850 million bridge and partially fund the company's large 2007 capital budget. The outlook is stable. Pro forma for the term loan issuance, Oklahoma City, Oklahoma- based SandRidge will have $1.1 billion in debt. "The ratings on SandRidge reflect its midsize reserve base, highly leveraged financial profile, high general and administrative (G&A) expenses, geographic concentration in the Pinon field in West Texas, and the E&P industry's highly cyclical and capital intensive nature," said Standard & Poor's credit analyst David Lundberg. "These weaknesses are only partially offset by the company's internal growth opportunities, competitive finding & development (F&D) costs, and experienced management team. Another ratings consideration is the financial flexibility of being able to pay interest expense and preferred stock dividend payments in kind over the next several years," Mr. Lundberg continued. The outlook is stable. In 2007 and 2008, Standard & Poor's expects the company to spend aggressively to ramp up production levels, particularly in the West Texas Overthrust. Lifting and F&D costs should be in line with 2006 levels, and the rating agency would expect G&A expense on a per-unit-of-production basis to decrease significantly. Standard & Poor's expects debt levels to remain in the $1.1 billion area, but the rating agency expects deleveraging through reserve and production growth. A positive rating action could result if the company deleverages materially and operating results are in line with expectations and the company. A successful IPO and conversion of the convertible preferred stock into common would contribute to deleveraging targets. A negative rating action could result if the company is not able to increase production levels at a reasonable cost, which would pressure the company's coverage ratios. Also, if the company does not raise additional capital over the next three to four quarters but is still pursuing a very aggressive capital budget, liquidity could become constrained, which could result in a negative rating action. SG MORTGAGE: S&P Holds BB Rating on Class M13 Certificates ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on 16 classes of certificates from SG Mortgage Securities Trust 2005-OPT1. The affirmations reflect the stable performance of the collateral as of the February 2007 remittance date. Current and projected credit support percentages are sufficient at each rating level. SG Mortgage Securities Trust 2005-OPT1 is supported by overcollateralization (O/C), excess interest, and subordination. This transaction is 14 months seasoned and has maintained O/C of 0.70% of the original balance since closing. While the deal has realized $197,564 in cumulative losses, monthly excess interest has covered these losses and O/C has not been compromised. Total and serious delinquencies are 15.73% and 9.17% of the current principal balance, respectively. While these percentages have increased over recent months, they have not translated into significant realized losses or reduced credit enhancement levels. The collateral backing these certificates consist of subprime fixed- and adjustable-rate mortgage loans originated by Option One Mortgage Corp. Ratings Affirmed SG Mortgage Securities Trust 2005-OPT1 Class Rating ----- ------ A1, A2, A3 AAA M1 AA+ M2 AA M3, M4 AA- M5 A+ M6 A M7 A- M8 BBB+ M9, M10 BBB M11 BBB- M12 BB+ M13 BB SIERRA HEALTH: Agrees to Sell Assets to UnitedHealth for $2.6 Bil. ------------------------------------------------------------------ Sierra Health Services, Inc., and UnitedHealth Group Inc. have signed a definitive merger agreement under which UnitedHealth Group will acquire all of the outstanding shares of Sierra for $43.50 per share in cash, representing a total equity value of $2.6 billion. The transaction, which has been approved by the Boards of Directors of both companies and is expected to close by the end of 2007 or sooner, is subject to state and federal regulatory approvals, including in Nevada, California and Texas, approval by Sierra's stockholders, and other customary conditions. "We have completed extensive due diligence, and expect Sierra's positive performance to continue," Mike Mikan, chief financial officer of UnitedHealth Group, said. "Sierra is a financially strong organization with very stable operations and systems, and has a long and well-recognized history of consistently and profitably delivering high-quality, affordable health care in Nevada." Sierra is a provider of health benefits and services, serving approximately 310,000 employer-sponsored health plan members in Nevada and 320,000 people in senior and government programs throughout the United States. The combined business in the Nevada region will continue under the leadership of Sierra's chairman and chief executive officer Anthony M. Marlon, M.D. and his management team. The transaction combines Sierra's broad local networks of high-quality health care providers and services with UnitedHealth Group's organized system of care providers and clinical centers of excellence programs throughout the United States, its significant capabilities and technologies to support consumers, and its leadership role in making the health care system work better for all constituents. "Combining UnitedHealthcare and Sierra brings together two strong and innovative companies that each have a heritage of providing consumers access to affordable, quality medical care," UnitedHealth Group president and chief executive officer Stephen J. Hemsley said. "The combined enterprise will have the scale, resources and commitment to offer the most comprehensive range of affordable services to our clients in the Southwest, as well as for clients with business interests across the country. "Sierra's clinical operations are led by the physicians of its affiliate, Southwest Medical Associates, which is Nevada's largest multi-specialty medical group practice," Mr. Hemsley continued. "They have long provided strong leadership around the delivery of quality care. We see significant opportunities to learn from them and to leverage their expertise in combination with our leading data assets to gain clinical insights that will be useful in a wide variety of broader care delivery settings in our network- based care model." "United's national scope, reputation for affordable, quality product design and overall credibility with decision-makers assure me that the best interests of our customers, providers and employees will be considered," Dr. Marlon, the founder of Sierra, said. "The key to Sierra's success over the past 25 years has always been our exceptional people and their promise to provide consumers with quality health care. These attributes have contributed to Sierra's positive reputation in Nevada and to the value the Company has created for its shareholders. This merger is the next step in continuing that promise, and we are confident that this combination will generate significant benefits for all of our stakeholders as we work to improve the delivery of care across the health care system." UnitedHealth Group sees this business combination creating opportunities in a number of areas: * The full spectrum of health benefit programs and services for commercial and governmental employers -- ranging from large multisite corporations to small local businesses -- as well as for individuals; * The most extensive portfolio of services to address the needs of participants in government-sponsored programs, including older Americans in a variety of Medicare programs and Nevada state Medicaid beneficiaries; * Diversified services dedicated to specialized health care needs such as behavioral, dental, vision and pharmaceutical benefits. The addition of Sierra further complements UnitedHealth Group's businesses in the high-growth Southwest region. The U.S. Census Bureau estimates that Nevada was the second fastest-growing state in 2006 -- after ranking number one for population growth percentage in each of the 19 previous years. UnitedHealth Group already has solid market positions in the adjacent growth states of Arizona, California, Colorado and Utah. "The assets, brands and reputations of Sierra and Southwest Medical Associates will significantly strengthen our growth platform in the region," David Wichmann, president of UnitedHealth Group's individual and employer markets business group, which includes its UnitedHealthcare business, said. "Sierra is widely recognized as the best-in-class local health benefits provider in Nevada. We have immense respect for Dr. Marlon and his management team and the 3,000 dedicated employees of Sierra, and we look forward to welcoming them into the UnitedHealth Group family." Under the agreement a wholly owned subsidiary of UnitedHealthcare, a UnitedHealth Group company, will merge with Sierra. The merger agreement requires Sierra to pay UnitedHealth Group a termination fee of approximately $85 million in the event the merger is not consummated for certain specified reasons, such as Sierra's Board of Directors changing its recommendation of the merger. UnitedHealth Group anticipates the acquisition will be immediately accretive to earnings per share upon closing, adding earnings of approximately $0.04 per share in the first 12 months without consideration of any potential synergies. UnitedHealth Group will not include these earnings gains in its financial outlook until the transaction has closed. UnitedHealth Group also expects the combined company to realize operating enhancements that will provide additional value for all constituents, including shareholders. Financial synergies are expected to contribute up to $30 million in additional operating earnings to combined company results in calendar 2008, with additional gains to follow in subsequent years. The transaction will be financed by UnitedHealth Group with cash on hand, cash flows from operations and normal capital market activities. Separately, UnitedHealth Group reiterated that it plans to buy back approximately $4 billion to $4.5 billion in stock in 2007 under its ongoing share repurchase program. Sierra Health Services and UnitedHealth Group were served on this agreement by financial advisors Lehman Brothers and J.P. Morgan, respectively. About UnitedHealth Headquartered in Minneapolis, Minnesota, UnitedHealth Group Inc. (NYSE: UNH) -- http://www.unitedhealthgroup.com/-- offers products and services through six operating businesses: UnitedHealthcare, Ovations, AmeriChoice, Uniprise, Specialized Care Services and Ingenix. Through its family of businesses, UnitedHealth Group serves approximately 70 million individuals nationwide. About Sierra Health Headquartered in Las Vegas, Nevada, Sierra Health Services Inc. (NYSE: SIE) -- http://www.sierrahealth.com/-- is a diversified health care services company that operates health maintenance organizations, indemnity insurers, military health programs, preferred provider organizations and multispecialty medical groups. Sierra's subsidiaries serve more than 1.2 million people through health benefit plans for employers, government programs and individuals. * * * The company's 2-1/4% Senior Convertible Debentures due 2023 carry Standard & Poor's BB+ rating. SMALL HYDRO: Case Summary & 17 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Small Hydro of Texas, Inc. 1298 FM 766 Cuero, TX 77954 Bankruptcy Case No.: 07-60033 Chapter 11 Petition Date: March 1, 2007 Court: Southern District of Texas (Victoria) Judge: Wesley W. Steen Debtor's Counsel: Jerome A. Brown, Esq. Brown & Associates P.O. Box 1667 Victoria, TX 77902 Tel: (361) 579-6700 Fax: (361) 485-0465 Estimated Assets: $1 Million to $100 Million Estimated Debts: $100,000 to $1 Million Debtor's 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Raleigh Coppedge Promissory Note $48,825 1105 North McLeod Cuero, TX 77954 Sanders Hydrostatic Testing Co. Business Debt $46,339 P.O. Box 690 Cuero, TX 77954 Van Sanders Promissory Note $29,503 P.O. Box 690 Cuero, TX 77954 Jim Conrad Promissory Note $29,433 Lionel Flores Promissory Note $25,000 Robert Sollock Promissory Note $22,840 AT&T Business Debt $17,281 Bradley Construction Business Debt $13,993 Central Concrete Inc. Business Debt $8,517 Scrapco Inc. Business Debt $7,500 McPhillips Insurance Business Debt $6,000 William Finney, Sr. Litigation $0 Tim Pennell Litigation $0 Rosemary Harrison Litigation $0 John Braden Litigation $0 Dan Donalson Litigation $0 Bob McCurdy Litigation $0 SMARTIRE SYSTEMS: Completes $1.8 Mil. Convertible Debentures Sale ----------------------------------------------------------------- SmarTire Systems Inc. has completed the sale of the third and last convertible debenture to be sold pursuant to the terms of the securities purchase agreement dated Jan. 23, 2007. As reported in the Troubled Company Reporter on Jan. 30, 2007 SmarTire entered into an agreement providing for the sale of convertible debentures in the amount of up to $1,800,000. On Jan. 23, 2007, SmarTire sold one convertible debenture for gross proceeds of $684,000. The agreement provides that SmarTire may sell convertible debentures for the balance of up to $1,116,000 at any time over the next six months. Pursuant to the securities purchase agreement with Xentenial Holdings Limited dated January 23, 2007, the company has sold a third convertible debenture to Xentenial Holdings Limited. This third convertible debenture is dated March 2, 2007, and is in the amount of $782,000. Under the terms of this March 2, 2007 secured convertible debenture, the company is required to repay principal, together with accrued interest calculated at an annual rate of 10%, on or before Jan. 23, 2009. Interest may be paid either in cash or in shares of our common stock valued at the closing bid price on the trading day immediately prior to the date paid, at our option. Subject to a restriction, all or any part of principal and interest due under the secured convertible debenture may be converted at any time at the option of the holder into shares of our common stock. The conversion price in effect on any conversion date shall be equal to the lesser of (i) $0.0573 or; (ii) 80% of the lowest volume weighted average price of our common stock during the 30 trading days immediately preceding the conversion date as quoted by Bloomberg, LP. The conversion price is subject to adjustment in the event the company issues any shares of its common stock at a price per share less than the conversion price then in effect, in which event, subject to certain agreed exceptions, the conversion price will be reduced to the lower purchase price. The secured convertible debenture contains a contractual restriction on beneficial share ownership. It provides that the holders may not convert the convertible debenture, or receive shares of our common stock as payment of interest, to the extent that the conversion or the receipt of the interest payment would result in such holder, together with its respective affiliates, beneficially owning in excess of 4.99% of our then issued and outstanding shares of common stock. The holder upon may waive this beneficial ownership limitation not less than 65 days' notice to us. "With a number of recent successes behind us, the proceeds from this financing will be used for working capital as we continue to streamline operations and establish a foothold in the estimated $2.2 billion commercial, recreational vehicle, bus and off-highway markets; an industry that depends on cost-saving measures in order to grow margins as tire, fuel and operator expenditures continue to squeeze profitability," SmarTire CFO Jeff Finkelstein said. On March 5, 2007, the company amended its stock option agreements with 28 employees of the company, including the officers of the company, in order to reprice an aggregate of 8,525,000 employee stock options to the market price for our common shares on the closing price for our common shares on the OTC Bulletin Board, which was $0.035 per share. A full-text copy of the Amendment to the Securities Purchase Agreement is available for free at: http://ResearchArchives.com/t/s?1b2d About SmarTire Systems Headquartered in Richmond, British Columbia, Canada, SmarTire Systems Inc. (OTCBB: SMTR) -- http://smartire.com/--develops and markets technically advanced tire pressure monitoring systems for the transportation and automotive industries that monitor tire pressure and tire temperature. Its TPMSs are designed for improved vehicle safety, performance, reliability and fuel efficiency. The company has three wholly owned subsidiaries: SmarTire Technologies Inc., SmarTire USA Inc. and SmarTire Europe Limited. * * * As reported in the Troubled Company Reporter on Jan. 8, 2007, the company's balance sheet at Oct. 31, 2006, showed $6.1 million in total assets, $38.7 million in total liabilities, $2.2 million in preferred shares subject to mandatory redemption, resulting in a stockholders' deficit of $34.8 million. SMARTIRE SYSTEMS: Sells $782,000 Conv. Debenture to Xentenial ------------------------------------------------------------- Smartire Systems Inc. have sold a third convertible debenture to Xentenial Holdings Limited in the amount of $782,000, dated March 2, 2007, pursuant to the securities purchase agreement with Xentenial Holdings Limited dated Jan. 23, 2007 and reported in a Form 8-K filed Jan. 26, 2007, as amended by an amendment dated Feb. 9, 2007 and reported in a Form 8-K filed Feb. 15, 2007, Under the terms of this Mar. 2, 2007 secured convertible debenture, The company are required to repay principal, together with accrued interest calculated at an annual rate of 10%, on or before Jan. 23, 2009. Interest may be paid either in cash or in shares of its common stock valued at the closing bid price on the trading day immediately prior to the date paid, at our option. Subject to a restriction describe below, all or any part of principal and interest due under the secured convertible debenture may be converted at any time at the option of the holder into shares of our common stock. The conversion price in effect on any conversion date shall be equal to the lesser of a. $0.0573 or; b. 80% of the lowest volume weighted average price of its common stock during the 30 trading days immediately preceding the conversion date as quoted by Bloomberg, LP. The conversion price is subject to adjustment in the event we issue any shares of its common stock at a price per share less than the conversion price then in effect, in which event, subject to certain agreed exceptions, the conversion price will be reduced to the lower purchase price. The secured convertible debenture contains a contractual restriction on beneficial share ownership. It provides that the holders may not convert the convertible debenture, or receive shares of its common stock as payment of interest, to the extent that the conversion or the receipt of the interest payment would result in such holder, together with its respective affiliates, beneficially owning in excess of 4.99% of our then issued and outstanding shares of common stock. This beneficial ownership limitation may be waived by the holder upon not less than 65 days' notice to us. On Mar. 5, 2007, the company amended its stock option agreements with 28 employees of our company, including the officers of its company listed below, in order to reprice an aggregate of 8,525,000 employee stock options to the market price for its common shares on the closing price for its common shares on the OTC Bulletin Board, which was $0.035 per share. About SmarTire Systems Headquartered in Richmond, British Columbia, Canada, SmarTire Systems Inc. (OTC BB: SMTR.OB) -- http://smartire.com/--develops and markets technically advanced tire pressure monitoring systems for the transportation and automotive industries that monitor tire pressure and tire temperature. Its TPMSs are designed for improved vehicle safety, performance, reliability and fuel efficiency. The company has three wholly owned subsidiaries: SmarTire Technologies Inc., SmarTire USA Inc. and SmarTire Europe Limited. * * * As reported in the Troubled Company Reporter on Jan. 8, 2007, the company's balance sheet at Oct. 31, 2006, showed $6.1 million in total assets, $38.7 million in total liabilities, $2.2 million in preferred shares subject to mandatory redemption, resulting in a stockholders' deficit of $34.8 million. SMURFIT-STONE: DBRS Holds B (high) Senior Unsecured Debt's Rating ----------------------------------------------------------------- Dominion Bond Rating Service confirmed the Senior Unsecured Debt rating of Smurfit-Stone Container Corporation at B (high). The trend is Stable. The rating of Smurfit-Stone Container remains on track regardless of the fact that the corrugated packaging industry has experienced long periods of oversupply conditions in the past five years that have produced weak financial results. The company's heavy reliance on this sector results in a business risk that is greater than the forest product industry's average. Containerboard producers reduced supply to met demand in 2005 and 2006 and product prices have been on an upward trend since fourth quarter 2005. Slow growth in packaging demand and containerboard/packaging industry capacity discipline should produce gradually increasing product prices. However, cost pressures, including high chemical and freight costs, and rising fibre prices are showing few signs of abating and are expected to offset some of the positive aspects of higher revenues. The company also faces the risk of: 1. increased linerboard imports from China as more domestic capacity comes on stream in 2007 and 2008, and 2. pressure from major retailers to reduce packaging volumes. Despite the potential for a negative impact on earnings, the aforementioned risks are not expected to have a major impact on company profitability in the near term. A major restructuring plan to reduce costs is underway. The Company expects to achieve $525 million in annual cost savings by the end of 2008. Smurfit-Stone achieved $243 million in savings in 2006 and is targeting another $177 million in additional incremental cost reduction in 2007. Capex is expected to remain at high levels in 2007 and 2008 as the company completes its restructuring and cost reduction program. Cash flow from operations is forecasted to be sufficient to fund capital expenditures in 2007 and 2008. However, free cash flow is only expected to be marginally positive in the next two years, preventing an improvement in the financial profile until the restructuring program is completed at the end of 2008. Smurfit-Stone has a long history of high leverage and this trend is expected to continue in the near term. As a result, the company's credit profile is not expected to change significantly over the next two years, remaining within the parameters associated with the above-noted rating. The greatest risk facing the company is a North American recession, particularly given its continuing high leverage. Smurfit-Stone would have limited financial flexibility to fund large free cash flow losses in the event of sharply lower earnings. However, DBRS does not expect this to occur over the near term, and the downside risk to the current rating is limited. SOLO CUP: Moody's Holds Ratings and Revises Outlook to Negative --------------------------------------------------------------- Moody's Investors Service confirmed the B3 Corporate Family Rating of Solo Cup Company and revised the rating outlook to negative. Moody's assigned a B1 rating to both the $638 million senior secured term loan B and $150 million revolver and confirmed all other instrument ratings. The revision of the ratings outlook to negative reflects the company's dependency on asset sales to ease liquidity constraints as well as the positive change in corporate governance at Solo Cup. The company's substantial working capital needs cannot be managed without significant utilization of the revolver because of the current and projected lack of free cash flow. Moreover, Solo Cup is dependent upon asset sales to provide adequate headroom under its covenants for working capital needs. Credit metrics are weak for the rating category and the company's viability and the ratings are dependent upon improvements in free cash flow and liquidity and reductions in debt and interest expense. Solo Cup has been plagued by poor corporate governance, an inability to execute on previous performance improvement plans, inadequate financial controls, increased competition, rising raw material prices, weak information systems, and high financial leverage. Moody's acknowledges that the new leadership structure is expected to have a greater focus on performance and accountability and has the potential to drive improved results. Solo Cup's strong brand name, broad product portfolio, scale and long standing customer relationships are also contemplated in the ratings and outlook. Affirmed: -- Confirmed Corporate Family Rating, B3 -- Confirmed $130 million senior secured second lien term loan due March 31, 2012, Caa1, LGD4, 69% -- Confirmed $325 million 8.5% subordinated notes due Feb. 15, 2014, Caa2 LGD 5, 87 % -- Assigned $150 million senior secured revolving credit facility maturing Feb 27, 2010, B1, LGD3, 32% -- Assigned $638 million senior secured term loan B due Feb 27, 2011, B1, LGD3, 32 % -- Confirmed Probability of Default Rating, B3 The rating outlook is revised to negative. Headquartered in Highland Park, Illinois, Solo Cup Company with annual revenues of about $2.4 billion is one of the largest domestic manufacturers of disposable paper and plastic food and beverage containers used in the foodservice and retail consumer markets. SOLUTIA INC: Selling Dequest to Thermphos Trading for $67 Million ----------------------------------------------------------------- Solutia Inc. has reached a definitive agreement to sell Dequest(r), its water treatment phosphonates business. Under the terms of the agreement, Thermphos Trading GmbH will purchase the assets and assume certain of the liabilities of the Dequest business for $67 million in cash, subject to a working capital adjustment. The parties will also enter into a lease and operating agreement under which Solutia will continue to operate the Dequest facility to produce Dequest products exclusively for Thermphos at Solutia's plant in Newport, Wales, in the United Kingdom. The closing of a sale of the Dequest business will be subject to certain governmental and regulatory approvals and other customary closing conditions. In addition, the sale transaction is subject to authorization by the bankruptcy court overseeing Solutia's reorganization, following completion of a court-supervised auction process. Solutia plans to seek bankruptcy court approval of the bidding procedures and other aspects of the auction process in April 2007. About Dequest Dequest -- http://www.dequest.com/-- produces phosphonates, which are used as additives in water processing across a broad spectrum of markets, including industrial water treatment, household and industrial detergents, industrial cleaners, enhanced oil recovery operations, and various industrial processes such as desalination and pulp production. In 2006, sales for the Dequest business accounted for less than 4% of the total sales of Solutia Inc. About Thermphos International Thermphos International -- http://www.thermphos.com/-- produces and sells phosphorus, phosphoric acid, phosphorus derivates and phosphates. Thermphos employs approximately 1,150 people worldwide with locations in the Netherlands, Germany, Switzerland, France, England Argentina and China. About Solutia Inc. Headquartered in St. Louis, Missouri, Solutia, Inc. (OTCBB:SOLUQ) -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The company filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. SPILSBURY PUZZLE: Assignee To Auction Assets on Friday ------------------------------------------------------ William A. Brandt, Jr., the assignee for the benefit of creditors of Spilsbury Puzzle Company, will hold a public auction to sell all of Spilsbury's inventory, furniture and equipment, and intellectual property and goodwill on March 16, 2007, at 9:00 a.m. at the offices of: Development Specialists Inc. 70 West Madison Street, Suite 2300 Chicago, IL 60602 Attn: Steven L. Victor Matthew E. Farnsworth The Assignee has received an offer to purchase substantiall all of Spilsbury's auctioned assets for $1,100,000. The Assignee has granted the offeror a $50,000 bid protection. The next bid must be at least $1,150,000. Thereafter, all bids must be in the increments of $10,000. All prospective bidders must deposit $25,000 in cashier's check or certified check with the Assignee before the auction to be eligible to bid. The highest bid must make a $75,000 additional earnest money deposit with the Assignee. The balance of the purchase price is payable on the closing date, which is on or before March 19, 2007. All assets are offered on an "as is, where is" basis, without any representations or warranties expressed or implied as to the value of the assets, their merchantibility or fitness for a particular case. The Assignee can be contacted at: William A. Brandt, Jr. Assignee for the Benefit of Creditors Spilsbury Puzzle Company 70 West Madison Street, Suite 2300 Chicago, IL 60602 Tel: (312) 263-4141 Robert Radasevich, Esq., and Robert G. Gerber, Esq., at Neal, Gerber & Elsenberg LLP represent the Assignee. Spilsbury Puzzle Company -- http://www.spilsbury.com/-- sold unique gifts, creative games, unusual toys and original puzzles. The company's operations have ceased. The company executed an Assignment for the Benefit of Creditors on Feb. 23, 2007. STRUCTURED ASSET: Moody's Cuts Ratings on Class B-3 Loans to Ba1 ---------------------------------------------------------------- Moody's downgrades three tranches and places two of them on watch for possible further downgrade on a SASCO 2002 deal. The deal is backed by a mix of adjustable rate Alt-A and jumbo loans, currently being serviced by Aurora Loan Services. This action has been in light of the presence of one large loan in REO under the Pool 1 group with potential for high severity. While this loan's effect on projected losses will not directly affect the other group's bonds in terms of immediate writedowns, it may adversely affect the credit enhancement of this group of bonds. These are the rating actions: Downgrade: * Structured Asset Securities Corp. 2002-18A -- Class B-3, downgraded to Ba1, previously A2. -- Class B-2-II, downgraded to A2, on review for possible further downgrade, previously Aa2. -- Class B-2-I, downgraded to A2, on review for possible further downgrade, previously Aa2. SYNAGRO TECH: S&P Junks Rating on $150 Million 2nd-Lien Term Loan ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned bank loan and recovery ratings to Synagro Technologies Inc.'s $540 million of proposed credit facilities, which will consist of a $100 million six-year first-lien revolving credit facility, a $290 million seven-year first-lien term loan B, and a $150 million seven-and-a- half year second-lien term loan. The first-lien facilities are rated 'B+' with recovery ratings of '1', indicating the expectation of full recovery of principal in the event of default. The second-lien term loan is rated 'CCC+' with a recovery rating of '4', indicating the expectation of marginal (25%-50%) recovery of principal in the event of default. Standard & Poor's said that its 'B+' corporate credit rating and other existing ratings on Houston, Texas-based Synagro remain on CreditWatch with negative implications, where they were placed on Jan. 30, 2007. The ratings were placed on CreditWatch after the report that Synagro had signed a definitive merger agreement to be acquired by The Carlyle Group. Proceeds of $440 million from the proposed credit facilities and about $277 million in equity contribution from Carlyle will be used to fund the acquisition of Synagro and for the repayment of existing indebtedness. Upon successful completion of the acquisition and proposed financing, Standard & Poor's will resolve the CreditWatch listing. Standard & Poor's will lower the corporate credit rating on Synagro to 'B' from 'B+' to reflect the increase in debt and subsequent deterioration of the financial profile. The outlook will be stable. Standard & Poor's also expects to withdraw the ratings on the existing credit facility upon closing of the proposed refinancing. "After the completion of the pending transaction, the ratings on Synagro will reflect its highly leveraged capital structure, a narrow scope of operations that results in limited diversity, some vulnerability of operating performance to government regulation, energy costs and weather conditions, and competition from larger and well-financed direct and indirect participants," said Standard & Poor's credit analyst Robyn Shapiro. "These factors are partially offset by the company's leading position as a national service provider of wastewater residuals management, offering a full range of services; the essential nature of services provided to municipalities and industrial customers; and the high percentage of sales under long-term contracts." With annual revenues of about $350 million, Synagro manages the organic, non-hazardous biosolids generated by public and privately owned water and wastewater treatment facilities. TEMBEC INC: Moody's Holds Junk Corporate Family Rating ------------------------------------------------------ Moody's Investors Service upgraded the Speculative Grade Liquidity rating of Tembec Inc.'s key operating subsidiary, Tembec Industries, Inc., to SGL-3 from SGL-4. The SGL upgrade results from the receipt of $242 million in softwood lumber duties, which provides a boost to liquidity and ensures that there will be more than ample cash available to fund interest payments over the next 12-18 months, despite the expectation that the company will remain free cash flow negative. Additionally, Tembec's recently refinanced credit facilities, available to itself and its wholly owned subsidiary, Tembec Enterprises Inc., provides further liquidity. Moody's also affirmed the company's Caa3 corporate family and Ca long term debt ratings. The outlook remains stable. Upgrades: * Tembec Industries Inc. -- Speculative Grade Liquidity Rating, Upgraded to SGL-3 from SGL-4 While Tembec's duty refund is sizable and will ensure that the company can continue to operate despite the weak financial performance, it does not change the company's credit profile as it will not enable the company to meaningfully improve its cost competitiveness relative to other producers. Although the company has made some progress in improving its cost structure since it disclosed a "recovery plan" in early 2006, it has been unable to consistently generate positive free cash flow. Moody's believes that Tembec will fund its operating cash deficit by using its cash and the availability under its credit facilities. These factors reduce the likelihood that bondholders' potential recovery will increase as a result of the duty refund. Consequently, Tembec's corporate family rating remains at Caa3. Given that the company's CDN$250 million credit facility is secured and has preferential access to liquid assets, the ratings on the company's notes are notched down from the Caa3 corporate family rating to Ca. On Jan. 22, 2007, Tembec reported a new 3-year C$250 million committed facility for itself and its wholly owned subsidiary, Tembec Enterprises Inc. The new facility effectively replaced two existing facilities of CDN$150 million and C$136 million that were available to Tembec and TEI respectively. Despite the $36 million reduction in the aggregate commitment level, effective availability is substantially unchanged, and with the company having applied a portion of the duty refund to reduce borrowings, availability is much improved. With these developments, the company's liquidity is expected to be adequate over the forward four-quarter SGL horizon, with cash on hand and credit availability off-setting expectations of a meaningful free cash flow deficit. Headquartered in Montreal, Quebec, Tembec is an integrated paper and forest products company with operations in North America and France. TERWIN MORTGAGE: S&P Puts Default Ratings on Six Cert. Classes -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on 11 certificates from six transactions issued by Terwin Mortgage Trust. Concurrently, the ratings on 28 classes of mortgage-backed securities from 20 transactions were lowered. The ratings on eight of these downgraded classes were placed on CreditWatch with negative implications, the ratings on three of these classes remain on CreditWatch negative, and the ratings on six of these classes were removed from CreditWatch negative. At the same time, the ratings on six classes were placed on CreditWatch with negative implications, and the ratings on two classes remain on CreditWatch negative. Lastly, the ratings on 582 classes from various Terwin Mortgage Trust transactions were affirmed. The raised ratings reflect pool performance or the shifting interest structures of the deals, which have led to projected credit support percentages that are at least 2x the percentage at the higher rating levels. Despite the adverse collateral performance of four of these transactions, which have lower tranches with ratings that were placed on CreditWatch or lowered, the sequential payment of principal to these deals due to a failing delinquency or cumulative loss trigger also warrants the upgrades. The upgraded classes from these series are now in the first position to be paid off; therefore, Standard & Poor's does not expect these tranches to absorb any future realized losses. The downgrades and negative CreditWatch placements reflect the deterioration of available credit support provided by overcollateralization (O/C), excess interest, and subordination to the respective classes due to adverse collateral performance of the 22 transactions. The collateral backing these transactions consists of 20 closed end second-lien transactions, one subprime transaction, and one nonperforming transaction. As of the February 2007 remittance period, delinquencies that have translated into severe monthly net losses have exhausted credit support to these deals by great amounts. With the exception of series 2004-EQR1 (a nonperforming transaction), serious delinquencies for this set of deals range from 2.45% to 14.77% of the current pool balances, while cumulative losses range from 0.29% to 3.68% of the original pool balances. Serious delinquencies and cumulative losses for series 2004-EQR1 are 56.28% and 6.25%, respectively. O/C is currently below its target for 19 of the 22 corresponding deals. A number of these deals were structured so that O/C would continue to build toward its target, as the deals amortized and built moderate amounts of excess interest early in their lives. Contrarily, the unfavorable performance has prevented O/C from continuing to build and has unexpectedly depleted O/C to vulnerable levels. Six classes from six separate transactions incurred realized losses in recent months. Separately, Standard & Poor's lowered the ratings on 11 classes from 10 separate transactions to 'CCC' because the rating agency expects them to default within the next six months, based on historical performance. The ratings that were lowered to 'CCC' were concurrently removed from CreditWatch. According to Standard & Poor's surveillance policy, RMBS certificates that are rated 'CCC+' and below are no longer eligible to be on CreditWatch negative. As of the February 2007 remittance period and aggregated by vintage, cumulative net loss rates for the aggregate original balances for the 2004, 2005, and 2006 vintages have increased over the past six months by 34 basis points (bps), 110 bps, and 40 bps, respectively. The 2003 vintage was the only vintage to experience a drop in the cumulative net loss rate (by 5 bps during this period). The affirmations reflect sufficient credit support percentages to maintain the current ratings, as well as stable performance, as reported during the February 2007 remittance period. The shifting interest structures of these deals have allowed credit support levels to grow to a point at which the current ratings are adequately supported. Standard & Poor's will continue to closely monitor the 16 transactions with ratings on CreditWatch negative. If losses decline to a point at which they no longer exceed monthly excess interest, and the level of credit enhancement is not further eroded, the rating agency will affirm the ratings on these classes and remove them from CreditWatch. Conversely, if delinquencies continue to translate into substantial realized losses in the coming months and continue to erode available credit enhancement, further negative rating actions can be expected on these classes and possibly on the more senior tranches. The collateral backing the 57 transactions in the Terwin Mortgage Trust review consists primarily of closed-end second-lien, subprime, Alt-A, home equity, and nonperforming mortgage loans originated by various originators. Ratings Raised Terwin Mortgage Trust Rating ------ Series Class To From ------ ----- -- ---- 2004-4SL B-1, B-X AA+ BBB 2004-4SL B-2 AA BBB- 2004-8HES B-2 BB+ BB 2004-10SL M-2 AAA A 2004-16SL M-2 AAA A 2004-18SL 1-M-2 AAA A 2004-18SL 1-M-3 AA+ A- 2004-18SL 1-B-1 AA BBB+ 2004-18SL 2-M-2 AAA A 2004-22SL M-2 AAA A Ratings Lowered And Placed On Creditwatch Negative Terwin Mortgage Trust Rating ------ Series Class To From ------ ----- -- ---- 2003-3SL B-2 B/Watch Neg BB 2003-5SL B-3 B/Watch Neg BB 2004-3HE B-3 BB/Watch Neg BBB- 2004-10SL B-3 B/Watch Neg BB 2004-22SL B-3B B/Watch Neg BB 2006-HF-1 B-6 B/Watch Neg BB 2006-8 II-B-5 B+/Watch Neg BB+ 2006-8 II-B-6 B/Watch Neg BB+ Ratings Lowered And Remaining On Creditwatch Negative Terwin Mortgage Trust Rating ------ Series Class To From ------ ----- -- ---- 2004-EQR1 M-2 A/Watch Neg AA/Watch Neg 2006-2HGS B-5 B/Watch Neg BB+/Watch Neg 2006-6 II-B-5 B/Watch Neg BB+/Watch Neg Ratings Remaining On Creditwatch Negative Terwin Mortgage Trust Series Class Rating ------ ----- ------ 2006-4SL B-7 BB+/Watch Neg 2006-6 I-B-7 BB+/Watch Neg Ratings Lowered And Removed From Creditwatch Negative Terwin Mortgage Trust Rating ------ Series Class To From ------ ----- -- ---- 2004-EQR1 B-1 CCC BBB/Watch Neg 2005-13SL B-7 CCC BB-/Watch Neg 2006-2HGS B-6 CCC B/Watch Neg 2006-6 I-B-8 CCC BB/Watch Neg 2006-6 II-B-6 CCC BB+/Watch Neg 2006-8 I-B-8 CCC BB+/Watch Neg Ratings Lowered Terwin Mortgage Trust Rating ------ Series Class To From ------ ----- -- ---- 2004-16SL B-3 CCC BB 2004-18SL 2-B-3 CCC BB 2005-1SL B-4 CCC BB 2005-3SL B-6-PI CCC BB+ 2005-5SL B-5 D BB 2005-9HGS B-6 CCC BB 2005-11 II-B-6 D BB+ 2005-13SL B-8 D CCC 2006-2HGS B-7 D CCC 2006-4SL B-8 D CCC 2006-1 II-B-5 D BB+ Ratings Placed On Creditwatch Negative Terwin Mortgage Trust Rating ------ Series Class To From ------ ----- -- ---- 2004-2SL B-3 BB/Watch Neg BB 2004-6SL B-3 BB/Watch Neg BB 2004-18SL 1-B-4 BB/Watch Neg BB 2005-5SL B-4 BB+/Watch Neg BB+ 2005-11 I-B-7 BB+/Watch Neg BB+ 2006-HF-1 B-5 BB+/Watch Neg BB+ Ratings Affirmed Terwin Mortgage Trust Series Class Rating ------ ----- ------ 2003-2HE A, M-1, R AAA 2003-2HE M-2 AA 2003-2HE B A- 2003-4HE A-1, R, A-3, M-1 AAA 2003-4HE M-2 AA+ 2003-4HE B BBB+ 2003-6HE A-1, A-3 AAA 2003-6HE M-1 AA+ 2003-6HE M-2 A+ 2003-6HE M-3 A 2003-6HE M-4 A- 2003-6HE M-5 BBB+ 2003-6HE M-6 BBB- 2003-8HE A, S AAA 2003-8HE M-1 AA+ 2003-8HE M-2 A+ 2003-8HE M-3 A- 2003-8HE B-1 BBB+ 2003-8HE B-2 BBB 2003-8HE B-3 BBB- 2003-3SL B-1 A+ 2003-5SL B-1 BBB 2003-5SL B-2 BBB- 2003-7SL B-1 BBB+ 2003-7SL B-2 BBB- 2003-7SL B-3 BB 2004-EQR1 M-1 AAA 2004-1HE M-1 AA 2004-1HE M-2 A 2004-1HE M-3 A- 2004-1HE B-1 BBB+ 2004-1HE B-2 BBB 2004-1HE B-3 BBB- 2004-3HE M-1, M-1-X AA+ 2004-3HE M-2, M-2-X A+ 2004-3HE M-3, M-3-X A 2004-3HE B-1 BBB+ 2004-3HE B-2 BBB 2004-5HE A-1-B, A-X-B AAA 2004-5HE M-1, M-1-X AA 2004-5HE M-2, M-2-X A 2004-5HE M-3 A- 2004-5HE B-1 BBB+ 2004-5HE B-2 BBB 2004-5HE B-3 BBB- 2004-7HE A-1, A-3, S AAA 2004-7HE M-1 AA 2004-7HE M-2 A 2004-7HE M-3 A- 2004-7HE B-1 BBB+ 2004-7HE B-2 BBB 2004-7HE B-3 BBB- 2004-15ALT A-1, A-X AAA 2004-15ALT B-1 AA 2004-15ALT B-2 A 2004-15ALT B-3 BBB 2004-15ALT B-4 BB 2004-15ALT B-5 B 2004-13 ALT 1-A-2, 1-A-3, 1-A-4 AAA 2004-13 ALT 2-PA-1, 2-P-X AAA 2004-13 ALT 1-M-1 AA+ 2004-13 ALT 2-B-1 AA 2004-13 ALT 1-M-2 A+ 2004-13 ALT 2-B-2 A 2004-13 ALT 1-M-3 BBB+ 2004-13 ALT 2-B-3, 2-B-X BBB 2004-13 ALT 2-B-4 BB 2004-13 ALT 2-B-5 B 2004-9HE A-3, A-1 AAA 2004-9HE M-1 AA 2004-9HE M-2 A 2004-9HE M-3 A- 2004-9HE B-1 BBB+ 2004-9HE B-2 BBB 2004-9HE B-3 BBB- 2004-11HE A, S AAA 2004-11HE M-1 AA 2004-11HE M-2 A 2004-11HE M-3 A- 2004-11HE B-1 BBB+ 2004-11HE B-2 BBB 2004-11HE B-3 BBB- 2004-19HE A-1, S AAA 2004-19HE M-1 AA+ 2004-19HE M-2 AA 2004-19HE M-3 A 2004-19HE M-4 A- 2004-19HE B-1 BBB+ 2004-19HE B-2 BBB 2004-19HE B-3 BBB- 2004-21HE 1-A-1 AAA 2004-21HE 2-A-3, 2-A-1, 2-A-2, 2-S AAA 2004-21HE 2-M-1 AA+ 2004-21HE 1-M-1, 2-M-2 AA 2004-21HE 1-M-2, 2-M-3 A 2004-21HE 2-M-4 A- 2004-21HE 2-B-1 BBB+ 2004-21HE 1-M-3, 2-B-2 BBB 2004-21HE 2-B-3 BBB- 2004-21HE 2-B-4 BB 2004-23HELOC A AAA 2004-2SL B-1 BBB 2004-2SL B-2 BBB- 2004-4SL B-3 BB 2004-6SL B-1 BBB 2004-6SL B-2 BBB- 2004-10SL B-1 BBB 2004-10SL B-2 BBB- 2004-16SL A-X AAA 2004-16SL B-1 BBB 2004-16SL B-2 BBB- 2004-18SL 1-B-2, 2-B-1 BBB 2004-18SL 1-B-3, 2-B-2 BBB- 2004-22SL B-1 BBB 2004-22SL B-2 BBB- 2004-22SL B-3A BB 2005-2HE S, A-1 AAA 2005-2HE M-1 AA+ 2005-2HE M-2 AA 2005-2HE M-3 A+ 2005-2HE M-4 A 2005-2HE B-1 BBB+ 2005-2HE B-2 BBB 2005-2HE B-3 BBB- 2005-4HE A-1, S AAA 2005-4HE M-1 AA+ 2005-4HE M-3, M-2 AA 2005-4HE M-4 A+ 2005-4HE M-5 A 2005-4HE B-2, B-1 BBB+ 2005-4HE B-4, B-3 BBB 2005-4HE B-5 BBB- 2005-4HE B-6 BB 2005-6HE A-1A, A-1B, A-1C, S AAA 2005-6HE M-1, M-2 AA+ 2005-6HE M-3, M-4 AA 2005-6HE M-5, M-6 A+ 2005-6HE B-1 A 2005-6HE B-2 A- 2005-6HE B-3, B-4 BBB+ 2005-6HE B-5 BBB 2005-6HE B-6 BBB- 2005-8HE A-2, A-3, M-1, A-1 AAA 2005-8HE M-2 AA+ 2005-8HE M-3 AA 2005-8HE M-4 AA- 2005-8HE M-5 A+ 2005-8HE M-6 A 2005-8HE M-7 A- 2005-8HE B-1 BBB+ 2005-8HE B-2 BBB 2005-8HE B-3 BBB- 2005-10HE A-1A, A-1B, A-1C AAA 2005-10HE M-1 AA+ 2005-10HE M-2, M-3 AA 2005-10HE M-4 AA- 2005-10HE M-5 A+ 2005-10HE M-6 A 2005-10HE B-1 A- 2005-10HE B-2 BBB+ 2005-10HE B-3 BBB 2005-10HE B-4, B-5 BBB- 2005-10HE B-6 BB+ 2005-10HE B-7 BB 2005-12ALT AF-1, AF-2, AF-3, AF-4 AAA 2005-12ALT AF-5, AV-2, AV-3 AAA 2005-12ALT M-1, M-2, M-3 AA+ 2005-12ALT M-4 AA 2005-12ALT M-5, M-6 AA- 2005-12ALT B-1 A+ 2005-12ALT B-2 A 2005-12ALT B-3 A- 2005-14HE AF-1, AF-2, AF-4, AV-1, AV-3, AAA 2005-14HE AV-2, AF-5, AF-3 AAA 2005-14HE M-2, M-1 AA+ 2005-14HE M-3 AA 2005-14HE M-4 A+ 2005-14HE M-5 A 2005-14HE M-6 A- 2005-14HE B-1 BBB+ 2005-14HE B-2 BBB 2005-14HE B-3 BBB- 2005-16HE AF-1, AF-3, AF-5, R, AV-3, AAA 2005-16HE AV-2, AV-1, AF-4, AF-2 AAA 2005-16HE M-1B, M-1A AA+ 2005-16HE M-2B, M-2A AA 2005-16HE M-3B, M-3A AA- 2005-16HE M-4B, M-4A A+ 2005-16HE M-5B, M-5A A 2005-16HE M-6B, M-6A A- 2005-16HE B-1 BBB+ 2005-16HE B-2 BBB 2005-16HE B-3 BBB- 2005-18ALT A-2, A-3, A-4, P-X, R, A-1 AAA 2005-18ALT M-1 AA+ 2005-18ALT M-2 AA 2005-18ALT M-3 AA- 2005-18ALT M-4 A+ 2005-18ALT M-5 A 2005-18ALT M-X, M-6 A- 2005-18ALT B-1 BBB+ 2005-18ALT B-X, B-2 BBB 2005-18ALT B-3 BBB- 2005-18ALT B-4 BB 2005-18ALT B-5 B 2005-1SL M-1 AA 2005-1SL M-2 A 2005-1SL B-1 BBB 2005-1SL B-2 BBB- 2005-1SL B-3 BB 2005-3SL A-1A, A-1B, B-6-A-X AAA 2005-3SL M-1 AA 2005-3SL M-2 A 2005-3SL M-3 A- 2005-3SL B-1 BBB+ 2005-3SL B-2 BBB 2005-3SL B-3 BBB- 2005-3SL B-4, B-5 BB+ 2005-5SL A-1, A2a, A-2b, A-X AAA 2005-5SL M-1a, M-1b AA 2005-5SL M-2 A 2005-5SL M-3 A- 2005-5SL B-1 BBB+ 2005-5SL B-2 BBB 2005-5SL B-3 BBB- 2005-9HGS A-1, A-X AAA 2005-9HGS M-1 AA 2005-9HGS M-2 AA- 2005-9HGS M-3 A 2005-9HGS B-1 A- 2005-9HGS B-2 BBB+ 2005-9HGS B-3 BBB 2005-9HGS B-4 BBB- 2005-9HGS B-5 BB+ 2005-11 I-A-1a, I-A-1b, I-A-X, I-G AAA 2005-11 II-A-1, II-A-2, II-A-X, II-G AAA 2005-11 I-M-1a AA+ 2005-11 I-M-1b, II-M-1 AA 2005-11 I-M-2, II-M-2 AA- 2005-11 I-M-3, II-M-3 A 2005-11 I-B-1, II-B-1 A- 2005-11 I-B-2a, I-B-2b, II-B-2 BBB+ 2005-11 I-B-3, II-B-3 BBB 2005-11 I-B-4, II-B-4 BBB- 2005-11 I-B-5, I-B-6, II-B-5 BB+ 2005-13SL A-1a, A-1b, A-2, A-X, G AAA 2005-13SL M-1 A 2005-13SL B-1 A- 2005-13SL B-2 BBB+ 2005-13SL B-3 BBB 2005-13SL B-4 BBB- 2005-13SL B-5, B-6 BB+ 2006-HF-1 A-1a, A-1b, A-X, G AAA 2006-HF-1 M-1 AA 2006-HF-1 M-2 AA- 2006-HF-1 M-3 A 2006-HF-1 B-1 A- 2006-HF-1 B-2 BBB+ 2006-HF-1 B-3 BBB 2006-HF-1 B-4 BBB- 2006-1 I-A1, I-A2, I-A3 AAA 2006-1 II-A-1a, II-A-1b AAA 2006-1 II-A-X, II-G AAA 2006-1 I-M-1 AA+ 2006-1 I-M-2, II-M-A AA 2006-1 I-M-3, I-M-1 AA- 2006-1 I-M-4, II-M-2 A+ 2006-1 I-M-5, II-M-3 A 2006-1 I-M-6, II-B-1 A- 2006-1 I-B-1, I-B-2, II-B-2 BBB+ 2006-1 I-B-3, II-B-3 BBB 2006-1 I-B-4, I-B-5, II-B-4 BBB- 2006-2HGS A-1, A-2, A-X, G AAA 2006-3 I-A-1, I-A-2, I-A-3 AAA 2006-3 II-A-1, II-A-2, II-A-3 AAA 2006-3 I-M-1 AA+ 2006-3 I-M-2, II-M-1 AA 2006-3 I-M-3 AA- 2006-3 I-M-4 A+ 2006-3 I-M-5, II-M-2 A 2006-3 I-M-6 A- 2006-3 I-M-7, I-M-8 BBB+ 2006-3 I-M-9, I-B-1, II-M-3 BBB 2006-3 I-B-2, II-M-4 BBB- 2006-5 I-A-1, I-A-2a, I-A-2b AAA 2006-5 I-A-2c, II-A-1, II-A-2 AAA 2006-5 II-A-3 AAA 2006-5 I-M-1 AA+ 2006-5 I-M-2 AA 2006-5 II-M-1 AA 2006-5 I-M-3 AA- 2006-5 I-M-4 A+ 2006-5 I-M-5, II-M-2 A 2006-5 I-M-6 A- 2006-5 I-M-7 BBB+ 2006-5 I-M-8, II-M-3 BBB 2006-5 I-M-9, II-M-4 BBB- 2006-5 I-B-1 BB+ 2006-5 I-B-2 BB 2006-6 I-A-1, I-A-2, I-A-X, I-G AAA 2006-6 II-A-1, II-A-2, II-A-X, II-G AAA 2006-6 I-M-1, II-M-1a, II-M-1b AA 2006-6 I-M-2, II-M-2 AA- 2006-6 I-M-3, II-M-3 A 2006-6 I-B-1, II-B-1 A- 2006-6 I-B-2, II-B-2 BBB+ 2006-6 I-B-3, II-B-3 BBB 2006-6 I-B-4, I-B-5, II-B-4 BBB- 2006-6 I-B-6 BB+ 2006-7 I-A-2a, I-A-2b, I-A-2c, I-A-1 AAA 2006-7 II-A-3, II-A-2, II-A-1 AAA 2006-7 I-M-1, II-M-1 AA+ 2006-7 I-M-2 AA 2006-7 I-M-3, II-M-2 AA- 2006-7 I-M-4 A+ 2006-7 I-M-5 A 2006-7 I-M-6, II-M-3 A- 2006-7 I-M-7, I-M-8, II-M-4 BBB+ 2006-7 I-M-9 BBB 2006-8 I-A-1, I-A-2, I-A-X, I-G AAA 2006-8 II-A-1, II-A-2, II-A-X, II-G AAA 2006-8 I-M-1, I-M-2, II-M-1 AA 2006-8 II-M-2 AA- 2006-8 I-M-3 A+ 2006-8 I-B-1, II-M-3 A 2006-8 I-B-2, II-B-1 A- 2006-8 I-B-3, II-B-2 BBB+ 2006-8 I-B-4, II-B-3 BBB 2006-8 I-B-5, I-B-6, II-B-4 BBB- 2006-8 I-B-7 BB+ 2006-11ABS A-2b, A-1, A-2a AAA 2006-11ABS M-1 AA+ 2006-11ABS M-2 AA 2006-11ABS M-3 AA- 2006-11ABS M-4 A+ 2006-11ABS M-5 A 2006-11ABS M-6 A- 2006-11ABS M-8, M-7 BBB+ 2006-11ABS M-9 BBB 2006-11ABS B-1 BBB- 2006-11ABS B-2 BB+ 2006-9HGA A-1, A-2, A-3 AAA 2006-9HGA M-1 AA 2006-9HGA M-2 A 2006-9HGA M-3 BBB 2006-9HGA M-4 BBB- 2006-4SL A-1, A-2, A-X, G AAA 2006-4SL M-1 AA 2006-4SL M-2 AA- 2006-4SL M-3 A 2006-4SL B-1 A- 2006-4SL B-2 BBB+ 2006-4SL B-3 BBB 2006-4SL B-4, B-5 BBB- 2006-4SL B-6 BB+ 2006-10SL G, A-X, A-2, A-1 AAA 2006-10SL M-1, M-2 AA 2006-10SL M-3 A+ 2006-10SL B-1 A 2006-10SL B-2 A- 2006-10SL B-3 BBB+ 2006-10SL B-4 BBB 2006-10SL B-6, B-5 BBB- 2006-10SL B-8, B-7 BB+ 2006-12SL A-1, A-2, A-IO, A-X, G AAA 2006-12SL M-1 AA 2006-12SL M-2 AA- 2006-12SL M-3 A 2006-12SL B-1 A- 2006-12SL B-2 BBB+ 2006-12SL B-3, B-4 BBB 2006-12SL B-5 BBB- TK ALUMINUM: Gets Requisite Consents for Notes Indenture Amendment ------------------------------------------------------------------ Teksid Aluminum Luxembourg S.a r.l., S.C.A., an indirect subsidiary of TK Aluminum Ltd., disclosed that, as of 12:00 P.M., New York City time (5:00 P.M., London time), on Wednesday, March 7, 2007, consents representing approximately 62% of the EUR240,000,000 aggregate principal amount of its outstanding 11.375% Senior Notes due 2011 have been validly delivered pursuant to its solicitation of consents to implement proposed amendments to the indenture governing the Senior Notes. Consequently, the company has the requisite consents from holders of Senior Notes required by the Indenture to execute a supplemental indenture giving effect to the proposed amendments to the Indenture. The consent solicitation expired, March 8, 2007 at 10:00 A.M., New York City time (3:00 P.M., London time). The company may, subject to certain restrictions, amend, extend or terminate the consent solicitation at any time in its sole discretion. The proposed indenture amendments permit the sale of certain assets and operations to Tenedora Nemak, S.A. de C.V., a subsidiary of Alfa, S.A.B. de C.V. on the amended terms as the company may negotiate, as long as certain conditions outlined in proposed amendments are satisfied; and implement the other terms that were agreed to with the financial and legal advisors to the adhoc committee of Noteholders. The company has executed a term sheet with Nemak indicating revised terms for the Nemak Sale, taking into account the most current circumstances. The company continues to work with Nemak to finalize definitive documentation consistent with these terms and consummate the Nemak Sale. The term sheet with Nemak places Nemak under no obligation to consummate the Nemak Sale until a definitive agreement to amend the transaction has been executed. Failure to close the Nemak Sale could materially and adversely affect the company's ability to continue trading. Closing of the amended Nemak Sale is subject to various conditions, including the execution of the Supplemental Indenture and other customary conditions, including regulatory approvals. About Teksid Aluminum Teksid Aluminum -- http://www.teksidaluminum.com/-- manufactures aluminum engine castings for the automotive industry. Principal products include cylinder heads, engine blocks, transmission housings and suspension components. The company operates 15 manufacturing facilities in Europe, North America, South America and Asia. The company maintains operations in Italy, Brazil and China. Until Sept. 2002, Teksid Aluminum was a division of Teksid S.p.A., which was owned by Fiat. Through a series of transactions completed between Sept. 30, 2002 and Nov. 22, 2002, Teksid S.p.A. sold its aluminum foundry business to a consortium of investment funds led by equity investors that include affiliates of each of Questor Management Company, LLC, JPMorgan Partners, Private Equity Partners SGR SpA and AIG Global Investment Corp. As a result of the sale, Teksid Aluminum is owned by its equity investors through TK Aluminum Ltd., a Bermuda holding company. * * * On Jan. 16, 2007, Moody's Investors Service placed TK Aluminum Ltd.'s long-term corporate family rating at Caa3. TOWER AUTOMOTIVE: Exclusive Plan-Filing Period Extended to Mar. 21 ------------------------------------------------------------------ Pending a final ruling on the request, the Honorable Allen L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York extends Tower Automotive Inc. and its debtor-affiliates' exclusive periods through and including March 21, 2007. Judge Gropper adjourns the hearing on the request to March 21. As reported in the Troubled Company Reporter on Feb. 13, 2007, the Debtors asked Judge Gropper to further extend, without prejudice, their exclusive periods to: (a) file a plan of reorganization to May 3, 2007; and (b) solicit acceptances of that plan to June 29, 2007. While the Debtors believed that they have made significant progress in preparing and distributing a draft Chapter 11 Plan to the Official Committee of Unsecured Creditors, negotiations are ongoing, Anup Sathy, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, told Judge Gropper. The Debtors stressed that their ability to formulate a Chapter 11 Plan is predicated upon obtaining a substantial equity investment, possibly implemented through a rights offering. As evidence of the their good faith efforts to negotiate the terms of an equity investment, late in December 2006, the Debtors obtained the Court's permission to indemnify and pay fees to certain investment funds managed by Strategic Value Partners LLC, Wayzata Investment Partners LLC and Stark Investments pursuant to a Backstop Commitment Letter and Restructuring Term Sheet, Mr. Sathy noted. While the Debtors later withdrew the Term Sheet Motion after receiving a notice of termination from the Initial Committed Purchasers, the Debtors continued to evaluate other alternatives. Moreover, if the Debtors are unable to locate a suitable investor, the Debtors may consider alternative exit structures that would be implemented through a Plan, Mr. Sathy said. The Debtors have continued to update the Creditors Committee's advisors regarding these discussions. Mr. Sathy maintained that the Debtors' Exclusive Periods should be extended because: (a) The Debtors' Chapter 11 cases are large and complex; (b) The Debtors have made considerable progress in their Chapter 11 cases, are paying their obligations as they come due and are effectively managing their business and preserving the value of their assets; and (c) The Debtors have been actively working with the Creditors Committee and other key parties-in-interest to facilitate the Debtors' emergence from bankruptcy as soon as possible. Headquartered in Grand Rapids, Michigan, Tower Automotive Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). TOWER AUTOMOTIVE: Posts $65 Mil. Net loss in Qtr. Ended Sept. 30 ---------------------------------------------------------------- Tower Automotive, Inc. reported a net loss of $65.15 million on revenues of $615.66 million for the three months ended Sept. 30, 2006, as compared with a net loss of $76.55 million on revenues of $712.66 million for the three months ended Dec. 31, 2005. The decrease in revenues for the year 2006 was primarily due to lower volume, the impact of two frame programs ending and unfavorable product mix, which decreased revenue by $103.5 million during the 2006 period, as compared with the 2005 period. Chapter 11 and related reorganization expense for the quarter decreased to $2.74 million during the 2006 period, as compared with $6.61 million in the 2005 period. Results for Nine-Month Period Sales decreased during the nine months ended Sept. 30, 2006, to $2.15 billion from $2.55 billion during the nine months ended Sept. 30, 2005. For the nine months ended Sept. 30, 2006, the company had a net loss of $150.88 million, versus a net loss of $309 million for the same period a year earlier. Chapter 11 and related reorganization expense incurred for the nine months ended Sept. 30, 2006, decreased by $93.5 million to $58.01 million during the 2006 period, as compared with $151.52 million in the 2005 period. Liquidity and Capital Resources During the first nine months of 2006, the company's cash requirements were met through operations and a $725 million commitment of debtor-in-possession financing. At Sept. 30, 2006, the company had available liquidity in the amount of $145.8 million, which consisted of $103.44 million of cash on hand and the availability of $43 million for borrowing under the DIP Financing. Net cash provided by operating activities was $13.89 million during the nine months ended Sept. 30, 2006, as compared with net cash utilized of $125.8 million during the nine months ended Sept. 30, 2005. Net cash utilized in investing activities was $61 million during the first nine months of 2006, as compared with net cash utilized of $104.54 million in the corresponding period of 2005. Net cash provided by financing activities was $84.76 million during the first nine months of 2006, as compared with net cash provided of $126.75 million during the comparable period of 2005. As of Dec. 31, 2006, the company had total assets were $2.21 billion and $2.82 billion in total liabilities, resulting to $613.16 million in total stockholders' deficit. The company had strained liquidity with $715.34 million in total current assets available to pay $1.29 billion in total current liabilities as of Dec. 31, 2006. The company's December 31 balance sheet also showed an accumulated deficit of $1.25 billion, as compared with $1.1 billion in 2005. Full-text copies of the company's second quarter financials are available for free at http://ResearchArchives.com/t/s?1b2f About Tower Automotive, Inc. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The company has operations in Korea, Spain and Brazil. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. TRITON CBO: Moody's Cuts Rating on $45 Mil. Class A-3 Notes to B2 ----------------------------------------------------------------- Moody's Investors Service lowered its rating on the notes issued by Triton CBO III, Ltd., a collateralized debt obligation issuer: * The $45,000,000 Class A-3 Floating Rate Senior Secured Notes Due 2011 -- Prior Rating: Baa3 (on watch for possible downgrade) -- Current Rating: B2 According to Moody's, the diversion of pincipal poceeds in order to cover Class B interest payments will cause the Class A Overcollateralization Test value to deteriorate in the future. Additionally, the current Weighted Average Rating Factor of the portfolio is 4109, versus the covenant level of 2700, Moody's noted. TRUMP ENTERTAINMENT: Taps Merrill Lynch to Assess Business Options ------------------------------------------------------------------ Trump Entertainment Resorts Inc. has engaged Merrill Lynch to assist the company in the identification and evaluation of strategic corporate options including, but not limited to, capital structure, financing and value-creation alternatives. The company said there can be no assurance with respect to the results of the engagement and that it does not intend to comment further publicly with respect to the matter unless required by law. As reported yesterday in the Troubled Company Reporter, Trump's "strategic alternatives" could range from a single property sale to a deal to sell the entire company, Peter Sanders and Dennis K. Berman of the Wall Street Journal reported, citing people familiar with the matter. Trump Marina property in Atlantic City, in particular, could be a sale target, the Journal pointing to the same source. Trump Entertainment, which incurred a loss from continuing operations of $10.3 million for the quarter ended Dec. 31, 2006, and a loss from continuing operations of $19.1 million for the year ended Dec. 31, 2006, reported that as of Dec. 31, 2006, it had cash of $100 million excluding $27.4 million of cash restricted in use by the agreement governing the sale of Trump Indiana. The company indicated total debt had decreased by $30.5 million since Dec. 31, 2005, to $1,407 million at Dec. 31, 2006. Capital expenditures for the year ended Dec. 31, 2006, were approximately $129 million, consisting of $48 million maintenance capital, $63 million renovation, and $18 million for the Taj Mahal Tower. About Trump Entertainment Based in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc., nka Trump Entertainment Resorts, Inc. (Nasdaq: TRMP) -- http://www.trumpcasinos.com/-- through its subsidiaries, owns and operates four properties and manages one property under the Trump brand name. The company and its debtor-affiliates filed for chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). The Court confirmed the Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005. The Plan took effect on May 20, 2005. TRUMP ENT: Merrill Lynch Engagement Cues S&P's Developing Watch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings for Trump Entertainment Resorts Holdings L.P., including the 'B' corporate credit rating, on CreditWatch with developing implications. The CreditWatch listing follows the report that TER has engaged Merrill Lynch to assist the company in the identification and evaluation of strategic alternatives, including, but not limited to, capital structure, financing and value-creation options. TER had about $1.4 billion in debt outstanding as of Dec. 31, 2006. Developing implications suggest that the rating could be affected either positively or negatively, depending on whether a transaction ultimately occurs. "An example of a transaction that might have a positive impact would be an acquisition by a higher rated entity," notes Standard & Poor's credit analyst Michael Scerbo. "An example of a transaction that could have a negative impact might include a decision to increase debt levels to pursue an acquisition or a recapitalization." In resolving its CreditWatch listing, Standard & Poor's will continue to monitor developments associated with TER's pursuit of value-creation alternatives. As the company may not provide ongoing guidance relative to its progress, the rating agency may decide to resolve the CreditWatch listing at a later date if it appears that a transaction is not likely to occur. UNICAPITAL: Poor Performance Prompts Fitch's Ratings' Withdrawal ---------------------------------------------------------------- Fitch Ratings withdraws the ratings on Unicapital securities. These rating actions affect four classes of notes in two transactions. Each of these classes was previously downgraded by Fitch due to portfolio deterioration as a result of higher than expected delinquencies and defaults. Fitch's actions are based on prior portfolio performance deterioration, which has significantly reduced the performing collateral supporting the notes in each transaction. In the Unicapital 1999-1 transaction, both subordinate classes were fully written down to $0 balance, due to higher than expected defaults. The total writedowns on the classes B and C notes were $11,623,310 and $4,219,762, respectively. The classes B and C notes benefited from individual class reserve accounts. Upon final legal maturity, which occurred on Jan. 23, 2007, the class B notes were allocated $1,501,721 from the reserve account, while the class C reserve account of $375,431 remains in escrow and will ultimately be used to pay principal to the class C noteholders. As of the February 2007 payment date, only $760,411 of performing collateral remains and Fitch's recovery expectations are low. Based on the notes reaching their final legal maturities, previous writedowns, and the low expectations on future recoveries, Fitch withdraws its ratings on the classes B and C notes as indicated below. Similar to the 1999-1 transaction, both subordinate classes of the Unicapital 2000-1 transaction have also been written down to $0 balance. The classes B and C notes were written down a total of $7,649,722 and $6,665,000, respectively. Unlike the 1999-1 transaction, the classes B and C notes in the 2000-1 transaction do not benefit from individual class reserve accounts and will reach their final legal maturities on June 20, 2010. As of the February 2007 payment date, only $1,263,563 of performing collateral remains and Fitch's recovery expectations are low. Based on the previous writedowns and low expectations on future recoveries, Fitch withdraws its ratings on the classes B and C notes as indicated below. Fitch's withdrawals: Unicapital UCP 1999-1, LLC -- Class B notes 'C/DR6'; and -- Class C notes 'C/DR6'. Unicapital UCP 2000-1, LLC -- Class B notes 'C/DR6'; and -- Class C notes 'C/DR6'. US AIRWAYS: S&P Rates $1.6 Billion Secured Credit Facility at B --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to US Airways Group Inc.'s $1.6 billion secured credit facility due 2014, currently being syndicated. In addition, the rating agency assigned a '1' recovery rating, indicating a high expectation of full recovery of principal in the event of a payment default. Proceeds from the proposed credit facility will be used to refinance the company's existing $1.25 billion credit facility put in place in March 2006. "The ratings on US Airways Group Inc. reflect the inherent high risk profile of the U.S. airline industry, a more limited route network than those of some larger competitors, and a substantial debt burden," said Standard & Poor's credit analyst Betsy Snyder. "Ratings also incorporate the company's relatively low cost structure, and significantly improved liquidity." US Airways Group is the product of a merger. On Sept. 27, 2005, America West Holdings Corp., parent of America West Airlines Inc., completed a reverse merger of US Airways Group Inc., parent of US Airways Inc., the same day US Airways emerged from Chapter 11 bankruptcy protection. In 2006, US Airways' earnings performance was among the best of the U.S. airlines, due in large part to strong revenue growth. In addition, the company has realized over $500 million of synergies from the merger, in excess of the expected $350 million. As a result, the company earned $304 million in 2006, even after the inclusion of $203 million in special charges, and has improved its liquidity. At Dec. 31, 2006, it had $2.4 billion of unrestricted cash compared with $1.6 billion a year earlier. Further profit improvement is expected in 2007, despite more difficult revenue comparisons. On March 3, 2007, the company completed the consolidation of its reservations system and, in the second quarter, intends to combine the two airline operations (they have been operating independently since the merger). However, the company still faces a major hurdle in that it has yet to successfully integrate the two predecessor airline labor forces. As a result of the company's better-than-expected earnings performance, its credit ratios, while still weak, have improved, with lease-adjusted EBITDA interest coverage of 1.5x in 2006, funds from operations to debt of 13%, and debt to capital of 90%. Further modest improvement is expected over the near to intermediate term due to increasing earnings and cash flow, but any progress will continue to be constrained by the company's heavy debt burden. US Airways has made progress in improving its financial profile, primarily through strong revenue growth, but also from integrating the two airlines, trends expected to continue. Further progress could result in a modest upgrade over the intermediate term. If the company were to encounter difficulties integrating its labor forces, resulting in operational disruptions or added costs, the outlook could be revised to stable. USEC INC: Increases Revenues to $1.84 Billion in Yr. Ended Dec. 31 ------------------------------------------------------------------ Usec, Inc. reported that for the year ended Dec. 31, 2006, it generated a net income of $106.2 million, an increase from a net income of $22.3 million for the year ended Dec. 31, 2005. The company reported total revenues totaling $1.84 billion in 2006, compared with $1.55 billion in 2005. Total costs of sales were $1.51 billion and $1.32 billion for the years 2006 and 2005, respectively. Interest expenses were $14.5 million and $40 million for the years 2006 and 2005, respectively. Balance sheet as of Dec. 31, 2006, listed $1.86 billion in total assets and $875 million in total liabilities, resulting to $986 million in total stockholders' equity. As of Dec. 31, 2006, the company held $171.4 million in cash and cash equivalents and zero restricted short-term investments, as compared with $259.1 million in cash and cash equivalents and $17.8 million in restricted short-term investments in the prior year. Liquidity and Short-term Liabilities Overall, the company has generated positive cash flows from operating activities ranging from $52.6 million to $278.1 million over the past three years. The company provided for additional liquidity through its cash balances, working capital and access to our bank credit facility. In January 2006, the company repaid the remaining balance of the 6.625% senior notes amount of $288.8 million on the scheduled maturity date. This payment was accomplished through a combination of the use of cash on hand and utilization of the bank credit facility. During 2005 and 2004, the company repurchased $36.2 million and $25 million, respectively, of the 6.625% senior notes. There were no short-term borrowings at Dec. 31, 2006 or 2005. At Dec. 31, 2005, current portion of long-term debt consisted of the remaining balance of $288.8 million of 6.625% senior notes due Jan. 20, 2006, which were paid in full at maturity. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1b33 Outlook for Year 2007 Revenue in 2007 is expected to be around $1.86 billion, with $1.54 billion coming from the sale of separate work units. The company expects the volume of SWU sold to increase by approximately 10 percent over 2006 and the average price billed to customers will increase by 4 to 5 percent. Uranium is expected to generate approximately $135 million in revenue as the volume of uranium delivered declines by about half compared to 2006. Uranium and SWU revenues include previously deferred revenue that is expected to be recognized during the year as deliveries of low enriched uranium are made to customers. Revenue from U.S. government contracts and other is expected to total about $185 million, down slightly from 2006. About USEC, Inc. Headquartered in Bethesda, Maryland, USEC, Inc. (NYSE: USU) -- http://www.usec.com/-- is a global supplier of low enriched uranium to nuclear power plants and is the exclusive executive agent for the U.S. Government under the Megatons to Megawatts program with Russia. * * * As reported in the Troubled Company Reporter on Feb. 19, 2007, Moody's Investors Service placed its ratings on USEC, Inc., including its B1 corporate family rating, under review for possible downgrade. VARIG SA: Bankruptcy Court to Hear Permanent Injunction Plea ------------------------------------------------------------ The U.S. Bankruptcy Court of the Southern District of New York will decide on March 16, 2007, at 10:00 a.m. whether to enter a permanent injunction order on Varig S.A., as well as on Rio Sul Linhas Aereas SA and Nordeste Linhas Aereas SA. On Dec. 28, 2005, the Commercial Bankruptcy and Reorganization Court in Rio de Janeiro, Brazil, issued an order sanctioning and approving the judicial recovery plan of Varig, Rio Sul and Nordeste Linhas in their reorganization proceedings pending in the Brazilian Court pursuant to the New Bankruptcy and Restructuring Law of Brazil. The Initial Plan was supplemented by a Detailed Judicial Reorganization Plan -- approved by the general assembly of creditors in the Foreign Proceedings on Feb. 23, 2006 -- and a Restated in-Court Reorganization, which was approved by the general assembly of creditors in the Foreign Proceedings on July 17, 2006. On Dec. 15, 2006, the Brazilian Court issued a decision that declared the sale of certain operations of the foreign debtors under the Plan and Article 60 of Brazil's New Bankruptcy and Restructuring Law. A permanent injunction order will allow for the full enforcement of the Plan, Approval Order and the Sale Approval Order in the U.S. and elsewhere within the jurisdiction of the Bankruptcy Court, and with regard to all parties subject to the Court's jurisdiction, and will be binding on and against all of the foreign debtors' creditors and all other relevant parties. The Permanent Injunction Order will enjoin and restrain parties from taking various actions against the foreign debtors with respect to: (a) claims arising prior to the commencement of the foreign proceedings, (b) various contracts and other agreements with the foreign debtors, and (c) various other matters. The counsel to the foreign representative of Varig, Rio Sul and Nordeste Linhas can be reached at: Rick B. Antonoff, Esq. Lara R. Sheikh, Esq. Pillsbury Winthrop Shaw Pittman LLP 1540 Broadway New York, NY 10036 Tel: (212) 858-1000 About Varig Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's largest air carrier and the largest air carrier in Latin America. VARIG's principal business is the transportation of passengers and cargo by air on domestic routes within Brazil and on international routes between Brazil and North and South America, Europe and Asia. VARIG carries approximately 13 million passengers annually and employs approximately 11,456 full-time employees, of which approximately 133 are employed in the United States. The Company, along with two affiliates, filed for a judicial reorganization proceeding under the New Bankruptcy and Restructuring Law of Brazil on June 17, 2005, due to a competitive landscape, high fuel costs, cash flow deficit, and high operating leverage. The Debtors may be the first case under the new law, which took effect on June 9, 2005. Similar to a chapter 11 debtor-in- possession under the U.S. Bankruptcy Code, the Debtors remain in possession and control of their estate pending the Judicial Reorganization. Sergio Bermudes, Esq., at Escritorio de Advocacia Sergio Bermudes, represents the carrier in Brazil. Each of the Debtors' Boards of Directors authorized Vicente Cervo as foreign representative. In his capacity, Mr. Cervo filed a Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case Nos. 05-14400 and 05-14402). Rick B. Antonoff, Esq., at Pillsbury Winthrop Shaw Pittman LLP represents Mr. Cervo in the United States. As of March 31, 2005, the Debtors reported BRL2,979,309,000 in total assets and BRL9,474,930,000 in total debts. Volo do Brasil, which purchased VARIG's cargo unit, VARIG Logistica S.A., and partially controlled by U.S. investment fund MatlinPatterson Global Advisors, bought VARIG for $600 million in July 2006. VERTRUE INC: Moody's Affirms Corporate Family Rating at B1 ---------------------------------------------------------- Moody's Investors Service affirmed Vertrue Incorporated's Ba3 rating on the 9.25% senior unsecured notes due 2014, B1 Corporate Family Rating, B1 Probability of Default rating, and SGL-1 Speculative Grade Liquidity rating. The outlook remains stable. The B1 Corporate Family Rating considers the company's moderate leverage position, stable free cash flow and its leading position in Internet marketing. For the twelve months ended Dec. 31, 2006, Vertrue had adjusted debt to EBITDA of 3.0x which compares favorably to the global B1 rating category. "Moody's expects that Vertrue's adjusted debt to EBITDA will improve to below 3.0 times over the near term driven by the expected increase in the company's operating performance," noted Sidney Matti, Analyst at Moody's. The company's Internet presence has grown from approximately 14% of fiscal year 2004 revenues to approximately 40% of fiscal year 2006 revenues. Although free cash flow has been stable over the past few quarters, free cash flow to adjusted debt remains modest at 3% for the twelve months ended Dec. 31, 2006. The Corporate Family Rating also acknowledges Vertrue's marketing costs associated with the attainment of new members, highly acquisitive nature, and continued challenges in the Lavalife subsidiary. "Although the switch to monthly programs from annual programs generate higher recurring revenue per member and greater profitability (i.e. higher margins) over the membership life, higher total acquisition costs per member as well as the churn of the customer base partially offset some of the benefit," Moody's Analyst added. While monthly revenues per retail member have improved by approximately 13% to $17.22 per month for the six months ended Dec. 31, 2006, from $15.12 per month for the six months ended Dec. 31, 2005, total acquisition costs per new billed member increased 22% to $44.36 for the six months ended Dec. 31, 2006 from $36.35 in the prior year period. Over the past few years, the company has been aggressively acquiring several companies within the Internet marketing space in order to enhance its presence online. In fact, the company has spent approximately $20 million in acquisitions through the twelve month period ended Dec. 31, 2006. Moody's expects Vertrue to continue to acquire Internet companies to further its online presence. The stable outlook reflects Moody's expectations for continued growth in operating performance over the near term. The outlook also considers Moody's expectation that the company will continue to pursue acquisitions and share repurchases within the restrictions of the $50 million senior secured revolver. The SGL-1 speculative grade liquidity rating reflects a very good liquidity profile comprised of Moody's expectation for strong cash flow generation over the twelve months ending Dec. 31, 2007, full availability under its revolver and sufficient cushion under its financial covenants. Affirmed: -- Ba3 rating on $148 million senior unsecured notes due 2014, LGD3, 42%; -- B1 Probability of Default rating; -- SGL-1 Speculative Grade Liquidity rating; and -- B1 Corporate Family rating. Headquartered in Norwalk, Connecticut, Vertrue Incorporated is a leading Internet marketing services company. For the twelve months ended Dec. 31, 2006, the company generated adjusted EBITDA of approximately $98 million on revenues of approximately $697 million. WACHOVIA BANK: S&P Rates $29 Million Class N Certificates at BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Wachovia Bank Commercial Mortgage Trust's $7.903 billion commercial mortgage pass-through certificates series 2007-C30. The preliminary ratings are based on information as of March 7, 2007. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying loans, and the geographic and property type diversity of the loans. Class A-1, A-2, A-3, A- 4, A-PB, A-5, A-1A, A-M, A-J, B, C, D, E, and F are currently being offered publicly. Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage of 1.25x, a beginning LTV of 117.1%, and an ending LTV of 113.9%. Preliminary Ratings Assigned Wachovia Bank Commercial Mortgage Trust Commercial Mortgage Pass-Through Certificates Series 2007-C30 Recommended Preliminary credit Class Rating amount support ----- ------ ----------- ------------ A-1 AAA $35,195,000 30.00% A-2 AAA $100,000,000 30.00% A-3 AAA $908,744,000 30.00% A-4 AAA $195,542,000 30.00% A-PB AAA $126,906,000 30.00% A-5 AAA $1,876,383,000 30.00% A-1A AAA $2,289,679,000 30.00% A-M AAA $790,349,000 20.00% A-J AAA $671,798,000 11.50% B AA+ $49,397,000 10.88% C AA $79,035,000 9.88% D AA- $69,155,000 9.00% E A+ $59,277,000 8.25% F A $69,155,000 7.38% G A- $98,794,000 6.13% H BBB+ $79,035,000 5.13% J BBB $88,914,000 4.00% K BBB- $79,035,000 3.00% L BB+ $39,518,000 2.50% M BB $19,759,000 2.25% N BB- $29,638,000 1.88% O NR $19,758,000 1.63% P NR $9,880,000 1.50% Q NR $19,759,000 1.25% S NR $98,793,737 0.00% X-P* AAA $1,912,455,500 N/A X-C* AAA $1,975,874,684 N/A X-W* AAA $5,927,624,052 N/A *Interest-only class with a notional amount. NR -- Not rated. N/A -- Not applicable. WASHINGTON MUTUAL: Moody's Holds B3 Rating on $1MM Class O Certs. ----------------------------------------------------------------- Moody's Investors Service upgraded the ratings of five classes and affirmed the ratings of 10 classes of Washington Mutual Asset Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2003-C1: -- Class A, $240,164,599, Fixed, affirmed at Aaa -- Class X-1, Notional, affirmed at Aaa -- Class B, $11,438,000 Fixed, affirmed at Aaa -- Class C, $2,859,000, Fixed, affirmed at Aaa -- Class D, $12,867,000, Fixed, upgraded to Aaa from Aa3 -- Class E, $2,860,000, Fixed, upgraded to Aa2 from A1 -- Class F, $4,289,000, Fixed, upgraded to Aa3 from A3 -- Class G, $5,718,000, Fixed, upgraded to A2 from Baa2 -- Class H, $2,860,000, WAC Cap, upgraded to Baa1 from Baa3 -- Class J, $5,718,000, Fixed, affirmed at Ba1 -- Class K, $4,289,000, Fixed, affirmed at Ba2 -- Class L, $1,430,000, Fixed, affirmed at Ba3 -- Class M, $2,859,000, Fixed, affirmed at B1 -- Class N, $2,860,000, Fixed, affirmed at B2 -- Class O, $1,429,000, Fixed, affirmed at B3 As of the Feb. 26, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 46.1% to $308.0 million from $574.8 million at securitization. The Certificates are collateralized by 137 seasoned mortgage loans secured by commercial and multifamily properties. The loans range in size from less than 1.0% to 8.7% of the pool, with the top 10 loans representing 41.3% of the pool. One loan has been liquidated from the pool resulting in a minimal realized loss. Currently there are no loans in special servicing. Thirty seven loans, representing 30.1% of the pool, are on the master servicer's watchlist. Moody's was provided with full-year 2005 and partial-year 2006 operating results for 97.5% and 57.5%, respectively, of the pool. Moody's loan to value ratio is 69.3%, compared to 69.0% at Moody's last full review in June 2005 and compared to 74.8% at securitization. Moody's is upgrading Classes D, E, F, G and H due to increased subordination levels and stable pool performance. Classes D, E and F were upgraded on December 8, 2006 based on a Q tool based portfolio review. The top three loans represent 20.2% of the outstanding pool balance. The largest loan is the Whitepoint Portfolio Loan of $26.8 million (8.7%), which is secured by four multifamily properties, an industrial property, a community shopping center and a mixed use retail/industrial property. All of the properties are located in Queens, New York. The portfolio's overall occupancy is 99.3%, essentially the same as at last review. Moody's LTV is 58.4%, compared to 57.3% at last review. The second largest loan is the Center Pointe Plaza Loan of $18.9 million (6.1%), which is secured by a 252,400 square foot power center located in suburban Wilmington, Delaware. The property is 100.0% occupied, the same as at last review and at securitization. Major tenants include Home Depot, Babies"R"Us and T.J.Maxx. Moody's LTV is 57.5%, compared to 62.7% at last review. The third largest loan is the Palmer Park Mall Loan of $16.7 million (5.4%), which is secured by a 448,000 square foot regional mall located in Easton, Pennsylvania. The center is anchored by Boscov's and Bon Ton and is 100.0% leased, essentially the same as at last review. The loan sponsors are Crown America Realty Trust and Pennsylvania Realty Trust. Moody's LTV is 53.8%, compared to 60.6% at last review. The pool's collateral is a mix of multifamily, retail, office and mixed use, lodging and industrial and self storage. The collateral properties are located in 20 states. The highest state concentrations are New York, California, Oregon, Pennsylvania and Washington. All of the loans are fixed rate. WINN-DIXIE STORES: Wants Final Decree Entered on 23 Cases --------------------------------------------------------- Winn-Dixie Stores, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to enter a final decree closing all of the 23 subsidiary Chapter 11 cases -- Case Nos. 05-03818 through 05-03840 -- no later than March 31, 2007. The Debtors also ask the Court to continue the jointly administered Chapter 11 case of Winn-Dixie, et al. -- Case No. 05-03817 -- pending further Court order upon completion of proceedings in that case. The Subsidiary Debtors are: Astor Products, Inc. Crackin' Good, Inc. Deep South Distributors, Inc. Deep South Products, Inc. Dixie Darling Bakers, Inc. Dixie-Home Stores, Inc. Dixie Packers, Inc. Dixie Spirits, Inc. Economy Wholesale Distributors, Inc. Dixie Stores, Inc. Kwik Chek Supermarkets, Inc. Foodway Stores, Inc. Sunbelt Products, Inc. Winn-Dixie Montgomery, Inc. Table Supply Food Stores Co., Inc. Superior Food Co. WD Brand Prestige Steaks, Inc. Winn-Dixie Handyman, Inc. Winn-Dixie Logistics, Inc. Sundown Sales, Inc. Winn-Dixie Procurement, Inc. Winn-Dixie Raleigh, Inc. Winn-Dixie Supermarkets, Inc. Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida, tells Judge Funk that the remaining proceedings in the Reorganized Debtors' Chapter 11 cases essentially consist of matters relating to claims allowance, distributions with respect to allowed claims, and other aspects of implementation of their confirmed Plan of Reorganization. Ms. Jackson states that none of the remaining bankruptcy matters involves issues that would require separate proceedings by any particular Debtor in the separate case of a particular Debtor. Ms. Jackson states that the claims objection process for the Subsidiary Debtors in the jointly administered case has been, and will continue to be, administered by the Winn-Dixie management. She relates that no claims objection proceedings have been brought, and none will be needed, in any separate case of any of the Subsidiary Debtors. In addition, the Winn-Dixie management will continue to be responsible for distributions and other implementation matters under the Plan, which does not require involvement of any of the Subsidiary Debtors in that process, Ms. Jackson says. Ms. Jackson avers that other than certain cash distributions required by the Plan, which are made by Winn-Dixie from consolidated cash accounts, the claims of creditors are being treated primarily with Winn-Dixie stock, and not with any consideration issued by any of the Subsidiary Debtors. Moreover, Ms. Jackson discloses that following the Plan Effective Date, 16 of the 23 subsidiary cases have either been dissolved, merged out of existence, or otherwise terminated in accordance with applicable state law. Therefore, Ms. Jackson asserts, there is no more reason to maintain the separate cases of the Subsidiary Debtors. If circumstances change for those cases, Section 350(b) permits the Court to reopen any of the closed cases at any time, she states. Ms. Jackson further insists that maintenance of the Subsidiary Cases will impose continuing financial burdens on the Debtors for fees under 28 U.S.C. Section 1930. Ms. Jackson avers that closing the subsidiary cases by March 31 will allow the Reorganized Debtors to reduce a substantial expense, thus benefiting the creditors who now hold the equity ownership of the Debtors. Headquartered in Jacksonville, Florida, Winn-Dixie Stores Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates 527 stores in Florida, Alabama, Louisiana, Georgia, and Mississippi. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. The Honorable Jerry A. Funk confirmed Winn-Dixie's Joint Plan of Reorganization on Nov. 9, 2006. Winn-Dixie emerged from bankruptcy on Nov. 21, 2006. (Winn-Dixie Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). WORLDSPAN LP: S&P Affirms Junk Rating on $250MM Debt & Holds Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services withdrew these ratings: * its 'B' rating and '2' recovery rating on Worldspan L.P.'s $490 million credit facility; * 'B' rating on the company's $300 million secured second-lien notes; and, * 'CCC+' rating on its $84 million of subordinated notes. The ratings were removed from CreditWatch with developing implications, where they were placed on Dec. 7, 2006. At the same time, Standard & Poor's is keeping other Worldspan ratings on CreditWatch with developing implications, including the 'B' corporate credit rating, 'B' rating ('2' recovery rating) on the company's $750 million revolver and first-lien term loan, and 'CCC+' rating ('5' recovery rating) on its $250 million second-lien term loan. The corporate credit rating was placed on CreditWatch on Dec. 7, 2006, after Worldspan reported its merger agreement with Travelport Inc. The bank loan ratings were placed on CreditWatch on Dec. 11, 2006; the recovery ratings are not on CreditWatch. The ratings withdrawal of certain securities follows their refinancing with proceeds of Worldspan's new credit facility, which it entered into in December 2006. Worldspan is the leading processor of GDS transactions for on-line travel agencies. Travelport processes both on-line and off-line transactions. "A combination with Travelport is expected to result in new revenue opportunities as well as $50 million of operating synergies for the combined entity, which could prompt us to raise our corporate credit rating on Worldspan to 'B+', the same as Travelport's," said Standard & Poor's credit analyst Betsy Snyder. "If the company's recent recapitalization results in a weaker financial profile without the benefits of the merger, ratings could be lowered." Affirmation of ratings at the current level is also a possible outcome. Completion of the merger will depend on approval by government regulatory authorities. Standard & Poor's will assess synergies from the proposed merger as well as the effect of the recapitalization on Worldspan's financial profile in resolving the CreditWatch. YUKOS OIL: Russia Raids PwC Office as Part of Criminal Probe ------------------------------------------------------------ Investigators from Russia's Interior Ministry and General Prosecutor's office searched the local branch of UK-based PricewaterhouseCoopers for evidence in two criminal cases against the firm, Gregory White of The Wall Street Journal reports. The Federal Tax Service of Russia had accused PwC, which served as Yukos's auditor in 2002-2004, of covering up the bankrupt company's alleged illegal financial schemes and compiling two different audits. PwC is also facing a tax-evasion probe in back-taxes for 2002. According to Anatoly Medetsky and Daan van der Schriek of The Moscow Times, PwC denied allegations that: -- it concealed tax evasion by Yukos in its 2002-2004 audit of the bankrupt firm; and -- it evaded paying up to RUR243 million (US$9.3 million) in back taxes in 2002 on its manager's orders. After losing two appeals in civil courts related to the tax-evasion case against PwC, the firm elected to pay about $14 million to satisfy tax claims and penalties last year. Under Russian law, criminal tax-evasion charges can be brought even after a back-tax claim is paid, WSJ relates. About 20 investigators seized company files, which could convict PwC Russia's senior executives in relation to the tax-evasion case against the firm. In December 2006, the Moscow Arbitration Court accepted a case from the FTS, which sought to invalidate a contract between Yukos and PwC's Russian office on auditing services. The tax regulator demanded a $145,000 repayment from PwC on the cost of the contract, RIA Novosti noted. According to RIA Novosti, the court granted FTS' request to change the litigation claims to charge $480,000 from PwC, instead of the $145,000 demand. As previously reported in the Troubled Company Reporter-Europe, the tax officials said PwC confirmed that Yukos's financial operations in 2003-2004 were in full compliance with Russian legislation, even amidst tax violations discovered in 2002, to which Yukos has failed to remove in the subsequent two years. The auditing firm has denied the tax regulator's accusations asserting that the management of a company, not an auditor, was responsible for financial decisions. PwC argued that its report on Yukos contained an amendment highlighting the disclosed irregularities, which the firm also included in a written statement recommending that the company review its operations. About Yukos Oil Headquartered in Moscow, Yukos Oil -- http://yukos.com/-- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for Chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742), but the case was dismissed on Feb. 24, 2005, by the Hon. Letitia Z. Clark. On March 10, 2006, a 14-bank consortium led by Societe Generale filed a bankruptcy suit in the Moscow Arbitration Court in an attempt to recover the remainder of a US$1 billion debt under outstanding loan agreements. The banks, however, sold the claim to Rosneft, prompting the Court to replace them with the state- owned oil company as plaintiff. On April 13, 2006, court-appointed external manager Eduard Rebgun filed a chapter 15 petition in the U.S. Bankruptcy Court for the Southern District of New York (Bankr. S.D.N.Y. Case No. 06-0775), in an attempt to halt the sale of Yukos' 53.7% ownership interest in Lithuanian AB Mazeikiu Nafta. On May 26, 2006, Yukos signed a US$1.49 billion Share Sale and Purchase Agreement with PKN Orlen S.A., Poland's largest oil refiner, for its Mazeikiu ownership stake. The move was made a day after the Manhattan Court lifted an order barring Yukos from selling its controlling stake in the Lithuanian oil refinery. On Aug. 1, 2006, the Hon. Pavel Markov of the Moscow Arbitration Court upheld creditors' vote to liquidate OAO Yukos Oil Co. and declared what was once Russia's biggest oil firm bankrupt. ZAIS INVESTMENT: Moody's Lifts Ratings on $84 Mil. Notes to Ba1 --------------------------------------------------------------- Moody's Investors Service upgraded the ratings on the notes issued by Zais Investment Grade Limited II, a collateralized debt obligation lender: * The $96,000,000 Class A-1 Floating Rate Notes due 2015 -- Prior rating: A1, on watch for possible upgrade -- Current rating: Aa2 * The $304,000,000 Class A-2 Floating Rate Notes due 2015 -- Prior rating: A1, on watch for possible upgrade -- Current rating: Aa2 * The $47,000,000 Class B-1 Floating Rate Notes due 2015 -- Prior rating: Caa2, on watch for possible upgrade -- Current rating: Ba1 * The $37,000,000 Class B-2 Fixed Rate Notes due 2015 -- Prior rating: Caa2, on watch for possible upgrade -- Current rating: Ba1 Moody's noted that the rating actions reflect an improvement in the credit quality of the transaction's underlying collateral, which consists primarily of structured finance securities, as well as the ongoing delevering of the notes. The transaction has seen an improvement in the coverage tests, as well as an improvement in the Weighted Average Rating Factor, the Weighted Average Coupon, and the Weighted Average Spread. * Cadwalader's Charles Banoun Receives Charles R. English Award --------------------------------------------------------------- Cadwalader, Wickersham & Taft LLP Partner Raymond Banoun, head of the firm's Business Fraud and Complex Litigation practice, received the Charles R. English Award bestowed by the American Bar Association's Section of Criminal Justice. The award is given to lawyers who exemplify the highest standards of professional ethics and service to the criminal justice system. "We are extremely proud that Ray has been recognized by our peers as an exceptional attorney who exhibits the highest levels of ethics and professionalism," Robert O. Link, Jr., Chairman and Managing Partner of the firm, stated. "He exemplifies the core values of the firm and reinforces our commitment to public service and the pursuit of equal justice for all." One of the leading business fraud litigators in the nation, Mr. Banoun is the Managing Partner of Cadwalader's Washington, D.C. office and oversees the firm's Business Fraud practice. A Fellow of the American College of Trial Lawyers who has been named among the top 500 litigators in the country, he represents corporations, financial institutions, investment firms, law firms and individuals in all aspects of criminal investigations and litigation, both pre- and post-indictment, as well as in complex civil litigation, including class, shareholders, whistleblower and RICO actions in federal and state courts. He is well-versed in the money laundering laws of the United States and foreign countries, including the USA PATRIOT Act and the Bank Secrecy Act and is co-author of "Money Laundering, Terrorism and Financial Institutions," published by The Civic Research Institute. Mr. Banoun is a past Chairman of the ABA Criminal Justice Section's White Collar Crime Committee and the Business Crimes Committee of the International Bar Association's Section of Business Law. He created and has chaired the ABA White Collar Crime National Institute for the past 21 years. About Cadwalader, Wickersham & Taft Cadwalader, Wickersham & Taft LLP -- http://www.cadwalader.com/-- established in 1792, is an international law firm, with offices in New York, London, Charlotte, Washington and Beijing. Cadwalader serves a diverse client base, including top financial institutions, undertaking business in more than 50 countries in six continents. The firm offers legal expertise in antitrust, banking, business fraud, corporate finance, corporate governance, environmental, healthcare, insolvency, insurance and reinsurance, litigation, mergers and acquisitions, private client, private equity, real estate, regulation, securitization, structured finance, and tax. * Gerald Shapiro Joins Corporate Revitalization's New York Office ----------------------------------------------------------------- Gerald Shapiro has joined Corporate Revitalization Partners, LLC as a director. Mr. Shapiro will be based out of CRP's New York office, where he will be responsible for marketing the firm's turnaround management services and actively building and maintaining the firm's client base. "I've known Jerry for a long time and have often hoped that we would have the opportunity to work together," said CRP Managing Partner Gil Osnos. "Jerry brings a wealth of experience, good judgment and the highest level of integrity, which is something CRP looks for in all of its professionals. "Jerry is well known in the turnaround industry," continued Mr. Osnos. "He has been highly visible for many years, and we are proud to have him join CRP." Mr. Shapiro has more than 30 years of management and advisory experience and a wide variety of engagements, including interim management positions such as CEO, CFO, CRO and trustee. In addition, he served as a Wall Street restructuring advisor and was the senior vice president and co-head of the New York office of Buccino & Associates Inc. "CRP is a good fit for me," said Mr. Shapiro. "The reason I joined CRP is that it has a large, national platform that keeps pace with the changing market, I know the senior partners well, and CRP has a reputation of excellent work and fair practices, which is important to me." Mr. Shapiro holds a bachelor's degree from City College of New York and a Master of Business Administration from Columbia University. He is actively involved in the American Bankruptcy Institute, the Turnaround Management Association and the Association for Corporate Growth. About Corporate Revitalization Corporate Revitalization, LLC -- http://www.crpllc.net/-- is a national turnaround management firm that guides distressed companies back to stability and profitability through hands-on leadership and management. It is committed to restoring companies' predictability, credibility and value as quickly as possible. CRP's services include interim management, operational financial advisory services, bankruptcy support, merger, acquisition and due diligence support, real estate maximization and EBITDA+ operational improvement analysis. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Accuray Inc ARAY (50) 144 3 AFC Enterprises AFCE (40) 157 4 Alaska Comm Sys ALSK (25) 562 13 Alliance Imaging AIQ (18) 674 30 AMR Corp. AMR (606) 29,145 (1,603) Atherogenics Inc. AGIX (153) 178 112 Bare Essentials BARE (228) 156 54 Blount International BLT (105) 430 118 CableVision System CVC (5,289) 9,844 (763) Carrols Restaurant TAST (104) 497 (25) Centennial Comm CYCL (1,092) 1,422 112 Choice Hotels CHH (62) 303 (53) Cincinnati Bell CBB (791) 2,014 28 Clorox Co. CLX (33) 3,624 (540) Compass Minerals CMP (65) 706 165 Corel Corp. CRE (12) 130 31 Crown Holdings CCK (266) 6,358 106 Crown Media HL CRWN (478) 768 48 CV Therapeutics CVTX (46) 421 303 Dayton Superior DSUP (101) 322 82 Deluxe Corp DLX (66) 1,267 (462) Denny's Corporation DENN (231) 454 (73) Domino's Pizza DPZ (565) 380 11 Dun & Bradstreet DNB (396) 1,360 (161) Echostar Comm DISH (219) 9,768 1,008 Embarq Corp EQ (468) 9,091 (241) Emeritus Corp. ESC (115) 713 (34) Empire Resorts NYNY (25) 61 (2) Encysive Pharm ENCY (94) 63 17 Enzon Pharmaceutical ENZN (56) 404 150 Extendicare Real EXE-U (24) 1,315 (112) Foamex Intl FMXI (404) 607 21 Ford Motor Co F (3,773) 290,217 (2,171) Gencorp Inc. GY (96) 1,021 4 Graftech International GTI (110) 906 349 Guidance Software GUID (2) 22 (1) HCA Inc HCA (10,332) 23,611 2,502 I2 Technologies ITWO (25) 190 17 ICOS Corp ICOS (18) 285 112 IDEARC Inc IAR (8,846) 1,318 15 IMAX Corp IMAX (33) 243 84 Immersion Corp. IMMR (23) 50 34 Immunomedics Inc IMMU (24) 45 15 Incyte Corp. INCY (85) 354 278 Indevus Pharma IDEV (133) 91 51 Investools Inc. IEDU (62) 132 (75) IPG Photonics IPGP (31) 115 24 J Crew Group Inc. JCG (55) 414 128 Koppers Holdings KOP (80) 649 162 Life Sciences LSR (25) 205 23 Ligand Pharm LGND (239) 232 (162) Lodgenet Entertainment LNET (58) 263 20 Maxxam Inc MXM (201) 992 26 McMoran Exploration MMR (18) 431 (27) Mediacom Comm MCCC (95) 3,652 (266) Movie Gallery MOVI (221) 1,166 (816) Navisite Inc. NAVI (2) 101 (9) New River Pharma NRPH (65) 170 135 Nexstar Broadcasting NXST (78) 679 27 NPS Pharm Inc. NPSP (182) 237 150 Obagi Medical OMPI (51) 50 12 ON Semiconductor ONNN (205) 1,417 268 Paetec Holding PAET (287) 238 7 Qwest Communication Q (1,445) 21,239 (1,506) Radnet Inc. RDNT (79) 131 (2) Regal Entertainment RGC (20) 2,469 (315) Riviera Holdings RIV (29) 222 10 Rural Cellular RCCC (580) 1,385 160 Rural/Metro Corp. RURL (89) 305 51 Savvis Inc. SVVS (138) 467 25 Sealy Corp. ZZ (152) 1,003 57 Sirius Satellite SIRI (389) 1,658 (258) St. John Knits Inc. SJKI (52) 213 80 Station Casinos STN (187) 3,716 (50) Sun-Times Media SVN (322) 905 (383) Syntroleum Corp. SYNM (14) 44 32 Town Sports Int. CLUB (18) 424 (58) Unisys Corp. UIS (64) 4,037 307 Weight Watchers WTW (68) 1,002 (82) Western Union WU (315) 5,321 869 Worldspace Inc. WRSP (1,574) 604 140 WR Grace & Co. GRA (485) 3,637 920 XM Satellite XMSR (253) 2,027 (115) ********* 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, Jason A. Nieva, Cherry A. Soriano-Baaclo, Melvin C. Tabao, Melanie C. Pador, 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 ***