/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/070316.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, March 16, 2007, Vol. 11, No. 64 Headlines ADVANCED MARKETING: Withdraws Request to Pay PGW Publisher Claims ADVANCED MARKETING: Baker & Taylor Asset Purchase Agreement Okayed ADVANCED MARKETING: Panel Hires Lowenstein Sandler as Counsel AEW REAL: Board of Trustees Approves Liquidation of Fund AMERICAN CAMSHAFT: Has Until May 10 to File Combined Chap. 11 Plan AMERICAN CELLULAR: Fitch Rates $1.05 Billion Senior Facility at B+ AMERICAN REAL: Earns $798.8 Million in Year Ended December 31 ASBURY AUTOMOTIVE: Prices Private Offering of Senior Notes ATTACHMATE CORPORATION: Moody's Holds B3 Corporate Family Rating AVENTINE RENEWABLE: Moody's Rates New $300 Mil. Senior Notes at B3 AXCESS INTERNATIONAL: Hein & Associates Raise Going Concern Doubt BALLY TOTAL: Defaults Under Note Covenants Due to Late 10-K Filing BIOSAFE MEDICAL: Involuntary Chapter 11 Case Summary CARBIZ INC: Secures $2.5 Million Financing from Trafalgar Capital CARROLS CORP: Inks $185 Million Senior Secured Credit Facility CEDAR FAIR: Earns $87.5 Million in Year Ended December 31 CFI MANUFACTURING: Section 341(a) Meeting Continued to March 23 CHIQUITA BRANDS: Posts $95.9 Mil. Net Loss in Year Ended Dec. 31 CITATION CORP: Judge Mitchell Approves First Day Motions CITATION CORP: Unsecured Creditors to Recover 100% of Claims CKE RESTAURANTS: Moody's Rates $200 Million Senior Loan at (P)Ba2 CLEAR CHANNEL: Highfields Capital Increases Stake to 5% COOLBREEZE ACQUISITION: Moody's Assigns B2 Corporate Family Rating COVALENCE SPECIALTY: Inks Merger Agreement with Berry Plastics COVALENCE SPECIALTY: Post $21.8MM Net Loss in Qtr. Ended Dec. 29 CREST 2002-IG: S&P Lifts Rating on Class D Notes to BB+ CUT-RATE PHARMACY: Case Summary & 22 Largest Unsecured Creditors CVS CORP: Shareholders Approve Merger of Equals with Caremark Rx CVS CORP: Glass Lewis Advises Caremark Stockholders to Vote No CWALT INC: Moody's Rates Class M-10 Certificates at Ba2 DAVID KALKSTEIN: Case Summary & 12 Largest Unsecured Creditors DOBSON COMMUNICATIONS: Fitch Affirms B- Issuer Default Rating EMPORIA PREFERRED: S&P Rates $18.5 Million Class E Notes at BB ENERGY PARTNERS: Inks Financing Agreement with Bank of America ENTERCOM RADIO: Moody's Cuts Rating on 7.625% Senior Notes to B1 FASSBERG CONSTRUCTION: Confirmation Hearing Set for March 27 GALE FORCE: S&P Rates $21.6 Million Class E Notes at BB GE COMMERCIAL: Fitch Holds Low-B Ratings on Five Cert. Classes GENERAL MOTORS: Shifts 20% of Pension Assets from Stocks to Bonds GENERAL MOTORS: DBRS Holds Rating on Long-Term Debt at B Negative GLACIER FUNDING: Fitch Holds BB Rating on $4 Mil. Class D Notes GOODYEAR TIRE: Jamaican Unit Reports $120 Million in Losses GOODYEAR TIRE: Names Kramer as North American Tire Biz President GRANITE BROADCASTING: Court Okays Assumption of ImagePlus Deal GRANITE BROADCASTING: Can Assume Pistons Broadcast Agreement GRANITE BROADCASTING: Court Extends Removal Period to May 31 HOLY CROSS: Moody's Holds B2 Rating on $20 Million Debt HUNTER FAN: Moody's Lowers Corporate Family Rating to B2 ILLINOIS HEALTH: Fitch Lifts Rating on $15 Million Bonds to BB+ INDIAN CREEK: Chap. 7 Trustee Hires Kokjer Peirotti as Accountants INDYMAC HOME: Fitch Rates $14 Mil. Class M-11 Certificates at BB INDYMAC INDX: S&P Up Rating on Series 2004-AR10 Class B-4 Certs. IRON MOUNTAIN: S&P Rates Proposed $800 Million Facilities at BB ISTAR FINANCIAL: Earns $91.7 Million in Quarter Ended December 31 J. CREW GROUP: Earns $44 Million in Fourth Quarter Ended Feb. 3 MASTR ADJUSTABLE: Moody's Rates Class M-8 Certificates at Ba2 MEDAVANT HEALTHCARE: Posts $1.6MM Net Loss in Qtr. Ended Dec. 31 MIDLAND REALTY: Fitch Affirms BB+ Rating on $7.7MM Class K Certs. MILLS CORP: Defers 2006 Form 10-K Filing Due to Restatement MKP CBO: Moody's Puts $250 Million Notes' B2 Rating on Watch ML-CFC: Fitch Puts Low-B Ratings on Four Certificate Classes MONTECITO BROADCAST: Moody's Holds Ratings & Says Outlook is Neg. MORGAN STANLEY: Fitch Holds BB+ Rating on Class N-SDF Certificates NAUTILUS RMBS: S&P Rates $20 Million Class C-F and C-V Notes at BB NPC INT'L: Closes Purchase of 59 Pizza Hut Units for $27.1 Mil. PACIFIC LUMBER: Scopac Can Access Cash Collateral until June 1 RADNOR HOLDINGS: Carroll Services to Assist in Liquidation REFCO INC: Court Disallows 59 Claims in Refco LLC Totaling $1.5MM REVLON INC: Posts $5.5 Million Net Loss in Fourth Quarter 2006 RIGHT-WAY DEALER: Selling Assets to Five Star for $5 Mil. in Cash SAXON ASSET: S&P Junks Rating on Series 2001-3 Class B Certs. SECURITIZED ASSET: Fitch Holds BB+ Rating on One Certificate Class SMURFIT-STONE: Fitch Rates $675 Million Senior Notes at B+ SOLUTIA: Initial Purchase Price Set at $212.5 Mil. in Flexsys Deal SOLUTIA INC: Earns $11 Million in Year Ended December 31 SOLUTIA INC: Has Made Significant Progress in Chapter 11 Case SPECTRUM BRANDS: Gets $1.6-Billion Pledge to Refinance Bank Loan SPECTRUM BRANDS: Launches Exchange Offer for 8-1/2% Senior Notes STRUCTURED ASSET: Fitch Rates $21 Mil. Class B2 Certificates at BB STUDENT FINANCE: Former CEO Found Guilty of Bankruptcy Fraud SUNTERRA CORP: Selling Assets to Diamond Resorts for $700 Million SUPERIOR PETROLEUM: Case Summary & Four Largest Unsec. Creditors TOWER AUTO: Wants to Make Initial Payment in ERISA Settlement TOWER AUTOMOTIVE: Wants Avoidance Actions Protocol Established TRANS CONTINENTAL: Court Approves Chapter 11 Trustee Appointment TRANSAX INT'L: David Bouzaid Resigns from Board of Directors US AIRWAYS: ALPA Says Inability to Merger Affecting Passengers WACHOVIA BANK: Fitch Holds Low-B Ratings on 6 Certificate Classes WAMU: Moody' Puts Low-B Ratings on Class B-1 and B-2 Certificates WESTLB AG: Closes $325 Million Credit Facility for Pacific Ethanol * BOOK REVIEW: Crafting Solutions for Troubled Businesses: A Disciplined Approach to Diagnosing and Confronting Management Challenges ********* ADVANCED MARKETING: Withdraws Request to Pay PGW Publisher Claims ----------------------------------------------------------------- Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, notifies the United States Bankruptcy Court for the District of Delaware that Advanced Marketing Services Inc. and its debtor-affiliates have withdrawn their request for authority to pay, in the ordinary course of business, up to $12 million in prepetition claims of publishers who supply goods and credit critical to the continued operation of Publishers Group West Incorporated's business. Mr. Collins did not explain the reason for the Debtors' decision. As reported in the Troubled Company Reporter on Jan. 15, 2007, the Debtors wanted to make the payments to minimize disruption and possible "domino effect" of further insolvencies that could be caused if PGW immediately ceased all payments with respect to the PGW Publisher Claims. Based in San Diego, California, Advanced Marketing Services, Inc. -- http://www.advmkt.com/-- provides customized merchandising, wholesaling, distribution and publishing services, currently primarily to the book industry. The company has operations in the U.S., Mexico, the United Kingdom and Australia and employs approximately 1,200 people Worldwide. The company and its two affiliates, Publishers Group Incorporated and Publishers Group West Incorporated filed for chapter 11 protection on Dec. 29, 2006 (Bankr. D. Del. Case Nos. 06-11480 through 06-11482). Suzzanne S. Uhland, Esq., Austin K. Barron, Esq., Alexandra B. Feldman, Esq., O'Melveny & Myers, LLP, represent the Debtors as Lead Counsel. Chun I. Jang, Esq., Mark D. Collins, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A., represent the Debtors as Local Counsel. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on Apr. 28, 2007. (Advanced Marketing Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ADVANCED MARKETING: Baker & Taylor Asset Purchase Agreement Okayed ------------------------------------------------------------------ The United States Bankruptcy Court for the District of Delaware has approved in its entirety the Asset Purchase Agreement between Advanced Marketing Services Inc., and Baker & Taylor Inc., for the sale of majority of AMS' assets. As reported in the Troubled Company Reporter on Feb. 27, 2007, Advanced Marketing and Baker & Taylor signed an Asset Purchase Agreement for the sale of majority of Debtor's assets. Judge Sontchi authorizes the Debtors and Baker & Taylor to take necessary actions to implement and effectuate the APA, the Transition Services Agreement, and the Collateral Agreement, without the necessity of a further Court order. A full-text copy of the approved APA is available for free at: http://researcharchives.com/t/s?1b66 Several creditors and publishers tried to block the sale, including: (1) The Official Committee of Unsecured Creditors, (2) Wells Fargo Foothill Inc., (3) Anova Books Company Limited, (4) Houghton Mifflin Company, (5) Hewlett-Packard Financial Services Company, (6) Hewlett Packard Company, (7) Simon & Schuster Inc., (8) Meredith Corporation, (9) Barron's Education Series Inc., (10) Manhattan Associates Inc., (11) Reader's Digest Children's Publishing Inc., (12) The Quarto Group Inc., (13) Hachette Book Group USA Inc., (14) New Holland Publishers (UK) Ltd., (15) Templar Company plc, (16) Random House Inc., (17) Teogas Inc., (18) Leisure Arts Inc., and (19) County of Denton, City of Carrollton and Lewisville Independent School District The Creditors Committee, among other things, asserted that the APA must provide adequate time to allow for the proper implementation of the TSA, and allow the Debtors to maintain control over their assets during the post-closing transition period. Wells Fargo consented to the sale so long as it and its participant lenders are paid in full in connection with the Debtors' pre- and post-petition financing. Denton County asked the Court to rule that delinquent property taxes, penalties and interest be paid in full from the proceeds of the sale, at the time of the closing of the transaction, prior to application of proceeds to other lien creditors. The rest of the objecting parties either opposed the Debtors' proposed assumption and assignment of their executory contracts, or the proposed cure amounts. Buyer to Make Cure Payments Judge Christopher S. Sontchi directs Baker & Taylor to promptly pay to parties to any assigned contract the requisite Prepetition Date "cure" amounts, or a lesser amount as maybe agreed upon between Baker & Taylor and the counterparty to an Assigned Contract, following assumption and assignment. The Debtors will pay any amounts due that arose and became payable after the Petition Date with respect to any non-debtor party to an Assigned Contract. Baker & Taylor will pay in a "Closing Payoff Amount" sufficient to satisfy the Debtors' obligations to the Lender and Senior Lender, to Wells Fargo Foothill concurrently with the Closing in full satisfaction of all obligations under the Senior Loan Agreement and the Loan Agreement. Wells Fargo Foothill, in turn, will provide Baker & Taylor and the Debtors a payoff demand letter and wire instructions at least three business days prior to the Closing Date. The payment of the Closing Payoff Amount will be part of, and not in addition to, Baker & Taylor's obligations to pay the purchase price, so that any amounts paid by Baker & Taylor to Wells Fargo Foothill for application to the obligations under the Senior Loan Agreement and the Loan Agreement will be credited in full against Baker & Taylor's obligations to deliver the purchase price to the Debtors. Judge Sontchi clarifies that no accounts receivable of the Debtors from Leisure Arts, Meredith Corp., and Barron's Educational are being sold or purchased pursuant to the APA, nor are any executory contracts, if any, with the parties being assumed and assigned pursuant to the APA. Judge Sontchi also holds that Baker & Taylor, absent the consent of the Quarto Group, will not take an assignment of any executory contracts to which the Debtors and the Quarto Group may be parties. In connection with Baker & Taylor's purchase of selected APG Inventory and APG Product Prepayments from the Debtors published and derived from the Quarto Group, Baker & Taylor will have and be granted a limited, non-exclusive license and full rights to sell any and all inventory published and derived from the Quarto Group selected and purchased by Baker & Taylor only to wholesale clubs, like Costco, Sam, and B.J.'s. The Debtors are authorized to assume and assign the executory contracts between Templar and the Debtors to Baker & Taylor. Baker & Taylor waives any right to exclude the executory contracts with Templar from the definition of Assigned Contracts in accordance with the terms of the APA. The Cure Amount has been agreed among Templar, Baker & Taylor, and the Debtors to be $481,707. Baker & Taylor agrees to pay the Cure Amount on or promptly following the Closing. Baker & Taylor and Manhattan Associates will promptly memorialize and execute, prior to assumption and assignment, an amendment to a license agreement between the Debtors and Manhattan. $100,000 Adequate Protection Reserve A $100,000 reserve will be established in the Debtors' general operating account as adequate protection for the claims filed on behalf of Denton County, et al. The liens of Denton County, et al., if any, will attach to the Reserved Funds with the same validity, to the same extent, and with the same priority as any liens now held in the property being sold. The Reserved Funds will be in the nature of adequate protection and will neither be a cap on the amounts recoverable by Denton County, et al., nor will the Reserve Funds be an allowance of their claims -- which claims remain subject to any rights of any party to object to the validity, extent or priority of the claims. No portion of the Reserve Funds will be distributed apart from the agreement of the Debtors and Denton County, et al. or upon subsequent Court order duly noticed to Denton County, et al. Payments to Hewlett-Packard Entities Baker & Taylor will pay $12,083 to Hewlett-Packard Financial as cure under HPFS' lease agreement with the Debtors through Feb. 28, 2007. Baker & Taylor will pay $19,700 to Hewlett Packard Co. as cure under HP's support agreement with the Debtors through Feb. 28, 2007. Baker & Taylor will timely pay all amounts under the Lease Agreement and the Support Agreement that come due after the Closing Date but before a final decision on assumption and assignment of the Agreements has been made. None of the equipment subject to the Lease Agreement will be considered part of the Purchased Assets under the APA. HP, the Debtors, and Baker & Taylor agree to confer promptly to identify the documentation that comprises the Support Agreement subject to assumption and assignment. If the parties cannot agree with respect to identification of the assumed and assigned contract or on the correct amount to be paid in connection with the proposed assumption and assignment, the Court will rule on the matter. Assumption of Indianapolis Facility Lease The Debtors are authorized to assume and assign to Baker & Taylor an Oct. 10, 2000 lease for the Debtors' Distribution Center facility in Building 140, Park 100 Business Park, 5045 West 79th Street, in Indianapolis, Indiana, subject to the execution of a mutually acceptable amendment between Baker & Taylor and the landlord, supplementing and modifying the lease agreement. Judge Sontchi says no "cure" payment under Section 365(b)(1)(A) of the Bankruptcy Code need be paid as none exists, and Baker & Taylor has complied with Section 365, and the Lease will be in full force and effect without any outstanding enforceable defaults. The Landlord will have the right to assert a claim for damages. The rent due to the Landlord for March 2007 will promptly be paid by the Debtors, and, subject to the Closing of the APA, Baker & Taylor will reimburse the Debtors for the period commencing with the date of the Closing through March 31, 2007. Judge Sontchi clarifies that Baker & Taylor is not a "successor" to the Debtors or their bankruptcy estates, and will not assume, nor be deemed to assume, or in any way be responsible for, any liability or obligation of any of the Debtors or their estates, including but not limited to any bulk sales law or similar liability, except as otherwise expressly provided in the APA. Objections not otherwise withdrawn, waived, or settled, are overruled and denied, Judge Sontchi adds. Based in San Diego, California, Advanced Marketing Services, Inc. -- http://www.advmkt.com/-- provides customized merchandising, wholesaling, distribution and publishing services, currently primarily to the book industry. The company has operations in the U.S., Mexico, the United Kingdom and Australia and employs approximately 1,200 people Worldwide. The company and its two affiliates, Publishers Group Incorporated and Publishers Group West Incorporated filed for chapter 11 protection on Dec. 29, 2006 (Bankr. D. Del. Case Nos. 06-11480 through 06-11482). Suzzanne S. Uhland, Esq., Austin K. Barron, Esq., Alexandra B. Feldman, Esq., O'Melveny & Myers, LLP, represent the Debtors as Lead Counsel. Chun I. Jang, Esq., Mark D. Collins, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A., represent the Debtors as Local Counsel. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on Apr. 28, 2007. (Advanced Marketing Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ADVANCED MARKETING: Panel Hires Lowenstein Sandler as Counsel ------------------------------------------------------------- The Hon. Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware approved the request of the Official Committee of Unsecured Creditors in Advanced Marketing Services Inc. and its debtor-affiliates' bankruptcy cases to retain Lowenstein Sandler PC as its main counsel to perform services relating to the Debtors' bankruptcy cases, effective as of January 12. The Creditors Committee selected Lowenstein Sandler because of its attorneys' experience and knowledge. The Committee believes that Lowenstein is well qualified to represent it in the Debtors' Chapter 11 cases. As the Creditors Committee's counsel, Lowenstein will: (a) provide legal advise as necessary with respect to the Committee's powers and duties as an official committee appointed under Section 1102 of the Bankruptcy Code; (b) assist the Committee in investigating the acts, conduct, assets, liabilities, and financial condition of the Debtors, the Debtors' business operations, potential claims, and any other matters relevant to the Debtors' bankruptcy cases or to the formulation of a Chapter 11 plan; (c) participate in the formulation of a Plan; (d) provide legal advices with respect to any disclosure statement and Plan filed the Debtors' bankruptcy cases, and with respect to the process for approving or disapproving disclosure statements and confirming or denying confirmation of a Plan; (e) prepare on behalf of the Committee, as necessary, applications, motions, complaints, answers, orders, agreements and other legal papers; (f) appear in the Court to present necessary motions, applications, and pleadings, and otherwise protecting the interests of those represented by the Committee; (g) assist the Committee in requesting the appointment of a trustee or examiner, should the action be necessary; and (h) perform other legal services as may be required and that are in the best interests of the Committee and creditors. Lowenstein will be paid on an hourly basis, plus reimbursement of the actual and necessary expenses that Lowenstein incurs in accordance with the ordinary and customary rates, which are in effect on the date the services are rendered. Lowenstein's hourly rates are: Professional Hourly Rate ------------ ----------- Partners $320 - $595 Counsel $265 - $425 Associates $165 - $300 Legal Assistants $75 - $150 Kenneth A. Rosen, Esq., a member at Lowenstein, related that the charges set forth are based on actual time charges on an hourly basis and based on the experience and expertise of the attorney or legal assistant involved. The hourly rates are subject to periodic adjustments to reflect economic and other conditions. Mr. Rosen assured the Court that his firm represents no other entity in connection with the Debtors' bankruptcy cases, is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code, and does not hold or represent any interest adverse to the Creditors Committee with respect to the matters on which it is to be employed. About Advanced Marketing Based in San Diego, California, Advanced Marketing Services Inc. - - http://www.advmkt.com/-- provides customized merchandising, wholesaling, distribution, and publishing services, currently primarily to the book industry. The company has operations in the U.S., Mexico, the United Kingdom, and Australia and employs approximately 1,200 people Worldwide. The company and its two affiliates, Publishers Group Incorporated and Publishers Group West Incorporated filed for chapter 11 protection on Dec. 29, 2006 (Bankr. D. Del. Case Nos. 06-11480 through 06-11482). Suzzanne S. Uhland, Esq., Austin K. Barron, Esq., Alexandra B. Feldman, Esq., O'Melveny & Myers, LLP, represent the Debtors as Lead Counsel. Chun I. Jang, Esq., Mark D. Collins, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A., represent the Debtors as Local Counsel. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than US$100 million. The Debtors' exclusive period to file a chapter 11 plan expires on April 28, 2007. (Advanced Marketing Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) AEW REAL: Board of Trustees Approves Liquidation of Fund -------------------------------------------------------- AEW Real Estate Income Fund's Board of Trustees has approved the liquidation and termination of the Fund. After considering the small asset size of the Fund, the lack of prospects for significant growth in assets and several alternatives to liquidation, the Board concluded that it would be in the best interests of the Fund and its shareholders to liquidate and terminate the Fund. As of March 8, 2007, the Fund had $93,942,390 in assets attributable to the Fund's common shares and $28,000,000 attributable to the auction preferred shares for total assets of $121,942,390. The Fund will begin the orderly liquidation of its assets in accordance with the plan of liquidation approved by the Board. It is expected that the liquidation of the Fund's assets and the termination of the Fund will be completed within 60 days. The Fund will issue an additional press release to announce the date as of which the transfer agent books of the Fund will be closed and the amount and timing of the liquidating distributions to shareholders. The AEW Real Estate Income Fund -- http://www.aew.com/-- a non- diversified closed-end investment management company, is advised by AEW Management and Advisors, L.P., an affiliate of AEW Capital Management, L.P., which is a subsidiary of IXIS Asset Management US Group, L.P. AEW is a real estate investment manager, providing advisory services to investors worldwide, focusing on directly held real estate assets, real estate equity securities, real estate opportunity funds and international investment. AEW and its affiliates currently manage over $30 billion1 of capital, which is invested in $41.5 billion1 of real estate and securities in North America, Europe and Asia. AMERICAN CAMSHAFT: Has Until May 10 to File Combined Chap. 11 Plan ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of Michigan has set deadlines in American Camshaft Specialties Inc. and its debtor-affiliates' chapter 11 cases. The debtor-affiliates are ACS Grand Haven Inc., Assembled Camshafts Inc., and ACS Orland Inc. The Court gave the Debtors until May 10, 2007, to file a combined plan and disclosure statement and until July 6, 2007, to solicit acceptances of that plan. Objections to disclosure statement and confirmation of plan are due on July 6, 2007. The confirmation hearing on any filed plan was set for 11:00 a.m. on July 13, 2007, at Courtroom 1975. For any asset sale in the future, the Debtors expect to obtain an order approving a sale of their assets by April 6, 2007, and close that sale no later than April 23, 2007. Final DIP Order The Debtors also obtained Court approval, on a final basis, to obtain debtor-in-possession financing from Citizens Bank to fund day-to-day operations and working capital requirements. The Court authorized Citizens, in its discretion, to make separate postpetition loans to each of the Debtors based on these borrowing base formula: -- up to 90% of the respective Debtor's eligible accounts; plus -- up to 75% of the cost of the respective Debtor's eligible inventory; plus -- up to $9 million of overformula advances to ACS and Parent and up to $3 million of overformula advances to ACI; minus -- availability reserves. The liens on and security interests of Citizens in the DIP Loan Collateral and the Citizens Administrative Expense Claim will be expressly subordinated to the payment of allowed but unpaid fees and disbursements incurred prior to May 1, 2007: (a) by the Debtors' professionals in an aggregate amount not to exceed $1,705,000; and (b) by the Official Committee of Unsecured Creditors' professionals in an aggregate amount not to exceed $350,000. Citizens will maintain borrowing base reserves from time to time equal to $2,055,000 minus aggregate advances made to the escrow account; the net reserves ($2,055,000 minus the aggregate amount advanced to the Escrow Account) will be allocated between the Debtors with 38% to ACI and 62% to ACS and Parent. Citizens and the Participating Customers will have the right, in their sole discretion, acting together, to increase the amount of the carve-out. Absent a written extension from Citizens, the postpetition indebtedness will be due on the earliest of: a) July 31, 2007; b) the occurrence of an event of default; c) the closing of a sale pursuant to an order authorizing a sale of all or substantially all of the applicable Debtor's assets; or d) the effective date of any confirmed plan of reorganization for the applicable Debtor/s. To secure their obligations on account of the postpetition loans, plus interest, the loan fees and the expenses, the Debtors granted Citizens Bank: -- a first priority lien and security interest in any and all property of the Debtors' estates; and -- a first priority lien and security interest in the Debtors' prepetition working capital assets. Participating Customers' Loan The Debtors manufacture motor vehicle component parts for sale to participating customers including Ford Motor Company, DaimlerChrysler Corporation, and General Motors Corporation. Pursuant to purchase orders and supply contracts, the Debtors are obligated to manufacture component parts for the Participating Customers, which are either used in the manufacture of motor vehicles or incorporated into components sold to manufacturers or other suppliers to the automotive and heavy equipment industry. Should the Debtors fail to meet their obligations to the Participating Customers to timely deliver component parts as called for by the purchase orders, the Participating Customers may suffer significant damages and may have claims against the Debtors for damages. To induce Citizens to provide the DIP financing, the Participating Customers agreed to provide these credit enhancements: 1) a limitation of setoffs against all of their respective accounts; and 2) an agreement to purchase inventory if certain events occur. In addition to the credit enhancements, the Participating Customers agreed to purchase subordinated participations in the postpetition loans, which will allow Citizens to make additional funds available to the applicable Debtors as overformula loans. North Fork Prepetition Loan Before filing for bankruptcy, the Debtors entered into various loan and security documents with North Fork Business Capital Corporation. As part of those prepetition loans, the Debtors granted North Fork a security interest and lien in all or substantially all of the Debtors' tangible and intangible real and personal property. As of Dec. 6, 2006, the aggregate outstanding amount of all prepetition loans owed by the Debtors to North Fork and the other prepetition lenders was not less than $11,657,851, consisting of: a) revolving credit loans in the aggregate principal amount of not less than $5,062,613, plus interest, fees, costs and expenses accrued or chargeable; and b) term loans in the aggregate principal amount of not less than $6,595,237, plus interest, fees, costs and expenses accrued or chargeable. North Fork Liens From the original advances under the credit facilities, the Debtors remitted to North Fork the amount of $5,069,101, plus accrued interest through and including Dec. 14, 2006, to repay the outstanding revolving credit loans. Upon North Fork's receipt of the partial payoff amount, North Fork's liens upon and security interests in the Debtors' prepetition accounts receivable and inventory were deemed released, and North Fork has no further lien or security interest in the prepetition working capital assets. Other than with respect to the prepetition working capital assets, North Fork's liens and security interests in and upon the prepetition collateral will remain in full force and effect until all prepetition obligations, including, without limitation, the outstanding term loans, have been repaid and satisfied in full. About American Camshaft American Camshaft Specialties Inc. is located at the southwest corner of M-45 and U.S. 31, includes two plants -- ACS Grand Haven, which is solely owned by Asimco Technologies, and a joint venture between Nippon Piston Ring and ACS Inc. Asimco Technologies -- http://www.asimco.com/-- is headquartered in Beijing, China, and produces a wide range of power train, chassis and diesel fuel injection products for light duty and commercial vehicle applications. Asimco assembles semi-fully finished cast, steel and assembled camshafts. Aside from its U.S. operations, Asimco has 18 manufacturing facilities and 52 sales offices in China and one regional office in Europe and Japan. Asimco's major customers are automotive-based, such as DaimlerChrysler, Ford, GM, Cummins and CAT. American Camshaft and three other U.S. affiliates filed for chapter 11 protection on Dec. 9, 2006 (Bankr. E.D. Mich. Lead Case No. 06-58298). Christopher A. Grosman, Esq., and Robert A. Weisberg, Esq., at Carson Fischer, P.L.C., represent the Debtors. Lawyers at Schafer and Weiner PLLC represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors they listed estimated assets and debts between $10 million and $50 million. AMERICAN CELLULAR: Fitch Rates $1.05 Billion Senior Facility at B+ ------------------------------------------------------------------ Fitch Ratings assigns a rating of 'B+/RR2' to American Cellular Corporation's planned $1.05 billion senior secured credit facility. The ratings for Amcell's $250 million credit facility will be withdrawn after the bank agreement closes. Fitch also downgrades the senior unsecured notes at AmCell to 'CCC+/RR5' from 'B/RR3' and the senior subordinated notes to 'CCC/RR6' from 'CCC+/RR5'. In addition, Fitch affirms the 'B-' Issuer Default Rating for AmCell, Dobson Cellular Systems Inc. and the parent company, Dobson Communications Corp. The Rating Outlook is Stable. The IDR ratings at Dobson reflect its current leverage, smaller scale as a regional operator, and the competitive operating environment. Until the nature of the reform is certain, Fitch also believes a higher level of event risk is present with potential universal service funding (USF) reform since USF disbursements are a material percentage of total cash flow. Positive offsets to these concerns include significantly improved operating metrics at Dobson primarily driven by the GSM migration as well as the significant coverage and quality improvements made to the company's GSM network. Performance at AmCell has improved from a year ago but not to the extent of the consolidated results at Dobson. In February 2007, Amcell announced a cash tender for its $900 million 10% senior notes and a consent solicitation to amend the terms of the notes while initially expecting to finance the tender with proceeds from a planned $850 million credit facility and a $425 million notes offering that was later cancelled. With the company changing its financing plans, Amcell increased the size of its credit facilities by $200 million to a $1.05 billion senior secured credit facility, which consists of a five-year, $75 million senior secured revolving credit facility, a seven-year, $900 million senior secured term loan B and a seven-year, $75 million senior secured delayed draw term loan. er the planned credit facility will be used to repurchase a minimum of $675 million of the $900 million in 10% unsecured notes at Amcell that are validly tendered and any outstandings under the existing $250 million credit facility. As a result of the expected drawdown on the credit facilities, LTM leverage will increase slightly at a consolidated Dobson to approximately 6.4 times. The consent solicitation seeks to amend covenants with the 10% notes including restricted payments and additional indebtedness. Dobson's consolidated liquidity is stable based on its cash position and lack of near-term maturities. Cash at the end of the fourth quarter of 2006 was approximately $117 million. Dobson's nearest material maturity is not until 2011. For 2006, Dobson reported $43 million of free cash flow with expectations to generate in excess of $90 million in 2007. The ratings for AmCell's senior unsecured notes were downgraded by two notches to reflect the diminished recovery prospects. These ratings were affected by this action: American Cellular Corporation -- $250 million senior secured credit facility withdrawn (when new credit facility closes); -- $1.05 billion senior secured credit facility 'B+/RR1'; -- $900 million senior unsecured notes to 'CCC+/RR5' from 'B/RR3'; -- $18.5 million senior subordinated notes to 'CCC/RR6' from 'CCC+/RR5'. These ratings were affirmed by this action: American Cellular Corporation (AmCell) -- Issuer default rating (IDR) 'B-'; Dobson Communications Corp. -- Issuer default rating (IDR) 'B-'; -- $160 million senior floating rate notes 'CCC+/RR5'; -- $150 million senior convertible debentures 'CCC+/RR5'; -- $420 million senior notes 'CCC+/RR5'; -- $136 million convertible preferred stock 'CCC-/RR6'. Dobson Cellular Systems Inc. -- Issuer default rating (IDR) 'B-'; -- $75 million senior secured credit facility 'BB-/RR1'; -- $500 million first priority secured notes 'BB-/RR1'; -- $325 million second priority secured notes 'BB-/RR1'. AMERICAN REAL: Earns $798.8 Million in Year Ended December 31 ------------------------------------------------------------- American Real Estate Partners LP reported net earnings of $798.83 million on total revenues of $1.47 billion for the year ended Dec. 31, 2006, as compared with a net loss of $25.66 million on total revenues of $900.96 million for the year ended Dec. 31, 2005. Most of the revenues in 2006 were from home fashion revenues, which increased to $957.65 million from $472.68 million in 2005. Revenues from gaming and real estate likewise increased in 2006. The company's total expenses in 2006 totaled $1.56 billion, which was over its total revenues, resulting to an operating loss of $89.79 million, versus an operating income of $45.24 million in 2005. Increase in interest income, net other income, equity earnings of affiliate, and minority interests in 2006 caused the company to have a positive income from continuing operations of $23.06 million for the year from loss from continuing operations of $22.65 million in 2005. Net earnings for the year ended Dec. 31, 2006, was largely due to income from discontinued operations totaling $154.83 million, and gain on sale of assets totaling $676.44 million. Both items are net of income taxes. The company's balance sheet as of Dec. 31, 2006, showed total assets of $4.24 billion, total liabilities of $1.64 billion, and minority interests of $292.22 million, resulting to total partners' equity of $2.31 billion. Cash and cash equivalents stood at $1.91 billion as of Dec. 31, 2006. Long-term Liabilities The company's long-term debt consisted of 7.125% senior unsecured notes due 2013 with the aggregate amount of $480 million; 8.125% senior unsecured notes due 2012 with the aggregate amount of $353 million; 7.85% senior unsecured notes due 2012 with the aggregate amount of $215 million; borrowings under credit facilities of $40 million; mortgages payable totaling $109 million; and other long-term debts totaling $13 million as of Dec. 31, 2006. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1b6f The Sands and Related Assets On Nov. 17, 2006, several of the company's subsidiaries and affiliates completed the sale to Pinnacle Entertainment, Inc. an outstanding membership interests in ACE Gaming LLC and 100 percent of the equity interests in certain subsidiaries of American Real Estate Holdings LLP, which own parcels of real estate adjacent to The Sands Hotel and Casino in Atlantic City, including 7.7 acres of land known as the Traymore site. The aggregate price was about $274.8 million. American Real Estate Partners owns, through its subsidiaries, about 67.6 percent of Atlantic Coast Entertainment Holdings, Inc., which owns 100 percent of ACE Gaming. On Feb. 22, 2007, the company resolved all outstanding litigation involving its interest in the Atlantic City gaming operations, resulting in a release of all claims against the company. Oil and Gas Operations On Nov. 21, 2006, the company's indirect wholly-owned subsidiary, AREP O & G Holdings LLC, completed the sale of all of the issued and outstanding membership interests of NEG Oil & Gas LLC to SandRidge for consideration consisting of $1.02 billion in cash, 12,842,000 shares of SandRidge's common stock, valued at $18 per share on the date of closing, and the repayment by SandRidge of $300 million of debt of NEG Oil & Gas. Pursuant to an agreement dated Oct. 25, 2006, among American Real Estate Holdings, NEG Oil & Gas and National Energy Group, Inc., NEGI sold its membership interest in NEG Holding LLC to NEG Oil & Gas in consideration of about $261.1 million paid in cash. Of that amount, $149.6 million was used to repay the NEGI 10.75% senior notes due 2007, including principal and accrued interest, all of which was held by the company. About American Real Estate Headquartered in New York City, American Real Estate Partners LP (NYSE:ACP) -- http://www.arep.com/-- a master limited partnership, is a diversified holding company engaged in a variety of businesses. The company's businesses currently include gaming, oil and gas exploration and production, real estate and home fashion. The company is in the process of divesting its Oil and Gas operating unit and their Atlantic City gaming property. The company owns a 99% limited partnership interest in American Real Estate Holdings LP. Substantially all of the company's assets and liabilities are owned by AREH and substantially all of the company's operations are conducted through AREH and its subsidiaries. American Property Investors, Inc., or API, owns a 1% general partnership interest in both the company and AREH, representing an aggregate 1.99% general partnership interest in the company and AREH. API is owned and controlled by Mr. Carl C. Icahn. * * * As reported in the Troubled Company Reporter on Jan. 15, 2007, Standard & Poor's Rating Services affirmed its 'BB+' long-term counterparty credit rating on American Real Estate Partners LP The outlook is stable. ASBURY AUTOMOTIVE: Prices Private Offering of Senior Notes ---------------------------------------------------------- Asbury Automotive Group Inc. priced its $150 million of 7.625% Senior Subordinated Notes due 2017 and $100 million principal amount of 3% Senior Subordinated Convertible Notes due 2012 through private offerings which are exempt from registration under the Securities Act of 1933. In connection with the Convertible Notes offering, the company also granted the initial purchasers a 30-day option to purchase up to an additional $15 million principal amount of Convertible Notes. The company estimates that the net proceeds from the offerings will be approximately $243.1 million and intends to use the proceeds of the offerings, together with available cash, to repurchase its outstanding $250 million principal amount of 9% senior subordinated notes due 2012 pursuant to the reported cash tender offer which is scheduled to expire on Mar. 23, 2007, and to pay related fees and expenses and the net cost of the convertible note hedge and warrant transactions. The company further said that any net proceeds not used for such purposes will be used for general corporate purposes. In addition, concurrently with the offerings Asbury expects to use available cash to repurchase approximately 1.3 million shares of its common stock in privately negotiated transactions. The new series of Senior Subordinated Notes and Convertible Notes will rank pari passu in right of payment with all of the company's existing and future senior subordinated indebtedness. The company said that it have the option to redeem all or a portion of the Senior Subordinated Notes due 2017 at any time on or after Mar. 15, 2012 at specified redemption prices. At any time before Mar. 15, 2010 the company may also redeem up to 35% of the aggregate principal amount of the Senior Subordinated Notes due 2017 at par, plus accrued and unpaid interest, if any, to the date of redemption, with the proceeds of certain equity offerings. At any time before Mar. 15, 2012 the company may also redeem all or a portion of the Senior Subordinated Notes due 2017 at par plus a specified premium. This offering is scheduled to close on Mar. 26, 2007, subject to satisfaction of customary closing conditions. The Convertible Notes will be convertible into cash up to the principal amount of the notes and, if applicable, shares of the comnpany's common stock, at an initial conversion rate of 29.4172 shares of common stock per $1,000 principal amount of the notes, which is equal to a conversion price of approximately $33.99 per share. This offering is scheduled to close on Mar. 16, 2007, subject to satisfaction of customary closing conditions. In connection with the offering of the Convertible Notes, the company intends to enter into convertible note hedge transactions with one or more of the initial purchasers andr their affiliates in respect of its common stock which are intended to reduce the potential dilution to the company's common stockholders upon any future conversion of the Convertible Notes. The company also intends to enter into warrant transactions in respect of its common stock in connection with the offering of the Convertible Notes. About Asbury Automotive Group Asbury Automotive Group, Inc., (S&P, BB- Corporate Credit Rating, Stable) headquartered in New York City, is one of the largest automobile retailers in the U.S., with 2003 revenues of $4.8 billion. Built through a combination of organic growth and a series of strategic acquisitions, Asbury now operates through nine geographically concentrated, individually branded "platforms." These platforms currently operate 100 retail auto stores, encompassing 140 franchises for the sale and servicing of 35 different brands of American, European and Asian automobiles. Asbury believes that its product mix contains a higher proportion of the more desirable luxury and mid-line import brands than most public automotive retailers. The Company offers customers an extensive range of automotive products and services, including new and used vehicle sales and related financing and insurance, vehicle maintenance and repair services, replacement parts and service contracts. * * * As reported in the Troubled Company Reporter on Mar. 14, 2007, Moody's Investors Service assigned a B3 rating to Asbury Automotive Group's proposed $150 million senior subordinated notes and affirmed existing ratings. The outlook has been revised to positive from stable. ATTACHMATE CORPORATION: Moody's Holds B3 Corporate Family Rating ---------------------------------------------------------------- Moody's Investors Service affirmed Attachmate Corporation's B3 corporate family rating pending payment of a debt financed $280 million dividend. The company will be refinancing and upsizing its credit facilities as part of the transaction. Moody's is also assigning B1 ratings on the $20 million revolving credit facility and $480 million first lien term loan and a Caa2 rating to the $275 million second lien term loan. The outlook is stable. These ratings were affirmed: Corporate Family Rating -- B3 Probability of Default -- B3 These ratings were assigned: $20 million revolving credit line -- B1, LGD2, 29% $480 million first lien term loan -- B1, LGD2, 29% $275 million second lien term loan -- Caa2, LGD5, 83% While leverage increases significantly with the dividend related debt, the increased risk is offset by the progress management has made in restructuring and integrating the NetIQ acquisition. Management appears to have also stemmed the rapid decline in revenues that NetIQ had been experiencing prior to the acquisition. The B3 rating reflects the high leverage of the business combined with the flat to declining prospects in Attachmate's core mainframe business and uncertainty around the growth prospects of NetIQ's product lines. While management has made significant progress with NetIQ, it is still too early to determine whether they will be able to actually grow revenues on a sustained basis. It should be noted that Attachmate's core business continues to show resilience and in the near term should be positively impacted by Microsoft's introduction of Vista. The stable outlook reflects Moody's expectation that revenue and cash flow will be relatively stable with minimal declines over the next twelve months. The ratings could face upward pressure if NetIQ's business is able to generate sustained growth while the core emulation business remains stable. Moody's subscribers can find further details in the Attachmate Credit Opinion published on Moodys.com. Attachmate Corporation provides software and services that allow customers to interface their mainframes with users on desktops, servers or the web. The company also provides a line of performance management, security and operations management software. The company is headquartered in Seattle, Washington. AVENTINE RENEWABLE: Moody's Rates New $300 Mil. Senior Notes at B3 ------------------------------------------------------------------ Moody's Investors Service assigned a B3 rating to Aventine Renewable Energy Holdings, Inc.'s new $300 million senior unsecured notes due 2017 and affirmed the company's B2 corporate family rating. The notes are being issued to partially finance the firm's construction of two ethanol plants with a combined capacity of 226 million gallons per year. A speculative grade liquidity rating of SGL-1 (excellent liquidity) was also affirmed for the firm. The outlook remains stable. Ratings assigned: $300 million Senior unsecured notes due 2017 -- B3 (LGD5, 74%) Ratings affirmed: Corporate family rating - B2 Probability of default rating -- B2 Speculative grade liquidity rating - SGL-1 The ratings reflect the modest leverage for the rating category, significant cash balances, supportive legislative environment and strong demand environment for ethanol. Aventine recently completed construction of its dry mill ethanol plant in Pekin, Illinois, which will contribute additional cash flow to the firm. The firm also benefits from continued expansion of its marketing alliance. The ratings consider the risks associated with the developing nature of the ethanol industry, industry economics that are driven by government legislation, low barriers to entry, aggressive competing capacity expansions that could lead to oversupply and lower ethanol prices, and the presence of competitors with substantially greater resources. The ratings further reflect Aventine's narrow product profile with predominately one commodity product (ethanol), the lack of correlation between input costs and ethanol prices, and the potential for additional leverage as the firm expands capacity. The ratings also reflect the expectation that ethanol industry profitability may be lower in 2007 as a result of higher corn prices and ethanol prices that are not likely to surge as they did in mid-2006 when blenders of gasoline sought a replacement for methyl tertiary butyl ether (MTBE), which left the gasoline pool in the first half of 2006 as a result of MTBE producers not being afforded product liability protection under the Energy Policy Act of 2005. The SGL-1 speculative grade liquidity rating reflects the expectation for excellent liquidity over the next 12-18 months. Liquidity is supported by significant cash balances, which will increase as a result of the $300 million notes issuance, an undrawn $30 million revolving credit facility that is in the process of being refinanced with a $200 million revolving credit facility (with availability subject to a borrowing base formula) and cash flows from operations. Despite significant planned capital spending for the next 12-18 months and the potential for lower profitability for ethanol producers in 2007 as a result of high commodity corn prices, high cash balances and the revolving credit facility should ensure excellent liquidity. The stable outlook reflects the firm's strong liquidity that can support near-term cash requirements, expectations for steady operating cash flow from its recent ethanol capacity addition, and favorable ethanol legislative environment conditions. The rating currently has limited upside in the near-term given the likelihood the company will be taking on more debt to finance the construction of additional ethanol plants. A deterioration in operating margins due to adverse movements in commodity prices or further levering of Aventine's balance sheet could put negative pressure on the rating. Aventine is a producer and marketer in the United States of ethanol used as a blending component for gasoline. It produces ethanol and co-products at its wholly-owned Pekin, IL wet milling and dry milling plants and its 78.4%-owned dry milling Aurora, NE plant. Additionally, the firm operates a marketing alliance that pools ethanol from multiple third party producers and sells it nationwide, for which it receives a commission. Revenues for the year ended December 31, 2006 were approximately $1.6 billion. AXCESS INTERNATIONAL: Hein & Associates Raise Going Concern Doubt ----------------------------------------------------------------- Hein & Associates LLP expressed substantial doubt on AXCESS International, Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's recurring losses from operations and continued dependence upon access to additional external financing. The auditing firm further said that the company may be forced to seek protection under federal bankruptcy laws if it is unable to generate profitable operations or raise additional capital. Full Year Results For the year ended Dec. 31, 2006, the company had sales of $1.5 million and a net loss of $3.35 million, as compared with sales of $1.08 million and a net loss of $3.25 million for the year ended Dec. 31, 2005. The company's balance sheet showed total assets of $1.28 million and total liabilities of $4.75 million, resulting to total stockholders' deficit of $3.47 million as of Dec. 31, 2006. It also had strained liquidity with total current assets of $1.07 million available to pay total current liabilities of $4.75 million as of Dec. 31, 2006. Accumulated deficit as of Dec. 31, 2006, totaled $162.01 million, as compared with $158.33 million a year ago. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1b59 About AXCESS International Headquartered in Dallas, Texas, AXCESS International, Inc. -- http://www.axcessinc.com-- through its proprietary technology, is a manufacturer of physical security and enterprise asset management systems that can locate, identify, track, monitor, count, and protect people, property and vehicles. The systems will reduce loss and liability, increase the efficiency of a client's employees, and improve the management of personal property, logistics, and facilities. Axcess utilizes two patented and integrated technologies: battery-powered wireless tagging called Active-Radio Frequency Identification and network based streaming digital video. BALLY TOTAL: Defaults Under Note Covenants Due to Late 10-K Filing ------------------------------------------------------------------ Bally Total Fitness has filed a notice with the Securities and Exchange Commission on Form 12b-25 indicating that it is unable to file its Annual Report on Form 10-K for the year ended Dec. 31, 2006 by March 16, 2007 deadline without unreasonable effort and expense because it has not yet completed the preparation of its financial statements for the year ended Dec. 31, 2006, by today's deadline. The company is not yet able to determine when it will be able to file this report. Bally indicated that in determining the amount of its liability for deferred revenue, the company estimates membership life for its members at the time that members enter into membership agreements based on historical trends of actual attrition. The company has identified certain errors in its historical member data used to create its estimates of membership life for those members whose memberships are expected to extend beyond seven years. The company is also evaluating the assumptions it uses in updating these attrition estimates throughout the memberships' terms. The company is evaluating the impact that these data errors and the assumptions relating to attrition estimates will have on its estimates of membership life and its estimate of deferred revenue on previously reported annual and interim consolidated financial statements as well as interim consolidated financial statements and interim consolidated financial information for 2006. In its SEC filing, Bally stated that it expects to report a loss from continuing operations for 2006, and that it expects cash collections of membership revenues in 2006 to be approximately 3%, or more than $25 million, lower than cash collections in 2005. The trend of lower cash collections has continued in the first eleven weeks of 2007 and is expected to continue through at least the remainder of 2007. These unfavorable comparisons and trends reflect shortfalls in new member additions and the continuing effects on cash collections associated with the company's 2005 transition to its Build Your Own Membership model, related changes in the company's sales approach and club operating model, and heightened competition in the company's key markets. While the changes implemented to the BYOM model since the third quarter of 2006 have led to some improvement in certain key operating parameters, this progress has not been sufficient to offset the impact of lower cash collections from BYOM members added in 2005 and early 2006. Bally reported that management is still finalizing its results of operations for 2006, and that it expected certain expenses to be higher in 2006 compared to 2005. Those higher expenses include an impairment charge estimated at $35 to $37 million and associated with the carrying value of certain long-lived assets, primarily leasehold improvements to certain fitness clubs. Interest expense increased approximately 20% (or approximately $16 million) in 2006, primarily due to the amortization of deferred financing costs. On March 14, 2007, the company's liquidity was approximately $45 million. The company's availability under its amended and restated Credit Agreement, subject to compliance with the terms thereof, was approximately $2.1 million. Bankruptcy Warning Further, as of March 14, 2007, the company had approximately $827 million in debt outstanding, which includes approximately $19 million in letters of credit. Interest payments on the company's public notes are due in April, July and October 2007, along with the maturity of the $300 million of 9-7/8% Senior Subordinated Notes in October 2007. The company is exploring a broad range of options to restructure its debt obligations. If the company is unable to restructure that debt, is unable or determines not to make the interest payments, or otherwise determines that its financial condition and obligations necessitate a broader restructuring, it may seek to reorganize its operations under Chapter 11. The company has engaged Jefferies & Company, Inc. as its financial advisor. Public Note Indentures Default The company's inability to file its 2006 Form 10-K today will be a default under its public note indentures. Subject to certain notice provisions, events of default resulting from the company's failure to file and deliver 2006 audited financial statements, or make the interest payment under its Senior Subordinated Notes on April 16, 2007, could ultimately result in certain debt obligations becoming immediately due and payable. The company also said that management is assessing the effectiveness of its internal control over financial reporting, and has identified material weaknesses in the internal control over financial reporting as of Dec. 31, 2006. Bally's independent auditor, KPMG LLP, has informed the company's Audit Committee that, in the absence of further information in support of the company's ability to meet its obligations as they become due, comply with certain debt covenants and timely file its financial statements, its auditors' report on the company's consolidated financial statements will include an explanatory paragraph indicating that substantial doubt exists as to the company's ability to continue as a going concern. Further, the company also expects that the independent auditor's report on internal control over financial reporting will again include an adverse opinion on the effectiveness of its internal controls over financial reporting, consistent with management's conclusion that material weaknesses exist. A full-text copy of the Notification of Late Filing in Form 12b-25 is available for free at http://ResearchArchives.com/t/s?1b73 About Bally Total Based in Chicago, Illinois, Bally Total Fitness Holding Corp. (NYSE: BFT) -- http://www.Ballyfitness.com/-- is a commercial operator of fitness centers in the U.S., with nearly 390 facilities and 30 franchises and joint ventures located in 29 states, Mexico, Canada, Korea, China and the Caribbean. Bally also sells Bally-branded apparel, nutritional products, fitness- related merchandise and its licensed portable exercise equipment is sold in more than 10,000 retail outlets. The company's 10.5% Series B Senior Notes due 2011 carry Moody's Investors Service's Caa1 rating and Standard & Poor's CCC- rating. BIOSAFE MEDICAL: Involuntary Chapter 11 Case Summary ---------------------------------------------------- Alleged Debtor: Biosafe Medical Technologies, Inc. 100 Field Dr., Suite 240 Lake Forest, IL 60045 Case Number: 07-04412 Type of Business: The Debtor has developed numerous accurate and convenient clinical laboratory tests, which represent a breakthrough in analytic technology. The Debtor offers home medical tests that eliminate the need for the patient to travel. The Debtor also improves the cost effectiveness of client companies' employee health plans by adopting BIOSAFE work-site health programs. Additionally, the Debtor helps pharmaceutical manufacturers through enhanced test compliance rates. See http://www.ebiosafe.com/ Involuntary Petition Date: March 13, 2007 Chapter: 11 Court: Northern District of Illinois (Chicago) Petitioners' Counsel: Carolina Y. Sales, Esq. Kenneth A. Michaels, Jr., Esq. Bauch & Michaels, LLC 53 West Jackson Boulevard, Suite 1115 Chicago, IL 60604 Tel: (312) 588-5000 Fax: (312) 427-5709 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ David C. Fleisner Compensation $1,066,419 1153 Ranch Road (Salary: Lake Forest, IL 60045 $209,000 Bonus: $75,000 Contract Severance: $545,000 Loan: $12,419) Steven J. Reitman Promissory Note $977,500 212 The Lane Hinsdale, IL 60521 Timothy O'Brien Contract & Custom $232,785 10419 Applewood Court Software Design Mequon, WI 53092 A. Alexander Arnold, III Deposit of Guarantor $250,000 460 East 79th Street Apartment 16B New York, NY 10021 Michael T. Welch Defaults $150,000 1239 West Montana Chicago, IL 60614 Peter M. Mott Promissory Note - $100,000 525 Rockefeller Road Default Lake Forest, IL 60045 William S. Lear, Esq. Compensation $55,000 c/o Focus Enterprises, Inc. (Salary: 875 North Michigan Avenue $14,000 Suite 3011 Expense Chicago, IL 60611 Reimbursement: $14,000) Frederick J. Fitzsimmons Default $25,000 2142 Ashland Avenue, Suite 2 Evanston, IL 60201 Ned Bedrio Commissions Due $20,000 5309 Main Street Skokie, IL 60077 Focus Enterprises, Inc. Contract Claim $12,000 875 North Michigan Avenue Suite 3011 Chicago, IL 60611 CARBIZ INC: Secures $2.5 Million Financing from Trafalgar Capital ----------------------------------------------------------------- Carbiz Inc. has finalized a deal that will assist in funding the expansion strategy of its business, CEO Carl Ritter disclosed. A $2.5 million convertible debenture financing with Trafalgar Capital Specialized Investment Fund, Luxemburg will provide Carbiz with capital to grow its chain of used car dealerships in the State of Florida. "The completion of this funding will provide the capital we need to continue to roll-out our expansion strategy," Carl Ritter stated. "We will provide more details on our expansion strategy later this month as we finalize our plans." Under the terms of the financing with Trafalgar, Carbiz sold an aggregate of $2.5 million secured convertible debentures to Trafalgar, of which $1 million was released upon executing the financing documents, $750,000 will be released upon the filing of a registration statement with the United States Securities and Exchange Commission registering the common shares underlying the debentures and certain common shares underlying warrants to purchase such shares, and $750,000 will be released on a date to be specified by the parties, which in no event shall be later than June 30, 2007. The debentures bear an annual interest rate of: (i) 12% compounded monthly from the date of issuance until Carbiz files the Registration Statement; (ii) 10% compounded monthly from the date the Registration Statement is filed until it is declared effective by the staff of the SEC; and (iii) 8% per annum thereafter until such debentures are repaid in full. Subject to certain limitations, the debentures are convertible at Trafalgar's option into common shares of Carbiz at a price per share equal to the lesser of (i) an amount equal to $0.22, or (b) an amount equal to 85% of the lowest daily closing bid price of the Carbiz's common shares, as quoted by Bloomberg, L.P., both for the five trading days immediately preceding the date of conversion. These debentures contain certain liquidated damage provisions for the failure to meet certain criteria as set forth in the financing documents. The debentures are also secured by all of the assets of Carbiz and Carbiz was required to irrevocably pledge 30 million of its common shares to ensure full and prompt payment of the debentures, with Trafalgar having the ability to seize such assets and shares in the case of an event of default in accordance with the terms of the financing documents. In addition to the aforementioned debentures, Carbiz issued to Trafalgar warrants to purchase up to 2.5 million common shares of Carbiz at an exercise price of $0.15 per share, with such warrants being exercisable over the next 5 years. A full-text copy of the Securities Purchase Agreement between Carbiz and Trafalgar is available for free at: http://ResearchArchives.com/t/s?1b6d A full-text copy of the Secured Convertible Debenture between Carbiz and Trafalgar is available for free at: http://ResearchArchives.com/t/s?1b6e About CarBiz Inc. Headquartered in Toronto, Ontario, Canada, CarBiz Inc. (OTCBB: CBZFF) -- http://www.carbiz.com/-- provides software and services for car dealers. CarBiz's software applications cover finance and insurance, special financing, leasing, buy here-pay here, traffic management, and accounting. Related services include software training and consulting, software applications hosting, and website design. CarBiz also offers service contracts and extended warranties through Heritage Warranty and car loans. Carbiz serves more than 3,000 dealers. Carbiz Inc.'s Oct. 31, 2006, balance sheet showed stockholders' deficit of $3,410,376 from a deficit of $2,403,162 at Jan. 31, 2006. CARROLS CORP: Inks $185 Million Senior Secured Credit Facility -------------------------------------------------------------- Carrols Corporation entered into a loan agreement providing for a new senior secured credit facility with a syndicate of ten lenders. The new senior secured credit facility provides for a $65 million five-year revolving credit facility and $120 million principal amount of term loan A borrowings which mature in six years. Wachovia Capital Markets, LLC and Banc of America Securities LLC acted as joint arrangers and book managers. Carrols used the net proceeds from the new senior secured credit facility to repay all outstanding borrowings and obligations under its old senior secured credit facility. At closing, amounts outstanding under the new senior credit facility included the $120 million term loan borrowings and $4.3 million borrowed under the revolving credit facility. In addition, there was $45.7 million available for borrowings under the revolving credit facility (after reserving $15 million for letters of credit guaranteed under the facility). "We are pleased to have closed this financing, which we believe will provide us with the flexibility to fund the capital needs of our growing business, and at more favorable interest rates than under our prior senior credit facility," Alan Vituli, Chairman and Chief Executive Officer of Carrols Restaurant Group, Inc. commented. "We anticipate that the availability of capital under this agreement will facilitate our growth plans as we move forward." Headquartered in Syracuse, New York, Carrols Restaurant Group, Inc., operating through its subsidiaries, including Carrols Corporation, operates three restaurant brands in the quick-casual and quick-service restaurant segments with 547 company-owned and operated restaurants in 16 states, and 30 franchised restaurants in the United States, Puerto Rico and Ecuador. Carrols Restaurant Group owns and operates two Hispanic Brand restaurants, Pollo Tropical and Taco Cabana. Carrols Restaurant Group is also the largest Burger King franchisee, based on number of restaurants, and has operated Burger King restaurants since 1976. * * * As reported in the Troubled Company Reporter on Jan. 11, 2007, Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Carrols Corp., and removed its ratings from CreditWatch, where they had been placed with positive implications on Oct. 16, 2006. In addition, Standard & Poor's upgraded the company's bank loan ratings to 'BB-' from 'B+'. CEDAR FAIR: Earns $87.5 Million in Year Ended December 31 --------------------------------------------------------- Cedar Fair LP reported net income of $87.5 million on revenues of $831.4 million for the year ended Dec. 31, 2006, compared with net income of $160.8 million on revenues of $568.7 million for the year ended Dec. 31, 2005. Income before taxes was $126.6 million in 2006, compared with income before taxes of $111.6 million in 2005. Included in the 2005 results was the reversal of $62.6 million of contingent liabilities recorded from 1998 through 2004 related to publicly- traded-partnership taxes. "I am pleased to report that 2006 was another successful year for the company," said Dick Kinzel, Cedar Fair chairman, president and chief executive officer. "We completed the acquisition of the Paramount Parks while maintaining the operations of our existing parks. In 2006, the combined parks entertained more than 19 million visitors and increased average in-park per capita spending 3% to $38.71. The result of this was a record $310 million in adjusted EBITDA." Kinzel added, "The integration of the new properties into Cedar Fair is on schedule and going extremely well. It was a significant benefit to take ownership of the new parks during the operating season. We were able to see the parks in operation and see first hand what it was like on the front lines. Because of this, we are on track to meet and possibly exceed our planned cost savings and synergies." Operating income was $219.5 million in 2006 compared with $137.3 million in 2005. Cash operating costs were $521.1 million versus $374.5 million in the prior year, while interest expense was $88.3 million, up from $26.2 million last year. The increased interest expense primarily reflects higher borrowings to fund the Paramount Parks acquisition and the refinancing of existing debt. Fourth Quarter Results For the fourth quarter, consolidated net revenues were $119.9 million including the addition of the new parks. Operating loss for this same period was $1.9 million compared with operating income of $6.2 million in 2005. "We continue to see growth in our fall season, something I'm very pleased with," said Kinzel. "Knott's Berry Farm, Cedar Point, Dorney Park, Valleyfair and Worlds of Fun all performed very well in October. We also experienced solid October results at our new parks. Our fall season has become increasingly important to our overall operating results and we believe our expansion into new vibrant markets will provide us with additional opportunities during the shoulder months." At Dec. 31, 2006, the company's balance sheet showed $2.51 billion in total assets, $2.1 billion in total liabilities, and $410.6 million in total stockholders' equity. The company's balance sheet at Dec. 31, 2006, also showed strained liquidity with $104.5 million in total current assets available to pay $159.3 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?1b6c Liquidity and Capital Resources Net cash from operating activities increased $5.9 million to $166.4 million in 2006 compared with net cash from operating activities of $160.5 million in 2005. The increase in operating cash flows is primarily attributable to the operation of the newly acquired parks, substantially offset by higher cash interest payments. During 2006, net cash used for investing activities totaled $1.312 billion, compared to net cash used for investing activities of $75.7 million in 2005. The significant increase in net cash for investing activities in 2006 is primarily attributable to the acquisition of Paramount Parks Inc. Net cash from financing activities totaled $1.173 billion in 2006, compared to net cash utilized of $83.8 million in 2005. The significant increase in cash from financing activities is attributable to higher borrowings to fund the PPI acquisition. At Dec. 31, 2006, the company had $1.736 billion of variable-rate term debt and $40.9 million in borrowings under its $2.09 billion revolving credit facility. About Cedar Fair LP Headquartered in Sandusky, Ohio, Cedar Fair LP (NYSE: FUN) -- http://www.cedarfair.com/-- is a publicly traded partnership and one of the largest regional amusement-resort operators in the world. The Partnership owns and operates 12 amusement parks, five outdoor water parks, one indoor water park and six hotels. * * * As reported in Troubled Company Reporter on Dec. 6, 2006, Standard & Poor's Ratings Services affirmed Cedar Fair LP's 'B+' corporate credit rating. CFI MANUFACTURING: Section 341(a) Meeting Continued to March 23 --------------------------------------------------------------- The U.S. Trustee for Region 21 set 12:30 p.m., on Mar. 23, 2007, to continue the meeting of creditors CFI Manufacturing Inc. under Section 341(a) of the Bankruptcy Code. The Trustee states that the meeting was continued to allow further examination of the Debtor's records. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Sarasota, Florida, CFI Manufacturing Inc. dba Carter Grandle manufactures casual outdoor furniture, cushions, and umbrellas. The company filed a chapter 11 petition on January 7, 2007 (Bankr. M.D. Fla. Case No. 07-00131). Benjamin G. Martin, Esq., at the Law Offices of Benjamin Martin, represents the Debtor in its restructuring efforts. Robert P. Charbonneau, Esq., at Kluger Peretz Kaplan & Berlin, represents the Official Committee of Unsecured Creditors. When the Debtor sought protection from its creditors, it listed assets and debts between $1 million to $100 million. CHIQUITA BRANDS: Posts $95.9 Mil. Net Loss in Year Ended Dec. 31 ---------------------------------------------------------------- Chiquita Brands International Inc. reported a net loss of $95.9 million on net sales of $4.499 billion for the year ended Dec. 31, 2006, compared with net income of $131.4 million on net sales of $3.904 billion for the year ended Dec. 31, 2005. The increase in net sales resulted from the acquisition of Fresh Express in June 2005. The operating loss for 2006 was $28 million, compared to operating income of $188 million for 2005. The 2006 results included a $43 million goodwill impairment charge related to Atlanta AG and a $25 million charge related to a potential settlement of a previously disclosed U.S. Department of Justice investigation. Operating income for 2005 included flood costs of $17 million related to Tropical Storm Gamma and a $6 million charge related to the consolidation of fresh-cut fruit facilities in the Midwestern United States. Operating results in 2006 were significantly affected by regulatory changes in the European banana market, which resulted in lower local pricing and increased tariff costs, and by higher fuel and other industry costs. Comparisons to 2005 are also affected by the fact that 2005 was an unusually good year for banana pricing in Europe. The Fresh Cut segment was significantly affected by consumer concerns regarding the safety of packaged salad products, after discovery of E. coli in certain industry spinach products in September 2006 and the resulting investigation by the U.S. Food and Drug Administration. Interest income in 2006 was $9 million, compared to $10.2 million in 2005. Interest expense in 2006 was $85.7 million, compared to $60.3 million in 2005. The increase in interest expense was due to the full-year impact of the Fresh Express acquisition financing. Fresh Express was acquired in June 2005. Other income was $6.3 million in 2006 compared to other expense of $3 million in 2005. Other income in 2006 included a $6 million gain from the sale of the company's 10% ownership in Chiquita Brands South Pacific, an Australian fresh produce distributor. In 2005, other expense included $3 million of financing fees, primarily related to the write-off of unamortized debt issue costs for a prior credit facility and $2 million of charges for settlement of an indemnification claim relating to prior periods, partially offset by a $1 million gain on the sale of Seneca Foods Corp. preferred stock and a $1 million gain from an insurance settlement. Income taxes were a $2 million benefit for 2006, compared to expense of $3 million in 2005. Income taxes for 2006 include benefits of $10 million primarily from the resolution of tax contingencies in various jurisdictions and a reduction in valuation allowance. In addition, the company recorded a tax benefit of $5 million as a result of a change in German tax law. Income taxes for 2005 included benefits of $8 million primarily from the resolution of tax contingencies and reduction in the valuation allowance of a foreign subsidiary due to the execution of tax planning initiatives. Goodwill Impairment Charge During the 2006 third quarter, due to a decline in Atlanta AG's business performance in the period following the implementation of the new EU banana import regime as of Jan. 1, 2006, the company accelerated its testing of the Atlanta AG goodwill and fixed assets for impairment. As a result of this analysis, the company recorded a goodwill impairment charge in the 2006 third quarter for the entire goodwill balance of $43 million. U.S. Department of Justice Investigation In April 2003 the company voluntarily disclosed to the U.S. Department of Justice that its banana-producing subsidiary in Colombia, which was sold in June 2004, had made payments to certain groups in that country which had been designated under United States law as foreign terrorist organizations. Following this disclosure, the Justice Department undertook an investigation, including consideration by a grand jury. During the fourth quarter of 2006, the company commenced discussions with the Justice Department about the possibility of reaching a plea agreement. As a result of these discussions, and in accordance with the guidelines set forth in SFAS No. 5, "Accounting for Contingencies," the company recorded a charge of $25 million in its financial statements for the quarter and year ended Dec. 31, 2006. This amount reflects liability for payment of a proposed financial sanction contained in an offer of settlement made by the company to the Justice Department. At Dec. 31, 2006, the company's balance sheet showed $2.738 billion in total assets, $1.867 billion in total liabilities, and $870.8 million 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?1b67 Liquidity and Capital Resources The company's cash balance was $65 million at Dec. 31, 2006, compared to $89 million at Dec. 31, 2005. Operating cash flow was $15 million in 2006, compared to $223 million in 2005. The decrease in operating cash flow for 2006 was primarily due to a significant decline in operating results. Capital expenditures were $61 million for 2006 and $43 million for 2005. The increase in 2006 was partially due to the full year impact of the acquisition of Fresh Express, which occurred in June 2005. The 2005 capital expenditures included $12 million related to Fresh Express subsequent to the acquisition. Total debt at both Dec. 31, 2006 and 2005, was $1 billion. The company and Chiquita Brands L.L.C. ("CBL"), the main operating subsidiary of the company, are parties to an amended and restated credit agreement with a syndicate of bank lenders for a senior secured credit facility (the "CBL Facility"), which consists of a $200 million revolving credit facility (the "Revolving Credit Facility"), a $125 million term loan ("Term Loan B"), and a $375 million term loan ("Term Loan C"). At Dec. 31, 2006, $44 million of borrowings were outstanding under the Revolving Credit Facility and $31 million of credit availability was used to support issued letters of credit, leaving $125 million of credit available. About Chiquita Brands Cincinnati, Ohio-based Chiquita Brands International, Inc. (NYSE: CQB) -- http://www.chiquita.com/-- markets and distributes fresh food products including bananas and nutritious blends of green salads. The company markets its products under the Chiquita(R) and Fresh Express(R) premium brands and other related trademarks. Chiquita employs approximately 25,000 people operating in more than 70 countries worldwide, including Panama. * * * On Nov. 6, Moody's Investors Service downgraded its ratings for Chiquita Brands LLC. as well as for its parent Chiquita Brands International Inc. Moody's said the outlook on all ratings is stable. Standard & Poor's Ratings Services also lowered its ratings on Cincinnati, Ohio-based Chiquita Brands International Inc., including its corporate credit rating, from 'B+' to 'B'. S&P said the ratings remain on CreditWatch with negative implications where they were placed on Sept. 26. CITATION CORP: Judge Mitchell Approves First Day Motions -------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Alabama has approved motions that will allow Citation Corporation to continue business in the normal course pending approval of a recapitalization plan designed to significantly improve the company's balance sheet, calling it a major step in the company's aggressive strategy to refocus operations, continue to win new business, build a strong financial base and invest in its core business segments. "Judge Tamara O. Mitchell, ruling Tuesday in the U.S. Bankruptcy Court for the Northern District of Alabama, agreed with Citation that there was no need to seek concessions from suppliers or customers." Citation was granted the ability to pay all unsecured creditors in normal course including its employees, suppliers and benefits carriers. It was also granted the ability to accept existing contracts with customers. A DIP financing facility of $25 million was also approved to be used should the cash on hand not be adequate during the process. Citation has significant cash on hand from two recent strategic divestitures. "The only parties impaired by our plan are the lenders and shareholders, and more than 95% of those affected overwhelmingly are in favor of the plan," Ed Buker, Citation's President and CEO, said. While the plan was filed in U.S. Bankruptcy Court late Monday to gain participation by all impaired parties, Mr. Buker stressed that the filing represents a dramatically different process from the restructuring of the company that occurred after Citation's 2004 Chapter 11 filing. "This affects our balance sheet only, greatly reducing our debt and interest expense giving us an enviable financial position within our industry," Mr. Buker said. "This plan represents the missing piece in our continuing progress since we exited Chapter 11 in 2005." Mr. Buker noted that the company has significantly reduced internal costs and met record sales marks across all business segments in the past two years. However, the bank agreements signed when the company exited Chapter 11 2005 did not contemplate the unprecedented production volume cuts within the automotive industry. The plan filed Monday will convert approximately $160 million of the company's approximate $190-million term debt to 100% of the new common equity with the remaining $30 million of debt converted into PIK debt that does not mature until 2013. Citation's existing asset-based revolving line of credit will be amended and restated using essentially the same terms that currently exist. Finally, Citation's existing preferred and common equity holders will receive warrants in the new company. Because the plan is a "pre-packaged" filing -- meaning details of the plan have been accepted ahead of time by Citation's major impaired constituencies -- the company expects to complete the court process with a confirmation hearing on April 5, 2007. About Citation Corporation Headquartered in Birmingham, Alabama, Citation Corporation -- http://www.citation.net/-- designs, develops and manufactures cast, forged and machined components for the capital and durable goods industries, including the automotive and industrial markets. Citation uses aluminum, steel, gray iron, and ductile iron as the raw materials in its various manufacturing processes. The Debtor and its debtor-affiliates previously filed for protection on Sept. 18, 2004 (Bankr. N.D. Ala. Case No. 04-08130). Michael Leo Hall, Esq., and Rita H. Dixon, Esq., at Burr & Forman LLP, represented the Debtors in their first bankruptcy. Judge Tamara O. Mitchell confirmed the company's Second Amended Joint Plan of Reorganization on May 18, 2005. The Debtor and 11 debtor-affiliates filed for their second bankruptcy on March 12, 2007 (Bankr. N.D. Ala. Case Nos. 07-01153 to 07-01162). David S. Heller, Esq., at Latham & Watkins LLP, and Michael Leo Hall, Esq., at Burr & Forman LLP, represent the Debtors. When the Debtors filed for their second bankruptcy petitions, they listed estimated assets and debts of more than $100 million. CITATION CORP: Unsecured Creditors to Recover 100% of Claims ------------------------------------------------------------ Citation Corp. and nine debtor-affiliates filed a Prepackaged Joint Chapter 11 Plan of Reorganization and Disclosure Statement explaining that plan with the U.S. Bankruptcy Court for the Northern District of Alabama. As reported in the Troubled Company Reporter on March 14, 2007, the plan aims to convert $160 million of debt into shares. The Plan and Disclosure Statement was filed along with their bankruptcy petition. Assumptions The Debtors tell the Court that in preparing the estimation of recoveries, these assumptions were made: * The ongoing enterprise value of the Reorganized Debtors for purposes of the Plan plus expected net proceeds from 2008 asset sales, based on the valuation prepared by Carl Marks Advisory Group, LLC, the Debtors' financial advisors, is $158.1 million. * The DIP Facility Claims shall be Allowed in an amount equal to the sum of all unpaid principal, interest and other charges outstanding on the Effective Date plus all reasonable fees and expenses and other charges. The aggregate amount of Allowed DIP Facility Claims will be approximately $3.5 million. * The aggregate Allowed amount of Administrative Expense Claims, including Professional Fee Claims, will be approximately $1 million. * The aggregate Allowed amount of unpaid Priority Tax Claims, including Secured Tax Claims, will be approximately $2.4 million. * The aggregate amount of Pre-Petition Secured Revolver Claims will be approximately $40.4 million plus interest, fees and expenses. * The aggregate amount of Pre-Petition Secured Term Loan Claims will be approximately $191 million plus interest, fees and expenses. * The aggregate Allowed amount of Other Secured Claims will be approximately $600,000. * The aggregate Allowed amount of Other Priority Claims will be approximately $4.2 million. * The aggregate Allowed amount of General Unsecured Claims will be approximately $33 million. Treatment of Claims Under the Plan, DIP Facility Claims, Administrative Expense Claims and Priority Tax Claims will be paid in full and in cash. Holders of Pre-Petition Secured Revolver Claims will have their contractual rights altered pursuant to the Restructured Credit Agreement. Holders in this class are expected to recover 100% of their claims. On the effective date, Holders of Pre-Petition Secured Term Loan Claims will receive: * their pro rata share of the New PIK Debt with an aggregate principal amount of $30 million, and * their pro rata share of 100% of the New Common Stock of Reorganized Citation. Claimholders under this class are expected to recover 63% of their claims. Holders of Other Secured Claims, at the Debtors' options, will have their claims: * Reinstated, * satisfied by the Debtors' surrender of the collateral securing their Claim, * offset against, and to the extent of, the Debtors' claims against the Holder of the Claim or * otherwise rendered not impaired, except to the extent that the Reorganized Debtors and the holder agree to a different treatment. Holders of Other Secured Claims will recover 100% of their claims. To the extent that a holder of Other Priority Claims agrees to a different treatment, each holder will receive a distribution of Cash in an amount equal to their Claim, without interest. Claimants under this class will receive 100% of their claims. General Unsecured Creditors, estimated to recover 100% of their claims, at the Debtors' option, will have their claims: * reinstated and paid in Cash in the ordinary course of the Reorganized Debtors' business operations and not on the Effective Date, * offset against, and to the extent of, the Debtors' claims against the holder of the Claim or * otherwise rendered not impaired, except to the extent that the Reorganized Debtors and the holder agree to a different treatment. The Debtors relate that Existing Preferred Stock will be cancelled and holders will receive their pro rata share of 100% of the New Class A Warrants and 66-2/3% of the New Class B Warrants. Preferred Stock holders are estimated to have a 3% recovery. Holders of Existing Common Stock will receive their pro rata share of 33-1/3% of the New Class B Warrants. The Debtors did not provide an estimate on how much holders under this class will get. Finally, the Reorganized Debtors will retain the Equity Interests they hold in the Subsidiaries. About Citation Corporation Headquartered in Birmingham, Alabama, Citation Corporation -- http://www.citation.net/-- designs, develops and manufactures cast, forged and machined components for the capital and durable goods industries, including the automotive and industrial markets. Citation uses aluminum, steel, gray iron, and ductile iron as the raw materials in its various manufacturing processes. The Debtor and its debtor-affiliates previously filed for protection on Sept. 18, 2004 (Bankr. N.D. Ala. Case No. 04-08130). Michael Leo Hall, Esq., and Rita H. Dixon, Esq., at Burr & Forman LLP, represented the Debtors in their first bankruptcy. Judge Tamara O. Mitchell confirmed the company's Second Amended Joint Plan of Reorganization on May 18, 2005. The Debtor and 11 debtor-affiliates filed for their second bankruptcy on March 12, 2007 (Bankr. N.D. Ala. Case Nos. 07-01153 to 07-01162). David S. Heller, Esq., at Latham & Watkins LLP, and Michael Leo Hall, Esq., at Burr & Forman LLP, represent the Debtors. When the Debtors filed for their second bankruptcy petitions, they listed estimated assets and debts of more than $100 million. CKE RESTAURANTS: Moody's Rates $200 Million Senior Loan at (P)Ba2 ----------------------------------------------------------------- Moody's Investors Service has taken these rating actions for CKE Restaurant, Inc. Ratings raised are; - Corporate family rating upgraded to Ba3 from B1 - Probability of default rating upgraded to Ba3 from B1 - $105 million, 4.0% convertible senior subordinated notes, due October 1, 2023, upgraded to B2 / 95% / LGD-6 from B3 / 95% / LGD-6 Ratings assigned - $200 million guaranteed first lien senior secured revolver, due March 2012, rated (P)Ba2 / 31% / LGD-3 - $120 million guaranteed first lien term loan B, due 2013, rated (P)Ba2 / 31% / LGD-3 Ratings affirmed; - $250 million guaranteed first lien senior secured revolver, due May 1, 2007, rated Ba2 / 29% / LGD-2 - $230 million guaranteed first lien term loan B, due 2009, rated Ba2 / 29% / LGD-2 The outlook is stable The Ba3 corporate family rating reflects CKE's improved operating performance and stronger credit metrics driven by the relatively stable operating performance of Carl's Jr., improved operating performance of Hardee's, lower restaurant operating costs, and reduced debt levels, in addition to the company's reasonable scale, multiple concepts, and diversified day part. The ratings also recognize CKE's improved liquidity in light of its entering into a proposed new credit facility consisting of a six year $120 million term loan and five year $200 million revolver. However, the ratings also incorporate the challenges of continuing the turnaround at Hardee's while maintaining the operating performance at Carl's Jr., in addition to addressing the difficulties at La Salsa. Moody's also remains concerned with transaction patterns at all concepts, which remain relatively weak. The stable outlook reflects Moody's view that the operating performance of CKE's two core brands, Carl's Jr. and Hardee's, should continue to improve and debt levels will be prudently managed with debt protection metrics that would include, but not be limited to, leverage of around 4.0x, EBIT coverage of interest of about 2.5x, and retained cash flow to debt above 10% on a sustained basis. The stable outlook also expects the company will maintain adequate liquidity at all times with the ability to fund all anticipated requirements at least 18 month out on a continual basis. The ratings and outlook also anticipate that the CKE's accounting restatement is limited to the items already identified, that any deficiency in its reporting functions have been rectified, and there will be no delay in the filing of its public financial statements. Moody's will withdraw its ratings on CKE's current bank credit facility once it has been fully repaid with the proceeds from the proposed new facility. As is customary, Moody's ratings are subject to the receipt of final documentation CKE Restaurants, Inc., headquartered in Carpinteria CA, owns, operates, and franchises, approximately 3,160 quick-service and fast casual restaurants under the brand names Carl's Jr., Hardee's, and La Salsa Fresh Mexican Grill. Carl's Jr. has 394 company owned units and 678 franchised units located in the Western U.S., with a concentration in California, while Hardee's reported ownership of 701 units and franchised 1,244 with a concentration in the South Eastern U.S. La Salsa is a much smaller concept with about 55 company owned and 43 franchised units. For the last twelve month period ending August 2006, the company generated revenues of about $1.6 billion and operating income of approximately $108 million. CLEAR CHANNEL: Highfields Capital Increases Stake to 5% ------------------------------------------------------- Clear Channel Communications Inc. disclosed in a regulatory filing with the Securities and Exchange Commission dated March 15, 2007, that Highfields Capital Management LP now beneficially owns a 5% stake in the company, equivalent to 24,854,400 shares at $0.10 par value per share. Sarah McBride of The Wall street Journal relates that previously, Highfields Capital held about 3% of Clear Channel's outstanding shares. Boston, Mass.-based Highfields Capital is an investment management firm focused on identifying long-term value investments on behalf of public and private charitable foundations, school endowments and other institutional and private investors. Highfields Capital currently manages approximately $10 billion in investment funds. The increase, WSJ says, citing people familiar with the matter, indicates that the investment company wants more influence in a coming vote on a possible privatization of Clear Channel, which Highfields opposes. According to WSJ, Clear Channel, along with investors Bain & Co. and Thomas H. Lee, are offering $37.60 a share, but many investors, including Highfields, believe the company is worth more. Clear Channel shareholders of record as of March 23, 2007, are due to vote on the issue at the special meeting, which will be held on April 19, 2007. Highfields is Clear Channel's second-biggest holder, the Journal says. About Clear Channel Communications Based in San Antonio, Texas, Clear Channel Communications Inc. -- http://www.clearchannel.com/-- (NYSE:CCU) is a global leader in the out-of-home advertising industry with radio and television stations and outdoor displays in various countries around the world. Aside from the U.S., the company operates in 11 countries -- Norway, Denmark, the United Kingdom, Singapore, China, the Czech Republic, Switzerland, the Netherlands, Australia, Mexico and New Zealand. * * * Clear Channel's long-term local and foreign issuer credits carry Standard & Poor's BB+ rating. In addition, the company's senior unsecured debt and long-term issuer default ratings were placed by Fitch at BB- on Nov. 16, 2006. COOLBREEZE ACQUISITION: Moody's Assigns B2 Corporate Family Rating ------------------------------------------------------------------ Moody's Investors Service lowered the corporate family rating of Hunter Fan Company to B2 from B1, and affirmed the company's B2 probability of default rating. In addition, Moody's assigned a B2 corporate family rating and probability of default rating to Coolbreeze Acquisition Corp., the entity being formed to facilitate the acquisition of Hunter Fan Company, a B1 rating to the $220 million of new secured first-lien credit facilities and a Caa1 rating to the proposed new $75 million second-lien term loan facility. The rating outlook is stable. The ratings assigned are subject to no material change in the terms and conditions of the financing as advised to Moody's. Proceeds from the $295 million of new credit facilities will be used to fund the acquisition of Hunter Fan by affiliates of MidOcean Partners, including refinancing the existing $150 million term loan and $50 million revolving credit facilities (currently rated Ba3 by Moody's). The initial borrower under the proposed facilities will be Coolbreeze Acquisition Corp, an entity established by MidOcean Partners to facilitate the acquisition. It is expected that as soon as practical after closing that Hunter Fan Company will assume the obligations under the new credit facilities. Upon closing of this transaction, Moody's expects to withdraw ratings on the existing first lien credit facilities. The downgrade of Hunter Fan Company's corporate family rating reflects the increased leverage of the company following the proposed acquisition, and negative impact on its leverage and interest coverage metrics to levels consistent with a B2 rating. The ratings also reflect the company's moderate scale in the home furnishing/small appliance market, and high customer concentration with major home improvement retail chains. These aspects are partly mitigated by the company's leading market position in the branded ceiling fan industry under the "Hunter" and "Casablanca" brand names, the ability of the company to expand its product offerings away from reliance on the ceiling fan market, and experienced operating management who will remain with the company following this transaction. The B1 rating assigned to the first lien credit facilities reflects the company's probability of default rating of B2 and its loss given default assessment of LGD 3 (35%), and reflects these facilities' first lien position on the assets of the company and the level of junior capital support from unsecured creditors and the proposed second lien facility. The Caa1 rating for the second lien credit facilities reflects the company's probability of default rating of B2 and the loss given default assessment of LGD 5 (84%) which reflects the junior ranking of the second lien facility to the first lien credit facilities. The affirmation of the PDR of B2 reflects the introduction of the second lien term loan into the capital structure of this transaction. These ratings were assigned: Coolbreeze Acquisition Corp. * $145 million first-lien secured term loan at B1 (LGD 3 - 35%) * $15 million first-lien secured delayed draw term loan at B1 (LGD 3 -- 35%) * $60 million first-lien secured revolving credit facility at B1 (LGD 3 -- 35%) * $75 million second-lien secured term loan at Caa1 (LGD 5 -- 84%) * Corporate Family and Probability of Default Ratings at B2 This rating was lowered: Hunter Fan Company -- Corporate Family Rating to B2 from B1 This rating was affirmed: Hunter Fan Company -- Probability of Default Rating -- B2 Hunter Fan Company headquartered in Memphis, Tennessee, designs, engineers, sources and markets ceiling fans, home comfort appliances, and lighting products primarily under the "Hunter" and "Casablanca" brands. COVALENCE SPECIALTY: Inks Merger Agreement with Berry Plastics -------------------------------------------------------------- Covalence Specialty Materials Holding Corp. and Berry Plastics Group Inc. have entered into a definitive agreement pursuant to which Berry Group will merge with Covalence Holding in a stock- for-stock merger. After the merger, Ira Boots, Chairman and Chief Executive Officer of Berry Group, and Brent Beeler, Chief Operating Officer of Berry Group, will remain in the same roles with the combined company, which will be known as Berry Plastics Group, Inc. Berry Group and Covalence Holding expect the closing of the merger to occur in April 2007 and the transaction is subject to the receipt of required regulatory approvals. "We welcome the merger with Covalence, which will bring additional customers, products and skilled personnel to our company" Mr. Boots stated. "Focus will be placed on servicing our customers by utilizing all assets available to Berry, including the strength derived from our current ownership." "The combined company will benefit from enhanced diversity of end- markets, customers and products, and the increased scale will make Berry one of the largest plastic packaging companies in the world, while at the same time deleveraging our balance sheet," Mr. Boots continued. Immediately following the merger, Covalence Specialty Materials Corp. and Berry Plastics Holding Corporation, respective subsidiaries of Covalence Holding and Berry Group, will be combined as a direct subsidiary of New Berry Group. New Berry Holding will remain the primary obligor in respect of CSMC's Senior Subordinated Notes due 2016, Berry Holding's Second Priority Senior Secured Fixed Rate Notes due 2014 and Second Priority Senior Secured Floating Rate Notes due 2014. The outstanding credit facilities of CSMC and Berry Holding are expected to be refinanced at the time of the closing with a $400 million asset based revolving credit facility and a $1.2 billion senior secured term loan facility. Kip Smith, Chief Executive Officer of Covalence Holding, who will remain with the combined company running the Covalence businesses, stated "We are excited about the merger with Berry and the benefits the added scale and financial resources bring to our customers, employees, and suppliers. We look forward to partnering with Ira, Brent and their accomplished and seasoned management team to grow the business and capitalize on the abundant opportunities that this merger will create." "Berry and Covalence are each leaders in their respective markets and the combined company will be one of the highest margin, most diverse and attractive plastic packaging businesses in the world." said Joshua Harris, founding partner of Apollo Management, L.P. Mr. Harris continued, "This merger will provide substantial growth, cross-selling and synergy opportunities, and we look forward to working with the combined management team to continue Berry's remarkable record of over 15 years of consistent growth in revenue and profitability." In connection with the merger, CSMC is also terminating, effective [Mon]day, its exchange offer relating to the Covalence Notes. The exchange offer was previously scheduled to expire [Mon]day. All Covalence Notes tendered pursuant to the exchange offer will be promptly returned to their holders. It is intended that the exchange offer will recommence following preparation of pro forma financial information. About Covalence Specialty Headquartered in Princeton, New Jersey, Covalence Specialty Materials Corp. is predominantly a North American manufacturer of polyethylene-based plastic film, packaging products, bags, and sheeting in a wide range of sizes, gauges, strengths, stretch capacities, clarities and colors. End markets include Industrial, Building Products, Specialty/Custom, Institutional, Retail, and Flexible Packaging. Annual consolidated net revenue is approximately $1.7 billion. * * * As reported in the Troubled Company Reporter on Jan. 3, 2007, Standard & Poor's Ratings Services affirmed Covalence Specialty's 'B' corporate credit rating. COVALENCE SPECIALTY: Post $21.8MM Net Loss in Qtr. Ended Dec. 29 ---------------------------------------------------------------- Covalence Specialty Materials Corp. disclosed results for its first fiscal quarter ended Dec. 29, 2006. The company reported net revenue for the three months ended Dec. 29, 2006 of $366.7 million and a net loss for the same period of $21.8 million. After giving effect to the Acquisition Transaction, Adjusted EBITDA for the first fiscal quarter of 2007 was $8.4 million. Management believes that presenting this non- GAAP measure is important for investors to better understand the company's underlying operational and financial performance, to facilitate comparison of results between periods and to monitor the company's compliance with certain financial covenants in its credit facilities. First Quarter Results Net revenue for the three months ended Dec. 29, 2006 was $366.7 million, a decrease of $83.5 million, compared to $450.2 million in the first quarter of fiscal 2006. Net revenue for the three months ended Dec. 29, 2006 was impacted by lower volumes driven by a mild 2006 hurricane season, weak housing starts and continued efforts by customers to minimize inventories during a period of softening polyethylene resin pricing. Gross profit for the three months ended Dec. 29, 2006 was $24.2 million, a decrease of $40.5 million compared to $64.7 million in the first quarter of fiscal 2006. Gross profit was negatively impacted by lower sales volumes and one-time charges in our Plastics operating segment due to lower production and the correction of finished goods inventory levels. In addition, gross profit was also reduced by a $3.5 million increase in depreciation resulting from the purchase method of accounting attributable to the Acquisition Transaction. Excluding the purchase accounting adjustments and one-time charges in our Plastics operating segment described above, gross profit for the three months ended Dec. 29, 2006 would have been $29.6 million. Selling, general and administrative expenses for the three months ended Dec. 29, 2006 were $41.8 million, an increase of $8.3 million compared to $33.5 million in the first quarter of fiscal 2006. The increase was mainly the result of $8.6 million of additional depreciation and amortization expense from the purchase method of accounting attributable to the Acquisition Transaction. The increase was also attributable to an investment in corporate services for future growth, severance costs and general inflation. Operating loss for the three months ended Dec. 29, 2006 was $17.8 million, a decrease of $38.9 million compared to an operating profit of $21.1 million in the first quarter of fiscal 2006. The decrease was primarily driven by the factors described above. This decrease was partially offset by the elimination of charges and allocations from Tyco. Excluding the purchase accounting adjustments, one-time charges in our Plastics operating segment and severance costs described above, operating loss for the three months ended Dec. 29, 2006 would have been $2.2 million. "[The company's] first fiscal quarter Adjusted EBITDA was consistent with our previous guidance. As noted during our earnings call in December 2006, a soft polyethylene resin market, a mild 2006 hurricane season and continued efforts by customers to structurally reduce inventories together with increases in certain non-resin raw materials, freight and other conversion costs, resulted in a very challenging environment," said Kip Smith, President and Chief Executive Officer. "We continue to work to improve volume and profitability in all of our businesses and have already seen significant volume improvement in January and February 2007. Actions taken during the quarter including extended holiday plant shutdowns, aggressive inventory management and business process changes position us for meaningful improvement in the second fiscal quarter." A full-text copy of Covalence Specialty's Quarterly Period Ended Dec. 29, 2006 is available for free at http://ResearchArchives.com/t/s?1b6a About Covalence Specialty Headquartered in Princeton, New Jersey, Covalence Specialty Materials Corp. is predominantly a North American manufacturer of polyethylene-based plastic film, packaging products, bags, and sheeting in a wide range of sizes, gauges, strengths, stretch capacities, clarities and colors. End markets include Industrial, Building Products, Specialty/Custom, Institutional, Retail, and Flexible Packaging. Annual consolidated net revenue is approximately $1.7 billion. * * * As reported in the Troubled Company Reporter on Jan. 3, 2007, Standard & Poor's Ratings Services affirmed Covalence Specialty's 'B' corporate credit rating. CREST 2002-IG: S&P Lifts Rating on Class D Notes to BB+ ------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on the class B, C, and D notes issued by Crest 2002-IG Ltd., a static CDO of ABS transaction consisting primarily of CMBS and REIT debt obligations and managed by Structured Credit Partners LLC, and removed them from CreditWatch, where they were placed with positive implications Sept. 22, 2006. At the same time, the rating on the preferred shares was also raised, and the 'AAA' rating on the class A notes was affirmed. The raised ratings reflect an increase in the level of overcollateralization available to support the notes and an improvement in the overall credit quality of the assets in the collateral pool since the transaction was originated in May 2002. Since that time, the transaction has paid down approximately $59.521 million to the class A notes. According to the February 2007 monthly trustee report, the class A O/C ratio was 132.15%, versus a minimum of 115.00%, and compared with a ratio of 128.40% at close; the class B O/C ratio was 112.79%, versus a minimum of 105.00%, and compared with a ratio of 111.50% at close; the class C O/C ratio was 104.91%, versus a minimum of 102.00%, and compared with a ratio of 104.40% at close; and the class D O/C ratio was 102.41%, versus a minimum of 101.00%, and compared with a ratio of 102.20% at close. Ratings Raised and Removed from Creditwatch Positive Crest 2002-IG Ltd. Rating Balance (mil. $) ------ ---------------- Class To From Original Current ----- -- ---- -------- ------- B AA+ A-/Watch Pos 78.000 78.000 C A- BBB/Watch Pos 40.000 40.000 D BB+ BB/Watch Pos 14.000 14.000 Rating Raised Crest 2002-IG Ltd. Rating Balance (mil. $) ------ ---------------- Class To From Original Current ----- -- ---- -------- ------- Preferred shares BB BB- 14.000 14.000 Rating Affirmed Crest 2002-IG Ltd. Balance (mil. $) ---------------- Class Rating Original Current ----- ------ -------- ------- A AAA 514.000 454.478 CUT-RATE PHARMACY: Case Summary & 22 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Cut-Rate Pharmacy Solutions, Inc. 2665 Cleveland Avenue, Suite 204 Fort Myers, FL 33901 Bankruptcy Case No.: 07-01958 Chapter 11 Petition Date: March 14, 2007 Court: Middle District of Florida (Fort Myers) Judge: Alexander L. Paskay Debtor's Counsel: Philip L. Burnett, Esq. Philip L. Burnett, P.A. P.O. Box 2258 Fort Myers, FL 33902 Tel: (239) 334-1922 Fax: (239) 334-7799 Debtor's financial condition as of March 9, 2007: Total Assets: $1,629,085 Total Debts: $696,728 Debtor's 22 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $227,384 Special Procedures Mail Code 5370 P.O. Box 17167 Medline Industries $46,904 P.O. Box 92301 Chicago, IL 60675 DOR $36,686 P.O. Box 6668 Tallahassee, FL 32314-66 Cleveland Medifirst $26,816 Greater Bay Capital $21,185 William McMahon $19,474 Florida Retail Fed $19,440 Bclbs $11,627 Medical Specialties $7,493 Sunrise Medical $6,112 James Wesolowski, CPA $5,779 Pride Mobility $5,700 Steven J. Polhemus P.A. $5,857 Baxter Healthcare $4,880 MSW Holdings $3,624 Metropolitan Life $4,277 PPS Plus Software $3,591 Wallenbrock Office $3,128 T3 Communications $3,024 Invacare Supply Group $2,976 Waste Management $578 Ecin $480 CVS CORP: Shareholders Approve Merger of Equals with Caremark Rx ---------------------------------------------------------------- CVS Corporation said its shareholders have voted to approve the company's merger with Caremark Rx, Inc. at the special shareholder meeting held yesterday March 15, 2007. Caremark shareholders are scheduled to vote on the transaction today, March 16, 2007. "We are extremely pleased our shareholders strongly supported our proposed merger with Caremark," Tom Ryan, CVS Chairman, President and CEO, said. "This landmark combination will uniquely position CVS/Caremark to deliver new products and services that will make a meaningful difference for both employers seeking to control costs and consumers seeking greater access and choice as they look to stretch their healthcare dollar further. We look forward to Caremark shareholders approving the transaction tomorrow and getting to work on delivering the significant financial and strategic benefits that only this deal can provide." 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 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 CORP: Glass Lewis Advises Caremark Stockholders to Vote No -------------------------------------------------------------- Glass, Lewis & Co., a leading independent voting advisory service, reiterated that Caremark RX, Inc. stockholders should vote against the proposed acquisition of Caremark by CVS Corporation at Caremark's special meeting of stockholders to be held today, March 16, 2007. In its recommendation, Glass Lewis stated: "As discussed in our initial report, we are not convinced that the process used by the Company and board resulted in shareholders receiving as big a stake as they deserved in the proposed, combined entity." "Though the incremental bumps to the cash dividend have been noted, CVS' ability to raise its offer multiple times over its original agreement calls into question the negotiating skills of the Caremark directors. We remind investors that this board endorsed the original agreement, which lacked any cash dividend. In this instance, we believe investors should be skeptical of the board's opinion regarding the value of Caremark. Blindly following the Caremark directors' lead would have left shareholders at least $3.3 billion poorer." "Given these considerations, we feel the CVS deal should be rejected based on what appears to have been a flawed negotiating process. ... we feel investors should remain concerned that the board of Caremark has not done all it could to ensure that shareholders stand to receive the highest value in any sale or merger of a Company." "That CVS was allowed to negotiate from the enviable position as the sole bidder for Caremark should concern investors." "By rejecting the current CVS proposal, shareholders can better ensure they are receiving maximum value by restarting and opening the process. We also believe the market can bear a higher price, as evidenced by Express Scripts Inc. current superior offer." "Caremark did not undertake a process that ensured it would receive 'best and final' proposals from all suitors, including preferred strategic partners, in our opinion." "We are pleased Glass Lewis has reiterated its recommendation that Caremark stockholders vote AGAINST the acquisition of Caremark by CVS," George Paz, president, chief executive officer and chairman of Express Scripts, commented. "Clearly Glass Lewis recognizes that the Caremark Board ran a flawed process and that value destruction is inherent in the proposed CVS transaction. We continue to focus on creating the best long term value for Express Scripts and Caremark stockholders. Meanwhile, Caremark continues press ahead with a flawed process, leaving the best interests of their stockholders behind." Skadden, Arps, Slate, Meagher & Flom LLP, Arnold & Porter LLP, and Young Conaway Stargatt & Taylor, LLP are acting as legal counsel to Express Scripts, and Citigroup Corporate and Investment Banking and Credit Suisse are acting as financial advisors. MacKenzie Partners, Inc. is acting as proxy advisor to Express Scripts. As reported in the Troubled Company Reporter on March 15, 2007, Institutional Shareholders Services Inc. recommended that Caremark Rx, Inc. shareholders support the proposed merger with CVS. 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. CWALT INC: Moody's Rates Class M-10 Certificates at Ba2 ------------------------------------------------------- Moody's Investors Service has assigned a Aaa rating to the senior certificates issued by Countrywide Alternative Loan Trust 2007- HY3, and ratings ranging from Aa1 to Ba2 to subordinate certificates in the deal. The securitization is backed by Countrywide Home Loans, Inc. originated, adjustable-rate, Alt-A residential mortgage loans acquired by Countrywide Financial Corporation. The ratings are based primarily on the credit quality of the loans and on the protection against credit losses provided by subordination, overcollateralization, excess spread, and an interest rate cap. Moody's expects collateral losses to range from 0.85% to 1.05%. Countrywide Home Loans Servicing LP will act as master servicer of the loans in the deal. The complete rating actions are: Countrywide Alternative Loan Trust 2007-HY3 Mortgage Pass-Through Certificates, Series 2007-HY3 * Cl. 1-A-1, Assigned Aaa * Cl. 1-A-2, Assigned Aaa * Cl. 2-A-1, Assigned Aaa * Cl. 2-A-2, Assigned Aaa * Cl. 3-A-1, Assigned Aaa * Cl. 3-A-2, Assigned Aaa * Cl. A-R, Assigned Aaa * Cl. M-1, Assigned Aa1 * Cl. M-2, Assigned Aa2 * Cl. M-3, Assigned Aa3 * Cl. M-4, Assigned A1 * Cl. M-5, Assigned A2 * Cl. M-6, Assigned A3 * Cl. M-7, Assigned Baa1 * Cl. M-8, Assigned Baa2 * Cl. M-9, Assigned Baa3 * Cl. M-10, Assigned Ba2 DAVID KALKSTEIN: Case Summary & 12 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: David Kalkstein 6 Gunning Lane Gladwynne, PA 19035 Bankruptcy Case No.: 07-11391 Chapter 11 Petition Date: March 6, 2007 Court: Eastern District of Pennsylvania (Philadelphia) Debtor's Counsel: Alan L. Frank, Esq. Alan L. Frank Law Associates, P.C. 8380 Old York Road, Suite 410 Elkins Park, PA 19027 Tel: (215) 935-1000 Estimated Assets: $1 Million to $100 Million Estimated Debts : $1 Million to $100 Million Debtor's 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ 555 Associates Business Lease $720,000.00 555 City Avenue Bala Cynwyd, PA 19007 Chase Line of Credit $124,338.00 PO Box 260161 Baton Rogue, LA 70826-0161 BPG Office Partners III Business Lease $44,800.00 PO Box 51089 Philadelphia, PA 19175-0829 Donato Spivante Lease $24,500.00 Martin Sussman Loan $13,000.00 Davia Construction Labor $10,500.00 Capital One Credit Card $8,524.00 Mckeon Inc. Services $7,585.00 Capital One, FSB Credit Card $6,400.00 Crocker and Breslin Service $5,147.55 Architects Yerkers & Company Services $3,000.00 Sunoco Heating oil $700.00 DOBSON COMMUNICATIONS: Fitch Affirms B- Issuer Default Rating ------------------------------------------------------------- Fitch Ratings assigns a rating of 'B+/RR2' to American Cellular Corporation's planned $1.05 billion senior secured credit facility. The ratings for Amcell's $250 million credit facility will be withdrawn after the bank agreement closes. Fitch also downgrades the senior unsecured notes at AmCell to 'CCC+/RR5' from 'B/RR3' and the senior subordinated notes to 'CCC/RR6' from 'CCC+/RR5'. In addition, Fitch affirms the 'B-' Issuer Default Rating for AmCell, Dobson Cellular Systems Inc. and the parent company, Dobson Communications Corp. The Rating Outlook is Stable. The IDR ratings at Dobson reflect its current leverage, smaller scale as a regional operator, and the competitive operating environment. Until the nature of the reform is certain, Fitch also believes a higher level of event risk is present with potential universal service funding (USF) reform since USF disbursements are a material percentage of total cash flow. Positive offsets to these concerns include significantly improved operating metrics at Dobson primarily driven by the GSM migration as well as the significant coverage and quality improvements made to the company's GSM network. Performance at AmCell has improved from a year ago but not to the extent of the consolidated results at Dobson. In February 2007, Amcell announced a cash tender for its $900 million 10% senior notes and a consent solicitation to amend the terms of the notes while initially expecting to finance the tender with proceeds from a planned $850 million credit facility and a $425 million notes offering that was later cancelled. With the company changing its financing plans, Amcell increased the size of its credit facilities by $200 million to a $1.05 billion senior secured credit facility, which consists of a five-year, $75 million senior secured revolving credit facility, a seven-year, $900 million senior secured term loan B and a seven-year, $75 million senior secured delayed draw term loan. er the planned credit facility will be used to repurchase a minimum of $675 million of the $900 million in 10% unsecured notes at Amcell that are validly tendered and any outstandings under the existing $250 million credit facility. As a result of the expected drawdown on the credit facilities, LTM leverage will increase slightly at a consolidated Dobson to approximately 6.4 times. The consent solicitation seeks to amend covenants with the 10% notes including restricted payments and additional indebtedness. Dobson's consolidated liquidity is stable based on its cash position and lack of near-term maturities. Cash at the end of the fourth quarter of 2006 was approximately $117 million. Dobson's nearest material maturity is not until 2011. For 2006, Dobson reported $43 million of free cash flow with expectations to generate in excess of $90 million in 2007. The ratings for AmCell's senior unsecured notes were downgraded by two notches to reflect the diminished recovery prospects. These ratings were affected by this action: American Cellular Corporation -- $250 million senior secured credit facility withdrawn (when new credit facility closes); -- $1.05 billion senior secured credit facility 'B+/RR1'; -- $900 million senior unsecured notes to 'CCC+/RR5' from 'B/RR3'; -- $18.5 million senior subordinated notes to 'CCC/RR6' from 'CCC+/RR5'. These ratings were affirmed by this action: American Cellular Corporation (AmCell) -- Issuer default rating (IDR) 'B-'; Dobson Communications Corp. -- Issuer default rating (IDR) 'B-'; -- $160 million senior floating rate notes 'CCC+/RR5'; -- $150 million senior convertible debentures 'CCC+/RR5'; -- $420 million senior notes 'CCC+/RR5'; -- $136 million convertible preferred stock 'CCC-/RR6'. Dobson Cellular Systems Inc. -- Issuer default rating (IDR) 'B-'; -- $75 million senior secured credit facility 'BB-/RR1'; -- $500 million first priority secured notes 'BB-/RR1'; -- $325 million second priority secured notes 'BB-/RR1'. EMPORIA PREFERRED: S&P Rates $18.5 Million Class E Notes at BB -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Emporia Preferred Funding III Ltd./Emporia Preferred Funding III LLC's $375.83 million floating-rate notes due 2021. The preliminary ratings are based on information as of March 14, 2007. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The expected commensurate level of credit support in the form of subordination to be provided by the notes junior to the respective classes; -- The cash flow structure, which was subjected to various stresses requested by Standard & Poor's; -- The experience of the collateral manager; and -- The legal structure of the transaction, including the bankruptcy remoteness of the issuer. Preliminary Ratings Assigned Emporia Preferred Funding III Ltd./ Emporia Preferred Funding III LLC Class Rating Amount (mil. $) ----- ------ --------------- A-1 AAA 100.000 A-2* AAA 40.000 A-3** AAA 132.580 B AA 26.845 C A 37.170 D BBB 20.650 E BB 18.585 Preferred equity NR 39.000 * Class A-2 consists of revolving notes. ** Class A-3 consists of delayed draw notes. NR-Not rated. ENERGY PARTNERS: Inks Financing Agreement with Bank of America -------------------------------------------------------------- Energy Partners Ltd. has entered into a Commitment Letter dated Mar. 13, 2007, pursuant to which Banc of America Securities LLC, Banc of America Bridge LLC and Bank of America, N. A. have committed to: * provide sufficient funds to finance the repurchase of up to $200 million of the company's outstanding common stock, * refinance the company's bank credit facility, and * refinance the company's 8-3/4% Senior Notes due 2010 through a concurrent debt tender offer and consent solicitation. The commitment provides for: a. a $300 senior secured revolving credit facility, of which not more than $165 million may be drawn at the closing and b. at least $450 million in gross proceeds from the issuance and sale of notes and convertible notes or, alternatively, at least $450 million of senior unsecured bridge loans as interim financing. The commitments are subject to various conditions, including customary closing conditions. 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 Mar. 14, 2007, Moody's Investors Service downgraded Energy Partners, Ltd.'s Corporate Family Rating to B3 from B2 and its Probability of Default Rating to B3 from B2 following the conclusion of the company's strategic alternative process. ENTERCOM RADIO: Moody's Cuts Rating on 7.625% Senior Notes to B1 ---------------------------------------------------------------- Moody's Investors Service has downgraded Entercom Radio LLC's corporate family rating to Ba2 from Ba1 and downgraded its 7.625% senior subordinated notes from Ba2 to B1. The outlook has been revised to stable. This concludes the review Moody's first initiated on August 22, 2006. Entercom Radio, LLC's Ba2 corporate family rating reflects the company's increased leverage, propensity for returning capital to shareholders, concentration of revenues in a few markets (5 markets accounted for more than 50% of revenues during the year ended 12/31/2006) and the highly competitive nature of the larger markets. The rating also reflects the inherent cyclicality of the advertising market and Moody's belief that radio is a mature industry with modest growth prospects. Entercom's rating is supported by its geographic and format diversity and strong EBITDA margins. The rating is further supported by its local market focus (approximately 77% of net revenues in 2006 were from local advertising). Ratings Downgraded: Entercom Radio, LLC * Corporate Family Rating, Ba1 to Ba2 * Probability-of-default rating, Ba1 to Ba2 * 7.625% senior subordinated notes, Ba2 (LGD 6, 92%) to B1 (LGD 6, 92%) The outlook is stable. Entercom Radio, LLC, headquartered in Bala Cynwyd, Pennsylvania, is a radio broadcaster with more than 100 radio stations clustered in 23 markets across the country. FASSBERG CONSTRUCTION: Confirmation Hearing Set for March 27 ------------------------------------------------------------ The United States Bankruptcy Court for the Central District of California has conditionally approved the Disclosure Statement accompanying Fassberg Construction Company's Plan of Reorganization. Final approval is set for March 27, 2007, at the same time as the hearing on the confirmation of the Debtor's Plan. The Debtor filed its Fourth Amended Disclosure Statement on Feb. 7, 2007. The objective of the Debtor's Chapter 11 Plan is to pay administrative claimants, U.S. Trustee fees, priority creditors, and allowed secured, bonded, and non-bonded claims. Bonded claims are claims of sub-contractors to Fassberg on bonded projects. These creditors are able to assert claims directly against Fidelity & Deposit Company of Maryland under performance or payment bonds. The total amount of bonded claims is $231,756. Non-bonded are the unsecured claims of creditors who hold general claims against Fassberg based on the sale of goods and delivery of services. The total amount of non-bonded claims ranges from $1.6 million to $12.7 million. Fidelity's secured claim is a partially unliquidated claim. Total exposure may exceed $16 million but the anticipated loss is less than $10 million. Distribution to administrative claimants, priority creditors, and bonded creditors will be made from advances by Fidelity & Deposit Company of Maryland and from recoveries into the estate. Distribution to non-bonded creditors will be made from recoveries into the estate with Fidelity and Abraham Fassberg not sharing in the first $150,000 distributed or expended from trust assets. Mr. Fassberg, the 100% shareholder, will retain stock ownership. As reported by the Troubled Company Reporter on October 12, 2006, distribution to the Debtor's creditors under the Amended Plan will be funded by: a) any recoveries from avoidance actions on non-bonded project funds; b) the Debtor's malpractice claim against Paul Lax; c) any recovery of contract sums in the Debtor's litigation with Corteen Village LP; and d) Fidelity & Deposit Company of Maryland, who will be a source of capital but only in the form of payments by Fidelity under payment bonds or cash collateral advanced by Fidelity. Disbursements will be made by Fidelity to cover Priority Taxes, Class 2 bonded claims and administrative claims of the estate. A Creditors' Trust will be established to prosecute avoidance actions on non-bonded jobs, and accept any recoveries from the estate on account of claims retained by the estate. The Trust will be administered by three unpaid trustees: two will be appointed by the Official Committee of Unsecured Creditors and one will be appointed by Mr. Fassberg. Mr. Fassberg will continue to serve as president and chief executive officer. He will pay $1,000 per quarter as long as the Creditors' Trust still exists, but for no longer than five years. A full-text copy of the Debtor's Fourth Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/Fassberg About Fassberg Construction Headquartered in Encino, California, Fassberg Construction Company is a full service general contracting and construction management firm. The company filed for chapter 11 protection on April 1, 2005 (Bankr. C.D. Calif. Case No. 05-11957). Douglas M. Neistat, Esq., at the Law Offices of Greenberg & Bass, serves as counsel in the Debtor's bankruptcy case. David B Golubchik, Esq., at Levene, Neale, Bender, Rankin & Brill LLP, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it had assets of $15,267,175 and debts of $6,758,113. GALE FORCE: S&P Rates $21.6 Million Class E Notes at BB ------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Gale Force 3 CLO Ltd./Gale Force 3 CLO Corp.'s $570.5 million floating-rate notes due April 2021. The preliminary ratings are based on information as of March 14, 2007. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The expected commensurate level of credit support in the form of subordination to be provided by the notes junior to the respective classes, and by the income notes and overcollateralization; -- The cash flow structure, which was subjected to various stresses requested by Standard & Poor's; and -- The legal structure of the transaction, including the bankruptcy remoteness of the issuer. Preliminary Ratings Assigned Gale Force 3 CLO Ltd./Gale Force 3 CLO Corp. Class Rating Amount (mil. $) ----- ------ --------------- A-1* AAA 300.0 A-2* AAA 143.3 B-1 AA 32.4 B-2 AA 12.0 C A 26.1 D BBB 27.6 E BB 21.6 Combination notes** BB 7.5 Income notes NR 54.1 * Class A contains a variable-funding note. ** The combination notes consist of the class E note component and the income note component. NR - Not rated. GE COMMERCIAL: Fitch Holds Low-B Ratings on Five Cert. Classes -------------------------------------------------------------- Fitch Ratings upgrades GE Commercial Mortgage Corporation, series 2003-C2 as: -- $26.6 million class D to 'AAA' from 'AA'; -- $14.8 million class E to 'AA+' from 'AA-'; -- $14.8 million class F to 'AA-'from 'A+'. In addition, Fitch affirms the ratings on these classes: -- $26.5 million class A-1 'AAA'; -- $165.1 million class A-2 'AAA'; -- $54.3 million class A-3 'AAA'; -- $406.1 million class A-4 'AAA'; -- $271 million class A-1A 'AAA'; -- Interest-only class X-1 'AAA'; -- Interest-only class X-2 'AAA'; -- $35.5 million class B 'AAA'; -- $14.8 million class C 'AAA'; -- $14.8 million class G 'A'; -- $14.8 million class H 'BBB+'; -- $19.2 million class J 'BBB-'; -- $7.4 million class K 'BB+'; -- $8.9 million class L 'BB'; -- $4.4 million class M 'B+'; -- $7.4 million class N 'B'; -- $3 million class O 'B-'; -- $3.3 million class BLVD-1 'A'; -- $2.5 million class BLVD-2 'A-'; -- $4.5 million class BLVD-3 'BBB+'; -- $3.5 million class BLVD-4 'BBB'; -- $8 million class BLVD-5 'BBB-'. Fitch does not rate $20.7 million class P certificates. The rating upgrades reflect increased credit enhancement levels due to scheduled amortization and the additional defeasance of six loans (3.3%) since Fitch's last rating action. In total, eighteen loans (15%) have defeased, including one (1.9%) of the top ten loans. As of the February 2007 distribution date, the pool's aggregate certificate balance has decreased 4.5% to $1.15 billion from $1.21 billion at issuance. Currently, three assets are in special servicing with projected losses (1%). The largest asset (0.5%) is an office property in Golden, Colorado, which transferred in October 2006 due to a decline in occupancy to 16% from the loss of two major tenants. The second specially serviced asset (0.3%) is a self-storage facility in New Orleans, Louisiana, that sustained damage from hurricanes Katrina and Rita. The special servicer is working to stabilize the property. The third asset (0.24%) is a multifamily property located in Louisville, New York, and is real estate-owned (REO). The special servicer is actively marketing the property for sale. There are two loans in the transaction that maintain their investment grade credit assessment based on stable performance: DDR Portfolio (6.3%) and The Boulevard Mall (4%). The DDR Retail portfolio, the largest loan in the pool (6.3%), is secured by seven retail properties, with a total of 1.8 million square feet (sf). The properties are located in Indiana, Ohio, California, Virginia and Florida. Combined third quarter 2006 occupancy was 98% for the portfolio. The Boulevard Mall (4%) is secured by a 1.2 million sf regional mall in Las Vegas, Nevada, of which 587,170 sf represents collateral. The A note has been divided into two pari passu notes A-1 ($45.7 million) in this trust and A-2, which is securitized in GMAC 2003-C2. The B-Note, a $21.8 million non-pooled portion of the loan, is also in this trust and collateralizes classes BLVD-1 through BLVD-5. Occupancy was 95% as of third quarter 2006, up from 93% at issuance. GENERAL MOTORS: Shifts 20% of Pension Assets from Stocks to Bonds ----------------------------------------------------------------- General Motors Corp. said Wednesday it was shifting 20% of its pension assets to bonds from stocks in a bid to protect the assets of plans overfunded by $17.1 billion, Reuters reports. According to the report, the automaker's pension plans will now be invested about 52% in global bonds, 29% in global equity, 8% in real estate and 11% in alternative investments. GM, the source says, had a 15% return on pension assets in 2006, well ahead of general market performance and an improvement on the strong 13% return on assets in 2005. With the shift of asset allocation, Reuters relates that GM lowered its expected return on assets for 2007 to 8.5%, down from the previous assumption of a 9% return. The automaker had undertaken the asset shift at the end of 2006 and early 2007, Reuters says, citing company's Chief Financial Officer Fritz Henderson. The shift is intended to reduce the expected volatility of asset returns in the plan's funded status, and lower the probability of any future funding requirements," Mr. Henderson said in the report. GM, which reported lower net loss for 2006, to $2.0 billion from a net loss of $10.4 billion in 2005, earlier said that it agreed to pay approximately $1 billion in settlement charges to GMAC Financial Services by the end of the first quarter in relation to a change in the lending arm's balance sheet. The cash settlement is related to the impact that problems in the subprime mortgage segment, which focuses on borrowers with low credit scores, have had on GMAC's book value, The Wall Street Journal said, citing people familiar with the settlement. 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: DBRS Holds Rating on Long-Term Debt at B Negative ----------------------------------------------------------------- Dominion Bond Rating Service confirmed the ratings of General Motors Corporation and General Motors of Canada Limited at B and R-5 and the trends remain Negative. General Motors Corp.'s confirmed ratings: * Commercial Paper Confirmed R-5 Neg * Convertible Debentures Confirmed B Neg * Ind. Dev. Empower. Zone Rev. Bds., S2004 (Issued by NYC Ind. Dev. Agency, Guar. by GMC) Confirmed B Neg * Long-Term Debt Confirmed B Neg General Motors of Canada Limited confirmed ratings: * Commercial Paper Confirmed R-5 Neg * Long-Term Debt Confirmed B Neg The rating actions reflect the fact that GM's financial profile remains weak despite improved results at its North American automotive operations. The Negative trends indicate that the company continues to face considerable headwinds in its recovery. GM has reported stronger results for the fourth quarter of 2006, reflecting the progress made by the company in restructuring its Automotive business, particularly in North America where the company's Automotive operations were profitable again. Net income, excluding special items, at GMNA, its problematic segment, was almost breakeven compared with a $1.4 billion loss in the prior-year period. The progress in structural cost reductions was the key driver, and an improved product mix was also a contributing factor. However, unit volume sales continued to decline and the resultant low capacity utilization remains a concern. GM was also affected by a loss at GMAC LLC, its former wholly owned finance subsidiary. Weaknesses in the "sub-prime" mortgage market in the United States have depressed the performance of the mortgage operations of GMAC, which reported a large loss for the quarter. GM achieved positive operating cash flow, on an adjusted basis, for the quarter, another favourable development. Liquidity at the company remains above average, with $26.4 billion in cash and short-term marketable securities at the end of 2006. DBRS believes that GM should have no problem funding its normal operations and restructuring initiatives. GM sold a 51% interest of GMAC LLC to a consortium led by Cerberus Capital Management on Nov. 30, 2006. As a result of the weak performance at GMAC, GM will refund approximately $1 billion to GMAC, in the form of a capital contribution, to restore GMAC's adjusted tangible equity balance as of Nov. 30, 2006 to the $14.4 billion level that was agreed upon in the sale agreement. DBRS believes that this unexpected payment, although a negative, would not have a material impact on the company's ability to meet its funding needs. GM has also announced that it has restated its stockholders' equity as of Dec. 31, 2001 by $245 million related to deferred tax liabilities and taxation of foreign currency transactions. In addition, the company had also restated its financial statements for 2002 through to the third quarter of 2006, largely due to hedge accounting. The adjustments had no impact on cash flow for any of the restated periods. However, similar to last year, these restatements may lead to issues with various existing financing agreements such as sale/leasebacks and leases. Nevertheless, DBRS believes that, based on the experience in 2006, the current restatements are not likely to cause problems for GM. Despite the recent improvement, DBRS notes that the company's financial profile remains weak. GM still faces significant headwinds to turn around its North American Automotive operations. Challenges affecting GM include: 1. Labour negotiations at Delphi Corporation, GM's largest parts supplier and a former subsidiary, are still ongoing, although labour tension at Delphi has eased significantly recently, reducing the odds of an extended strike but the risk still exists. 2. GMNA has been ineffective in stopping its market share decline. Stabilizing market share is critical to GMNA's turnaround. 3. Capacity utilization at GMNA remains unsatisfactory despite its ongoing downsizing efforts. 4. The large legacy cost burden, high wage rates and employee benefit costs and the costly "jobs bank" for temporarily laid off workers make GMNA one of the highest cost automobile manufacturers. The restrictive labour contract and a large number of inflexible production lines also limit GMNA's ability to improve operating efficiency. 5. GMNA used to benefit from price concessions from suppliers. With weakening financial health at most parts suppliers, as evidenced by a number of bankruptcy filings recently, further price concessions would be difficult to achieve. Moreover, prices from some weak suppliers are more likely to rise to protect the supply base. In addition, the continuing high commodity prices further add to GMNA's cost base. DBRS notes that there are a number of positive developments supporting the current ratings. GM is on track to achieve its structural cost reduction target of $9 billion in 2007. The reception of the new models has been encouraging, and a strengthening product cadence should help GM to stabilize its market share. The company continues to have an above-average liquidity position. DBRS notes that, going forward, GM's ratings are largely dependant on the continuing progress at GMNA, which has become more difficult due to the high risk of a slowdown in vehicle demand in North America due to a sharp decline in the housing market, still-high gasoline prices and high interest rates. The upcoming contract negotiations with the UAW in September 2007 will be another key event affecting GMNA. A lack of meaningful progress in GMNA would likely lead to downgrades of the current ratings. GLACIER FUNDING: Fitch Holds BB Rating on $4 Mil. Class D Notes --------------------------------------------------------------- Fitch affirms five classes of notes issued by Glacier Funding CDO II, Ltd. These affirmations are the result of Fitch's review process and are effective immediately: -- $293,335,668 class A-1 notes 'AAA'; -- $70,000,000 class A-2 notes 'AAA'; -- $65,750,000 class B notes 'AA'; -- $18,940,258 class C notes 'BBB'; and -- $4,000,000 class D notes 'BB'. Glacier II is a collateralized debt obligation that closed Oct. 12, 2004, and is managed by Terwin Money Management, LLC. Glacier II exited its substitution period in February 2007 and currently contains about 83.8% residential mortgage-backed securities in its portfolio, with other diversified structured finance assets & real-estate investment trust (REIT) debt comprising the remaining portion. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. Since Fitch's last rating action in February 2006 the collateral has continued to exhibit stable performance. The weighted average rating factor has remained stable at 3.5 as of the most recent trustee report dated Feb. 8, 2007. All overcollateralization ratios have increased slightly since Fitch's last review and remain passing their minimum covenants. The interest coverage ratios have decreased slightly since the last review, but are still above their respective trigger levels. As of the most recent trustee report there were no defaulted assets, and approximately 3% of the portfolio was rated below 'BBB-'. The ratings of the class A-1, class A-2, and class B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class C and class D notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. GOODYEAR TIRE: Jamaican Unit Reports $120 Million in Losses ----------------------------------------------------------- Goodyear Jamaica Ltd., The Goodyear Tire & Rubber Co.'s Jamaican subsidiary, has lost an estimated $120 million from the recent fire at its Spanish Town Road plant, Radio Jamaica reports. Goodyear Jamaica said in its audited financial statements for 2006 that inventories totaling $120 million and office equipment that cost $250,000 were lost in the fire. Goodyear Jamaica told Radio Jamaica that the inventories and office equipment were insured through Goodyear Tire's Global Insurance Policy. Goodyear Jamaica's revenue increased by $122 million to $1.3 billion in 2006, from 2005. However, a 20% boost in the cost of sales brought down its profit to $25.2 million in 2006, compared to US$73 million in 2005, Radio Jamaica states. About The Goodyear Tire & Rubber Company Headquartered in Akron, Ohio, The Goodyear Tire & Rubber Company (NYSE: GT) -- http://www.goodyear.com/-- is the world's largest tire company. The company manufactures tires, engineered rubber products and chemicals in more than 90 facilities in 28 countries. Goodyear Tire has marketing operations in almost every country around the world including Chile, Colombia, Guatemala and Peru in Latin America. Goodyear employs more than 80,000 people worldwide. * * * As reported in the Troubled Company Reporter on Jan. 12, 2007, Moody's Investors Service affirmed Goodyear Tire & Rubber Company's Corporate Family Rating of B1. Ratings on Goodyear's existing secured and unsecured obligations were also affirmed as was the company's Speculative Grade Liquidity rating of SGL-2. The outlook was reverted to stable from negative. As reported in the Troubled Company Reporter on Jan. 9, 2007, Fitch Ratings affirmed ratings for The Goodyear Tire & Rubber Company including its 'B' Issuer Default Rating and removed the ratings from Rating Watch Negative. As reported in the Troubled Company Reporter on Jan. 8, 2007, Standard & Poor's Ratings Services affirmed its 'B-' ratings on the class A-1 and A-2 certificates from the $46 million Corporate Backed Trust Certificates Goodyear Tire & Rubber Note-Backed Series 2001-34 Trust. The ratings were removed from CreditWatch, where they were placed with negative implications on Oct. 24, 2006. GOODYEAR TIRE: Names Kramer as North American Tire Biz President ---------------------------------------------------------------- Richard J. Kramer has been appointed president of the Goodyear Tire & Rubber Company's North American Tire unit, effective immediately. Mr. Kramer succeeds Jonathan D. Rich, 51, who is leaving the company to pursue other leadership options. Currently executive vice president and chief financial officer for Goodyear, Mr. Kramer, 43, also will continue as CFO until the company names a replacement. The company disclosed that Jonathan D. Rich was leaving the company to pursue other leadership options. Mr. Rich had served as President of the company's North American Tire unit since December 2002. Mr. Kramer joined Goodyear in March of 2000 and was elected an officer of the company as vice president, corporate finance. He became vice president of finance for the North American Tire business in July of 2002 and was promoted to senior vice president, strategic planning and restructuring in August of 2003. In May of 2004 Kramer became chief financial officer. "Rich Kramer has demonstrated outstanding business leadership at every level in his career and has earned the respect of his peers, his associates and Wall Street," Robert J. Keegan, Goodyear chairman and chief executive officer, said. "Rich became our chief financial officer under very challenging circumstances, made courageous value-creating decisions, recruited top talent, and built a strong finance team." Mr. Keegan said that in Mr. Kramer's time in North American Tire as that business' chief financial officer, he helped build the business platforms for our improvement. "He knows the business, knows the customers and understands the challenges," Mr. Keegan said. "I believe Rich is the ideal leader to take the North American Tire business to the next level of performance. "At the same time, I want to thank Jon Rich for his outstanding service to the company and the significant contributions that he made in helping to create the foundation for the future success of the North American business," Mr. Keegan added. "Jon assembled a strong, capable team that has earned the respect of our customers in a challenging environment." Mr. Rich was elected president of Goodyear Chemical in August of 2001 after joining the company in September of 2000. He was named president of North American Tire in December of 2002. Prior to joining Goodyear, Mr. Rich served in various senior management roles at General Electric where he worked for 18 years. A native of Cleveland, Mr. Kramer received a bachelor of science in business administration degree from John Carroll University in Cleveland in 1986. Prior to joining Goodyear he spent 13 years with PricewaterhouseCoopers. About The Goodyear Tire & Rubber Company Headquartered in Akron, Ohio, The Goodyear Tire & Rubber Company (NYSE: GT) -- http://www.goodyear.com/-- is the world's largest tire company. The company manufactures tires, engineered rubber products and chemicals in more than 90 facilities in 28 countries. Goodyear Tire has marketing operations in almost every country around the world including Chile, Colombia, Guatemala and Peru in Latin America. Goodyear employs more than 80,000 people worldwide. * * * As reported in the Troubled Company Reporter on Jan. 12, 2007, Moody's Investors Service affirmed Goodyear Tire & Rubber Company's Corporate Family Rating of B1. Ratings on Goodyear's existing secured and unsecured obligations were also affirmed as was the company's Speculative Grade Liquidity rating of SGL-2. The outlook was reverted to stable from negative. As reported in the Troubled Company Reporter on Jan. 9, 2007, Fitch Ratings affirmed ratings for The Goodyear Tire & Rubber Company including its 'B' Issuer Default Rating and removed the ratings from Rating Watch Negative. As reported in the Troubled Company Reporter on Jan. 8, 2007, Standard & Poor's Ratings Services affirmed its 'B-' ratings on the class A-1 and A-2 certificates from the $46 million Corporate Backed Trust Certificates Goodyear Tire & Rubber Note-Backed Series 2001-34 Trust. The ratings were removed from CreditWatch, where they were placed with negative implications on Oct. 24, 2006. GRANITE BROADCASTING: Court Okays Assumption of ImagePlus Deal -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Granite Broadcasting Corp. and its debtor-affiliates permission to assume the ImagePlus Agreement. In the ordinary course of business, the Debtors enter into certain advertising representation agreements with companies that procure advertising to be broadcast on the Debtors' television stations. Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York states that one example of this is the ImagePlus Agreement dated Jan. 11, 2006. New Revenue Solutions, LLC, a company engaged in the business of marketing, advertising plans, and advertising strategies for television stations, agreed with the Debtors to provide advertising representation for WEEK-TV License, Inc., the Debtors' station in Peoria, Illinois. Accordingly, the Debtors first entered into the Agreement with NRS in February 2005 and renewed the Agreement in January 2006. The Debtors estimate that WEEK has generated approximately $1,900,000 in new local advertising revenue from its association with NRS, notes Mr. Dizengoff. Pursuant to the Agreement, NRS receives an annual commission, in 12 monthly installments, of 15% of the net revenues produced by NRS' "ImagePlus" advertising program. According to Mr. Dizengoff, as of the Petition Date, the Debtors owed NRS a cure payment for $16,310 for commissions. Upon review of the Agreement, the Debtors believe that the relationship established with NRS and the services NRS provides under the Agreement are essential to the continued success of WEEK. The Debtors derive their revenues primarily from local, regional, and national advertising on their Stations and maintaining relationships with advertising representative firms, like NRS, is critical to their continued operation and future success, Mr. Dizengoff notes. The Debtors submit that the Cure Payment will fully satisfy their obligations under Sections 365(b) of the Bankruptcy Code to cure any outstanding prepetition defaults. In addition, NRS is provided "adequate assurance" of performance given the debtors entry into its postpetition financing with Silver Point Finance, LLC, and available cash -- both of which provide the Debtors with the necessary liquidity to continue to perform under the Agreement, Mr. Dizengoff asserts. "The Debtors believe no further adequate assurance is warranted," says Mr. Dizengoff. Headquartered in New York, Granite Broadcasting Corp. -- http://www.granitetv.com/-- owns and operates, or provides programming, sales and other services to 23 channels in 11 markets: San Francisco, California; Detroit, Michigan; Buffalo, New York; Fresno, California; Syracuse, New York; Fort Wayne, Indiana; Peoria, Illinois; Duluth, Minnesota-Superior, Wisconsin; Binghamton, New York; Utica, New York and Elmira, New York. The company's channel group includes affiliates of NBC, CBS, ABC, CW and My Network TV, and reaches approximately 6% of all U.S. television households. The company and five of its debtor-affiliates filed for chapter 11 protection on Dec. 11, 2006 (Bankr. S.D.N.Y. Case No. 06-12984). Ira S. Dizengoff, Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, it estimated assets of $443,563,020 and debts of $641,100,000. (Granite Broadcasting Corp. Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). The Debtors' exclusive period to file a plan expires on April 10, 2007. GRANITE BROADCASTING: Can Assume Pistons Broadcast Agreement ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York authorized Granite Broadcasting Corp. and its debtor-affiliates permission to assume the Pistons Broadcast Agreement. On July 1, 2004, WDWB-TV 4 entered into a television broadcast agreement with the Detroit Pistons Basketball Company. The Pistons own and operate a National Basketball Association franchise that plays its home games in the Detroit area. Pursuant to the Broadcast Agreement, the Pistons granted the Station live, over-the-air broadcast rights for all of the Pistons' games that are available for over-the-air broadcasts -- as permitted by the NBA -- up to a maximum of 43 games per season. The term of the Broadcast Agreement is set to expire June 30, 2007, and the Debtors are currently engaged in negotiations to renew the Broadcast Agreement for another term. Although the Broadcast Agreement contains options to renew, these options are at the discretion of the Pistons. Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, notes that Section 365(a) of the Bankruptcy Code provides, in pertinent part, that a debtor-in-possession "subject to the court's approval, may assume or reject any executory contract or unexpired lease of the debtor." Under the Broadcast Agreement, the Pistons have paid -- and will pay -- the Station $32,009 per game for the 30 games aired on the Station in the 2006 to 2007 season. In addition, the Station sells a two-minute commercial break leading into the games, which will result in approximately $200,000 in additional revenue during the 2006 to 2007 season. In sum, the Debtors estimate the aggregate revenue generated under the Broadcast Agreement for the 2006 to 2007 season will be approximately $1,160,000. "The costs borne by the Debtors by performing under the Broadcast Agreement (estimated to be $233,500), pale in comparison to the revenue," says Mr. Dizengoff. Furthermore, broadcasting the Pistons' games has provided the Debtors with significant unquantifiable benefits, Mr. Dizengoff explains. Through its obligations under the Broadcast Agreement and sponsorship of various programs related to the Pistons, the Station has expanded its audience base and entrenched itself in the local community. Mr. Dizengoff adds that under the Broadcast Agreement, the Station is promoted through Pistons' ads in various cable, newspaper, Internet, and in-game media. The association with the Pistons has opened the door to advertisers and agencies that previously did not advertise on the Station. Given the expiration of the Broadcast Agreement at the end of the 2006 to 2007 season, it is imperative that the Station assume the Broadcast Agreement at this time, assuring the Pistons that they have a broadcast partner who will continue to meet its obligations under the Broadcast Agreement, Mr. Dizengoff asserts. In addition, because there has been no default under the Broadcast Agreement, no "cure" payment will be required to effectuate the assumption of that Agreement, as is otherwise required under Section 365 of the Bankruptcy Code, contends Mr. Dizengoff. Headquartered in New York, Granite Broadcasting Corp. -- http://www.granitetv.com/-- owns and operates, or provides programming, sales and other services to 23 channels in 11 markets: San Francisco, California; Detroit, Michigan; Buffalo, New York; Fresno, California; Syracuse, New York; Fort Wayne, Indiana; Peoria, Illinois; Duluth, Minnesota-Superior, Wisconsin; Binghamton, New York; Utica, New York and Elmira, New York. The company's channel group includes affiliates of NBC, CBS, ABC, CW and My Network TV, and reaches approximately 6% of all U.S. television households. The company and five of its debtor-affiliates filed for chapter 11 protection on Dec. 11, 2006 (Bankr. S.D.N.Y. Case No. 06-12984). Ira S. Dizengoff, Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, it estimated assets of $443,563,020 and debts of $641,100,000. (Granite Broadcasting Corp. Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). The Debtors' exclusive period to file a plan expires on April 10, 2007. GRANITE BROADCASTING: Court Extends Removal Period to May 31 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York extended the period within which Granite Broadcasting Corp. and its debtor-affiliates may file notices of removal with respect to any pending civil action as of its bankruptcy filing through and including the earlier of: (a) the date an order is entered confirming the Debtors' Plan of Reorganization; and (b) May 31, 2007. If a further extension of the time period should be sought, it must be on notice to the parties of the affected civil actions, Judge Gropper says. Headquartered in New York, Granite Broadcasting Corp. -- http://www.granitetv.com/-- owns and operates, or provides programming, sales and other services to 23 channels in 11 markets: San Francisco, California; Detroit, Michigan; Buffalo, New York; Fresno, California; Syracuse, New York; Fort Wayne, Indiana; Peoria, Illinois; Duluth, Minnesota-Superior, Wisconsin; Binghamton, New York; Utica, New York and Elmira, New York. The company's channel group includes affiliates of NBC, CBS, ABC, CW and My Network TV, and reaches approximately 6% of all U.S. television households. The company and five of its debtor-affiliates filed for chapter 11 protection on Dec. 11, 2006 (Bankr. S.D.N.Y. Case No. 06-12984). Ira S. Dizengoff, Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, it estimated assets of $443,563,020 and debts of $641,100,000. (Granite Broadcasting Corp. Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). The Debtors' exclusive period to file a plan expires on April 10, 2007. HOLY CROSS: Moody's Holds B2 Rating on $20 Million Debt ------------------------------------------------------- Moody's Investors Service has affirmed the B2 bond rating on Holy Cross Hospital's $20 million of Series 1994 debt issued by the Illinois Health Facilities Authority. The outlook remains positive. Legal Security: The bonds are secured by a security interest in the unrestricted receivables of the obligated group, which consists solely of the hospital. There is no mortgage or property security pledge. Debt service reserve fund maintained. Interest Rate Derivatives: None. Strengths * Holy Cross benefits from expanded state subsidy programs, which have contributed to significantly improved operating results in fiscal year (FY) 2006 (5.1% operating cash flow margin) that appear to continue through six months FY 2007, after years of generally very weak margins * Relatively new management team who is committed to making needed capital investments in Holy Cross' physical plant. Holy Cross received dedicated funding from the State of Illinois to fund the renovation of the emergency department * Holy Cross management has increased needed capital investments over the past two years without the use of leases or other debt obligations * No other major acute care hospital within a four mile radius Challenges * Low liquidity levels (24 days cash on hand at year-end FY 2006) do not provide cushion in case of operating volatility. Cash on hand declined to a very weak 8.8 days (annualized) at December 31, 2006 due to capital spending, a net increase in receivables, and debt payments * Location in challenging urban service area with a high reliance on Medicaid, which represented nearly 25% of gross revenues in FY 2006 * Average age of plant has increased steadily in recent years, measuring an unfavorably high 20 years in FY 2006, as a result of modest capital spending in prior years Recent Developments/Results The affirmation follows a review of Holy Cross' audited FY 2006 financial statements and unaudited six-month FY 2007 financial statements. Operating performance improved materially in FY 2006, which Moody's views as a key credit positive. In FY 2006, Holy Cross recorded an operating income of $143,000 (0.1% operating margin, less the portion of investment income included in operating revenue) and operating cash flow of $6.2 million (5.1% operating cash flow margin). FY 2006 represents Holy Cross' first year of profitable operations since FY 1998. In FY 2005, Holy Cross recorded an operating loss of -$5.3 million (-4.6%) and operating cash flow of $895,000 (0.8%), excluding $2.4 million in net revenues received from the state's Medicaid Hospital Assessment program. I mproved performance generally continues through six months FY 2007, as Holy Cross recorded a modest operating loss of -$210,000 (-0.3%) through the interim period. Holy Cross' improved operating performance is the result of a number of factors, including: * a favorable prior year cost report settlement of $1.5 million in FY 2006, compared to a negative settlement of -$137,000 in FY 2005; * Safety Net Adjustment Payments (SNAP) from the state increased to $4.5 million in FY 2006 from $3.0 million in FY 2005, the year the program commenced; * increased outpatient imaging volumes; * improved coding, which contributed to modest case mix increases in FY 2006 and interim FY 2007; * revenue cycle improvement, as accounts receivable decreased to 51 days in FY 2006 from 55 days in FY 2005; * expense growth controls as operating expenses increased approximately 1% in FY 2006 and 4% in interim FY 2007, in part due to the conversion to a defined contribution pension plan; and * surgical volume growth in FY 2006 after years of decline, although Moody's notes that surgeries decreased through six months FY 2007. Despite improved operating results, Holy Cross' absolute unrestricted liquidity declined in FY 2006 and through six months FY 2007, which Moody's views as a key credit concern. Unrestricted cash and investments measured $7.6 million at fiscal year end (FYE) 2006, translating to very modest 24 days cash on hand and thin 28% cash-to-debt, compared to $9.4 million at FYE 2005 (30 days cash, 33% cash-to-debt). Through six months FY 2007 at December 31, 2006, unrestricted cash and investments declined to $2.9 million or very weak 8.8 days cash (annualized) and 11% cash-to-debt. Management attributes the decline in cash in interim FY 2007 to capital spending ($1.7 million), a net increase in patient receivables ($1.7m) primarily resulting from delays in Medicaid payments due to a change in billing system that largely has been remedied, an increase in third-party settlement receivables ($754,000), and principal payments on debt ($540,000). Management expects unrestricted cash and investments to increase materially through the current fiscal year and approach $10 million by FYE 2007. Increased cash by FYE 2007 will be the result of decreased patient receivables and receipt of state subsidy payments from the Medicaid Assessment, SNAP, and Community Hospital Payment (CHAP) programs. Moody's also expects Holy Cross' balance sheet to benefit from restricted state funding from a capital grant to be used to renovate the emergency department. To date, Holy Cross has received $3.5 million in restricted cash from the state to support the ED project and an additional $3.4 million is expected by FYE 2007. Moody's notes that management expects to maintain (although not grow) absolute liquidity in FY 2008 as increased cash flows are expected to support additional capital spending needs. While Moody's has concerns regarding Holy Cross' modest liquidity position, Moody's notes favorably management's commitment to reinvest in the hospital's physical plant. As noted, Holy Cross benefits from a number of state subsidy programs. The state recently reinstated the Medicaid Assessment program, from which Holy Cross is expected to receive $6.2 million in total net payments in FY 2007, a portion of which is to reimburse the hospital for FY 2006 ($3.1 million in net payments were received in February 2007). The current Medicaid Assessment program is a three-year agreement and Holy Cross expects to receive $3.1 million per year under the current formula. Hospital management expects to receive $3.7 million in total CHAP payments in FY 2007, the first dollars of which are scheduled to be received in early March 2007. Management anticipates receiving approximately $3 million per year in annual CHAP payments. The SNAP program commenced in FY 2005 and does not expire. Management expects to receive $4.5 million in annual SNAP payments, including in FY 2007. While Holy Cross' cash flows depend heavily on subsidies, these programs, as well as the state's funding of the ED renovation, demonstrate the state's commitment to Holy Cross as an essential safety net provider in its service area. Outlook The positive outlook reflects Moody's belief that Holy Cross will maintain improved operating performance as a result of added state subsidies and other operational improvements implemented under the current management team. Moody's believes improved operating performance ultimately will benefit Holy Cross' liquidity ratios, although we note that absolute cash growth likely will be moderated by Holy Cross' still modest cash flow generation and management plans to make needed capital investments. The additional state funding is a key factor in the positive outlook as it demonstrates the state's commitment to Holy Cross as an essential safety net provider. What could change the rating -- UP Continuation of improved cash flow generation; improved and stable liquidity position; patient volume growth combined with a payer mix shift that decreases dependency on Medicaid and self-pay volumes What could change the rating -- DOWN Moderated liquidity ratios; material reduction in net payments from state subsidy programs; reversion to weaker operating margins; increase in debt without commensurate increase in cash flow generation or cash position Key Indicators Assumptions & Adjustments: - Based on Holy Cross Hospital Consolidated Financial Report - First number reflects audited FY 2005 for the year ended June 30, 2005 - Second number reflects audited FY 2006 for the year ended June 30, 2006 - Net revenue from Medicaid Hospital Assessment program excluded from FY 2005 results - Holy Cross has a bank note with $1.3 million outstanding at FYE 2006 (due October 2009). The MADS calculations assume payments on this note are smoothed evenly between 2006 and 2025 at $99,000 per year - Investment returns reclassified to non-operating revenue and smoothed at 6% * Inpatient admissions: 10,744; 10,817 * Total operating revenues: $114.0 million; $121.0 million * Moody's-adjusted net revenues available for debt service: $1.5 million; $6.6 million * Total debt outstanding: $28.7 million; $27.1 million * Maximum annual debt service (MADS): $3.4 million; $2.8 million * MADS Coverage with reported investment income: 0.32 times; 2.34 times *Moody's-adjusted MADS Coverage with normalized investment income: 0.44 times; 2.38 times * Debt-to-cash flow: -63.38 times; 5.64 times * Days cash on hand: 29.7 days; 23.9 days * Cash-to-debt: 32.6%; 28.1% * Operating margin: -4.6%; 0.1% * Operating cash flow margin: 0.8%; 5.1% Rated Debt (debt outstanding as of June 30, 2006) Issued through Illinois Health Facilities Authority: - Series 1994 Hospital Revenue Bonds ($20.3 million outstanding), rated B2 HUNTER FAN: Moody's Lowers Corporate Family Rating to B2 -------------------------------------------------------- Moody's Investors Service lowered the corporate family rating of Hunter Fan Company to B2 from B1, and affirmed the company's B2 probability of default rating. In addition, Moody's assigned a B2 corporate family rating and probability of default rating to Coolbreeze Acquisition Corp., the entity being formed to facilitate the acquisition of Hunter Fan Company, a B1 rating to the $220 million of new secured first-lien credit facilities and a Caa1 rating to the proposed new $75 million second-lien term loan facility. The rating outlook is stable. The ratings assigned are subject to no material change in the terms and conditions of the financing as advised to Moody's. Proceeds from the $295 million of new credit facilities will be used to fund the acquisition of Hunter Fan by affiliates of MidOcean Partners, including refinancing the existing $150 million term loan and $50 million revolving credit facilities (currently rated Ba3 by Moody's). The initial borrower under the proposed facilities will be Coolbreeze Acquisition Corp, an entity established by MidOcean Partners to facilitate the acquisition. It is expected that as soon as practical after closing that Hunter Fan Company will assume the obligations under the new credit facilities. Upon closing of this transaction, Moody's expects to withdraw ratings on the existing first lien credit facilities. The downgrade of Hunter Fan Company's corporate family rating reflects the increased leverage of the company following the proposed acquisition, and negative impact on its leverage and interest coverage metrics to levels consistent with a B2 rating. The ratings also reflect the company's moderate scale in the home furnishing/small appliance market, and high customer concentration with major home improvement retail chains. These aspects are partly mitigated by the company's leading market position in the branded ceiling fan industry under the "Hunter" and "Casablanca" brand names, the ability of the company to expand its product offerings away from reliance on the ceiling fan market, and experienced operating management who will remain with the company following this transaction. The B1 rating assigned to the first lien credit facilities reflects the company's probability of default rating of B2 and its loss given default assessment of LGD 3 (35%), and reflects these facilities' first lien position on the assets of the company and the level of junior capital support from unsecured creditors and the proposed second lien facility. The Caa1 rating for the second lien credit facilities reflects the company's probability of default rating of B2 and the loss given default assessment of LGD 5 (84%) which reflects the junior ranking of the second lien facility to the first lien credit facilities. The affirmation of the PDR of B2 reflects the introduction of the second lien term loan into the capital structure of this transaction. These ratings were assigned: Coolbreeze Acquisition Corp. * $145 million first-lien secured term loan at B1 (LGD 3 - 35%) * $15 million first-lien secured delayed draw term loan at B1 (LGD 3 -- 35%) * $60 million first-lien secured revolving credit facility at B1 (LGD 3 -- 35%) * $75 million second-lien secured term loan at Caa1 (LGD 5 -- 84%) * Corporate Family and Probability of Default Ratings at B2 This rating was lowered: Hunter Fan Company -- Corporate Family Rating to B2 from B1 This rating was affirmed: Hunter Fan Company -- Probability of Default Rating -- B2 Hunter Fan Company headquartered in Memphis, Tennessee, designs, engineers, sources and markets ceiling fans, home comfort appliances, and lighting products primarily under the "Hunter" and "Casablanca" brands. ILLINOIS HEALTH: Fitch Lifts Rating on $15 Million Bonds to BB+ --------------------------------------------------------------- Fitch Ratings upgrades the Illinois Health Facilities Authority's approximately $15 million revenue refunding bonds, series 1998 (Midwest Physician Group Ltd.) to 'BB+' from 'BB'. The Rating Outlook is Stable. The rating upgrade reflects the requirement that Midwest Physician Group make debt service payments prior to payment of physician distribution which results in strong coverage of maximum annual debt service, MPG's position as the leading osteopathic medical group in the Chicago land area and the relative stability in MPG physician staffing. Under the 1994 bond documents, MPG is required to make monthly principal and interest payments to the bond trustee. Payments or distributions to physicians are restricted to the extent such payment would cause income available for debt to fall below 1.1 times (x). When including the total amount of physician distributions into revenues available for debt service from years 2002-2006, coverage of MADS ranged between 7.2x and 8.9x . Assuming payment of physician distributions causes coverage of MADS to drop to 0.1x to 1.5x over the same time frame. In fact, a rate covenant violation originally reported by the auditors in fiscal 2003 was due to an incorrect calculation. MPG was started in 1975 as a division of the Chicago College of Osteopathic Medicine. Many of MPG physicians have faculty positions at Midwestern University's School of Osteopathic Medicine. Fitch believes MPG's position as the largest osteopathic physician clinic provides certain advantages in attracting and retaining osteopathic physicians. Since fiscal 2003, the total number of physicians has been very stable at around 80-85 doctors with roughly 30 primary care physicians, 45-50 specialists and five-to- eight mid-level providers. A higher rating is precluded due to MPG declining liquidity position combined with a belief that MPG financials are subject to greater risk from physician departures and managed care contracting pressures. At Dec. 31, 2006 MPG had $7.8 million of unrestricted cash and investments (65 days cash on hand) which was down from $11.3 million in fiscal 2002 (99 days cash on hand). Management expects to spend $1.9 million during fiscal 2007 to expand the Orland Park surgi-center which will further reduce MPG's liquidity. Fitch believes that the risk profile of MPG is greater relative to our investment grade portfolio. Year to year physician recruitment and retention and changes in manage care contracts can have a much greater affect on MPG credit profile than is typical in Fitch's investment grade portfolio. Fitch's Stable Outlook reflects the expectations that MPG will maintain stable staffing levels and that liquidity should stabilize around 60-70 days of cash on hand. MPG recently hired a recruitment coordinator to formalize identification and recruitment of physician and medical staff. MPG is an 81-physician, independent, multi-specialty, physician practice group with various locations in the south and southwest Chicago markets. Although not required under MPG bond document, management provides quarterly disclosure to investors including a balance sheet, income statement and selected utilization data which is viewed positively by Fitch. INDIAN CREEK: Chap. 7 Trustee Hires Kokjer Peirotti as Accountants ------------------------------------------------------------------ The U.S. Bankrupt Court for the Northern District of California allowed John W. Richardson, the Chapter 7 Trustee overseeing the liquidation of Indian Creek Vineyard Estates, LLC, to employ Kokjer, Peirotti, Maiocco & Duck LLP, as his accountants. The firm is expected to advise the Trustee regarding the preparation of the Debtor's tax returns. Richard Peirotti and Charles Duck Jr., Senior Managers, will bill $310 per hour this engagement. The firm's other professionals rate: Designation Hourly Rate ----------- ----------- Senior Manager $230 Senior Accountant $190 Senior Staff Accountant $170 Staff Accountant $145 To the best of the Trustee's knowledge the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Mr. Pierotti can be reached at: Richard Peirotti, CPA Kokjer, Pierotti, Maiocco & Duck LLP 351 California Street, Suite 300 San Francisco, California 94104 Tel: (415) 981-4224 http://www.kpmd.com/ Headquartered in Carmel Valley, California, Indian Creek Vineyard Estates, LLC, filed for chapter 11 protection on June 14, 2006 (Bankr. N.D. Ca. Case No. 06-51053). Henry B. Niles, Esq., represents the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtor's bankruptcy proceedings. The Debtor's schedules show total assets of $17,011,000 and total debts of $6,868,740. On Dec. 22, 2006, the Court converted the Debtor's chapter 11 case to a chapter 7 liquidation. John W. Richardson was appointed as the Debtor's chapter 7 trustee. Charles P. Maher, Esq., at Luce, Forward, Hamilton and Scripps, represents Mr. Richardson. INDYMAC HOME: Fitch Rates $14 Mil. Class M-11 Certificates at BB ---------------------------------------------------------------- Fitch rates IndyMac Home Equity Mortgage Loan Asset-Backed Trust, series INABS 2007-A: -- $996,450,000 classes 1A, 2A-1 through 2A-3, 2A4-a and 2A4- 'AAA'; -- $48,750,000 class M-1 'AA+'; -- $60,450,000 class M-2 'AA'; -- $21,450,000 class M-3 'AA-'; -- $26,000,000 class M-4 'A+'; -- $22,100,000 class M-5 'A'; -- $13,650,000 class M-6 'A-'; -- $17,550,000 class M-7 'BBB+'; -- $11,700,000 class M-8 'BBB'; -- $15,600,000 class M-9 'BBB-'; -- $20,800,000 non-offered class M-10 'BB+'; and -- $14,300,000 non-offered class M-11 'BB'. The 'AAA' rating on the senior certificates reflects the 23.35% total credit enhancement provided by the 3.75% class M-1, 4.65% class M-2, 1.65% class M-3, 2% class M-4, 1.70% class M-5, 1.05% class M-6, 1.35% class M-7, 0.90% class M-8, 1.20% class M-9, 1.60% non-offered class M-10, 1.10% non-offered class M-11, and 2.40% initial overcollateralization (OC). All certificates have the benefit of monthly excess cash flow to absorb losses. In addition, the ratings reflect the integrity of the transaction's legal structure as well as the capabilities of IndyMac Bank, F.S.B. as a servicer and Deutsche Bank National Trust Company as a trustee. The certificates are supported by two groups of mortgage loans. The aggregate mortgage pool consists of first and second lien fixed-rate mortgage and adjustable-rate mortgage loans, with a closing date pool balance of approximately $1.18 billion. On the closing date, the depositor will deposit approximately $120 million into a pre-funding account. The amount in this account will be used to purchase subsequent mortgage loans after the closing date and on or prior to April 13, 2007. IndyMac MBS, Inc., the depositor, purchased the mortgage loans from IndyMac Bank, F.S.B., the mortgage loan seller, and caused the mortgage loans to be assigned to the trustee for the benefit of holders of the certificates. INDYMAC INDX: S&P Up Rating on Series 2004-AR10 Class B-4 Certs. ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on 10 classes of mortgage-backed certificates from four IndyMac INDX Mortgage Loan Trust transactions. At the same time, ratings on classes from various IndyMac INDX Mortgage Loan Trust deals were affirmed. The upgrades reflect rapid prepayments and good performance of the mortgage loan pools. All of the series with raised ratings have paid down to less than 41% of their original pool sizes. Projected credit support percentages range from 1.74x to 2.40x the levels associated with the higher rating categories and should be sufficient to support the certificates at the higher rating levels. Cumulative realized losses are very low for all of the upgraded series, with a maximum of 0.03% of the original pool balances (for series 2004-AR6), while total delinquencies ranged from 6.40% (series 2004-AR10) to 8.59% (series 2004-AR3) of the current pool balances. The affirmations are based on credit support percentages that are sufficient to maintain the current ratings on the certificates. The predominant form of credit support protecting the affirmed certificates from losses is subordination, with the exception of series 2004-AR9, 2006-AR2, 2006-AR4, 2006-AR6, 2006-AR8, 2006- AR12, 2006-AR15, 2006-AR21, and 2006-AR27, which have additional support from overcollateralization and excess interest. As of the February 2007 distribution period, 90-plus-day delinquencies (including REOs and foreclosures) ranged from 0.29% to 4.21%. The mortgage loans in all 60 series have experienced very low losses. The underlying collateral for these transactions consist mostly of five loan groups of one- to four-family, conventional, first-lien, adjustable- or fixed-rate, fully amortizing, residential mortgage loans. Ratings Raised IndyMac INDX Mortgage Loan Trust Mortgage pass-through certificates Rating ------ Series Class To From ------ ----- -- ---- 2004-AR3 B-1 AA+ AA 2004-AR3 B-2 A+ A 2004-AR3 B-3 BBB+ BBB 2004-AR6 B-1 AA+ AA 2004-AR6 B-2 A+ A 2004-AR10 B-1 AA+ AA 2004-AR10 B-2 A+ A 2004-AR10 B-3 BBB+ BBB 2004-AR10 B-4 BB+ BB 2004-AR11 B-1 AA+ AA Ratings Affirmed IndyMac INDX Mortgage Loan Trust Series Class Rating ------ ----- ------ 2004-AR1 1-A-1,2-A-1,A-X-1,A-X-2 AAA 2004-AR1 A-R AAA 2004-AR1 B-1 AA 2004-AR1 B-2 A 2004-AR1 B-3 BBB 2004-AR1 B-4 BB 2004-AR1 B-5 B 2004-AR2 1-A-1,2-A-1,A-X-1,A-X-2 AAA 2004-AR2 A-R AAA 2004-AR2 B-1 AA 2004-AR2 B-2 A 2004-AR2 B-3 BBB 2004-AR2 B-4 BB 2004-AR2 B-5 B 2004-AR3 A-1,A-X-1,A-X-2 AAA 2004-AR3 B-4 BB 2004-AR3 B-5 B 2004-AR4 1-A,2-A,3-A,A-R AAA 2004-AR4 B-1 AA 2004-AR4 B-2 A 2004-AR4 B-3 BBB 2004-AR4 B-4 BB 2004-AR4 B-5 B 2004-AR5 1-A-1,2-A-1A,2-A-1B AAA 2004-AR5 2-A-2,A-X-1,A-X-2,A-R AAA 2004-AR5 B-1 AA 2004-AR5 B-2 A 2004-AR5 B-3 BBB 2004-AR5 B-4 BB 2004-AR5 B-5 B 2004-AR6 1-A,2-A,3-A-1,3-A-2 AAA 2004-AR6 3-A-3,4-A,5-A-1,5-A-2 AAA 2004-AR6 6-A-1,6-A-2,A-R AAA 2004-AR6 B-3 BBB 2004-AR6 B-4 BB 2004-AR6 B-5 B 2004-AR7 A-1,A-2,A-3,A-4,A-5,A-X AAA 2004-AR7 A-R AAA 2004-AR7 B-1 AA 2004-AR7 B-2 A 2004-AR7 B-3 BBB 2004-AR7 B-4 BB 2004-AR7 B-5 B 2004-AR8 1-A-1,2-A-1,2-A-2A, AAA 2004-AR8 2-A-2B,A-X-1,A-X-2,A-R AAA 2004-AR8 B-1 AA 2004-AR8 B-2 A 2004-AR8 B-3 BBB 2004-AR8 B-4 BB 2004-AR8 B-5 B 2004-AR9 1-A,2-A,3-A,4-A,5-A-1 AAA 2004-AR9 5-A-2,5-A-3,A-R AAA 2004-AR9 B-1 AA+ 2004-AR9 5-M-1 AA 2004-AR9 B-2 A+ 2004-AR9 5-M-2 A 2004-AR9 5-M-3,5-M-4,5-M-5,B-3 BBB+ 2004-AR9 B-4 BB 2004-AR9 B-5 B 2004-AR10 1-A-1,2-A-1,2-A-2A AAA 2004-AR10 2-A-2B,A-X-1,A-X-2,A-R AAA 2004-AR10 B-5 B 2004-AR11 1-A,1-X,2-A,2-X,A-R AAA 2004-AR11 B-2 A 2004-AR11 B-3 BBB 2004-AR11 B-4 BB 2004-AR11 B-5 B 2004-AR12 A-1,A-2,A-X-1,A-X-2,A-R AAA 2004-AR12 B-1 AA 2004-AR12 B-2 A 2004-AR12 B-3 BBB 2004-AR12 B-4 BB 2004-AR12 B-5 B 2004-AR13 1-A-1,2-A-1,2-A-2,2-A-3 AAA 2004-AR13 A-R,X AAA 2004-AR13 B-1 AA 2004-AR13 B-2 A 2004-AR13 B-3 BBB 2004-AR13 B-4 BB 2004-AR13 B-5 B 2004-AR14 1-A-1A,1-A-1B,2-A-1A AAA 2004-AR14 2-A-1B,2-A-2A,2-A-2B AAA 2004-AR14 A-X-1,A-X-2,A-R AAA 2004-AR14 B-1 AA 2004-AR14 B-2 A 2004-AR14 B-3 BBB 2004-AR14 B-4 BB 2004-AR14 B-5 B 2004-AR15 1-A-1,2-A-1,3-A-1,4-A-1 AAA 2004-AR15 4-A-2,5-A-1,5-A-2,6-A-1 AAA 2004-AR15 A-R AAA 2004-AR15 B-1 AA 2004-AR15 B-2 A 2004-AR15 B-3 BBB 2004-AR15 B-4 BB 2004-AR15 B-5 B 2005-AR1 1-A-1,1-A-2,2-A-1,3-A-1 AAA 2005-AR1 3-A-2,4-A-1,A-R AAA 2005-AR1 B-1 AA 2005-AR1 B-2 A 2005-AR1 B-3 BBB 2005-AR1 B-4 BB 2005-AR1 B-5 B 2005-AR2 1-A-1,2-A-1A,2-A-1B, AAA 2005-AR2 2-A-2A,2-A-2B,2-A-3 AAA 2005-AR2 2-A-4,A-X-1,A-X-2,A-R AAA 2005-AR2 B-1 AA 2005-AR2 B-2 A 2005-AR2 B-3 BBB 2005-AR2 B-4 BB 2005-AR2 B-5 B 2005-AR3 1-A-1,2-A-1,3-A-1,3-A-2 AAA 2005-AR3 3-X,4-A-1,4-A-2,5-A-1 AAA 2005-AR3 5-A-2,A-R AAA 2005-AR3 B-1 AA 2005-AR3 B-2 A 2005-AR3 B-3 BBB 2005-AR3 B-4 BB 2005-AR3 B-5 B 2005-AR4 1-A-1,2-A-1A,2-A-1B AAA 2005-AR4 2-A-2,A-X-1,A-X-2,A-R AAA 2005-AR4 B-1 AA 2005-AR4 B-2 A 2005-AR4 B-3 BBB 2005-AR4 B-4 BB 2005-AR4 B-5 B 2005-AR5 1-A-1,1-A-2,2-A-1,2-A-2 AAA 2005-AR5 2-A-3,3-A-1,4-A-1,A-R AAA 2005-AR5 B-1 AA 2005-AR5 B-2 A 2005-AR5 B-3 BBB 2005-AR5 B-4 BB 2005-AR5 B-5 B 2005-AR6 1-A-1,1-A-2,1-A-3,2-A-1 AAA 2005-AR6 2-A-2,A-X-1,A-X-2,A-R AAA 2005-AR6 B-1 AA+ 2005-AR6 B-2 AA- 2005-AR6 B-3 BBB 2005-AR6 B-4 BB 2005-AR6 B-5 B 2005-AR7 1-A-1,2-A-1,3-A-1,3-A-2 AAA 2005-AR7 3-A-3,4-A-1,5-A-1,6-A-1 AAA 2005-AR7 7-A-1,A-R AAA 2005-AR7 B-1 AA+ 2005-AR7 B-2 A+ 2005-AR7 B-3 BBB+ 2005-AR7 B-4 BB 2005-AR7 B-5 B 2005-AR8 1-A-1,2-A-1A,2-A-1B AAA 2005-AR8 2-A-2,A-X-1,A-X-2,A-PO AAA 2005-AR8 A-R AAA 2005-AR8 B-1 AA 2005-AR8 B-2 A 2005-AR8 B-3 BBB 2005-AR8 B-4 BBB- 2005-AR8 B-5 BB 2005-AR8 B-6 B 2005-AR9 1-A-1,2-A-1,3-A-1,4-A-1 AAA 2005-AR9 4-A-2,4-A-3,4-A-4,5-A-1 AAA 2005-AR9 6-A-1,A-R AAA 2005-AR9 B-1 AA 2005-AR9 B-2 A 2005-AR9 B-3 BBB 2005-AR9 B-4 BB 2005-AR9 B-5 B 2005-AR10 A-1,A-2,A-3,A-X,A-R AAA 2005-AR10 B-1 AA+ 2005-AR10 B-2 AA 2005-AR10 B-3 AA- 2005-AR10 B-4 A 2005-AR10 B-5 BBB+ 2005-AR10 B-6 BBB 2005-AR10 B-7 BBB- 2005-AR10 B-8 BB 2005-AR10 B-9 B 2005-AR11 A-1,A-2,A-3,A-4,A-5,A-6 AAA 2005-AR11 A-7,A-R AAA 2005-AR11 B-1 AA+ 2005-AR11 B-2 AA- 2005-AR11 B-3 BBB+ 2005-AR11 B-4 BB 2005-AR11 B-5 B 2005-AR12 1-A-1,2-A-1A,2-A-1B, AAA 2005-AR12 2-A-1C,2-A-2,A-X-1,A-X-2 AAA 2005-AR12 A-PO,A-R AAA 2005-AR12 B-1 AA 2005-AR12 B-2 A 2005-AR12 B-3 BBB 2005-AR12 B-4,B-5 BBB- 2005-AR12 B-6 BB 2005-AR12 B-7 B 2005-AR13 1-A-1,1-X,2-A-1,2-A-2,2-X AAA 2005-AR13 3-A-1,3-A-2,3-X,4-A-1 AAA 2005-AR13 4-A-2,4-X,5-A-1,5-A-2,5-X AAA 2005-AR13 A-R AAA 2005-AR13 B-1 AA 2005-AR13 B-2 A 2005-AR13 B-3 BBB 2005-AR13 B-4 BB 2005-AR13 B-5 B 2005-AR14 1-A-1A,1-A-1B1,1-A-1B2 AAA 2005-AR14 2-A-1A,2-A-1B,2-A-1C AAA 2005-AR14 1-X,2-X,B-X,A-R AAA 2005-AR14 B-1 AA+ 2005-AR14 B-2 AA 2005-AR14 B-3 A+ 2005-AR14 B-4 A- 2005-AR14 B-5 BBB 2005-AR14 B-6 BB 2005-AR14 B-7 B 2005-AR15 A-1,A-2,A-3,A-4,A-5,A-R AAA 2005-AR15 B-1 AA+ 2005-AR15 B-2 AA- 2005-AR15 B-3 A- 2005-AR15 B-4 BB 2005-AR15 B-5 B 2005-AR16IP A-1,A-2,A-3,A-R,A-X AAA 2005-AR16IP B-1 AA 2005-AR16IP B-2 A 2005-AR16IP B-3 BBB+ 2005-AR16IP B-4 BBB- 2005-AR16IP B-5 BB 2005-AR16IP B-6 B 2005-AR17 1-A-1,1-A-2,2-A-1,2-A-2 AAA 2005-AR17 3-A-1,4-A-1,4-A-2,5-A-1 AAA 2005-AR17 6-A-1,6-A-2,A-R AAA 2005-AR17 B-1 AA 2005-AR17 B-2 A 2005-AR17 B-3 BBB 2005-AR17 B-4 BB 2005-AR17 B-5 B 2005-AR18 1-A-1,1-A-2,1-A-3A AAA 2005-AR18 1-A-3B,2-A-1A,2-A-1B AAA 2005-AR18 2-A-2A,2-A-2B,2-A2C AAA 2005-AR18 2-A-3A,2-A-3B,1-X,2-X AAA 2005-AR18 A-R,B-X AAA 2005-AR18 B-1 AA+ 2005-AR18 B-2 AA 2005-AR18 B-3 AA- 2005-AR18 B-4 A+ 2005-AR18 B-5 A- 2005-AR18 B-6 BBB+ 2005-AR18 B-7 BBB 2005-AR18 B-8 BBB- 2005-AR18 B-9 BB 2005-AR18 B-10 B 2005-AR19 A-1,A-2,A-R AAA 2005-AR19 B-1 AA+ 2005-AR19 B-2 AA- 2005-AR19 B-3 A- 2005-AR19 B-4 BB 2005-AR19 B-5 B 2005-AR21 1-A-1,2-A-1,3-A-1,3-A-2 AAA 2005-AR21 3-A-3,4-A-1,4-A-2,4-A-3 AAA 2005-AR21 A-R AAA 2005-AR21 B-1 AA 2005-AR21 B-2 A 2005-AR21 B-3 BBB 2005-AR21 B-4 BB 2005-AR21 B-5 B 2005-AR23 1-A-1,2-A-1,2-A-2,3-A-1 AAA 2005-AR23 3-A-2,4-A-1,4-A-2,I-A-R AAA 2005-AR23 5-A-1,6-A-1,6-A-2,II-A-R AAA 2005-AR23 I-B-1,II-B-1 AA 2005-AR23 I-B-2,II-B-2 A 2005-AR23 I-B-3,II-B-3 BBB 2005-AR23 I-B-4,II-B-4 BB 2005-AR23 I-B-5,II-B-5 B 2005-AR25 1-A-1-1,1-A-1-2,1-A-2-1 AAA 2005-AR25 1-A-2-2,2-A-1,2-A-2-1 AAA 2005-AR25 2-A-2-2,A-R AAA 2005-AR25 B-1 AA+ 2005-AR25 B-2 AA- 2005-AR25 B-3 A- 2005-AR25 B-4 BB 2005-AR25 B-5 B 2005-AR27 1-A-1,2-A-1,2-A-2,2-A-3 AAA 2005-AR27 3-A-1,3-A-2,3-A-3,4-A-1 AAA 2005-AR27 4-A-2,A-R AAA 2005-AR27 B-1 AA 2005-AR27 B-2 A+ 2005-AR27 B-3 BBB+ 2005-AR27 B-4 BB 2005-AR27 B-5 B 2005-AR29 A-1,A-2,A-R AAA 2005-AR29 B-1 AA+ 2005-AR29 B-2 AA 2005-AR29 B-3 A 2005-AR29 B-4 BB 2005-AR29 B-5 B 2005-AR31 1-A-1,1-A-2,2-A-1,2-A-2 AAA 2005-AR31 3-A-1,4-A-1,4-A-2,5-A-1 AAA 2005-AR31 5-A-2,A-X,A-R AAA 2005-AR31 B-1 AA 2005-AR31 B-2 A 2005-AR31 B-3 BBB 2005-AR31 B-4 BB 2005-AR31 B-5 B 2005-AR33 1-A-1,1-A-2,2-A-1,2-A-2 AAA 2005-AR33 3-A-1,3-A-2,4-A-1,4-A-2 AAA 2005-AR33 A-R AAA 2005-AR33 B-1 AA 2005-AR33 B-2 A 2005-AR33 B-3 BBB 2005-AR33 B-4 BB 2005-AR33 B-5 B 2005-AR35 1-A-1,1-A-2,2-A-1,2-A-2 AAA 2005-AR35 A-R AAA 2005-AR35 B-1 AA 2005-AR35 B-2 A 2005-AR35 B-3 BBB 2005-AR35 B-4 BB 2005-AR35 B-5 B 2006-AR2 1-A-1A,1-A-1B,1-A-2 AAA 2006-AR2 1-A-3A,1-A-3B,2-A-1 AAA 2006-AR2 2-A-2 AAA 2006-AR2 M-1 AA+ 2006-AR2 M-2,M-3 AA 2006-AR2 M-4 AA- 2006-AR2 M-5,M-6 A+ 2006-AR2 M-7 A 2006-AR2 M-8 BBB+ 2006-AR2 M-9 BBB- 2006-AR3 1-A-1,1-A-2,2-A-1A,2-A-1B AAA 2006-AR3 1-X,2-X,2-A-1C,2-A-2 AAA 2006-AR3 3-A-1A,3-A-1B,3-A-2,3-X AAA 2006-AR3 A-R AAA 2006-AR3 B-1 AA 2006-AR3 B-2 A 2006-AR3 B-3 BBB 2006-AR3 B-4 BB 2006-AR3 B-5 B 2006-AR4 A1-A,A1-B,A1-C,A2-A AAA 2006-AR4 M-1 AA+ 2006-AR4 M-2 AA 2006-AR4 M-3 AA- 2006-AR4 M-4 A 2006-AR4 M-5 A- 2006-AR4 M-6 BBB 2006-AR4 M-7,M-8 BBB- 2006-AR5 1-A-1,1-A-2,2-A-1,2-A-2 AAA 2006-AR5 A-R AAA 2006-AR5 B-1 AA 2006-AR5 B-2 A 2006-AR5 B-3 BBB 2006-AR5 B-4 BB 2006-AR5 B-5 B 2006-AR6 1-A-1A,1-A-1B,2-A-1A AAA 2006-AR6 2-A-1B,2-A-1C, AAA 2006-AR6 M-1 AA+ 2006-AR6 M-2,M-3 AA 2006-AR6 M-4 AA- 2006-AR6 M-5 A+ 2006-AR6 M-6 A 2006-AR6 M-7 A- 2006-AR6 M-8 BBB+ 2006-AR6 M-9,M-10 BBB 2006-AR7 1-A-1,1-A-2,2-A-1,2-A-2 AAA 2006-AR7 3-A-1,3-A-2,4-A-1 AAA 2006-AR7 4-A-2,5-A-1,5-A-2,A-R AAA 2006-AR7 B-1 AA 2006-AR7 B-2 A 2006-AR7 B-3 BBB 2006-AR7 B-4 BB 2006-AR7 B-5 B 2006-AR8 A-1A,A1-B,A2-A1,A2-A2 AAA 2006-AR8 A2-A3,A2-B,A3-A,A3-B,A4-A AAA 2006-AR8 A4-B AAA 2006-AR8 M-1 AA+ 2006-AR8 M-2 AA 2006-AR8 M-3 AA- 2006-AR8 M-4,M-5 A+ 2006-AR8 M-6 A 2006-AR8 M-7 BBB+ 2006-AR8 M-8 BBB 2006-AR8 M-9 BBB- 2006-AR9 1-A-1,2-A-1,2-A-2 AAA 2006-AR9 3-A-1,3-A-2,3-X,3-A-3 AAA 2006-AR9 3-A-4,4-A-1,4-X,A-R AAA 2006-AR9 B-1 AA+ 2006-AR9 B-2 AA- 2006-AR9 B-3 A- 2006-AR9 B-4 BB 2006-AR9 B-5 B 2006-AR11 1-A-1,1-A-2,1-X,2-A-1 AAA 2006-AR11 2-A-2,2-X,3-A-1 AAA 2006-AR11 3-A-2,3-X,4-A-1,4-A-2 AAA 2006-AR11 4-X,5-A-1,5-A-2,5-X,6-A-1 AAA 2006-AR11 6-A-2,6-X,A-R AAA 2006-AR11 B-1 AA 2006-AR11 B-2 A 2006-AR11 B-3 BBB 2006-AR11 B-4 BB 2006-AR11 B-5 B 2006-AR12 A-1,A-2,A-3 AAA 2006-AR12 M-1 AA 2006-AR12 M-2 A 2006-AR12 M-3 BBB 2006-AR12 M-4 BBB- 2006-AR13 A-1,A-2,A-2X,A-3,A-4 AAA 2006-AR13 A-4X,A-R AAA 2006-AR13 B-1 AA+ 2006-AR13 B-2 AA- 2006-AR13 B-3 A- 2006-AR13 B-4 BB 2006-AR13 B-5 B 2006-AR15 A-1,A-2,A-3,A-R AAA 2006-AR15 M-1,M-2,M-3 AA+ 2006-AR15 M-4 AA 2006-AR15 M-5,M-6 AA- 2006-AR15 M-7,M-8 A 2006-AR15 M-9,M-10 BBB+ 2006-AR15 M-11 BBB- 2006-AR19 1-A-1,1-A-2,1-A-3,1-A-4 AAA 2006-AR19 2-A-1,2-A-2,3-A-1,3-A-2 AAA 2006-AR19 4-A-1,4-A-2,A-R AAA 2006-AR19 5-A-1,5-A-2,5-A-3 AAA 2006-AR19 I-B-1,II-B-1 AA 2006-AR19 I-B-2,II-B-2 A 2006-AR19 I-B-3,II-B-3 BBB 2006-AR19 I-B-4,II-B-4 BB 2006-AR19 I-B-5,II-B-5 B 2006-AR21 A-1,A-2,A-R,M-1 AAA 2006-AR21 M-2,M-3 AA+ 2006-AR21 M-4,M-5 AA 2006-AR21 M-6 AA- 2006-AR21 M-7,M-8 A+ 2006-AR21 M-9,M-10 A- 2006-AR21 M-11 BBB 2006-AR23 A-1,A-2,A-R AAA 2006-AR23 B-1 AA+ 2006-AR23 B-2 AA- 2006-AR23 B-3 A 2006-AR23 B-4 BB 2006-AR23 B-5 B 2006-AR25 1-A-1,1-A-2,2-A-1,2-A-2 AAA 2006-AR25 3-A-1,3-A-2,3-A-3,3-A-4 AAA 2006-AR25 4-A-1,4-A-2,4-A-3,4-A-4 AAA 2006-AR25 4-A-5,5-A-1,5-A-2 AAA 2006-AR25 6-A-1,6-A-2,6-A-3 AAA 2006-AR25 6-A-4,6-A-5,AR AAA 2006-AR25 B1 AA 2006-AR25 B2 A 2006-AR25 B3 BBB 2006-AR25 B4 BB 2006-AR25 B5 B 2006-AR27 1A-1,1-A-2,1-A-3,1-A-4 AAA 2006-AR27 1-A-5,2-A-1,2-A-2,2-A-3 AAA 2006-AR27 A-R AAA 2006-AR27 M-1,M-2 AA+ 2006-AR27 M-3,M-4 AA 2006-AR27 M-5,M-6 A+ 2006-AR27 M-7 A 2006-AR27 M-8 A- 2006-AR27 M-9 BBB- IRON MOUNTAIN: S&P Rates Proposed $800 Million Facilities at BB --------------------------------------------------------------- Standard & Poor's Ratings Services assigned a bank loan rating of 'BB' and a recovery rating of '1' to the proposed $800 million credit facilities of Iron Mountain Inc. (BB-/Stable/--), indicating high expectation of full recovery of principal in the event of a payment default. The credit facilities consist of a $600 million revolving credit facility due 2012 and a $200 million term loan due 2014. Proceeds from the proposed transaction will be used to repay existing debt and for general corporate uses. At the same time, we affirmed all existing ratings, including the 'BB-' corporate credit rating, on the company. The outlook is stable. Boston-based Iron Mountain had total debt outstanding of about $2.7 billion. Iron Mountain provides warehouse storage of paper-based files, management of electronic records, and other related services, such as shredding. "The ratings reflect Iron Mountain's high debt leverage, history of debt-financed acquisitions, and aggressive financial policies, and the capital intensity of the record storage business," said Standard & Poor's credit analyst Andy Liu. These factors are only partially offset by Iron Mountain's leading position as the world's largest record management company and fairly stable growth from existing and new customer accounts. ISTAR FINANCIAL: Earns $91.7 Million in Quarter Ended December 31 ----------------------------------------------------------------- iStar Financial Inc. reported net income of $91.7 million for the fourth quarter ended Dec. 31, 2006, compared with net income of $80.3 million for the fourth quarter ended Dec. 31, 2005. "In 2006, we made significant steps to grow our business by extending iStar's reach and building on our strengths," said Jay Sugarman, iStar Financial's chairman and chief executive officer. "Our team produced record originations and earnings, while maintaining our disciplined approach in a competitive real estate market. We closed a high percentage of the deals we pursued by providing truly flexible, customer-focused, custom-tailored capital to our valued customers." Net investment income and total revenue were $128.1 million and $265.3 million, respectively, for the quarter ended Dec. 31, 2006, compared to $97.4 million and $195.6 million, respectively, for the fourth quarter of 2005. The year-over-year increase in net investment income was primarily due to growth of the company's loan portfolio. Net investment income represents interest income, operating lease income and equity in earnings from joint ventures, less interest expense, operating costs for corporate tenant lease assets and loss on early extinguishment of debt. The company reported that during the fourth quarter, it closed a record 39 new financing commitments, for a total of $1.8 billion, up 10% year-over-year. Of that amount, $1.1 billion was funded during the fourth quarter. In addition, the company funded $238.1 million under pre-existing commitments and received $371.2 million in principal repayments. Cumulative repeat customer business totaled $12 billion at Dec. 31, 2006. Additionally, the company completed the sale of two non-strategic office/R&D portfolios consisting of five properties, as well as the sale of an interest in one additional property, for total proceeds of $55 million net of costs, resulting in a total net book gain of approximately $2.4 million. Net income was $374.8 million for the year ended Dec. 31, 2006, compared with net income of $287.9 million for the year ended Dec. 31, 2005. Net investment income and total revenue were $462.2 million and $980.2 million, respectively, for the year ended Dec. 31, 2006, versus net investment income and total revenue of $330.4 million and $789.7 million, respectively, for the year ended Dec. 31, 2005. "To support our growth, in 2006, we increased the total number of employees by 12% across all levels of the organization and in multiple disciplines including investments, risk management, asset management, finance and accounting," Mr. Sugarman said. "I am proud that we are able to continue to attract high caliber talent who embrace the iStar culture and join an outstanding team of over 200 employees at our firm." Mr. Sugarman concluded, "In 2007, we will look to continue to grow our business by utilizing our proven competitive advantages including our size, scale, depth, breadth and long-standing customer relationships. We believe all of these elements, combined with our absolute commitment to integrity and fairness, should allow iStar to continue to deliver superior risk- adjusted returns to our shareholders." At Dec. 31, 2006, the company's balance sheet showed $11.059 billion in total assets, $8.034 billion in total liabilities, $38.7 million in minority interest in consolidated entities, and $2.986 billion in total stockholders' equity. Capital Markets Summary During the fourth quarter, the company completed a follow-on equity offering in which it issued 12.65 million primary common shares, generating $541.4 million in net proceeds. The company used the proceeds from the offering to repay borrowings under its unsecured revolving credit facility. As of Dec. 31, 2006, the company had $923.1 million outstanding under $2.7 billion in credit facilities. Risk Management At Dec. 31, 2006, first mortgages, participations in first mortgages, senior loans and corporate tenant lease investments collectively comprised 81.6% of the company's asset base, versus 83.8% in the prior quarter. The company's loan portfolio consisted of 61% floating rate and 39% fixed rate loans, with a weighted average maturity of 4.3 years. At Dec. 31, 2006, watch list assets represented 1.34% of total assets. During the fourth quarter, two assets were removed and four assets were added to the watch list. At Dec. 31, 2006, the company's non-performing loan (NPL) assets represented 0.56% of total assets. The company currently has two loans on its NPL list, both of which were on the watch list in the previous quarter. The two assets previously on the NPL list last quarter were removed during the fourth quarter. The company's policy is to stop the accrual of interest on loans placed on NPL status. The company believes it has adequate collateral to support the book value for each of the watch list and NPL assets. During the quarter, the company wrote off a total of $3.2 million of book value related to its loan portfolio, including $3 million relating to an asset in its AutoStar portfolio. The remaining balance of this loan was added to the company's NPL list pending further discussion and action with the borrower. In addition, the company received $18 million of the $18.2 million of book value of a mezzanine loan that had been on the NPL list since 2003 and wrote off the remaining $200,000 balance of that loan. These write-offs were applied to the company's loan loss reserves and had no impact to fourth quarter 2006 earnings. The company had $52.2 million in loan loss reserves at Dec. 31, 2006, versus $46.9 million at Dec. 31, 2005. About iStar Financial iStar Financial (NYSE: SFI) -- http://www.istarfinancial.com/-- is a publicly traded finance company focused on the commercial real estate industry. The company primarily provides custom- tailored financing to high-end private and corporate owners of real estate, including senior and mezzanine real estate debt, senior and mezzanine corporate capital, corporate net lease financing and equity. * * * iStar Financial Inc.'s preferred stock carry Moody's Investors Service's Ba1 rating with a stable outlook. Fitch Ratings raised the company's preferred stock rating to 'BB+' from 'BB' in January 2006. Fitch said the Rating Outlook is Stable. J. CREW GROUP: Earns $44 Million in Fourth Quarter Ended Feb. 3 --------------------------------------------------------------- J. Crew Group Inc. reported net income of $44 million for the fourth quarter ended Feb. 3, 2007, compared with a net loss of $5.9 million for the period ended Jan. 28, 2006. Net income in the fourth quarter of fiscal 2006 includes $1.4 million of stock based compensation expense related to the adoption of SFAS 123(R), which was not applicable in fiscal 2005. Net income in the fourth quarter of fiscal 2006 also includes a non-recurring tax benefit of $10.9 million related to the recognition of deferred tax assets that were previously reserved. Revenues increased 27% to $366.7 million in the fourth quarter of fiscal 2006, from revenues of $289.9 million in the fourth quarter of fiscal 2005. Store sales (Retail and Factory) increased 20% to $241.8 million, with comparable store sales increasing 7%. Direct sales (Internet and Catalog) rose by 43% to $113.2 million. The impact of the 53rd week of fiscal 2006 on Store and Direct sales was $8.2 million and $4 million, respectively. Gross margin increased 400 basis points to 40.8% of revenues from 36.8% of revenues in the fourth quarter of fiscal 2005. Operating income increased 160% to $37.3 million, or 10.2% of revenues, compared to operating income of $14.4 million, or 5% of revenues, in the fourth quarter of fiscal 2005. Millard Drexler, J.Crew's chairman and chief executive officer stated: "We're very pleased with our fourth quarter results. We continue to re-define the designer business in America through our continued focus on quality, style and design along with endless attention to our customers' needs. This has translated into strong topline growth and significant improvements in profitability, with our operating margin more than doubling to 10.2% in the fourth quarter." J. Crew Group Inc. reported net income of $77.8 million for the fiscal year ended Feb. 3, 2007, compared with net income of $3.8 million for the fiscal year ended Jan. 28, 2006. Net income for fiscal 2006 includes pre-tax charges of $10 million related to the refinancing of debt and $2.9 million of stock based compensation expense related to the adoption of SFAS 123(R), which was not applicable in fiscal 2005. Net income for fiscal 2006 also includes a non-recurring tax benefit of $10.9 million related to the recognition of deferred tax assets that were previously reserved. Revenues increased 21% to $1.152 billion in fiscal 2006, from revenues of $953.2 million in fiscal 2005. Store sales (Retail and Factory) increased 21% to $808.5 million, with comparable store sales increasing 13%. Direct sales (Internet and Catalog) increased 22% to $308.6 million. Gross margin increased 160 basis points to 43.4% from 41.8% in fiscal 2005. Operating income increased 58% to $125.6 million, or 10.9% of revenues, compared to operating income of $79.5 million, or 8.3% of revenues, in fiscal 2005. "I am also pleased with our full year results," Mr. Drexler continued. "We increased sales productivity as evidenced by our comparable store sales gain of 13% with sales per square foot improving to $526 from $457 last year on a 52 week basis. We accelerated our store expansion, opening 24 net new stores and introducing two new concepts, Crewcuts and Madewell. Importantly, we strengthened our financial flexibility by successfully completing our initial public offering. This provides us with a strong capital base for the continued execution of our growth plans." About J. Crew Group J. Crew Group Inc. (NYSE: JCG) -- http://www.jcrew.com/-- is a nationally recognized multi-channel retailer of women's and men's apparel, shoes and accessories. As of March 13, 2007, the company operates 178 retail stores, the J. Crew catalog business, jcrew.com, and 51 factory outlet stores. * * * On July 17, 2006, Standard & Poor's placed its 'B+' rating on both long term foreign issuer credit and long term local issuer credit of J. Crew Group Inc. MASTR ADJUSTABLE: Moody's Rates Class M-8 Certificates at Ba2 ------------------------------------------------------------- Moody's Investors Service has assigned a Aaa rating to the senior certificates issued by MASTR Adjustable Rate Mortgages Trust 2007- 2, and ratings ranging from Aa1 to Ba2 to the subordinate certificates in the deal. The securitization is backed by closed-end, adjustable-rate Alt-A residential mortgage loans originated by Countrywide Home Loans, Inc. and other originators (none of which originated more than 10% of the loans). The ratings are based primarily on the credit quality of the loans and on the protection against credit losses provided by subordination, overcollateralization, excess spread, an interest rate swap agreement, and an interest rate cap contract. Moody's expects collateral losses to range from 1.00% to 1.20%. Countrywide Home Loans Servicing, L.P. will service the loans in the transaction and Wells Fargo Bank, N.A. will act as master servicer. Moody's has assigned Wells Fargo Bank, N.A. its top servicer quality rating of SQ1 as a master servicer of residential mortgage loans. The complete rating actions are: MASTR Adjustable Rate Mortgages Trust 2007-2 Mortgage Pass-Through Certificates, Series 2007-2 * Cl. A-1, Assigned Aaa * Cl. A-2, Assigned Aaa * Cl. A-3, Assigned Aaa * Cl. A-4, Assigned Aaa * Cl. M-1, Assigned Aa1 * Cl. M-2, Assigned Aa2 * Cl. M-3, Assigned Aa3 * Cl. M-4, Assigned A1 * Cl. M-5, Assigned A2 * Cl. M-6, Assigned Baa1 * Cl. M-7, Assigned Baa3 * Cl. M-8, Assigned Ba2 MEDAVANT HEALTHCARE: Posts $1.6MM Net Loss in Qtr. Ended Dec. 31 ---------------------------------------------------------------- MedAvant Healthcare Solutions reported results for the fourth quarter and year ended Dec. 31, 2006. Net loss for the fourth quarter of 2006 was $1.6 million, compared with a net loss of $1.8 million for the fourth quarter of 2005. Net revenue for the fourth quarter ended Dec. 31, 2006, was $15.8 million, compared with net revenue of $17.3 million for the fourth quarter ended Dec. 31, 2005. The fourth quarter 2006 net revenue was positively impacted by the acquisition of Medical Resource, LLC and National Provider Network, Inc. of approximately $200,000. Operating loss for the fourth quarter was $600,000 compared with an operating loss for the same period in 2005 of $1.2 million. The 2006 loss includes $321,000 of litigation settlements. Net loss for the year ended 2006 was $6.6 million compared with net loss of $105.3 million in the prior year period. The 2006 amount is impacted by $1.1 million of SFAS 123R expenses that was not incurred in 2005. The company's net revenue for the full year ended Dec. 31, 2006, was $65.5 million compared with net revenue of $77.5 million for the full year ended Dec. 31, 2005. The 2006 revenue was impacted by the acquisition of MRL of approximately $200,000. Operating loss for the 12-month period was $3.4 million compared with $103.2 million in the prior year. The operating loss for 2005 was impacted by a non-cash impairment charge of $96.4 million primarily in our Transaction Services segment. "We ended the year having accomplished several milestones that lay the foundation for our future success," John Lettko, President and Chief Executive Officer, said. "Our greatest achievement in 2006 was moving all our transactions to our PhoenixSM platform. We believe having all our business in one operating system will open up new revenue potential for us and allow us to take on additional transaction volume. "Our partners recognize the value we add to their products and continue to collaborate with us to expand their offerings. In 2006 we began or expanded our business relationships with companies such as Misys Healthcare Systems, Quest Diagnostics, CBLPath, Adventist Health System, MD On-Line, and Pekin Insurance." At Dec. 31, 2006, the company's balance sheet showed total assets of $72,240,000 and total liabilities of $44,816,000, resulting in a stockholders' equity of $27,424,000. Operations Update The acquisition of Zeneks, Inc. complements MedAvant's claim negotiation services, and the acquisition of Medical Resource, LLC and National Provider Network, Inc. added 175,000 direct providers to the Preferred Provider Organization that MedAvant operates, the National Preferred Provider Network. The company introduced myMedAvant, a premium real-time, secure portal service for provider and partner clients that provides access to healthcare transaction data through a dashboard view and allows providers to easily verify eligibility, receive remittance details with claim data, and correct problems on claims before they are submitted for payment. The company reduced operational expenses through internal cost controls and a business partnership with ppoONE, a Fiserv Health company, which will provide business process outsourcing operations for MedAvant's cost containment services. The company improved customer resources by offering eligibility verification to Medicare plans throughout the nation, developing a bridge between medical laboratory results and Electronic Medical Records, using virtual call center technology to improve customer service, and guiding providers through the process of getting a federally-required National Provider Identifier Going Concern Doubt Expectation "We expect our independent registered public accounting firm to issue a going concern opinion with respect to the company's consolidated financial statements for the year ended Dec. 31, 2006," Mr. Lettko added. "Over the last several years we have experienced recurring losses from operations and have limitations on access to capital, however, we are continuing our efforts to reduce costs and increase revenue through execution of our business strategies, new product launches and expanded relationships with certain customers." About MedAvant Healthcare Solutions Headquartered in Norcross, Georgia, MedAvant Healthcare Solutions (NASDAQ:PILL) -- http://www.medavanthealth.com/-- provides healthcare transaction processing, medical cost containment services, business process outsourcing solutions and related value-added products to physicians, payers, pharmacies, medical laboratories, and other healthcare suppliers. MedAvant is a trade name of ProxyMed, Inc. MIDLAND REALTY: Fitch Affirms BB+ Rating on $7.7MM Class K Certs. ----------------------------------------------------------------- Fitch upgrades one class of Midland Realty Acceptance Corp.'s commercial mortgage pass-through certificates, series 1996-C2: -- $12.8 million class J to 'AA' from 'A'. In addition, Fitch affirms these classes: -- Interest-only class A-EC at 'AAA'; -- $462 thousand class F at 'AAA'; -- $12.8 million class G at 'AAA'; -- $5.1 million class H at 'AAA'; and -- $7.7 million class K at 'BB+'. Fitch does not rate the $10.3 million class L-1 or the interest- only class L-2 certificates. The class A-1, A-2, B, C, D and E certificates have paid in full. The upgrade to class J is due to the increase in subordination resulting from loan payoffs and amortization. As of the February 2007 distribution date, the pool has paid down 90.4% to $49.1 million from $512.1 million at issuance. There are currently three loans (9.2%) in special servicing: one loan that is in foreclosure (2.3%) and two loans that are current (6.9%). The largest specially serviced loan is secured by a multifamily property located in Texas City, Texas and is current. The loan transferred to the special servicer in January 2007 after missing its December balloon payment. The next specially serviced loan (2.3%) is secured by a multifamily property in Great Falls, MT and is in foreclosure. This loan transferred to the special servicer in March 2006 after missing two consecutive payments. The smallest specially serviced loan (1.6%) is secured by an industrial property in El Paso, Texas and is current. This loan transferred to the special servicer in January 2007 after missing its January balloon payment. The special servicer is currently evaluating workout options for these properties and Fitch currently expects losses. However, any losses are expected to be fully absorbed by the unrated class L-1. The deal is concentrated with only 20 loans remaining and with the top five loans representing 63.7% of the pool. In addition to the specially serviced loans, one loan (1.8%) is considered a Fitch Loan of Concern due to performance issues. Fitch will monitor this transaction closely as loans payoff and will take further rating actions if warranted. MILLS CORP: Defers 2006 Form 10-K Filing Due to Restatement ----------------------------------------------------------- The Mills Corp. and Mills Limited Partnership informed the Securities and Exchange Commission that they will be unable to timely file their Form 10-K for the years ended Dec. 31, 2005, and 2006, because the companies has not completed their financial statements for 2005. The companies have previously reported a restatement of financials in their 2005 Form 10-K when filed, or Form 10-Qs for the first three quarters of 2006. The companies' books for 2006 will not be closed until after these filings have been made. As a result, they are unable to reasonably estimate the anticipate change in the results of operations from 2005 that will be reflected in their financial statements on 2006 Form 10-K. Currently, the companies are unable to provide an expected date for the filing of their 2006 Form 10-K and are not requesting the 15-day extension from the SEC. The Mills Corp. and Mills Limited Partnership file joint annual reports with the SEC. About The Mills Corp. Headquartered in Chevy Chase, Maryland, The Mills Corp. (NYSE: MLS) -- http://www.themills.com/-- develops, owns, manages retail destinations including regional shopping malls, market dominant retail and entertainment centers, and international retail and leisure destinations. The Company owns 42 properties in the U.S., Canada and Europe, totaling 51 million square feet. In addition, The Mills has various projects in development, redevelopment or under construction around the world. * * * As reported in the Troubled Company Reporter on Jan. 10, 2007, The Mills Corp. issued a warning in a Securities and Exchange Commission filing saying that it could file for bankruptcy protection if it cannot sell all or part of the company amidst accounting errors and speculations of possible executive misconduct. MKP CBO: Moody's Puts $250 Million Notes' B2 Rating on Watch ------------------------------------------------------------ Moody's Investors Service has placed the notes issued by MKP CBO I, Ltd. on watch for possible downgrade: Class Description: $250,000,000 Class A-IL Floating Rate Notes Due February 2036 Prior Rating: B2 Current Rating: B2 (on watch for possible downgrade) According to Moody's, the rating action results primarily from ongoing deterioration in the coverage tests. Moody's noted that as of the most recent monthly report on the transaction, the Class A Overcollateralization Percentage was at 84.3% (106.0% trigger) and the Class B Overcollateralization Percentage was at 74.7% (101.0% trigger). ML-CFC: Fitch Puts Low-B Ratings on Four Certificate Classes ------------------------------------------------------------ Fitch rates ML-CFC Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 2007-5 as: -- $87,368,000 class A-1 'AAA'; -- $63,315,000 class A-2 'AAA'; -- $60,000,000 class A-2FL 'AAA'; -- $153,428,000 class A-3 'AAA'; -- $187,053,000 class A-SB 'AAA'; -- $1,090,152,000 class A-4 'AAA'; -- $245,000,000 class A-4FL 'AAA'; -- $1,205,597,000 class A-1A 'AAA'; -- $341,702,000 class AM 'AAA'; -- $100,000,000 class AM-FL 'AAA'; -- $211,490,000 class AJ 'AAA'; -- $175,000,000 class AJ-FL 'AAA'; -- $4,417,019,866 class X* 'AAA'; -- $77,297,000 class B 'AA'; -- $33,128,000 class C 'AA-'; -- $77,298,000 class D 'A'; -- $38,649,000 class E 'A-'; -- $55,213,000 class F 'BBB+'; -- $49,691,000 class G 'BBB'; -- $49,692,000 class H 'BBB-'; -- $16,563,000 class J 'BB+'. -- $11,043,000 class K 'BB'; -- $11,043,000 class L 'BB-'; -- $11,042,000 class M 'NR'; -- $5,521,000 class N 'B'; -- $11,043,000 class P 'NR'; -- $49,691,866 class Q 'NR'. * Notional Amount and Interest Only. Classes A-1, A-2, A-3, A-SB, A-4, A-1A, AM, AJ, B, C, D and X are offered publicly, while classes A-2FL, A-4FL, AM-FL, AJ-FL, E, F, G, H, J, K, L, M, N, P and Q are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 333 fixed-rate loans having an aggregate principal balance of approximately $4,417,019,866, as of the cutoff date. MONTECITO BROADCAST: Moody's Holds Ratings & Says Outlook is Neg. ----------------------------------------------------------------- Moody's Investors Service has affirmed Montecito Broadcast Group, LLC's existing ratings and changed the outlook to negative. Montecito Broadcast Group, LLC's B2 corporate family rating reflects substantial debt to EBITDA leverage of low 6 times for year ended 12/31/2006, modest scale and lack of geographic diversification. The rating further reflects the operating challenges the company has encountered in the first eleven months of operations and the increasing business risk associated with the broadcast television industry as advertising spending gets diversified over a growing number of media. The negative outlook reflects Montecito's lower than previously anticipated operating and financial performance and Moody's concerns regarding the lack of adequate room under the financial covenants in the company's credit facilities. Montecito's rating is supported by its substantial margin improvement, diverse network affiliations and concentration of local advertising revenues. Ratings Affirmed: Montecito Broadcast Group, LLC * Corporate Family Rating, B2 * Probability-of-default, B2 * Secured first lien revolver, B1 (LGD 3, 34%) * Secured first lien term loan, B1 (LGD 3, 34%) * Secured second lien term loan, Caa1 (LGD 5, 87%) to (LGD 5, 86%) The outlook is negative. Montecito Broadcast Group, LLC, headquartered in Montecito, California, is a television broadcaster comprised of stations located in Oregon, Kansas, and Hawaii. MORGAN STANLEY: Fitch Holds BB+ Rating on Class N-SDF Certificates ------------------------------------------------------------------ Fitch upgrades Morgan Stanley Capital I Inc., series 2006-XLF, commercial mortgage pass-through certificates as: -- $34.2 million class B to 'AAA' from 'AA+'; -- $53.3 million class C to 'AAA' from 'AA'; -- $38 million class D to 'AAA' from 'AA'; -- $38 million class E to 'AAA' from 'AA'; -- $23.7 million class F to 'AAA' from 'AA-'; -- $23.7 million class G to 'AA+' from 'A+'; -- $23.7 million class H to 'AA' from 'A'; -- $23.3 million class J to 'A' from 'A-'. Fitch affirms the ratings on these classes: -- $126.7 million class A-1 at 'AAA'; -- $289.3 million class A-2 at 'AAA'; -- Interest-only class X-1 at 'AAA'; -- Interest-only class X-2 at 'AAA'; -- $6.8 million class K at 'BBB+'; -- $18.5 million class L at 'BBB'; -- $27.8 million class M at 'BBB-'; -- $11 million class N-LAF at 'A-'; -- $9.2 million class N-RQK at 'BBB-'; -- $2 million class N-SDF at 'BB+'; -- $8 million class O-LAF at 'BBB-'. Fitch does not rate class N - W40. The rating upgrades reflect increased credit enhancement due to 49.1% paydown since issuance in July 2006. As of the February 2007 remittance date, the transaction's principal balance had decreased to $788.6 million from $1.6 billion at issuance. The largest loan in the transaction at issuance was the Magazine Multifamily Portfolio loan. It was secured by 37 multifamily apartment properties in various states with a total of 12,919 units. Since issuance, 29 of the properties have been released from the loan, and eight properties remain. As a result, the Magazine Multifamily loan's balance has been reduced by 88.2% is currently the third-largest loan in the transaction at $67.9 million (8.6%). The second largest loan in the transaction at issuance was the loan on the John Hancock Complex. The loan has paid in full. NAUTILUS RMBS: S&P Rates $20 Million Class C-F and C-V Notes at BB ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its preliminary ratings to Nautilus RMBS CDO IV Ltd./Nautilus RMBS CDO IV LLC's $607 million floating-rate notes due 2046. The preliminary ratings are based on information as of March 14, 2007. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The expected commensurate level of credit support in the form of subordination to be provided by the notes junior to the respective classes; -- The cash flow structure, which was subjected to various stresses requested by Standard & Poor's; -- The experience of the collateral manager; and -- The legal structure of the transaction, including the bankruptcy remoteness of the issuer. Preliminary Ratings Assigned Nautilus RMBS CDO IV Ltd./Nautilus RMBS CDO IV LLC Class Rating Amount (mil. $) ----- ------ --------------- A-1S AAA 406.25 A-1J AAA 72.00 A-2 AA 53.00 A-3 A 29.00 B-F BBB 6.00 B-V BBB 20.75 C-F BB 4.00 C-V BB 16.00 Preferred shares NR 18.00 NR - Not rated. NPC INT'L: Closes Purchase of 59 Pizza Hut Units for $27.1 Mil. --------------------------------------------------------------- NPC International, Inc., has completed the acquisition of 59 Pizza Hut units located primarily in Idaho and the Spokane Valley for $27.1 million from Pizza Hut of Idaho, Inc.; Rocky Mountain Pizza Huts, Inc.; Northwest Restaurant Group, Inc.; and Northern Idaho Pizza Huts, Inc. As reported in the Troubled Company Reporter on Feb. 16, 2007, the 51 restaurants, 6 delivery/carryout units and 2 express units generated $46.9 million in net product sales during the 52 weeks ended December 2006, according to information provided to NPC. Forty of these stores are located throughout Idaho, 4 in eastern Oregon and 15 in Washington, primarily in the Spokane Valley. Forty-four of these locations will be leased from the sellers on certain agreed-upon terms and 15 locations will be leased from unrelated third parties. The transaction was funded by approximately $16 million of available cash reserves and borrowings on the company's $75 million revolving credit facility. NPC International Inc. is a franchisee of Pizza Hut restaurants, with about 800 restaurants and delivery kitchens in more than 25 states, mostly in the South. * * * As reported in the Troubled Company Reporter on Nov. 6, 2006, Moody's Investors Service's confirmed its B2 Corporate Family Rating for NPC International Inc. PACIFIC LUMBER: Scopac Can Access Cash Collateral until June 1 -------------------------------------------------------------- The United States Bankruptcy Court for the Southern District of Texas has authorized Scotia Pacific Company LLC to use Cash Collateral solely in accordance with the Budget through the week ending June 1, 2007. All objections to the extent not resolved or withdrawn are overruled. Scotia Pacific Company LLC delivered to the Court cash flow projections for the week ending March 9, 2007, through June 1, 2007, a full-text copy of which is available for free at: http://researcharchives.com/t/s?1b64 The Court finds that Scopac's request for use of Cash Collateral is necessary, essential and appropriate for the preservation of its estates and the operation of its business. The Budget may be modified from time to time in writing with the prior consent of Bank of America National Trust and Savings Association, as lender and agent for itself and other lender parties under a Credit Agreement dated July 20, 1998; Bank of New York Trust Company, NA, as successor trustee under the Indenture dated July 20, 1998; the Ad Hoc Committee of Timber Noteholders; and the Official Committee of Unsecured Creditors. Scopac intends to develop a further detailed budget in connection with further requests of approval for the use of Cash Collateral. Scopac will provide copies of any Additional Budgets to the California State Agencies and the Federal Agencies. In the event Scopac, BofA, BoNY, the Noteholder Committee and the Creditors Committee are unable to reach an agreement on an Additional Budget, Scopac's right to use Cash Collateral will cease when the term of the then current budget ends pending further Court order. The Court directs BoNY, as Indenture Trustee, to permit use of the Cash Collateral, specifically the Scheduled Amortization Reserve Account. BoNY will not suffer any liability to any noteholder or any other party, and will be held harmless from any liability that could exist or arise as a result of the Cash Collateral Order. The Creditors Committee has until June 7, 2007, to investigate the amount of the Prepetition Claims and the extent, validity or priority of BofA's and BoNY's liens on the Prepetition Collateral. Absent the filing of an objection, the Prepetition Claims will be deemed allowed claims, and the liens, security interests and pledges granted by Scopac to or for the benefit of BofA and BoNY in the Prepetition Collateral pursuant to the Indenture, Scopac Line of Credit and Deed of Trust will be deemed valid, enforceable and perfected. Adequate Protection As adequate protection of the interests, if any, of BofA, BoNY and the Noteholders in the Prepetition Collateral and the Cash Collateral, the Court grants each of BofA and BoNY, on its own behalf and on behalf of BofA and the Noteholders, a first priority, perfected replacement lien and security interest in all the Prepetition Collateral and the Cash Collateral of Scopac, to the extent of the diminution of their interests in the Prepetition Collateral and the Cash Collateral. BofA and BoNY are also each granted a superpriority cost of administrative priority claim under Section 507(b) of the Bankruptcy Code to the extent of the diminution of their interests in the Prepetition Collateral and the Cash Collateral. BofA's and BoNY's superpriority administrative claims, if any, will be subject to the fees and expenses of the Office of the U.S. Trustee and the Clerk of the Bankruptcy Court. Reporting Requirements The Court requires Scopac to timely deliver to each of BofA, BoNY and their counsel, the Creditors Committee, and the counsel to the Noteholder Committee: (i) Any and all information required by the Scopac Line of Credit documents when due; (ii) On a monthly basis, a financial report consisting of Scopac's balance sheet and income statement as of the end of that period; (iii) Copies of all monthly operating reports delivered to the office of the U.S. Trustee and to the Creditors Committee within two days after filing; (iv) On a weekly basis, a report of the difference between budgeted and expended Cash Collateral; and (v) On a monthly basis, a report on the balance in the SAR Account, including a report on whether any funds in the SAR Account had been used. The California State Agencies reserve the right to request copies of the financial information Scopac is providing to BofA, BoNY and the Noteholder Committee. Professional Fees Any provision of the Cash Collateral Order, the Scopac Line of Credit or the Deed of Trust is subject and subordinate to a carve-out for the payment of allowed fees and disbursements incurred by the consultants and professionals retained, pursuant Sections 327 or 328 of the Bankruptcy Code, by Scopac and any committee appointed under Section 1102 of the Bankruptcy Code, in an amount not to exceed the aggregate amount -- the Pre-Default Carve-Out Amount -- of all: (i) unpaid consultant and professional fees and disbursements incurred, accrued or invoiced from the Petition Date until the Default Point; and (ii) quarterly fees required to be paid pursuant to Section 1930(a)(6) of the Judicial and Judiciary Procedures Code and any fees payable to the Clerk of the Bankruptcy Court, provided, however, that in no event will the Carve-Out include professional fees and disbursements incurred in connection with the actual filing of any claims or causes of action against BofA or BoNY challenging or raising any defense to the Prepetition Claims or any liens of BofA or BoNY. Nothing will preclude Scopac from reimbursing any fees and expenses incurred by the Creditors Committee in investigating or reviewing the Prepetition Claims or any liens of BofA, BoNY or the Noteholders to the extent permitted by the Cash Collateral Order, the Court rules. Scopac filed with the Court a 13-week forecast of its projected professional fees through the week ending June 1, 2007. A full-text copy of Scopac's 13-Week Forecast of Professional Fees is available for free at http://researcharchives.com/t/s?1b65 The Default Point refers to the earlier of: -- the date the Cash Collateral Order expires; or -- the date when an Event of Default has occurred and BofA, BoNY and the Noteholders have given notice and have obtained a further Court order terminating Scopac's right to use Cash Collateral. Scopac will be permitted to pay compensation and reimbursement of expenses incurred up to the Default Point in accordance with the Budget, allowed and payable under Sections 328, 330 and 331 Bankruptcy Code, and free and clear of the liens and superpriority administrative claims of BofA and BoNY. Scopac will pay on a monthly basis the reasonable fees of BofA and BoNY, including the reasonable fees and expenses of their counsel. Counsel for BofA and BoNY will submit bills to Scopac on a monthly basis, and Scopac will have 10 days after receipt of those monthly bills to object to fees, expenses and other matters. Any unresolved disputes with respect to those bills will be resolved by the Court. Scopac is authorized to pay any of those fees and expenses to which no objection is filed. Events of Default An Event of Default with respect to the use of the Cash Collateral refers to the occurrence and continuance of any of these events: 1. Scopac fails or refuses to pay any interest in relation to the adequate protection provisions of the Cash Collateral Order and that failure or referral continues for 14 days after notice from BOfA and BoNY; 2. The conversion of Scopac's case to one under Chapter 7 of the Bankruptcy Code; 3. The dismissal of Scopac's case; 4. Appointment of a Chapter 11 trustee in Scopac's case; 5. Appointment of an examiner having extended powers relating to the operation of Scopac's business; 6. The lifting of the automatic stay as to any material asset of Scopac; 7. Scopac's actual revenues during any period from the Petition Date of any budget period through the last date of that same budget period fall more than 10% below Scopac's revenue projections for that same period; provided however, that in the event those revenues are not met, Scopac may cure any default by decreasing expenses by 10%; or 8. Scopac's expenditure of Cash Collateral with respect to any line item in the Budget during any period from March 9, 2007, through the last date of any budget period in an aggregate amount in excess of 110% of the amount budgeted during that period for that line item and Scopac's failure to cure the same within 14 days after that failure first occurred; provided, however, that, to the extent the amount budgeted for that line item for any period exceeds the amount actually expended for that item during the period, the amount equal to the lesser of (a) 10% of the amount of that line item for the period and (b) the amount of that excess, may be allocated by Scopac to any line item or items for which expenditures during the period exceeded the budget. Upon the occurrence and continuance of an Event of Default, Scopac's right to use Cash Collateral terminates on not less than five business days' notice to both Scopac and the Creditors Committee from BoNY and the Noteholders. On notice of any Event of Default, Scopac may seek from the Court for interim authority to use Cash Collateral on five business days' notice. The Cash Collateral Order will have no effect on the Noteholder Committee's right or the right of any party-in-interest to seek compensation under Section 503 of the Bankruptcy Code. 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. 9, http://bankrupt.com/newsstand/or 215/945-7000). RADNOR HOLDINGS: Carroll Services to Assist in Liquidation ---------------------------------------------------------- Radnor Holdings Corp. and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the District of Delaware to hire Carroll Services LLC to provide certain wind-down and liquidation services. The Court also permitted the Debtors to hire James Patrick Carroll to serve as their Chief Liquidation Officer and on the Board of Directors of Radnor, pursuant to an engagement letter. As reported in the Toubled Company Reporter on Feb. 22, 2007, Mr. Radnor will replace Paul Finigan, the former sole independent director on Radnor's Board who resigned late last year. Stan Springel of Alvarez & Marsal LLC, who was the Debtors' Chief Restructuring Officer, also left Radnor following the sale of substantially all of the Debtors' assets in November 2006. Trustee's Objection As reported in the Troubled Company Reporter on March 12, 2007, the U.S. Trustee for Region 3 opposed the Debtors' request for a turnaround manager and wanted the case converted to a chapter 7 liquidation. The Trustee argued that it was both easier and cheaper to have a chapter 7 trustee than a turnaround manager. Scope of Services Carroll Services, through the efforts of Mr. Carroll and any additional officers, will: (a) analyze assets and potential causes of action remaining with the Debtors after the sale of substantially all of their assets; (b) analyze liabilities and potential liabilities of the Debtors; (c) assist the Debtors in developing, negotiating, and pursuing a liquidating plan of reorganization; (d) serve as a principal contact with the company's senior secured creditors, the Official Committee of Unsecured Creditors, and other parties-in-interest with respect to the Debtors' bankruptcy cases and their financial and operational matters; and (e) assist the Debtors in all bankruptcy-related matters. Mr. Carroll charges $350 per hour. The firm will charge its usual and customary rates for additional officers. The Debtors agree to indemnify Mr. Carroll and any additional officers to the same extent as the most favorable indemnification it extends to its officers or directors. Mr. Carroll and each additional officer will also be covered as an officer or director under Radnor's existing director and officer liability insurance policy. "To the best of my knowledge, information and belief, Carroll Services has not represented any of the Debtors' parties-in- interest in connection with matters relating to the Debtors, their estates, assets, or businesses, and will not represent other entities, which are creditors of, or have other relationships to, the Debtors," Mr. Carroll assures the Court. The firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Radnor Holdings Headquartered in Radnor, Pennsylvania, Radnor Holdings Corporation -- http://www.radnorholdings.com/-- manufactured and distributed a broad line of disposable food service products in the United States, and specialty chemicals worldwide. The Debtor and its affiliates filed for chapter 11 protection on Aug. 21, 2006 (Bankr. D. Del. Case No. 06-10894). Gregg M. Galardi, Esq., and Mark L. Desgrosseilliers, Esq., at Skadden, Arps, Slate, Meagher, represent the Debtors. Donald J. Detweiler, Esq., and Victoria Watson Counihan, Esq., at Greenberg Traurig, LLP, serve the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed total assets of $361,454,000 and total debts of $325,300,000. The Debtors' exclusive period to file a chapter 11 plan expires on April 18, 2007. REFCO INC: Court Disallows 59 Claims in Refco LLC Totaling $1.5MM ----------------------------------------------------------------- In consideration of separate pleadings filed by Albert Togut, the Chapter 7 Trustee overseeing the liquidation of Refco, LLC's estate, the Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York disallowed and expunged in their entirety 59 proofs of claim, totaling more than $1,500,000, on various grounds. Specifically, at the Chapter 7 Trustee's request, Judge Drain disallowed and expunged 56 claims because they: (a) failed to provide sufficient information to ascertain the basis of the claim; (b) were based on customer accounts which were closed before the Debtor's bankruptcy filing, or which carried a zero balance when the Debtor filed for bankruptcy; or (c) were for account balances that were transferred to Man Financial, Inc., pursuant to the Chapter 7 Sale Order. The Unsubstantiated Customer Claims, totaling more than $900,000, include: Claimant Claim No. Claim Amount -------- --------- ------------ Michael C. James 146 $312,688 Matach 24 Ltd. 206 100,014 Cynthia C. Terwilliger 305 90,000 Michael Stamer 538 83,891 G. David Richardson 262 60,000 Khashayar & Laaden Vosough 390 60,000 In a separate order, Judge Drain disallowed Karl Ulmer's Claim Nos. 430 and 549 on the basis that (i) Claim NO. 430 is barred by principles of res judicata and seeks no affirmative relief against the Debtor and (ii) Claim No. 549 is duplicative of Claim No. 430. Judge Drain also disallowed and expunged in its entirety Claim No. 36 filed by L&A Investments because the National Futures Association has determined that the Chapter 7 Debtor is not liable for the losses incurred in L&A's commodity trading account. Moreover, Judge Drain is yet to rule with respect to the Chapter 7 Trustee's proposed disallowance of: -- Claim No. 155 filed by the Department of Treasury - Internal Revenue Service for $66,000, arising from federal tax liabilities owed by the Chapter 7 Debtor on information reporting failures; and -- Claim Nos. 152, 203, and 286 filed by Paul Bueltmann, Stefan Lew, and Hartmut Fenkl on the grounds that: * they are contractually barred due to their failure to meet the requirement of the claimants' agreement with Refco LLC to commence an action within one year after the alleged cause of action arose; * the Claimants have released Refco LLC from liability for accepting trading instructions from, and for the remittance of fees to, the trading advisor; * the Claimants agreed to indemnify and hold harmless the Chapter 7 Debtor for its commission-sharing arrangement with, and the trading practices of, the Claimants' trading advisor; and * no agency relationship existed between Refco LLC and an identified broker regarding the Claimants' commodity trading accounts with the Debtor. 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). REVLON INC: Posts $5.5 Million Net Loss in Fourth Quarter 2006 -------------------------------------------------------------- Revlon Inc. reported its results for the fourth quarter and full year ended Dec. 31, 2006 Net loss for the fourth quarter was $5.5 million against net income of $64.3 million in the fourth quarter of 2005. Net loss for the full year was $251.3 million versus a net loss of $83.7 million in 2005. Fourth Quarter Results The company's net sales in the fourth quarter of 2006 declined to $378.9 million, compared with net sales of $437.8 million in the fourth quarter of 2005. This decline was primarily driven by lower shipments, partially offset by lower returns, allowances and discounts. Excluding the favorable impact of foreign currency, net sales in the fourth quarter of 2006 declined 13.8% versus year-ago. The fourth quarter of 2005 benefited significantly from the sell-in associated with the complete re-stage of the Almay brand and the launch of the Vital Radiance brand. U.S. Net Sales Net sales for the quarter declined to 227.1 million, versus $286.3 million in the fourth quarter of 2005. This performance was driven by lower shipments in color cosmetics, partially offset by lower returns, allowances and discounts, and higher shipments in the beauty care businesses. As noted above, the fourth quarter of 2005 benefited significantly from the sell-in associated with the Almay re-stage and the launch of Vital Radiance. International Net Sales Net sales for the quarter were essentially even at $151.8 million, versus $151.5 million in the fourth quarter of 2005. Double-digit growth in Latin America was offset by low-single-digit declines in Asia Pacific and Europe. Excluding the impact of foreign currency translation, International net sales in the quarter declined by approximately one percentage point versus year-ago. Operating income in the fourth quarter was $70.1 million, against operating income of $99.6 million in the fourth quarter of 2005. Adjusted EBITDA in the fourth quarter of 2006 was $108.2 million, compared with Adjusted EBITDA of $126.8 million in the same period last year. Operating income and Adjusted EBITDA in the fourth quarter of 2006 were negatively impacted by $20.8 million and $9.7 million, respectively, as a result of the previously announced February 2006 and September 2006 restructuring programs and the discontinuance of the Vital Radiance brand. Net loss in the fourth quarter of 2006 was $5.5 million compared with net income of $64.3 million in the fourth quarter of 2005. Net cash used for operating activities in the fourth quarter of 2006 was $13.9 million, compared with net cash used for operating activities of $23.8 million in the fourth quarter of 2005. This performance reflected the higher net loss in the fourth quarter of 2006, offset by an overall improvement in the levels of working capital. During the quarter, the company continued to successfully implement its disclosed organizational streamlining, as well as its previously disclosed discontinuance of Vital Radiance, which did not maintain an economically feasible retail platform for future growth. Revlon reiterated its belief that the restructuring actions taken during 2006 and the discontinuance of Vital Radiance will accelerate the company's path to becoming net income and cash flow positive. The total impact of restructuring charges, Vital Radiance and executive severance negatively impacted full year 2006 operating profitability by approximately $145 million and Adjusted EBITDA by approximately $123 million. Revlon President and Chief Executive Officer David Kennedy stated, "Our results for the year reflect the important and costly decisions we have made to position Revlon for future success. We are fortunate to have such a strong portfolio of brands, particularly the Revlon brand, which we intend to fully leverage going forward. As we move into 2007, we will continue to concentrate on bringing innovation and excitement to the market in a way that is intensely focused on improving our profitability and cash flow. We remain confident in our ability to achieve Adjusted EBITDA of approximately $210 million in 2007." Recent Financing In December 2006, the company successfully refinanced its 2004 credit agreement and extending the maturity of the credit agreement to January 2012. In refinancing the credit agreement, the company entered into a new $840 million term loan facility with a maturity of January 2012 and an amended and restated revolving credit agreement, extending the maturity of the existing $160 million multi-currency revolving credit facility through January 2012. The interest rate on the new term loan facility, which was fully drawn at Feb. 28, 2007, was reduced by 200 basis points. The interest rate on the revolving credit facility, which was undrawn at Feb. 28, 2007, was reduced by 50 basis points. In January 2007, the company completed a significantly over- subscribed $100 million rights offering, which it launched in December 2006. The proceeds from the offering were used to redeem $50 million in aggregate principal amount of its 8-/8% Senior Subordinated Notes, reducing the outstanding balance of these notes to $167.4 million, and to repay all of the approximately $43.3 million of indebtedness then outstanding in January 2007 under the revolving credit facility, with the balance of approximately $5 million, after fees and expenses, being available for general corporate purposes. Also, effective upon the consummation of the $100 million rights offering, $50 million of the line of credit from MacAndrews & Forbes will remain available through Jan. 31, 2008. A full-text copy of Revlon's regulatory filing is available for free at http://ResearchArchives.com/t/s?1b55 About Revlon Inc. Revlon, Inc. (NYSE:REV) -- http://www.revloninc.com/-- is a worldwide cosmetics, skin care, fragrance, and personal care products company. The company's vision is to deliver the promise of beauty through creating and developing the most consumer preferred brands. The company's brands include Revlon(R), Almay(R), Vital Radiance(R), Ultima(R), Charlie(R), Flex(R), and Mitchum(R). The company's Latin American operations are located in Argentina, Brazil, Chile, Mexico and Venezuela. On Dec. 31, 2006, the company's balance sheet showed a stockholders' deficit of $1,229,800,000, compared to a deficit of $1,095,900,000 on Dec. 31, 2005. RIGHT-WAY DEALER: Selling Assets to Five Star for $5 Mil. in Cash ----------------------------------------------------------------- Five Star Products, Inc. has signed a definitive agreement with Right-Way Dealer Warehouse, Inc., to acquire substantially all of Right-Way's assets and the operations of its Brooklyn Cash & Carry business pursuant to Section 363 of the Bankruptcy Code for an aggregate purchase price of approximately $5 million in cash subject to adjustment as provided in the definitive agreement. The transaction, which is subject to approval by the Bankruptcy Court for the District of Massachusetts, is scheduled to close on April 13, 2007. Both Five Star, whose annual revenues were in excess of $100 million in 2006, and Right-Way are distributors of paint sundries, home decorating and hardware products, primarily in the Northeast market. Five Star is majority owned by National Patent Development Corporation. In addition to the agreement to acquire Right-Way's assets, at the closing of the asset purchase, Five Star will enter into a lease of a warehouse in Brooklyn, New York at which Right-Way conducts the Brooklyn Cash & Carry business. At the closing, Five Star will also enter into an employment agreement with Ron Kampner, the principal of Right-Way. Mr. Kampner will become Five Star's Senior Vice President of Sales, reporting to Bruce Sherman, CEO of Five Star's operating subsidiary. "Right-Way is an excellent acquisition for Five Star and is the first step in expanding our footprint in the hardware and paint distribution business on the Eastern Seaboard," Leslie Flegel, recently appointed Chairman of Five Star, commented. "The two companies' product lines and markets complement each other in a way that should create cost savings and marketing synergies. This will result in better service for our customer base while improving profits for Five Star Products. This type of transaction has the double positive effect of allowing us to become a larger enterprise and at the same time more broad based in our offerings to our customers. Our management team also benefits from the addition of Ron Kampner who enjoys an outstanding reputation in the marketplace, and he and his experienced team are a welcome addition to the Five Star group." "Five Star and Right-Way have long been respected competitors, sharing the common value of serving the customer first," Mr. Kampner commented. "Now that we will be together, Bruce Sherman and I concur that the customer is the real winner in this deal. I look forward to working with Bruce and his operating team and making that goal a reality." "A particularly exciting aspect of this acquisition is that it follows so quickly last week's announcement of Five Star's strengthened leadership and its aggressive business plan for expansion," John Belknap, recently named CEO of Five Star, added. "Ron Kampner is an outstanding addition to the Five Star team, which is led by Bruce Sherman, our operating CEO." The company, as a result of this transaction, expects its revenues for the twelve months following the close to exceed $130 million and anticipates that the acquisition will be accretive to Five Star's earnings in 2007. About Five Star Products Five Star Products, Inc. (OTC Bulletin Board: FSPX.OB), with annual revenues exceeding $100 million, is engaged in the wholesale distribution of home decorating, hardware, paint and finishing products in twelve states with emphasis in the greater New York market. The company distributes products to approximately 3,500 independent retail dealers, which include lumber yards, do-it yourself centers, independent hardware stores, and paint stores. Five Star operates two warehouse facilities, the primary one located in East Hanover, New Jersey and another in Newington, Connecticut. About Right-Way Dealer Based in Norwood, Massachusetts, Right-Way Dealer Warehouse Inc. is a wholesaler of hardware, paints, varnishes, and supplies. The Debtor filed for chapter 11 protection on Jan. 22, 2007 (Bankr. D. Mass. Case No. 07-10355). D. Ethan Jeffery, Esq., Harold B. Murphy, Esq., and Natalie B. Sawyer, Esq., at Hanify & King PC represent the Debtor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $1 million and $100 million. SAXON ASSET: S&P Junks Rating on Series 2001-3 Class B Certs. ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class B asset-backed certificates from Saxon Asset Securities Trust 2001-3 to 'CCC' from 'B' and removed it from CreditWatch, where it was placed with negative implications June 14, 2006. At the same time, the ratings on the class M-2 and B notes from series 2001-3 and 2002-2, respectively, were lowered and remain on CreditWatch negative, where they were placed on the same date. Concurrently, the ratings on the remaining classes from these two transactions were affirmed. The lowered ratings and negative CreditWatch placements are the result of realized losses that have continuously reduced overcollateralization. During the previous six remittance periods, realized losses have exceeded excess interest by approximately 2.34x for series 2001-3 and 1.74x for series 2002-2. As of the February 2007 distribution date, O/C was below its target balance by approximately 68% for series 2001-3 and 26% for series 2002-2. Serious delinquencies (90-plus days, foreclosure, and REO) represent 18.23% of the current pool balance for series 2001-3 and 11.60% of the current pool balance for series 2002-2. Cumulative realized losses represent 4.53% of the original pool balance for series 2001-3 and 2.29% of the original pool balance for series 2002-2. Standard & Poor's will continue to closely monitor the performance of these transactions. If losses continue to outpace excess spread, further negative rating actions can be expected. Conversely, if losses are covered by excess spread and O/C builds toward its target balance, S&P will affirm the ratings and remove them from CreditWatch. The rating on class B from series 2001-3 was removed from CreditWatch because it was lowered to 'CCC'. According to Standard & Poor's surveillance practices, ratings lower than 'B-' on classes of certificates or notes from RMBS transactions are not eligible to be on CreditWatch negative. The affirmations are based on current and projected credit support percentages that are sufficient to maintain the current ratings. Credit support is provided by subordination, O/C, and excess interest cash flow. The collateral consists primarily of 30-year, subprime, fixed- or adjustable-rate mortgage loans secured mostly by first liens on residential properties. Rating Lowered And Removed From Creditwatch Negative Saxon Asset Securities Trust Rating ------ Series Class To From ------ ----- -- ---- 2001-3 B CCC B/Watch Neg Ratings Lowered and Remaining on Creditwatch Negative Saxon Asset Securities Trust Rating Series Class To From ------ ----- -- ---- 2001-3 M-2 BBB/Watch Neg A/Watch Neg. 2002-2 B BB/Watch Neg BBB/Watch Neg. Ratings Affirmed Saxon Asset Securities Trust Series Class Rating ------ ----- ------ 2001-3 AF-6, X-IO, AV-1 AAA 2001-3 M-1 AA 2002-2 AF-5, AF-6, AV AAA 2002-2 M-1 AA 2002-2 M-2 A SECURITIZED ASSET: Fitch Holds BB+ Rating on One Certificate Class ------------------------------------------------------------------ Fitch has updated the ratings for Securitized Asset Backed Receivables' mortgage pass-through certificates: Series 2004-DO1: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'A-'; -- Class B-1 affirmed at 'BBB+'; -- Class B-2 affirmed at 'BBB'; and -- Class B-3 affirmed at 'BBB-'. Series 2004-DO2: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A+'; -- Class M-3 affirmed at 'A'; -- Class B-1 affirmed at 'A-'; -- Class B-2 affirmed at 'BBB'; and -- Class B-3 affirmed at 'BBB-'. Series 2004-OP1: -- Class M-1 upgraded to 'AA+' from 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'A-'; -- Class B-1 affirmed at 'BBB+'; -- Class B-2 affirmed at 'BBB'; and -- Class B-3 affirmed at 'BBB-'. Series 2004-OP2: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'A'; -- Class B-1 affirmed at 'A-'; -- Class B-2 affirmed at 'BBB+' -- Class B-3 affirmed at 'BBB'; and -- Class B-4 affirmed at 'BBB-'. Series 2004-NC1: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'A-'; -- Class B-1 affirmed at 'BBB+'; -- Class B-2 affirmed at 'BBB'; and -- Class B-3 affirmed at 'BBB-'. Series 2004-NC2: -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'A-'; -- Class B-1 affirmed at 'BBB+'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 affirmed at 'BBB-'; and -- Class B-4 affirmed at 'BB+'. Series 2004-NC3: -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'A+'; -- Class M-3 affirmed at 'A'; -- Class B-1 affirmed at 'A-'; -- Class B-2 affirmed at 'BBB+'; -- Class B-3 affirmed at 'BBB'; and -- Class B-4 affirmed at 'BBB-'. The collateral in the aforementioned transactions consists primarily of adjustable- and fixed-rate sub-prime mortgage loans secured primarily by first-liens on residential properties. For series 2004-NC1, 2004-OP1, and 2004-OP2, a very small percentage of the collateral consisted of second-lien loans at issuance. The originators include Decision One, Option One, and New Century, and are appropriately dubbed in their series' names. The servicers include Countrywide Home Loans, Inc. (rated 'RPS1' by Fitch), Option One Mortgage Corp. ('RPS1'), and Litton Loan Servicing ('RPS1'). The affirmations reflect satisfactory levels of credit enhancement (CE) to future expected losses, and affect approximately $754.31 million in outstanding certificates. The upgrade reflects an improvement in the relationship of CE to future expected losses, and affects approximately $110.9 million in outstanding certificates. For all transactions, the pool factors (current collateral balance as a percentage of initial collateral balance) range from 9% to 29%, and are seasoned in a range of 27 months to 35 months. The percentage of collateral in the 60+ buckets (including bankruptcy, Foreclosure, and Real Estate Owned) ranges from 15.07% to 22.15%. The cumulative losses as a percentage of original collateral balance range from 0.10% to 0.85%. The CE levels for a 'BBB-' rated bond range from 3.88% to 6% for transactions that have stepped-down, and 5.39% to 12.20% for transactions that have not stepped-down. SMURFIT-STONE: Fitch Rates $675 Million Senior Notes at B+ ---------------------------------------------------------- Fitch Ratings has assigned a 'B+/RR4' rating to the $675 million 8% senior unsecured notes due 2017 issued by Smurfit-Stone Container Enterprises Inc., a wholly owned subsidiary of Smurfit-Stone Container Corporation (SSCC). Proceeds from the new bond issue together with revolver borrowings will be used to tender for the company's 9.75% notes due 2011. The company's Issuer Default Rating is currently 'B+'. The Rating Outlook is Negative. SSCC has made visible progress in its strategic initiatives to return to profitability. The company turned profitable in the last two quarters on higher linerboard and box realizations and lower unit costs to manufacture and sell. The company's operating margins still trail behind those of other industry leaders, however, who are also closing box plants to improve efficiency and profits. To catch up SSCC will need to make headway in its revenue target initiatives, which may not be as easy to achieve as cutting costs, particularly if North American box demand is lackluster and competition is fierce. SSCC did restore a large piece of its financial health last year, paying down $937 million of debt principally from the proceeds of the sale of its folding carton business to Texas Pacific Group. Now SSCC needs to prove that it can grow the profitability of its corrugated business and generate substantial free cash flow and repay debt. SSCC's debt/EBITDA metric at the end of last year was 5.4x. SSCC is a North American leader in the production of corrugated boxes, a leading producer of folding cartons, and the world's largest recycler of paper products. SSCC produces over seven million tons of containerboard and ships over 80 billion square feet of boxes annually. Sales in 2006 were in excess of $7 billion. SOLUTIA: Initial Purchase Price Set at $212.5 Mil. in Flexsys Deal ------------------------------------------------------------------ In February, Solutia Inc. reached a definitive agreement to purchase Akzo Nobel N.V.'s stake in Flexsys, the 50%/50% rubber chemicals joint venture between Akzo Nobel and Solutia. In a Form 10-K filed by Solutia with the Securities and Exchange Commission, the transaction agreement provides for the sale by Akzo of its interest in the Flexsys joint venture to Solutia for an initial purchase price of $212,500,000 subject to various adjustments. The transaction is subject to conditions, including approval from the U.S. Bankruptcy Court for the Southern District of New York and the finalizing of the purchase agreement for Akzo's Crystex manufacturing operations in Japan. Solutia will fund the acquisition through a combination of sources, including a portion of its debtor-in-possession financing package. Pursuant to the Transaction Agreement, Akzo, and Flexsys and Solutia, including their affiliates and representatives, have agreed, subject to certain limitations and exclusions, to indemnify, defend and hold the other harmless from and in respect of any losses and liabilities arising out of any breaches of representations, warranties or covenants contained in the Transaction Agreement. Akzo also agreed, subject to certain exceptions, that for a period of five years after the closing of the Transaction Agreement, neither it nor its affiliates will compete with the Flexsys business and for a period of three years, will not solicit for employment certain Flexsys employees. In addition to customary termination rights, the Transaction Agreement may be terminated before closing by Akzo or Solutia if the closing has not occurred on or before May 25, 2007. A full-text copy of the Transaction Agreement is available for free at http://researcharchives.com/t/s?1b5f Headquartered in St. Louis, Missouri, Solutia Inc. (OTCBB:SOLUQ) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Allen E. Grimes, III, Esq., at Dinsmore & Shohl, LLP and Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher, LLP. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 81; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SOLUTIA INC: Earns $11 Million in Year Ended December 31 -------------------------------------------------------- Solutia Inc. and its debtor and non-debtor subsidiaries reported net income of $11,000,000 on $2,905,000,000 of net sales for the year ended Dec. 31, 2006, compared with net income of $8,000,000 on $2,759,000,000 of net sales for the prior year. Solutia's net cash flow was $43,000,000 in 2006, compared with a negative cash flow of $8,000,000 in 2005. Solutia held $150,000,000 in cash at Dec. 31, 2006, compared to $107,000,00 during the same point in 2005. Deloitte & Touche LLP, the Debtors' auditors, notes that the financial statements have been prepared assuming that the company will continue as a going concern. However, Deloitte notes, the company's recurring losses from operations, negative working capital, and shareholders' deficit raise substantial doubt about its ability to continue as a going concern. The financial statements do not include adjustments that might result from the outcome of the uncertainty. A full-text copy of Solutia's 2006 annual report on Form 10-K is available for free at http://researcharchives.com/t/s?1b5d Solutia Inc. Statement of Consolidated Financial Position As of December 31, 2006 (In millions) ASSETS Current Assets: Cash & cash equivalents $150 Trade receivables, net 288 Miscellaneous receivables 105 Inventories 274 Prepaid expenses 31 ------- Total Current Assets 848 Property, plant and equipment, net 795 Investments in affiliates 193 Goodwill, net 89 Intangible assets, net 31 Other assets 99 ------- Total Assets $2,055 ======= LIABILITIES AND SHAREHOLDERS' DEFICIT Current Liabilities: Accounts Payable $228 Accrued liabilities 245 Short-term debt 650 Liabilities of discontinued operations 1 ------ Total Current Liabilities 1,124 Long-term debt 210 Other liabilities 289 ------ Total liabilities not subject to compromise 1,623 Liabilities subject to compromise 1,849 Shareholders' Deficit: Common stock (authorized, 600,000 shares, 1 par value $0.01) -- 118,400,635 shares issued Additional contributed capital 56 Treasury stock, at cost (13,941,057 shares) (251) Net deficiency of assets at spin-off (113) Accumulated other comprehensive loss (67) Accumulated deficit (1,043) ------ Shareholders' deficit (1,417) ------ Total Liabilities & Shareholders' Deficit $2,055 ====== Solutia Inc. Statement of Consolidated Operations Year Ended December 31, 2006 (In millions) NET SALES $2,905 Total cost of goods sold 2,524 ------ Gross Profit 381 Marketing expenses 136 Administrative expenses 97 Technological expenses 45 Amortization expenses 1 ------ Operating income (Loss) 102 Equity earnings from affiliates 38 Interest expense, net (104) Other income, net 14 Loss of debt modification (8) Reorganization items, net (71) ------ Loss before income tax expense (benefit) (29) Income tax expense 18 ------ Income from continuing operations before (47) Income (loss) from discontinued operations, net 58 ------ Income before cumulative effect of change in accounting 11 principle Cumulative effect of change in accounting principle, net 0 ------ NET INCOME $11 ====== Solutia Inc. Statement of Consolidated Cash Flows Year Ended December 31, 2006 (In millions) Cash & cash equivalents used in operating activities: Net income (loss) $11 Adjustments to reconcile to Cash from Operations: Cumulative effect of change in accounting principle 0 Depreciation and amortization 111 Loss (income) from discontinued operations (58) Amortization of deferred credits (9) Deferred income taxes 4 Equity (earnings) loss from affiliates, net (38) Gain on sale of Astaris assets 0 Restructuring expenses and other changes 5 Other, net (2) Changes in assets and liabilities Income and deferred taxes 4 Trade receivables (43) Inventories (14) Accounts payable 12 Liabilities subject to compromise (307) Other assets and liabilities 138 ------ Cash provided (used in) by continuing operations (186) Cash provided by discontinued operations 2 ------ Cash provided by (used in) operations (184) ------ Investing activities: Property, plant and equipment purchases (106) Acquisition and investment payments, net (16) Property disposals and investment proceeds, net 5 ------ Cash used in continuing investing activities (117) Cash used in discontinued investing activities 69 ------ Cash provided by (used in) investing activities (48) ------ Financing Activities: Net change in short-term debt obligations 350 Proceeds from issuance of long-term debt obligations 0 Net change in cash collateralized letters of credit 0 Payments on long-term obligations (51) Deferred debt issuance costs (17) Other, net (7) ------ Cash provided by continuing financing activities 275 ------ Increase (Decrease) in cash and cash equivalents 43 Cash and cash equivalents, beginning of year 107 ------ CASH AND CASH EQUIVALENTS, END OF YEAR $150 ====== About Solutia Inc. Headquartered in St. Louis, Missouri, Solutia Inc. (OTCBB:SOLUQ) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Allen E. Grimes, III, Esq., at Dinsmore & Shohl, LLP and Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher, LLP. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 81; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SOLUTIA INC: Has Made Significant Progress in Chapter 11 Case ------------------------------------------------------------- Last month, Solutia Inc. and its debtor-affiliates sought further extension of their exclusive periods to file a Chapter 11 plan of reorganization through and including April 30, 2007, and to solicit acceptances of that plan through and including June 29, 2007. Subsequently, among various parties that filed responses to the Debtors' motion, the Ad Hoc Committee of Solutia Noteholders asked the U.S. Bankruptcy Court for the Southern District of New York to deny the requested extension. The Noteholders argued that the Debtors' request is not supported by real progress in the Chapter 11 cases, and the justifications given for extending exclusivity are hollow. Debtors Slam Noteholders Undisputed facts show that the Debtors have made significant progress toward emerging from Chapter 11 and have accomplished what the Court asked it to do at the November 16, 2006 hearing on exclusivity, Jonathan S. Henes, Esq., at Kirkland & Ellis LLP, in New York, states. The only thing Solutia, Inc., et al., has not done since the November 2006 hearing on the Debtors' request for extension is persuade the Ad Hoc Committee of Solutia Noteholders to engage in good faith, confidential negotiations with Solutia and its stakeholders, Mr. Henes tells the Court. The Noteholders cannot have it both ways -- simultaneously refusing to negotiate with the Solutia and its stakeholders while decrying the supposed lack of progress in the Debtors' Chapter 11 cases, he argues. Each of Solutia's major stakeholders, other than the Noteholders -- the Official Committee of Unsecured Creditors, Official Committee of Retirees, Official Committee of Equity Security Holders and Monsanto Co. -- support the Debtors' request for an extension of their exclusive periods to file, and solicit acceptances of, a reorganization plan. Once again, the Noteholders Committee is the lone party objecting to the Debtors' exclusivity, Mr. Henes notes. The Noteholders Committee claims that the Dec. 8, 2006 plan term sheet "failed to move the parties closer together and never became the focus of plan discussions." Mr. Henes says that in an effort to stimulate negotiations, and in recognition of the risks of the unresolved adversary proceeding commenced by Equity Committee against JPMorgan Chase Bank, as indenture trustee, Solutia provided the Noteholders with a term sheet outlining a compromise stand-alone plan of reorganization predicated on the Court's 50/50 assessment of the risks attendant to all parties from the JPMorgan Adversary Proceeding. The proposal provided the Noteholders with an 80.2% recovery, which has a 26% premium to the recovery proposed for Solutia's general unsecured creditors, but the Noteholders refused to engage in any negotiations with the Debtors or their official committees, Mr. Henes tells the Court. The Noteholders Committee asserts that the improvement in its recovery is the result of financial gamesmanship as opposed to the reallocation of real value or improvements in Solutia's business operations. As the Debtors clearly disclosed in their Exclusivity Request, the term sheet assumes a higher equity value than the disclosure statement, filed on Feb. 14, 2006, to their Plan, of Reorganization. The Noteholders' objection is a proverbial "red herring," Mr. Henes contends. The actual equity value will be determined by the Court or through the sale process, he states. The Noteholders Committee also attacks Solutia's exploratory sale process, conveying decidedly false impression that the Noteholders' professionals have not been involved in discussions regarding the sale process and have not been provided with all available confidential information concerning the sale process and its progress, Mr. Henes says. In consideration of the Court's and their stakeholders' concerns regarding the sale process, the Debtors pushed back the timetable for the sale process so that indications of interest would be due in late December 2006. The Debtors also met with each of their major stakeholders, including the Noteholders, to discuss the sale process, Mr. Henes relates. The discussions resulted in constructive comments and suggestions, which were incorporated into the sale process. The exploratory sale process was successful. The Debtors received indications of interest that would allow it to proceed with a viable alternative to a stand-alone plan based on a sale. Solutia also identified a second sale alternative premised on the sale of certain of Solutia's businesses and a reorganization around the remaining businesses. Mr. Henes informs the Court that Solutia is analyzing and evaluating its options and will continue to work with its stakeholders and prospective purchasers to develop and alternative sale-based plan that would be supported by the constituents. The Noteholders' repeated opposition to the continuation of the Debtors' exclusive periods is an exercise in futility because they are not in position to propose a viable, confirmable plan of reorganization, Mr. Henes maintains. Mr. Henes asserts that there is no prejudice to the Noteholders or any other stakeholders from extending the Exclusive Periods to allow the recently commenced talks between the Noteholders Committee and Monsanto to continue or for Solutia to continue to pursue the sale alternatives. He notes that Solutia's exclusive right to file a plan and solicit acceptances does not preclude the Noteholders or any other stakeholders from continuing to propose restructuring alternatives for the estate. Mr. Henes warns that termination of the Exclusive Periods at this juncture would be highly detrimental to the Chapter 11 cases and Solutia's businesses. Solutia believes that a clarification of the legal rights of its creditors is necessary, through a ruling on the JPMorgan Adversary Proceeding, to resolve the issues impeding Solutia's progress to confirm a Chapter 11 plan. About Solutia Inc. Headquartered in St. Louis, Missouri, Solutia Inc. (OTCBB:SOLUQ) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Allen E. Grimes, III, Esq., at Dinsmore & Shohl, LLP and Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher, LLP. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 81; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SPECTRUM BRANDS: Gets $1.6-Billion Pledge to Refinance Bank Loan ---------------------------------------------------------------- Spectrum Brands Inc. reported that Goldman Sachs and Bank of America have provided a commitment to refinance Spectrum Brands' existing bank credit facility. This commitment provides for a new bank credit facility in the aggregate principal amount of at least $1.6 billion with a six-year maturity. The refinancing will be completed by March 30, 2007. "We are very pleased to have reached this refinancing agreement, which will provide us with the financial flexibility to pursue additional steps to improve our capital structure in an orderly manner, while continuing to strengthen our operating businesses," Spectrum Brands President and Chief Executive Officer David Jones stated. "We remain keenly focused on completion of asset sales to reduce our outstanding debt and leverage. We believe the Company is on the right track to creating long-term sustainable value." The commitment of Goldman Sachs and Bank of America is subject to customary terms and conditions, including negotiation and execution of definitive loan documentation. Goldman Sachs will lead the refinancing and act as joint lead arranger, joint bookrunner and sole syndication agent. Bank of America will act as joint lead arranger and joint bookrunner. There can be no assurances that the anticipated refinancing will be completed or, if completed, what the time or terms of such transaction will be. Headquartered in Atlanta, Georgia, Spectrum Brands (NYSE: SPC) -- http://www.spectrumbrands.com/-- is a consumer products company and a supplier of batteries and portable lighting, lawn and garden care products, specialty pet supplies, shaving and grooming and personal care products, and household insecticides. Spectrum Brands' products are sold by the world's top 25 retailers and are available in more than one million stores in 120 countries around the world. The company has manufacturing and distribution facilities in China, Australia and New Zealand, and sales offices in Melbourne, Shanghai, and Singapore. * * * As reported in the Troubled Company Reporter on Feb. 12, 2007, Standard & Poor's Ratings Services lowered all of its ratings on Atlanta, Georgia-based Spectrum Brands Inc., including the company's corporate credit rating, which was lowered to 'CCC+' from 'B-'. The outlook is developing. SPECTRUM BRANDS: Launches Exchange Offer for 8-1/2% Senior Notes ---------------------------------------------------------------- Spectrum Brands, Inc. intends to commence an exchange offer to refinance the $350 million in aggregate principal amount outstanding of its 8-1/2% Senior Subordinated Notes due Oct. 1, 2013 (CUSIP No. 755081AD8) with new senior subordinated notes due October 2, 2013 of equal principal amount. The company intends to commence the exchange offer by Friday, March 16, 2007, and to consummate the initial settlement of the exchange offer and the bank credit facility refinancing referred to below by March 30, 2007, subject to the terms, and the satisfaction of the conditions, described below. The New Notes will bear interest at an initial rate of 11.00%, increasing to 11.25% on April 1, 2007 and thereafter increasing semi annually based on a specified schedule and other provisions. The New Notes will be redeemable by the company at scheduled redemption prices, reflecting a specified premium to par beginning immediately and declining to par on Oct. 1, 2010. In conjunction with the exchange offer, the company plans to solicit consents from the holders of Existing Notes to effect proposed amendments to the indenture for the Existing Notes that would eliminate substantially all of the restrictive covenants and events of default contained therein. The company expects that the indenture for the New Notes will contain restrictive covenants and events of default substantially similar to those pertaining to the Company's outstanding 7-3/8% Senior Subordinated Notes due 2015, including specified provisions for senior secured credit facilities of up to $1.6 billion. In connection with the exchange offer, the company has entered into an agreement with certain holders of the Existing Notes who previously delivered a notice of default to the company under which such holders have agreed not to exercise any rights or remedies which may be available to them under the indenture for the Existing Notes in respect of and to waive alleged defaults, to tender their notes in the exchange offer and to consent to the proposed amendments to the indenture for the Existing Notes. The company has been advised that these holders own or otherwise control a majority in aggregate principal amount of the outstanding Existing Notes. The agreement will terminate in the event that Existing Notes are not exchanged in the offer prior to April 10, 2007. The closing of the exchange offer will be subject to various conditions, including the refinancing of the company's existing bank credit facility and holders of a majority in principal amount of the Existing Notes having tendered their Existing Notes in the exchange offer, consented to the amendments to the indenture for the Existing Notes and waived alleged defaults, and other customary terms and conditions. Annual Shareholders' Meeting Spectrum Brands, Inc., will hold its annual shareholders' meeting on April 25, 2007, at 8:00 a.m. CT at the company's North American headquarters, at 601 Rayovac Drive in Madison, Wisconsin. Shareholders of record as of March 27, 2007, will be entitled to vote at the meeting. About Spectrum Brands Headquartered in Atlanta, Georgia, Spectrum Brands (NYSE: SPC) -- http://www.spectrumbrands.com/-- is a consumer products company and a supplier of batteries and portable lighting, lawn and garden care products, specialty pet supplies, shaving and grooming and personal care products, and household insecticides. Spectrum Brands' products are sold by the world's top 25 retailers and are available in more than one million stores in 120 countries around the world. The company has manufacturing and distribution facilities in China, Australia and New Zealand, and sales offices in Melbourne, Shanghai, and Singapore. * * * As reported in the Troubled Company Reporter on Feb. 12, 2007, Standard & Poor's Ratings Services lowered all of its ratings on Atlanta, Georgia-based Spectrum Brands Inc., including the company's corporate credit rating, which was lowered to 'CCC+' from 'B-'. The outlook is developing. STRUCTURED ASSET: Fitch Rates $21 Mil. Class B2 Certificates at BB ------------------------------------------------------------------ Structured Asset Securities Corporation's (SASCO) mortgage pass-through certificates, series 2007-MLN1, are rated by Fitch Ratings: -- $706,858,000 classes A1 through A5 'AAA'; -- $40,105,000 class M1 'AA+'; -- $37,827,000 class M2 'AA'; -- $12,761,000 class M3 'AA-'; -- $18,230,000 class M4 'A+'; -- $13,672,000 class M5 'A'; -- $8,203,000 class M6 'A-'; -- $9,115,000 class M7 'BBB+'; -- $7,747,000 class M8 'BBB'; -- $11,394,000 class M9 'BBB-'; -- $13,216,000 class B1 'BB+'; and -- $21,420,000 class B2 'BB'. The 'AAA' rating on the class A certificates reflects the 22.45% credit enhancement provided by the 4.40% class M1, 4.15% class M2, 1.40% class M3, 2% class M4, 1.50% class M5, 0.90% class M6, 1% class M7, 0.85% class M8, 1.25% class M9, 1.45% class B1 and 1.50% class B2 along with overcollateralization (OC). The initial OC amount is 1.20%, growing to a target OC of 3.55%. In addition, the ratings on the certificates reflect the quality of the underlying collateral, and Fitch's level of confidence in the integrity of the legal and financial structure of the transaction. The mortgage pool consists of fixed-rate mortgage and adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties, with an aggregate principal balance of $ 911,486,558. As of the Feb. 1, 2007, cut-off date the mortgage loans had a weighted average loan-to-value ratio of 81.80%, weighted average coupon of 8.357%, weighted average remaining term to maturity of 354 months and an average principal balance of $222,911. Single-family properties and planned unit developments account for approximately 84.83% of the mortgage pool, condos 6.68% of the mortgage pool, and two-to-four family properties 8.49% of the mortgage pool. The three largest state concentrations are Florida (15.51%), New York (9.95%), and Maryland (8.85%). All of the mortgage loans were acquired by Lehman Brothers Holdings Inc. from Mortgage Lenders Network USA, Inc. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. SASCO deposited the loans into the trust, which issued the certificates, representing beneficial ownership in the trust. For federal income tax purposes, the Trust will consist of multiple real estate mortgage investment conduits (REMICs). Wells Fargo Bank, N.A. will act as trustee. Aurora Loan Services LLC, rated 'RMS1-' will act as Master Servicer for this transaction. STUDENT FINANCE: Former CEO Found Guilty of Bankruptcy Fraud ------------------------------------------------------------ Student Finance Corp.'s former chief executive officer Andrew Yao was found guilty Wednesday by a federal jury of two counts of bankruptcy fraud, the Houston Chronicle reports citing the Associated Press. Mr. Yao faces up to five years in prison and a fine of up to $250,000. According to the report, the trial, which started Monday, stemmed on a 2003 bankruptcy deposition wherein Mr. Yao denied knowing the identity of the person to whom $669,000 was wired to in 2001. Mr. Yao also claimed that the $150,000 he sent to two Las Vegas casinos was payment for lodging and gambling expenses for friends and relatives. In reality, according to the report, the $669,000 was wired to former Playboy centerfold Alexandria "Lexie" Karlsen Wolfe, Mr. Yao's mistress at that time, while the $150,000 was sent to cover Mr. Yao's blackjack games. Prosecutors suggested that Mr. Yao lied in order to fight off efforts by SFC's creditors to convert SFC's case to a chapter 7 liquidation, the report says. Mr. Yao claimed that he had no intention of lying to creditors or the bankruptcy court but rather wanted to hide his infidelity. Prosecutors however argued that all they needed was to prove that Mr. Yao intended to lie regardless of the reason why. Based in New Castle, Delaware, Student Finance Corp., was in the business of originating and acquiring non-guaranteed student loans and tuition installment agreements primarily from truck and driving schools. On June 5, 2005, four trucking schools filed an involuntary petition against the company (Bankr. D. Del. Case No. 02-11620). On Nov. 4, 2002, the Court entered an Order for Relief under Chapter 11 of the Bankruptcy Code. On Sept. 29, 2003, the Court appointed Charles A. Stanziale, Jr., as the chapter 11 trustee. The case was converted to a chapter 7 liquidation on Nov. 14, 2003 with Mr. Stanziale appointed as the chapter 7 trustee. Fox Rothschild LLP represents Mr. Stanziale. SUNTERRA CORP: Selling Assets to Diamond Resorts for $700 Million ----------------------------------------------------------------- Diamond Resorts, LLC has entered into a definitive agreement under which an affiliate of Diamond Resorts will acquire Sunterra Corporation for $16 per share in cash, a 35% premium over the closing price of Sunterra's common stock on March 8, 2007, the day before rumors of the acquisition entered the marketplace. The total value of the transaction is approximately $700 million, including $375 million of existing Sunterra debt. The Diamond Resorts affiliate is expected to commence a tender offer for all of Sunterra's outstanding common stock within the next five business days, which is subject to extension in certain circumstances and will remain open for 40 calendar days following commencement of the Offer. A bank group led by Credit Suisse has provided a debt financing commitment to Diamond Resorts to support the Offer. "We are very excited about this acquisition, which will enable Diamond Resorts to build on our position as a world leader in the vacation ownership industry to create the largest pure-play vacation ownership company in the world," Stephen J. Cloobeck, Chairman and Chief Executive Officer of Diamond Resorts, said. "With over 25 years of experience and a successful track record in the development, management, marketing and sales of vacation ownership properties, we are uniquely positioned to capitalize on Sunterra's assets and enhance its position as a global leader in vacation ownership innovation and quality." "We plan to invest in Sunterra's worldwide platform, including its 96 branded or affiliated vacation ownership resorts throughout the continental United States as well as in Hawaii, Canada, Europe, the Caribbean and Mexico," Mr. Cloobeck added. "Our goal is to acquaint more consumers with the many benefits of vacation ownership and deliver an enhanced hospitality experience to Sunterra's 326,000 current owner families in 13 countries across the globe. We look forward to working with Sunterra's talented managers and employees to grow the company in the years ahead." The Sunterra Board of Directors has unanimously approved the acquisition and recommends that shareholders accept the Offer. Consummation of the Offer is subject to customary conditions and is not subject to financing. Diamond Resorts' acquisition of Sunterra is expected to be completed during the second quarter of 2007. Following the acquisition of at least 90% of Sunterra's outstanding shares in the Offer, the Diamond Resorts affiliate will merge with and into Sunterra, with any shares not tendered in the Offer being converted into the right to receive $16.00 per share in cash. Sunterra will remain headquartered in Las Vegas, Nevada. UBS Securities LLC, Credit Suisse, Trivergance LLC, Piercy Bowler Taylor and Kern, Certified Public Accountants, and Textron Financial Corporation are acting as financial advisors to Diamond Resorts and Christensen, Glaser, Fink, Jacobs, Weil & Shapiro, LLP, Ballard Spahr Andrews & Ingersoll, LLP and Katten Muchin Rosenman LLP are acting as legal counsel to Diamond Resorts. About Diamond Resorts Diamond Resorts LLC -- http://www.diamondresorts.com/-- has over 25 years of experience in the successful development, management, marketing and sales of vacation ownership properties and has been a consistent leader in the vacation ownership industry. Diamond Resorts' premier properties include Polo Towers, the first purpose built, high-rise vacation ownership property in the industry. Diamond Resorts most recently spearheaded the design of Marriott's Grand Chateau vacation ownership resort. The Diamond Resorts properties include some of the first vacation ownership properties in Las Vegas, such as the Jockey Club and The Carriage House, as well as Kona Reef in Hawaii. About Sunterra Corp. Headquartered in Las Vegas, Nevada, Sunterra Corporation (PINKSHEETS: SNRR) -- http://www.sunterra.com/-- is a vacation ownership company with more than 324,000 owner families and nearly 100 branded or affiliated vacation ownership resorts throughout the continental United States and Hawaii, Canada, Europe, the Caribbean and Mexico. Credit Facility Waiver On Feb. 1, 2007, the company entered into a waiver and amendment to its credit facility with Merrill Lynch Mortgage Capital Inc., as administrative agent and collateral agent for the lenders under the facility, pursuant to which, among other things, the company is permitted to postpone until July 31, 2007, the delivery of audited financial statements for the fiscal year ended Sept. 30, 2006. The company intends to restate its financial results for the fiscal years ended Dec. 31, 2002, through Sept. 30, 2005, and for the fiscal quarter ended Dec. 31, 2005. Sunterra has not filed financial statements for the fiscal quarters ended March 31, 2006, June 30, 2006, and Dec. 31, 2006, and for the fiscal year ended Sept. 30, 2006. The restatement is a result of certain issues with respect to European taxes and historical accruals, which were determined by management after its review of the factual findings of the independent investigation of the Audit and Compliance Committee of its Board of Directors into certain allegations by a former employee regarding, among other things, accounting improprieties at its European subsidiary. If the company cannot complete the audit and provide audited financials by July 31, which is the expiration date for the credit facility, the company would intend to request an additional waiver in connection with an extension or renewal of the credit facility. SUPERIOR PETROLEUM: Case Summary & Four Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Superior Petroleum Corporation 781 Progress Court Williamston, MI 48895 Bankruptcy Case No.: 07-01786 Type of Business: The Debtor is engaged in oil exploration and development. Chapter 11 Petition Date: March 13, 2007 Court: Western District of Michigan (Grand Rapids) Judge: Jo Ann C. Stevenson Debtor's Counsel: Jerome D. Frank, Esq. Frank & Frank P.C. 30833 Northwestern Highway, Suite 205 Farmington Hills, MI 48334 Tel: (248) 932-1440 Debtor's financial condition as of March 13, 2007: Total Assets: $8,878,442 Total Debts: $23,712,958 Debtor's Four Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Red River Operators $437,202 c/o Stephen Metzler 1800 West Big Beaver Road, Suite 100 Troy, MI 48084 Joe Blimline $99,016 c/o Joseph Spiegel 825 Victory Way, Suite 300 Ann Arbor, MI 48108 Great Lakes Energy LLC $27,350 c/o Stephen Metzler 1800 West Big Beaver Road, Suite 100 Troy, MI 48084 J2 Investments $6,466 c/o Stephen A. Metzler 1800 West Big Beaver Road, Suite 100 Troy, MI 48084 TOWER AUTO: Wants to Make Initial Payment in ERISA Settlement ------------------------------------------------------------- Tower Automotive Inc. and its debtor-affiliates seek permission from the Honorable Allen L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York to make a $2 million provisional settlement payment as part of a settlement of an Employee Retirement Income Security Act Class Action. The Debtors previously obtained approval from Judge Gropper to advance up to an aggregate of $1,500,000 in legal defense fees, costs and related expenses incurred by the Debtors' current and former officers, directors and employees to defend alleged violations of the Employee Retirement Income Security Act Class Action. The Debtors maintain that resolution of the ERISA Litigation is an important aspect of their efforts to reorganize. The Debtors and the individual defendants have been negotiating a settlement of the Class Action Lawsuits that resolves all potential liability of the Debtors or the Individual Defendants, Richard M. Cieri, Esq., at Kirkland & Ellis LLP, in New York, relates. While the Settlement will be subject to review and approval by U.S. District Court for the Southern District of New York, the Debtors come before Judge Gropper seeking authority to make a provisional payment pursuant to the Settlement, Mr. Cieri notes. If the request is granted, the Debtors would execute a fully documented settlement agreement and make the Provisional Settlement Payment. The salient terms of the Settlement term sheet provides that: (a) Upon approval of the Settlement by the District Court, the Debtors will deposit $2,000,000 in a segregated account; (b) The stipulated liability under the ERISA Litigation will be capped at $14,000,000, which is within the policy limits under the ERISA Policy; (c) The Debtors and the Individual Defendants would agree to assign to the plaintiffs in the Class Action Lawsuits the right to pursue the Debtors' and the Individual Defendants' claims against Federal Insurance Company -- the Debtors' insurance carrier -- up to $14,000,000, at the Plaintiffs' sole expense; and (d) If the Plaintiffs prevail against Federal in the Coverage Litigation, the first $4,000,000 of any recovery would go to the Plaintiffs, the next $2,000,000 would go to the Debtors to reimburse them for the Provisional Settlement Payment, and the balance of any recovery would go to the Plaintiffs. Thus, so long as there is more than $6,000,000 in coverage for the ERISA Litigation, the Debtors will be entitled to a full refund of the Provisional Settlement Payment upon the Plaintiffs' receipt of funds from Federal. The Debtors submit that the Settlement is beneficial to their estates and creditors, fair and equitable, and falls well within the range of reasonableness. Mr. Cieri also notes that in exchange for the Provisional Settlement Payment, the Debtors will receive several important benefits from the Settlement, including that: (1) The Debtors will realize significant savings by not continuing to fund the litigation costs associated with the Coverage Litigation and the ERISA Litigation. The Coverage Litigation and the ERISA Litigation are both in relatively early stages, and given the tenor to date, would be very costly to conclude, and would likely involve significant appellate litigation; (2) The Settlement will provide much needed certainty to the Debtors and the Individual Defendants at a crucial time in the Debtors' Chapter 11 cases. The ERISA Litigation and the Coverage Litigation have been a distraction for the Debtors and for the Individual Defendants, and the Debtors believe that their reorganization efforts would benefit from putting an end to this distraction and allowing the Debtors and the Individual Defendants to more fully focus on the considerable challenges at hand related to the Debtors' planned emergence from Chapter 11; (3) The Settlement will remove a significant obstacle to the Debtors' ability to retain the services of the Individual Defendants going forward. The Debtors expect that the future owners of, or investors in, their businesses, whomever they may be, may want to retain some or all of the Individual Defendants, and that the ERISA Litigation could be a barrier to that goal; and (4) The Debtors and the Individual Defendants will receive a full release of all claims arising out of, or in any way related to, directly or indirectly, any or all of the acts, omissions, facts, matters, transactions or occurrences during the Class Period that are, were, or could have been alleged, asserted or set forth in the ERISA Litigation related to alleged violations of ERISA. The release is significant because there's a risk that if the Individual Defendants were held liable in the ERISA Litigation, their liability would be as agents of the Debtors, exposing the Debtors to both vicarious liability under the theory of "respondeat superior" and the risk of being collaterally estopped from denying liability for the actions of the Individual Defendants. Responses (a) Silver Point Silver Point Capital Fund, L.P., asserts that it neither takes issue with the economic structure of the Settlement nor maintains that the Settlement falls outside the "range of reasonableness." However, Silver Point believes that consideration of the request should be deferred until a better understanding of the Debtors' ability to fully satisfy the claims of their senior creditors -- specifically, the Second Lien Lenders -- in cash can be ascertained. James C. Tecce, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, argues that the Debtors' bankruptcy cases have reached a critical point, and paying junior creditors' prepetition claims outside of a Chapter 11 plan before the satisfaction of the Second Lien Lenders' claims simply is inappropriate. "This is especially true when the $2 million provisional payment will not be used to satisfy claims asserted against the Debtors," Mr. Tecce argues. Mr. Tecce adds that at best, the Debtors may be obligated with respect to indemnification claims asserted by the Individual Defendants relating to the ERISA Litigation. These claims would arise under the Debtors' by-laws and employment agreements, and relate to alleged prepetition misconduct. Accordingly, Silver Point asks Judge Gropper to sustain its objection and defer consideration of the Debtors' request. (b) Creditors Committee The Official Committee of Unsecured Creditors asks the Bankruptcy Court to deny the Debtors' request because: * The Plaintiffs' claims arose from the sale of securities, and the Bankruptcy Code mandates that the claims be subordinated to the claims of general unsecured creditors. Thus, payment of the Settlement, without a guarantee of insurance coverage, will in essence elevate the plaintiffs' claims above all other claims; and * The Settlement Payment will constitute the payment of a prepetition claim outside of a confirmed Reorganization Plan. Courts have consistently held that payment of those claims should only be approved where it is essential to the debtors' reorganization efforts. The Bankruptcy Court must not allow the Debtors to end run around the bankruptcy priority scheme, and favor the Plaintiffs' subordinate claims to the detriment of all other claimants, Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, emphasizes. Under Section 510(b) of the Bankruptcy Code, courts must subordinate bankruptcy claims "for damages arising from purchases and sales of securities of a debtor," including claims for "reimbursement or contribution" based on those claims, Mr. Dizengoff notes. According to Mr. Dizengoff, even if the Plaintiffs' claims are not subordinated pursuant to Section 510(b), they are still merely general unsecured claims that should be paid pursuant to a confirmed Plan. Multiple provisions in the Bankruptcy Code envision and demand that similarly situated creditors receive equal treatment. Moreover, as required by the Bankruptcy Court's prior orders, the Debtors must be directed to seek reimbursement from Federal of all amounts advanced, including amounts already paid, to the Individual Defendants if the Debtors prevail in the ERISA Coverage Litigation, Mr. Dizengoff argues. It is premature to allow the Debtors to pay any more amounts, including the Settlement Payment, if there is no basis to recover those amounts from Federal, he says. Mr. Dizengoff maintains that the Debtors should know first if they can recover the Settlement Payment -- plus the amounts previously paid -- from Federal. If the Debtors or their assigns are successful in the ERISA Coverage Litigation, then the proposed Settlement would have no impact on the estate. 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. The Debtors' exclusive plan-filing deadline is extended to March 21, 2007, pending a hearing on that date. (Tower Automotive Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). TOWER AUTOMOTIVE: Wants Avoidance Actions Protocol Established -------------------------------------------------------------- Tower Automotive Inc. and its debtor-affiliates previously asked the U.S. Bankruptcy Court for the Southern District of New York to enter a ruling establishing streamlined procedures for claims and actions that are commenced by the Debtors pursuant to Sections 502, 547, 548 and 550 of the Bankruptcy Code. The Court requested that the motion be noticed to all defendants in the Avoidance Actions. On Feb. 23, 2007, the Debtors filed a similar request asking the Court to enter an order establishing certain procedures governing all Avoidance Actions. Specifically, Frank A. Oswald, Esq., at Togut, Segal & Segal, LLP, in New York, says, the Debtors ask the Court to enter a ruling: (a) eliminating the requirement of a scheduling conference required by Rule 7026(f) of the Federal Rules of Bankruptcy Procedure, and an initial pretrial conference under Rule 7016, and instead, set procedures and timetables for service of Rule 7026 disclosures; (b) requiring a pre-motion conference before any motion is filed; and (c) authorizing and approving omnibus procedures for the settlement and compromise of the Avoidance Actions, pursuant to which the Debtors would be permitted to settle a majority of the Avoidance Actions without the requirement of noticing all creditors or bringing all of the proposed settlements before the Court for approval pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure. Mr. Oswald notes that the Debtors have served a copy of the present request with the summons and complaint on the defendant in each adversary proceeding. The Debtors, the Official Committee of Unsecured Creditors and their retained professionals have been working together to determine whether any transfers made by the Debtors to third parties within the one-year period immediately before their bankruptcy filing, may be avoided and recovered by the Debtors pursuant to Chapter 5 of the Bankruptcy Code, Mr. Oswald tells Judge Kishel. According to Mr. Oswald, the Debtors have commenced more than 400 adversary proceedings seeking to avoid and recover in excess of $260,000,000, and have entered into 29 tolling agreements. Mr. Oswald asserts that absent the establishment of streamlined procedures to govern the prosecution and settlement of the Avoidance Actions, it will be extremely difficult and costly for the Debtors to prosecute the Avoidance Actions in an efficient and timely manner and equally as difficult for the Court to administer the matters. Mr. Oswald says by instituting certain procedures, the Debtors will be able to minimize the administrative costs to the estates including, among other things: * the cost and expense of having counsel travel to and from the Court for countless pretrial and scheduling conferences; * drafting Rule 9019 motions; and * serving every creditor with every proposed settlement, which could amount to hundreds of motions for approval of settlements. Mr. Oswald explains that given the volume of the Avoidance Actions that were commenced, the Debtors believe that their request with respect scheduling conferences, pretrial conferences, initial disclosures and motion practice are imperative. Absent the limitations, Mr. Oswald says, the Court's docket will be clogged with those matters and additional time will be consumed with reviewing and signing individual scheduling orders in potentially hundreds of adversary proceedings. In addition, the Debtors seek the Court's authority to settle and compromise Avoidance Actions in accordance with these procedures: (1) For the settlement of any Avoidance Action where the amount demanded is $1,000,000 and greater, the Debtors will, after obtaining the prior agreement of the Creditors Committee or its successor that the proposed settlement is fair and reasonable, seek for Court approval of the proposed settlement pursuant to Rule 9019 on notice by regular, first-class mail upon: (a) counsel for the Creditors Committee; (b) the Office of the U.S. Trustee for the Southern District of New York; (c) the parties listed on the "Notice List" established by the Court's ruling establishing notice procedures; and (d) the defendant in that particular Avoidance Action; (2) For the settlement of any Avoidance Action where the amount demanded is greater than $150,000 but less than $1,000,000, after consultation with the Creditors Committee or its successor regarding the settlement, the Debtors will serve notice of any proposed settlement by regular, first-class mail on the Notice Parties, provided that if any of the Notice Parties object to a settlement proposed by the Debtors, and the Debtors still desire to enter into the proposed settlement with the defendant, the execution of the settlement will not proceed except upon: -- resolution of the objection by the Debtors and the Objecting Party; or -- further Court ruling after a hearing. The Debtors will also file notice on the Court's electronic docket. If no written objection is received within 10 business days after the date of service of the Notice, the Debtors will be authorized to consummate the proposed settlement without further Court ruling or consent of any other party; (3) For the settlement of any Avoidance Action where the amount demanded is $150,000 or less, the Debtors will be authorized to consummate the proposed settlement without further Court ruling, and without giving notice to, or receiving consent from any other party; and (4) The Debtors will provide a confidential bi-weekly settlement report to the Creditors Committee or its successor listing all settled actions, settlement amounts and claim waivers, unless the Committee or its successor waives the requirement. The Debtors hope that the proposed procedures will promote settlements because they believe proceeding in this manner may obviate the need for defendants to retain outside counsel during the settlement process. Often, not having to expend substantial resources for outside counsel is a major consideration in a defendant's willingness to settle quickly, Mr. Oswald explains. 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. The Debtors' exclusive plan-filing deadline is extended to March 21, 2007, pending a hearing on that date. (Tower Automotive Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). TRANS CONTINENTAL: Court Approves Chapter 11 Trustee Appointment ---------------------------------------------------------------- The Hon. Arthur B. Briskman of the U.S. Bankruptcy Court for the Middle District of Florida granted Tatonka Capital Corporation, Integra Bank, National Association, American Bank of St. Paul and First National Bank & Trust Company of Williston's request and order the U.S. Trustee for Region 21 to appoint a chapter 11 trustee in Trans Continental Airlines, Inc.'s case. Trans Continental is owned by Louis Pearlman. A Rudderless Ship The Movants told the Court that the Debtor's case literally cried out for a chapter 11 trustee to take control and direct the "rudderless ship" that was once the "financial empire" controlled by Mr. Pearlman. Mr. Pearlman is alleged to have direct or indirect control of over 100 entities. The Movants said that they are collectively owed in excess of $48 million by Mr. Pearlman and in excess of $64 million by Trans Continental. The Movants firmly believe that all roads point to the inevitable need to have an independent fiduciary appointed to immediately take control over this bankruptcy case so as to attempt to preserve value for all creditors and parties in interest. Ponzi Scheme The Movants disclosed that Mr. Pearlman and Trans Continental were the centerpieces in the largest "ponzi" scheme ever perpetrated in the State of Florida, with over $300 million in investor funds unaccounted for and an additional approximately $150 million in bank loans with little to no apparent assets to show for it. When it became apparent that his financial empire was crumbling around him, Mr. Pearlman is alleged to have fled the country after transferring substantial funds to himself personally and shortly after that, the federal authorities, including the FBI, the IRS, the FDIC and the Florida Office of Financial Regulation executed a search warrant at the offices of TCA and at Mr. Pearlman's home, taking control over numerous books and records of Pearlman, Trans Continental and perhaps other entities. Receivership The Movants tell the Court that a receiver was appointed over Trans Continental and certain other entities, excluding Mr. Pearlman individually, in a state court proceeding in the Circuit Court for the Ninth Judicial Circuit in and for Orange County in an action commenced by the State of Florida, Office of Financial Regulation in the exercise of the police powers of the State of Florida. Cause Exist to Appoint Chapter 11 Trustee The Movants contend that cause exists for the appointment of a chapter 11 trustee citing: (a) the allegations and apparent evidence of the largest "ponzi" scheme ever in the State of Florida, (b) the fact that Mr. Pearlman has fled the country, (c) the lack of any immediately available assets, (d) the allegations and apparent evidence that substantial monies and assets were diverted by Mr. Pearlman and others over the past several weeks, and (e) the seizure of the books and records of TCA and others by the federal authorities. About Trans Continental Based in Orlando, Florida, Trans Continental Airlines, Inc. -- http://www.t-con.com/-- provides charter flight services to numerous destinations in the US and the Caribbean. On March 1, 2007, American Bank of St. Paul, First National Bank and Trust Co. of Williston, Tatonka Capital Corporation, and Integra Bank filed an involuntary chapter 11 petition against the company and its owner Louis J. Pearlman (Bankr. M.D. Fla. Case Nos. 07-00761 & 07-0062). The petitioners are represented by: * American Bank - William P. Wassweiler, Esq., at Rider Bennett LLP; * First National - Raymond V. Miller, Esq., at Gunster Yoakley & Stewart, P.A.; * Tatonka Capital - Derek F. Meek, Esq., at Burr & Forman LLP; and * Integra Bank - Lawrence E. Rifken, Esq., at McGuire Woods LLP. Mr. Pearlman is best known for managing boy bands such as 'N Sync and the Back Street Boys. A former Pearlman-owned company, F.F. Station, LLC, filed for chapter 11 protection on Feb. 20, 2007 (Bankr. M.D. Fla. Case No. 07-00575). F.F. Station owns and operates a downtown shop, office, entertainment property called Church Street Station. TRANSAX INT'L: David Bouzaid Resigns from Board of Directors ------------------------------------------------------------ Transax International Limited's Board of Directors reported that it accepted the resignation of David Bouzaid as a member of the board of directors effective Mar. 9, 2007. Mr. Bouzaid's resignation is a result of an unrelated contractual arrangement that precludes Mr. Bouzaid from holding any directorship position in a public company. About Transax International Limited Based in Miami, Florida, Transax International Limited (OTCBB: TNSX) -- http://www.transax.com/-- provides health information management systems to hospitals, physicians and health insurance companies. The company's subsidiaries, TDS Telecommunication Data Systems LTDA provides services in Brazil; Transax Australia Pty Ltd. operates in Australia; and Medlink Technologies Inc. initiates research and development. At Sept. 30, 2006, the company's balance sheet showed US$2,003,214 in total assets, US$6,179,904 in total liabilities, resulting in a $4,176,690 in total stockholders' deficit. US AIRWAYS: ALPA Says Inability to Merger Affecting Passengers -------------------------------------------------------------- The Air Line Pilots Association, International, said in its website that operational debacles are nothing new at US Airways, only now; the passengers are suffering alongside labor as a result of management's inability to merge America West and US Airways. The pilots of America West and US Airways, both of whom are represented by the Air Line Pilots Association, International, have been working for nearly a year-and-a-half to achieve a fair, single agreement, which would be a significant step in merging the two operations. However, management continues to thwart the process by passing bankruptcy-era proposals and seeking ways to circumvent the pilots' agreements to illegally merge the two airlines on the cheap. Noting the disturbing trend of long lines and delayed, rerouted or cancelled flights, the America West and US Airways pilots have urged senior management to focus on merging the two airlines. Instead, management has disregarded the pilots' concerns to chase their dream of building a bigger airline. Following the failed merger attempt with Delta Air Lines Inc., US Airways management bunkered down and recently emerged to demonstrate their ineptitude when they bypassed the pilots' agreements and illegally eliminated America West's HP designator code from reservation systems, listing all flights as a US Airways flight. While the pilots are now fighting this action -- and similar contract violations -- under the Railway Labor Act, the passengers have no such recourse and were left literally holding their bags for hours. "No amount of whitewashing by management can cover the fact that the daily operations of US Airways are appalling," America West Master Executive Council Chairman Captain John McIlvenna said. "Last week's disastrous attempt to merge the reservation systems after violating our agreements was just the tip of the iceberg. Until management gets serious about negotiations and meets us at the bargaining table with proposals that recognize our contributions, America West and US Airways will continue to operate separately to the detriment of our passengers, investors and employees." "The US Airways pilots share the frustrations of our passengers, who are realizing that US Airways is long on promises and short on delivery, as they learned last week during the disastrous reservation systems switchover. Just as management promised our customers 'military precision' during the reservation systems merger, they promised the pilots a single contract. We're still waiting. We sincerely hope that our passengers don't have to wait as long as we do," US Airways Master Executive Council Chairman Captain Jack Stephan said. Reaching a fair, single collective bargaining agreement with the pilots would go a long way toward merging the two operations and eliminating many of the problems encountered by running two separate airlines, which has prohibited passengers, investors and employees from capitalizing on the synergies the merger would create. Founded in 1931, Air Line Pilots Association, International -- http://www.alpa.org/-- represents 60,000 pilots at 40 airlines in the U.S. and Canada. About US Airways Headquartered in Tempe, Arizona, US Airways Group Inc.'s -- http://www.usairways.com/-- primary business activity is the ownership of the common stock of US Airways, Inc., Allegheny Airlines, Inc., Piedmont Airlines, Inc., PSA Airlines, Inc., MidAtlantic Airways, Inc., US Airways Leasing and Sales, Inc., Material Services Company, Inc., and Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on Sept. 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. The Debtors' chapter 11 plan for its second bankruptcy filing became effective on Sept. 27, 2005. The Debtors completed their merger with America West on the same date. * * * As reported in yesterday's Troubled Company Reporter 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. WACHOVIA BANK: Fitch Holds Low-B Ratings on 6 Certificate Classes ----------------------------------------------------------------- Fitch Ratings affirms Wachovia Bank Commercial Mortgage Securities Trust 2005-C22 as: -- $40.7million class A-1 at 'AAA'; -- $93.9 million class A-2 at 'AAA'; -- $164.6 million class A-3 at 'AAA'; -- $148.5 million class A-PB at 'AAA'; -- $941 million class A-4 at 'AAA'; -- $376.2 million class A-1A at 'AAA'; -- $253.4 million class A-M at 'AAA'; -- $152 million class A-J at 'AAA'; -- Interest-only class IO at 'AAA'; -- $22.2 million class B at 'AA+'; -- $31.7 million class C at 'AA'; -- $25.4 million class D at 'AA-'; -- $47.5 million class E at 'A'; -- $31.7 million class F at 'A-'; -- $28.5 million class G at 'BBB+'; -- $28.5 million class H at 'BBB'; -- $34.8 million class J at 'BBB-'; -- $15.8 million class K at 'BB+'; -- $12.7 million class L at 'BB'; -- $12.7 million class M at 'BB-'; -- $6.3 million class N at 'B+'; -- $6.3 million class O at 'B'; -- $9.5 million class P at 'B-'; Fitch does not rate the $41.2 million class Q. The rating affirmations reflect stable transaction performance and minimal paydown since issuance. As of the February 2007 distribution date, the pool's aggregate certificate balance has decreased 0.4% to $2.525 billion from $2.534 billion at issuance. There have been no delinquent loans or loans in special servicing since issuance. At issuance, Fitch credit assessed the following three loans; Metro Pointe at South Coast, 1201 Broadway and The Shoppes at Eastchase. These loans maintain their investment grade credit assessments based on stable performance and occupancy levels since issuance. WAMU: Moody' Puts Low-B Ratings on Class B-1 and B-2 Certificates ----------------------------------------------------------------- Moody's Investors Service has assigned a Ba1 rating to the Class B-1 Certificates and a Ba2 rating to the Class B-2 Certificates issued by WaMu Asset-Backed Certificates, WaMu Series 2007-HE1 Trust. The complete rating actions are: Issuer: WaMu Asset-Backed Certificates, WaMu Series 2007-HE1 Trust * Cl. B-1, Assigned Ba1 * Cl. B-2, Assigned Ba2 WESTLB AG: Closes $325 Million Credit Facility for Pacific Ethanol ------------------------------------------------------------------ WestLB AG's Global Energy Group has successfully closed a $325 million senior secured credit facility for Pacific Ethanol, Inc., a West Coast-based marketer and producer of ethanol and a publicly traded company on the NASDAQ Global Market. WestLB acted as the sole book runner, lead arranger and administrative agent. The facility is the first widely syndicated owner-construct financing in the ethanol industry and allows Pacific Ethanol to act as its own construction contractor, which is expected to provide lower construction costs and shorter time to market. The financing is for the construction and operation of Pacific Ethanol's first five plants, all of which will be located in the Western United States. The facility consists of a $300 million senior secured construction and term loan, and a $25 million working capital letter of credit facility to finance a portfolio of five ethanol plants. "WestLB has successfully syndicated over $1.5 billion in ethanol financing in the past 18 months and is committed to delivering the best financial solutions in this sector," Tom Murray, Global Head of Energy, said. "WestLB is pleased to partner with high end companies like Pacific Ethanol that have intelligent and successful strategic growth plans in place within the ethanol sector." About Pacific Ethanol Headquartered in Sacramento, California, Pacific Ethanol Inc. has an operational ethanol plant in Madera, California, two additional plants under construction in Boardman, Oregon, and Burley, Idaho, and owns a 42% interest in Front Range Energy, LLC, which owns an ethanol plant in Windsor, Colorado. About WestLB Hearquartered in Duesseldorf, Germany, WestLB AG (DAX:WESTLB) -- http://www.westlb.com/-- provides financial advisory, lending, structured finance, project finance, capital markets and private equity products, asset management, transaction services and real estate finance to institutions. In the United States, certain securities, trading, brokerage and advisory services are provided by WestLB AG's wholly owned subsidiary WestLB Securities Inc., a registered broker-dealer and member of the NASD and SIPC. * * * Moody's Investor Service assigned WestLB AG's 7.15% Fixed Rate Credit Linked Notes due 2013 at B1. * BOOK REVIEW: Crafting Solutions for Troubled Businesses: A Disciplined Approach to Diagnosing and Confronting Management Challenges ----------------------------------------------------------------- Author: Stephen J. Hopkins and S. Douglas Hopkins Publisher: Beard Books Hardcover: 316 pages List Price: $74.95 Order your personal copy at http://www.amazon.com/exec/obidos/ASIN/1587982870/internetbankrupt So the first thing to do when dealing with a troubled business is to find the guilty and lop someone's head off! Don't be so quick to react, advise co-authors Stephen J. Hopkins and S. Douglas Hopkins in their thoughtful, well-researched book, Crafting Solutions for Troubled Businesses. The father-son team of Steve and Doug Hopkins are principals of Kestrel Consulting LLC, a firm they founded in March 2004. Each has more than 25 years of experience working with troubled businesses and providing turnaround advisory and interim management services. Steve got his first taste of a troubled business when, as chief financial officer of an 80-year-old chemical company, Bill Nightingale of Nightingale & Associates assisted him in taking the company through a Chapter 11 filing. The company subsequently emerged from bankruptcy with payment in full to all creditors. Steve then joined Nightingale, staying for 23 years and serving initially as a principal and eventually as president from 1994 to 2000. Doug began working at Nightingale in 1978 as a part-time resource for special projects. After working in this capacity for 10 years, Steve joined Nightingale full time in the 1980s and became a principal in 1994. Both Steve and Doug have served in various C-level roles in troubled companies, including CEO, CFO, COO, and CRO. To write this book, the Hopkinses drew upon their vast experience in dealing with troubled companies. They took 100 of the largest projects they have been involved in and applied a "disciplined analysis" to diagnose problem situations and produce successful outcomes. The projects -- helpfully set apart by shaded boxes -- demonstrate the authors' theories and methods in dealing with troubled businesses. The authors also analyze some well-known cases like Enron, WorldCom, and Sunbeam to help the reader connect the dots in a very real sense and use the book for actionable advice. The book is divided into five parts: 1) Conceptual Approach and Key Issues, 2) Managing the Crisis, 3) The Diagnosis Process, 4) Alternatives and Action Plans, and 5) Lessons Learned in 100 Completed Assignments. Each part has multiple chapters expanding on these themes, and each chapter concludes with a recap of what was discussed. For speed readers and the time crunched, these recaps are an excellent way of extracting from the book the essence of what the authors are advocating. So what about lopping off that head? The authors contend that management's role is much less pivotal than is commonly believed. The real issue when working with a troubled business is determining the viability of the business. To do that, the underlying causes must be identified at different stages of the corporate lifecycle. The authors categorize troubled businesses as Undisciplined Racehorses, Overburdened Workhorses, and Aging Mules. Only through a step-by-step diagnosis can the core problems be dealt with. Pursuing a turnaround may not always be a viable and, in fact, in only one-third of the 100 cases the authors worked on did the company achieve a true operational turnaround. Crafting Solutions to Troubled Businesses should be on the must- read list of anyone involved in dealing with, consulting for, or operating a troubled business. ********* 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 ***