/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/070320.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, March 20, 2007, Vol. 11, No. 67 Headlines ACCREDITED HOME: Selling $2.7 Billion of Loans ACE SECURITIES: Moody's Reviews Ratings and May Downgrade ACE SECURITIES: Moody's Rates Class M-10 Certificates at Ba1 ADVANCED MARKETING: Baker & Taylor Completes Business Acquisition AIRWAY INDUSTRIES: Court Approves Amended Disclosure Statement AIRWAY INDUSTRIES: Plan Confirmation Hearing Set for Thursday ALLIANT TECHSYSTEMS: S&P Rates Proposed $775 Mil. Facility at BB+ AMERIQUEST MORTGAGE: Fitch Junks Rating on 2003-2 Class M4 Loans ARCAP 2005-RR5: Fitch Junks Rating on $9.4 Mil. Class N Certs. ASARCO LLC: Ct. Rejects Grupo Mexico Bid to Overturn Labor Pact AVENTINE RENEWABLE: S&P Rates $300 Million Senior Notes at B- BALLY TOTAL: Moody's Downgrades All Credit Ratings BEAR STEARNS: Moody's Rates Class B-5 Certificates at Ba2 BERRY PLASTICS: Moody's Rates $1.2 Billion Senior Loan at (P)Ba3 BORALEX INVESTMENT: Moody's Withdraws Ba3 Rating BOYD GAMING: To Redeem 8.75% Senior Subordinated Notes C-BASS 2007-CB2: Moody's Rates Class B-4 Certificates at Ba1 CABELAS CREDIT: Fitch Holds BB+ Rating on Two Class Securities CARTER GRANDLE: Wants to Sell Substantially All Assets in Florida CARTER GRANDLE: Taps Michael Fox Int'l to Auction Florida Assets CARTER GRANDLE: Files Schedules of Assets and Liabilities CASCADES INC: Earns CDN$3 Million in Year Ended December 31 CATHOLIC CHURCH: Court Approves Spokane's Pact with ACE Insurers CATHOLIC CHURCH: Court Approves Spokane's $5.25MM Pact with GICA CATHOLIC CHURCH: Oregon Class Action Settlement Hearing Set CHIQUITA BRANDS: Pleads Guilty to Terrorist Payment Allegation CITIZENS COMMUNICATIONS: Inks $37.5 Million Settlement Agreement COLLINS & AIKMAN: Court Okays Alan Miller as Special Counsel COLLINS & AIKMAN: Court Approves Agreement with Nissan COMMUNITY HEALTH: Inks $6.8 Bil. Merger Pact with Triad Hospitals COMMUNITY HEALTH: Triad Buy Prompts Moody's to Review Ratings COVALENCE SPECIALTY: Moody's Puts Ratings Under Review CREDIT SUISSE: Fitch Junks Rating on $12.6 Million Class S Certs. CREDIT SUISSE: S&P Cuts Rating on Class B Certificates to B CREST G-STAR: Moody's Upgrades Rating on $21 Million Class C Notes DAIMLERCHRYSLER: Union Leaders Fight Chrysler Sale to Equity Buyer DANA CORP: Sells Bristol Plant Assets to Dana Canada for $1.9 Mil. DANA CORP: Wants Amended Danacq Rochester Lease Assumed DEUTSCHE ALT-A: Moody's Rates Class M-9 Certificates at Ba1 DEUTSCHE ALT-A: Moody's Rates Class M-10 Certificates at Ba2 DEUTSCHE ALT-A: Moody's Rates 2007-OA1 Class M-10 Certs. at Ba1 DORAL FINANCIAL: Sells 11 Branches to New York Commercial Bank DOV PHARMA: Closes Exchange Offer for 2.5% Conv. Sub. Debentures EASI FINANCE: Fitch Expects to Put Low-B Ratings on 6 Note Classes EURONET WORLDWIDE: S&P Rates $265 Million Loans at BB FERRP CORP: Earns $20.1 Million in Year Ended December 31 FIRST FRANKLIN: Moody's Rates Class B-4 Certificates at Ba1 FREEPORT-MCMORAN: Prices $16 Billion Senior Unsecured Notes FREEPORT-MCMORAN: Shareholders Approve Phelps Dodge Acquisition FREMONT GENERAL: To Lay Off 2,400 Employees of Subprime Unit FREMONT GENERAL: DBRS Says Ratings Remain Under Negative Review FREMONT HOME: Moody's Review Ratings on Four Certificates FREMONT HOME: S&P Cuts Rating on Two Classes and Places Neg. Watch GATEHOUSE MEDIA: To Buy 9 Publications from Copley for $380 Mil. GATEHOUSE MEDIA: $380 Mil. Purchase Cues Moody's to Review Ratings GNC PARENT: Completes $1.6 Billion Ares and Teacher's Private Buy GRAHAM PACKAGING: High Leverage Cues Moody's Negative Outlook GREENPOINT MORTGAGE: Moody's Rates Class B-2 Notes at Ba1 GSAMP TRUST: Moody's Junks Ratings on Four Loans GSAMP TRUST: S&P Junks Rating on 2006-S5 Class B-1 and B-2 Certs. HALEKUA DEV'T: Secures $97.9 Million Loan to Pay Secured Creditors HAWKER BEECHCRAFT: S&P Holds BB- Rating on $1.95 Bil. Financing HAYES LEMMERZ: Board Approves Equity Rights Offering HAYES LEMMERZ: Planned Debt Repurchase Cues S&P's Positive Watch HMSC CORPORATION: Increased Borrowing Cues Moody's to Cut Rating HUNTER FAN: S&P Junks Rating on $75 Million Second-Lien Loan IELEMENT CORP: Post $577,781 Net Loss in 3rd Quarter Ended Dec. 31 ISLE OF CAPRI: Financial Restatement Cues Nasdaq Delisting Notice J.G. WENTWORTH: Moody's Junks Rating on New $100MM 2nd-Lien Loan JOCKS & JILLS: Files for Bankruptcy in Georgia JOCKS & JILLS: Case Summary & 122 Largest Unsecured Creditors KARA HOMES: Affiliate Inks DIP Financing Pact with Valley National KID CASTLE: Brock Schechter's Expresses Going Concern Doubt KRONOS INTERNATIONAL: Earns $73.6 Million in Year Ended Dec. 31 LANDRY'S RESTAURANTS: S&P Places BB- Rating on Negative Watch LAZARD GROUP: Improved Capital Base Cues Fitch to Lift Rating LE-NATURE'S INC: Court Bars Harbinger, et al. from Suing Wachovia LEGACY ESTATE: Court Confirms Joint Chapter 11 Liquidation Plan LEHMAN XS: Moody's Rates Class A-4 Notes at B2 LENOX GROUP: Deloitte & Touche Raises Going Concern Doubt LID LTD: Files for Bankruptcy in New York LONG BEACH: Moody's Puts Low-B Ratings Under Review MACDERMID INC: Moody's Holds B2 Rating and Revises LGD Assessments MALDEN MILLS: Inks Exit Facility Deal with GECC, Stays in Chap. 11 MASTR SECOND: Moody's Junks Rating on 2006-1 Class M-8 Loans MERRILL LYNCH: Moody's Places Ba2 Ratings Under Review METRIS MASTER: Fitch Holds BB+ Rating on 2005-2 Class D Securities MTI TECHNOLOGY: Has Until April 9 to Regain Compliance with Nasdaq NEW CENTURY: DBSP Wants Immediate Payment Loan NEW CENTURY: Receives Cease & Desist Orders from Four More States NEW CENTURY HOME: Moody's Reviews Ratings and May Downgrade NEWPOWER HOLDINGS: Court Approves Final Distribution NORTEL NETWORKS: Posts $80 Mil. Net Loss in Quarter Ended Dec. 31 NOVELIS INC: Posts $275 Million Net Loss in Year Ended December 31 PENN NATIONAL: Earns $327.1 Million in Year Ended December 31 PENN TREATY: S&P Retains Negative CreditWatch on B Rating PENTON MEDIA: Proposed PIK Loan Offering Cues S&P's Negative Watch PHELPS DODGE: Shareholders Approve Freeport-McMoran Copper Merger PHOTRONICS INC: Earns $7.58 Million in Quarter Ended January 28 RALI SERIES: Moody's Rates Class B Certificates at Ba1 RAMP SERIES: Moody's Rates Class M-10 Certificates at Ba1 RCN CORP: Debt-Financed Dividend Cues Moody's to Review Ratings REFCO INC: Plan Administrators want $15MM Admin Claims Disallowed REFCO INC: Plan Administrators want Cross-Border Protocol Fixed RESORTS INT'L: Notes Redemption Cues Moody's to Withdraw Ratings SACO I: Moody's Junks Rating on 2004-3 Class B-3 Certificates SEMCO ENERGY: Earns $10.4 Million in Year Ended December 31 SERVICEMASTER CO: Okays $5.5 Billion Clayton Dubilier Buyout SERVICEMASTER CO: $5.5 Bil. CD&R Buyout Cues Fitch to Cut Ratings SOVRAN SELF STORAGE: Earns $9.2 Million in Quarter Ended Dec. 31 SPECTRUM BRANDS: Launches Exchange Offer for 8-1/2% Senior Notes SPECTRUM BRANDS: Fitch Holds Ratings & Revises Outlook to Negative STATSURE DIAGNOSTIC: Restated 2005 Report Shows Lower Net Loss STRATUS SERVICES: Fiscal 1st Qtr. Net Income Decreases to $21,976 STRUCTURED ASSET: S&P Downgrades Ratings on Two Class Certificates STRUCTURED ASSET: Moody's Puts Reviews Ratings and May Downgrade STRUCTURED ASSET: Moody's Rates Class I-B-5 Certificates at Ba2 STRUCTURED ASSET: Poor Performance Cues S&P to Cut Ratings SUPERCLICK INC: Jan. 31 Balance Sheet Upside-down by $2.5 Million TENNECO INC: Fitch Rates New $831 Million Senior Facility at BB+ TERWIN MORTGAGE: Moody's Puts Low-B Rating Under Review TOWER AUTOMOTIVE: Wants Deutsche Bank's 2nd Lien L/Cs Extended TOWER AUTOMOTIVE: Increases Payment to Equity Investors to $3.2MM+ TOWER AUTOMOTIVE: Wants Lease-Decision Period Extended to July 31 TRIAD HOSPITALS: Inks $6.8 Bil. Merger Pact with Community Health TRIAD HOSPITALS: Moody's Holds Ratings on Review & May Downgrade TRIPOS INC: Shareholders Vote to Sell Unit and Liquidate Company TRW AUTO: To Issue $1.1 Billion and EUR275 Million Senior Notes TXU CORP: Units Plan to Issue $1.8 Billion Senior Unsec. Notes TXU CORP: Blackstone, Carlyle & Riverstone Plan to Make Rival Bid UNITED CUTLERY: Creditors Committee Files Liquidation Plan UNITED CUTLERY: Wants Case Converted to Chapter 7 USA COMMERCIAL: Compass Partners Buys Loan Portfolio for $67 Mil. WASHINGTON MUTUAL: Fitch Holds BB Rating on 2005-1D Class D Loans WCI COMMUNITIES: Icahn Offer Prompts S&P's Negative CreditWatch WESTERN OIL SANDS: Earns CDN$63.4 Million in Year Ended Dec. 31 WESTLB AG: Closes $1.1 Billion Longview Power Financing ZOOMERS HOLDING: Has Until June 1 to File Amended Plan * Large Companies with Insolvent Balance Sheets ********* ACCREDITED HOME: Selling $2.7 Billion of Loans ---------------------------------------------- Accredited Home Lenders Holding Co. has reached an agreement to sell substantially all of its loans held for sale that are currently funded out of its warehouse and repurchase credit facilities, asset-backed commercial paper facility, and its equity. The $2.7 billion of loans held for sale will be sold at a substantial discount in order to alleviate recent pressures from margin calls. Terms of the sale include a holdback reserve of approximately $40 million to satisfy all future claims against the loans, including early payment defaults. Claims in excess of the holdback reserve will have no recourse against the company. The sale is expected to be completed over the next couple of days. The sale of its loans held for sale will provide additional liquidity to Accredited, thereby facilitating the company's efforts to continue its intention to explore various strategic options, including potentially raising additional capital. The company estimates that this discounted loan sale will result in a pre-tax charge of approximately $150 million. Accredited will retain approximately $120 million of loans held for sale in its warehouse facilities, comprised mostly of loans originated since March 7, 2007. Late Annual Report Filing The company also will not file its Annual Report on Form 10-K by March 16, 2007 as on March 2, 2007. Accredited has determined that changes are required to the amount of goodwill established in its acquisition of Aames Investment Corporation in the fourth quarter of 2006. The previous goodwill estimate was based on the market price of the company's common stock as of the closing date of the transaction, which was Oct. 1, 2006. The company has determined that the goodwill should have been established based on the market price of the company's common stock on the announcement date of the transaction of May 25, 2006, resulting in total goodwill of approximately $130 million. Further, Accredited has determined that the entire amount of goodwill established has been impaired and will be charged-off in the quarter ended Dec. 31, 2006. This goodwill charge-off will not affect Accredited's operations, tangible book equity, cash, or liquidity. In addition, the company is still evaluating whether the deferred tax assets acquired in the Aames acquisition are realizable. Quest for Waivers While the sale of the loans held for sale has substantially reduced the company's debt outstanding in its warehouse and repurchases facilities, Accredited is continuing to seek waivers and extensions of waivers of certain financial and operating covenants, including waivers relating to required levels of net income and requirements to file the Form 10-K by March 16, 2007. There can be no assurance that the company will be successful in receiving any of the required waivers. About Accredited Home Lenders Headquartered in San Diego, California, Accredited Home Lenders Holding Co. (NASDAQ:LEND) -- http://www.accredhome.com/-- is a mortgage company operating throughout the U.S. and in Canada. Founded in 1990, the company originates, finances, securitizes, services, and sells non-prime mortgage loans secured by residential real estate. ACE SECURITIES: Moody's Reviews Ratings and May Downgrade --------------------------------------------------------- Moody's Investors Service has placed on review for possible downgraded four certificates from a transaction, issued by Ace Securities Corp. Home Equity Loan Trust. The transaction is backed by second lien loans. The primary originators on the transaction are Long Beach Mortgage Company (60%) and Fremont Investment & Loans (30%). The projected pipeline loss has increased over the past few months and is likely to affect the credit support for these certificates. The certificates are being placed on review for possible downgrade based on the fact that the bonds' current credit enhancement levels, including excess spread, may be too low compared to the current projected loss numbers at the current rating level. Complete rating actions are: Issuer: Ace Securities Corp. Home Equity Loan Trust Review for Possible Downgrade: * Series 2006-SL2, Class M-8 current rating Baa2, under review for possible downgrade * Series 2006-SL2, Class M-9A, current rating Baa3, under review for possible downgrade * Series 2006-SL2, Class M-9B, current rating Baa3, under review for possible downgrade * Series 2006-SL2, Class B1, current rating Ba1, under review for possible downgrade ACE SECURITIES: Moody's Rates Class M-10 Certificates at Ba1 ------------------------------------------------------------ Moody's Investors Service has assigned a Aaa rating to the senior certificates issued by ACE Securities Corp. Home Equity Loan Trust, Series 2007-SL1 and ratings ranging from Aa1 to Ba1 to the mezzanine certificates in the deal. The securitization is backed by Alt-A and subprime fixed-rate, closed end second residential mortgage loans acquired by DB Structured Products. The originators include American Home Mortgage Corp. (21%), Residential Funding Company (21%), Chapel Funding Corporation (16%), and other residential mortgage lenders (42%, none individually funding more than 10%). The ratings are based primarily on the credit quality of the loans and on protection against credit losses provided by subordination, excess spread, and overcollateralization. The ratings also benefit from the interest-rate swap agreement provided by Swiss Re Financial Products Corporation. Moody's expects collateral losses to range from 8.30% to 8.80%. GMAC Mortgage, LLC and Ocwen Loan Servicing, LLC will service the mortgage loans, and Wells Fargo Bank will act as master servicer. Moody's has assigned Wells Fargo its top servicer quality rating of SQ1 as a master servicer. The complete rating actions are: ACE Securities Corp. Home Equity Loan Trust, Series 2007-SL1 Asset Backed Pass-Through Certificates * Class A-1, Assigned Aaa * Class A-2, Assigned Aaa * Class M-1, Assigned Aa1 * Class M-2, Assigned Aa2 * Class M-3, Assigned Aa3 * Class M-4, Assigned A1 * Class M-5, Assigned A2 * Class M-6, Assigned A3 * Class M-7, Assigned Baa1 * Class M-8, Assigned Baa2 * Class M-9, Assigned Baa3 * Class M-10, Assigned Ba1 ADVANCED MARKETING: Baker & Taylor Completes Business Acquisition ----------------------------------------------------------------- Baker & Taylor, Inc. has completed the acquisition of the wholesale operations of Advanced Marketing Services, Inc. Advanced Marketing has been in proceedings under Chapter 11 of the Bankruptcy Code since Dec. 29, 2006. The U.S. Bankruptcy Court in Wilmington, Delaware, approved the transaction Friday March 9, 2007. Baker & Taylor's acquisition includes Advanced Marketing assets through which it distributes bestsellers, children's books, culinary titles, reference works, and other books to membership warehouse clubs. Baker & Taylor also acquired Advanced Marketing's wholesale distribution operations in the United Kingdom and in Mexico. Baker & Taylor said it would operate the warehouse club business under a new brand, Baker & Taylor Marketing Services, and resume full shipping operations to the warehouse clubs on March 19, 2007. Richard Willis, Baker & Taylor's chairman and chief executive officer, noted that Advanced Marketing had been the dominant wholesale book club distributor for over 20 years. "The Advanced Marketing acquisition is a perfect fit with Baker & Taylor and gives us a formidable presence in this industry," Mr. Willis noted. "At Baker & Taylor," Mr. Willis said, "we have built the world's largest book wholesaler by focusing on the needs of our customers. Advanced Marketing's employees have shown the same dedication and passion for their customers, and we are pleased to be able to give them the opportunity to continue to grow their business." Baker & Taylor, founded in 1828, is based in Charlotte, North Carolina. Advanced Marketing's headquarters is in San Diego, California. Baker & Taylor Marketing Services will continue to keep its primary office in San Diego and operate warehouses in Indianapolis, Indiana and Sacramento, California. About Baker & Taylor Baker & Taylor is a portfolio company of Castle Harlan Partners IV, L.P., an investment fund organized and managed by Castle Harlan, Inc., a private equity firm based in New York. Castle Harlan acquired Baker & Taylor last summer. Castle Harlan, founded in 1987, invests in controlling interests in the buyout and development of middle-market companies in North America and Europe. Its team of 20 investment professionals has completed 48 acquisitions since its inception with a total value in excess of $9 billion. The firm traces its roots to the start of the institutionalized private-equity business in the late 1960s. Castle Harlan's current portfolio companies, which employ more than 42,000 people, include Ames True Temper, a leading manufacturer of lawn and garden tools and accessories; RathGibson, a leader in the manufacture of stainless steel and high alloy precision-welded tubing, and Perkins & Marie Callender's, Inc., which operates and franchises 618 family restaurants in the United States and Canada. About Advanced Marketing Based in San Diego, California, Advanced Marketing Services, Inc. -- http://www.advmkt.com/-- provides customized merchandising, wholesaling, distribution and publishing services, currently primarily to the book industry. The company has operations in the U.S., Mexico, the United Kingdom and Australia and employs approximately 1,200 people Worldwide. The company and its two affiliates, Publishers Group Incorporated and Publishers Group West Incorporated filed for chapter 11 protection on Dec. 29, 2006 (Bankr. D. Del. Case Nos. 06-11480 through 06-11482). Suzzanne S. Uhland, Esq., Austin K. Barron, Esq., Alexandra B. Feldman, Esq., O'Melveny & Myers, LLP, represent the Debtors as Lead Counsel. Chun I. Jang, Esq., Mark D. Collins, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A., represent the Debtors as Local Counsel. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on Apr. 28, 2007. AIRWAY INDUSTRIES: Court Approves Amended Disclosure Statement -------------------------------------------------------------- The United States Bankruptcy Court for the Western District of Pennsylvania approved the Amended Disclosure Statement accompanying Airway Industries Inc.'s Plan of Liquidation. The Court determined that the Debtor's disclosure statement contain adequate information -- the right kind of the right amount for creditors to make informed decisions when asked to vote for the Plan -- as required by Section 1125 of the Bankruptcy Code. The Plan embodies the terms of a settlement of two adversary proceedings filed by the Official Committee of Unsecured Creditors' of Airway Industries, Inc., against Airway Industries, Inc., et al., and Cerberus Partners, L.P., et al. The Settlement Agreement provides that: (a) Cerberus Partners L.P. will have an allowed secured claim equal to the amount that is the lesser of: (i) $44,197,874; and (ii) the value of its collateral. Cerberus will have an allowed general unsecured claim for $58,653,670. (b) Philadelphia Indemnity Insurance Company will contribute $825,000 cash to the Estate. (c) Approximately $1,315,000 cash will be carved out from the Liquid Assets portion of Cerberus' Collateral, and will be used to fund a Creditor Trust. About $1,290,000 of the Creditor Carve-Out will be available for distribution on a pro rata basis to holders of Allowed General Unsecured Claims and to fund a Trust Expense Fund, after payment by the Creditor Trust of all Allowed Administrative Claims and Allowed Other Priority Claims. The remaining $25,000 will comprise the initial Trust Expense Fund. (d) The Debtor's right to commence or otherwise pursue any Causes of Action will be transferred to the Creditor Trustee on behalf of the Creditor Trust. (e) These Professional Fee Claims will be allowed: Firm Fee ---- --- Arent Fox PLLC $785,000 Alpern Rosenthal & Co. $100,000 Duane Morris LLP $664,700 Ansel M. Schwartz $17,409 Malin, Bergquist, and Horwath Orenstein, LLP $28,245 (f) William Berry, Grazyna Kurowska, and Brian Miller will reduce the amount of the transaction bonus that each was to be paid by Cerberus by $100,000, $60,000 and $60,000, respectively. (g) The Creditors' Committee will file notices or stipulations dismissing the Pending Litigation with prejudice. (h) J. Richard Abraham will have a Junior Lien Claim, which will be entitled to distribution on a pari passu basis with all other Allowed General Unsecured Claims, for $325,000. (i) Cerberus will pay J. Richard Abraham $185,000 in full satisfaction, settlement, release, and discharge of any and all claims he has asserted or may assert against Cerberus. Each holder of an Allowed General Unsecured Claim will receive its Pro Rata Share of Available Cash. Allowed General Unsecured Claims could exceed $20,000,000. Until objections to those claims are resolved, it is impossible to determine the actual amount of Allowed General Unsecured Claims. Cerberus will subordinate its right to any distribution on account of its unsecured claim to the rights of holders of General Unsecured Claims. The holders of the Remaining Abraham Claim, the Kurowska Claim, and the Berry Claim also subordinate their rights to the rights of holders of Allowed General Unsecured Claims. The holders of the Subordinated Claims and Equity Interests will not be entitled to receive or retain any property under the Plan on account of their claims and interests. The Creditors' Committee has appointed Clear Thinking LLC through Joseph E. Myers as the Creditor Trustee. A full-text copy of the Debtor's Disclosure Statement is available for free at http://ResearchArchives.com/t/s?1ba4 A full-text copy of the Debtor's Chapter 11 Plan is available for free at http://ResearchArchives.com/t/s?1ba3 Headquartered in Ellwood City, Pennsylvania, Airway Industries, Inc. -- http://www.atlanticluggage.com/-- manufactured suitcases, garment bags, briefcases, and other travel products and accessories. The Company filed for chapter 11 protection on Jan. 20, 2006 (Bankr. W.D. Pa. Case No. 06-20224). Joel M. Walker, Esq., at Duane Morris LLP represents the Debtor in its restructuring efforts. The U.S. Trustee appointed the Official Committee of Unsecured Creditors on Feb. 6, 2006. The Debtor sold all or substantially all of its assets free and clear of liens to TravelPro International Inc. on March 1, 2006. George Angelich, Esq., at Arent Fox PLLC, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $10 million to $50 million. AIRWAY INDUSTRIES: Plan Confirmation Hearing Set for Thursday ------------------------------------------------------------- The United States Bankruptcy Court for the Western District of Pennsylvania set a hearing at 11:00 a.m. on March 22, 2007, to consider confirmation of Airway Industries Inc.'s Plan of Liquidation. Headquartered in Ellwood City, Pennsylvania, Airway Industries, Inc. -- http://www.atlanticluggage.com/-- manufactured suitcases, garment bags, briefcases, and other travel products and accessories. The Company filed for chapter 11 protection on Jan. 20, 2006 (Bankr. W.D. Pa. Case No. 06-20224). Joel M. Walker, Esq., at Duane Morris LLP represents the Debtor in its restructuring efforts. The U.S. Trustee appointed the Official Committee of Unsecured Creditors on Feb. 6, 2006. The Debtor sold all or substantially all of its assets free and clear of liens to TravelPro International Inc. on March 1, 2006. George Angelich, Esq., at Arent Fox PLLC, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $10 million to $50 million. ALLIANT TECHSYSTEMS: S&P Rates Proposed $775 Mil. Facility at BB+ ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' bank loan rating and '1' recovery rating to Alliant Techsystems Inc.'s proposed $775 million secured credit facility, indicating high expectations of a full recovery of principal in the event of payment default. The facility consists of a $500 million five-year revolver and a $275 million five-year term loan A. The proceeds from the new term loan will be used to refinance the company's existing term loan and drawings on the existing $300 million revolver. At the same time, S&P affirmed its other ratings, including the 'BB' corporate credit rating, on the propulsion and munitions supplier. The outlook is stable. "The ratings on Alliant reflect a somewhat aggressively leveraged balance sheet and limited program diversity, but benefit from leading market positions, satisfactory profitability, and a generally favorable environment for defense spending," said Standard & Poor's credit analyst Christopher DeNicolo. The company is the leading manufacturer of solid rocket motors for space-launch vehicles and strategic missiles and is second in the market for tactical missiles. In addition, the firm is the largest provider of small-caliber ammunition to the U.S. military (13% of sales) and has strong positions in tank and other types of ammunition. Edina, Minn.-based Alliant's revenues have more than tripled since 2000 due mostly to a series of acquisitions that have improved product and program diversity. Acquisitions in the high-priority precision-guided munitions area have enabled the company to win key contracts for advanced guided missiles and mortars. Other acquisitions have bolstered Alliant's R&D and hypersonic propulsion capabilities, and added new products such as satellite components and propellant tanks. Satisfactory profitability and cash flows, along with some debt reduction, are expected to result in a steadily strengthening credit profile, despite likely share repurchases and the possibility of small to moderate-size debt-financed acquisitions. The outlook could be revised to negative if leverage increases materially to fund a major acquisition. It is less likely that the outlook will be revised to positive in the near term. AMERIQUEST MORTGAGE: Fitch Junks Rating on 2003-2 Class M4 Loans ---------------------------------------------------------------- Fitch has taken rating actions on these Ameriquest Mortgage Securities Inc. home equity issues: AMSI, series 2002-3 -- Class M-2 upgraded to 'AA+' from 'AA'; -- Class M-3 affirmed at 'BBB'; -- Class M-4 affirmed at 'C'; Distressed Recovery Rating downgraded to 'DR3' from 'DR4'. AMSI, series 2003-2 -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class M3 downgraded to 'B' from 'BB-'; -- Class M4 downgraded to 'C/DR5' from 'CCC/DR5'. AMSI, series 2005-R10 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA+'; -- Class M-3 affirmed at 'AA'; -- Class M-4 affirmed at 'AA'; -- Class M-5 affirmed at 'A+'; -- Class M-6 affirmed at 'A'; -- Class M-7 affirmed at 'A-'; -- Class M-8 affirmed at 'BBB+'; -- Class M-9 affirmed at 'BBB'; -- Class M-10 affirmed at 'BBB-'. AMSI, series 2005-R11 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA+'; -- Class M-3 affirmed at 'AA'; -- Class M-4 affirmed at 'AA-'; -- Class M-5 affirmed at 'A+'; -- Class M-6 affirmed at 'A'; -- Class M-7 affirmed at 'A-'; -- Class M-8 affirmed at 'BBB+'; -- Class M-9 affirmed at 'BBB'; -- Class M-10 affirmed at 'BBB-'. ARSI, series 2005-W2 -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA+'; -- Class M2 affirmed at 'AA+'; -- Class M3 affirmed at 'AA'; -- Class M4 affirmed at 'AA'; -- Class M5 affirmed at 'AA-'; -- Class M6 affirmed at 'A+'; -- Class M7 affirmed at 'A'; -- Class M8 affirmed at 'A-'; -- Class M9 affirmed at 'BBB+'; -- Class M10 affirmed at 'BBB'; -- Class M11 affirmed at 'BBB'; -- Class M12, rated 'BBB-', placed on Rating Watch Negative; -- Class M13, rated 'BB+', placed on Rating Watch Negative. ARSI, series 2005-W3 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA+'; -- Class M-3 affirmed at 'AA+'; -- Class M-4 affirmed at 'AA'; -- Class M-5 affirmed at 'AA'; -- Class M-6 affirmed at 'A+'; -- Class M-7 affirmed at 'A'; -- Class M-8 affirmed at 'A-'; -- Class M-9 affirmed at 'BBB+'; -- Class M-10 affirmed at 'BBB'; -- Class M-11 affirmed at 'BBB-'; -- Class M-12 affirmed at 'BBB-'. ARSI, series 2005-W4 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'AA-'; -- Class M-4 affirmed at 'A+'; -- Class M-5 affirmed at 'A'; -- Class M-6 affirmed at 'A-'; -- Class M-7 affirmed at 'BBB+'; -- Class M-8 affirmed at 'BBB'. ARSI, series 2005-W5 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA+'; -- Class M-3 affirmed at 'AA'; -- Class M-4 affirmed at 'AA'; -- Class M-5 affirmed at 'AA-'; -- Class M-6 affirmed at 'A'; -- Class M-7 affirmed at 'A-'; -- Class M-8 affirmed at 'BBB+'; -- Class M-9 affirmed at 'BBB'. ARSI, series 2006-W1 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA+'; -- Class M-3 affirmed at 'AA'; -- Class M-4 affirmed at 'AA-'; -- Class M-5 affirmed at 'A+'; -- Class M-6 affirmed at 'A'; -- Class M-7 affirmed at 'A-'; -- Class M-8 affirmed at 'BBB+'; -- Class M-9 affirmed at 'BBB+'; -- Class M-10 affirmed at 'BBB-'. ARSI, series 2006-W2 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'AA'; -- Class M-4 affirmed at 'A+'; -- Class M-5 affirmed at 'A'; -- Class M-6 affirmed at 'A-'; -- Class M-7 affirmed at 'BBB+'; -- Class M-8 affirmed at 'BBB'; -- Class M-9 affirmed at 'BBB-'; -- Class M-10 affirmed at 'BB+'. ARSI, series 2006-W3 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'AA'; -- Class M-4 affirmed at 'A+'; -- Class M-5 affirmed at 'A'; -- Class M-6 affirmed at 'A-'; -- Class M-7 affirmed at 'BBB+'; -- Class M-8 affirmed at 'BBB'; -- Class M-9 affirmed at 'BBB-'; -- Class M-10 affirmed at 'BB+'; -- Class M-11 affirmed at 'BB'. ARSI, series 2006-W4 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'AA'; -- Class M-4 affirmed at 'AA-'; -- Class M-5 affirmed at 'A+'; -- Class M-6 affirmed at 'A'; -- Class M-7 affirmed at 'BBB+'; -- Class M-8 affirmed at 'BBB'; -- Class M-9 affirmed at 'BBB'; -- Class M-10, rated 'BBB-', placed on Rating Watch Negative. The affirmations, affecting approximately $13.87 billion of the outstanding balances, are taken due to a satisfactory relationship of credit enhancement to expected losses. The upgrades, affecting approximately $25.29 million of the outstanding balances, are taken due to improved credit enhancement in relation to expected losses. The downgrades, affecting approximately $5.6 million of the outstanding balances, are taken due to a deteriorating relationship between expected losses and credit enhancement. AMSI series 2002-3 is structured with a fixed 60+ delinquency trigger of 16.75%. This deal is currently failing its delinquency trigger and is expected to continue to fail, which will allow credit enhancement for classes M-2 and M-3 to continue to grow relative to the remaining pool balance. In AMSI series 2003-2, classes M3 and M4 (approximately $5.64 million outstanding in aggregate) are downgraded due to monthly losses exceeding the available excess spread in recent months, which has caused deterioration in the overcollateralization amount. As of the February 2007 distribution, the OC amount of $326 thousand (0.8%) is below the target amount of $2 million (4.89%). Monthly losses have exceeded excess spread by an average of approximately $200,000 over the last six months. In ARSI series 2005-W2, classes M-12 and M-13 (approximately $44 million in aggregate) are placed on Rating Watch Negative due to current trends in the relationship between serious delinquency (DQ) and credit enhancement. After 17 months of seasoning, the 60+ delinquency (including loans in bankruptcy, foreclosure [FC], and real estate owned [REO]) is 13.72% of the current collateral balance, above the age-adjusted 2005 vintage industry average of 9.52%. 9.33% of the current collateral balance is in FC and REO. The OC is currently providing 2.96% in credit enhancement to class M-12 and 2.18% in credit enhancement to class M-13. The annualized excess spread, including cash flow pledged to the trust from interest rate derivatives currently available to absorb losses is 2.23%. In ARSI, series 2006-W4, class M-10 is placed on Rating Watch Negative due to trends in the relationship between DQ and credit enhancement. After 10 months of seasoning, the 60+ DQ (including loans in bankruptcy, FC, and REO) is 15.99% of the current collateral balance, which is notably higher than the age-adjusted 2006 vintage industry average of 9.07%. 10.72% of the current collateral balance is in FC and REO. The OC is currently at target and providing 2.61% in credit enhancement to class M-10. The annualized excess spread, including cash flow pledged to the trust from interest rate derivatives currently available to absorb losses is 2.37%. For all transactions, the underlying collateral consists of fully amortizing 15- to 30-year, fixed- and adjustable-rate mortgages secured by first liens extended to subprime borrowers. As of the February distribution date, the transactions listed above are seasoned from 10 months (2006-W4) to 53 (2002-3) months. The pool factors (current principal balance as a percentage of original) range approximately from 7% (2002-3) to 79% (2006-W4). The Ameriquest Securities loans, the retail sector for the Ameriquest Mortgage Securities Inc., were either originated or acquired by Ameriquest Mortgage Company. The Argent Securities (ARSI) loans, the wholesale sector for the Ameriquest Mortgage Securities Inc., were either originated or acquired by Argent Mortgage Company, LLC or Olympus Mortgage Company. Ameriquest Mortgage Company serves as the servicer for the loans in both of these sectors and is rated 'RPS2+' by Fitch. ARCAP 2005-RR5: Fitch Junks Rating on $9.4 Mil. Class N Certs. -------------------------------------------------------------- Fitch downgrades and assigns Distressed Recovery ratings to ARCap 2005-RR5 Resecuritization, Inc., commercial mortgage-backed securities pass-through certificates, series 2005-RR5 (ARCap 2005- RR5) as: -- $9.4 million class L to 'B' from 'B+'; -- $9.4 million class M to 'B-/DR1' from 'B'; and -- $9.4 million class N to 'CCC/DR3' from 'B-'; In addition, Fitch affirms the ratings on these classes as: -- $26.1 million class A-1 at 'AAA'; -- $26.1 million class A-2 at 'AAA'; -- $26.2 million class A-3 at 'AAA'; -- $21.9 million class B at 'AA'; -- $21.9 million class C at 'A'; -- $3.1 million class D at 'A-'; -- $12.5 million class E at 'BBB+'; -- $9.4 million class F at 'BBB'; -- $9.4 million class G at 'BBB-'; -- $15.7 million class H at 'BB+'; -- $6.3 million class J at 'BB'; -- $9.4 million class K at 'BB-' Fitch does not rate class O and the interest only class X. The downgrades are due to realized and anticipated losses on ten of the 18 underlying fixed-rate commercial mortgage-backed securities transactions which back the subject transaction. ARCap 2005-RR is a static CMBS resecuritization which closed August 16, 2005. ARCap REIT, Inc., rated 'CAM1' by Fitch, serves as the collateral administrator. Since Fitch's last review in August 2006, the transaction has suffered an additional $35.0 million in losses, for a total of $64.1 million in losses as of the February 2007 trustee report. This loss, representing a 20.9% reduction in collateral, to date has been absorbed by class O, but has reduced credit enhancement to the classes. The losses are due to realized losses on specially serviced loans within the underlying transactions. Based on an analysis of the loans in the 90 day delinquency, foreclosure, and REO buckets in the underlying transactions and discussions with the collateral administrator, additional losses are anticipated. Total anticipated losses through the life of the deal are currently greater than that anticipated at issuance. Given that the pace of transfers to special servicing on the underlying transactions has slowed significantly, the pace of resolutions has improved, and the vintage distribution of the underlying transactions reflects an average seasoning of seven years, additional losses are not anticipated to continue at the same pace. Taking into account the current anticipated losses, however, the credit enhancement for classes L through N have fallen below sufficient levels to maintain their ratings. Fitch will closely monitor the pool performance on a monthly basis with specific attention to realized losses and the pace of transfers of the underlying mortgage loans to special servicing. If the losses or the pace of transfer exceeds Fitch's current expectations, the ratings will be reviewed again. Based on Fitch's actual rating or on Fitch's internal credit assessment for those classes not rated by Fitch, the current weighted average rating factor of the underlying bonds has worsened to 53.13 ('CCC/CCC-') compared to 42.78 ('B-/CCC+') at issuance. The remaining collateral consists of 24 tranches within 18 transactions. Nearly 69% by par value represents first loss classes within their respective transactions. ASARCO LLC: Ct. Rejects Grupo Mexico Bid to Overturn Labor Pact --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi, Texas, has authorized ASARCO LLC to enter into an agreement that had been ratified in February with the United Steelworkers and other unions representing some 1,600 workers in Arizona and Texas. As reported in the Troubled Company Reporter on Feb. 12, 2007, the labor agreement had been challenged by Grupo Mexico, owners of the bankrupt copper mining company, who had wanted to scuttle the contract and possibly force a labor dispute. A strike could have caused global copper prices to rise, thus benefiting Grupo Mexico's holdings elsewhere. "The court decision reassures our members that the contract will go forward," USW District 12 Director Terry Bonds said. "Workers will now get a well-deserved signing bonus, a long over-due wage increase, and other ground-breaking protections, while our retirees will receive an improved insurance package. We believe that the new labor agreement will position ASARCO to move forward in its bankruptcy reorganization process." Grupo Mexico filed an appeal on Friday to the District Court in Corpus Christi. "We will fight this frivolous appeal," Mr. Bonds said. "And we will fight any further attempts of Grupo Mexico to place its self- interest above the interest of our members and retirees in a healthy ASARCO." ASARCO filed for bankruptcy protection in August 2005. Since then, copper prices have risen to historic highs, as ASARCO has continued to work toward reorganization. Workers represented by the USW and other unions ended a four-month long strike in November 2005 and agreed to extend the old contract for one year. That contract, which was due to expire on Dec. 31, 2006, has been extended and now will be replaced by the new agreement. ASARCO has appointed new management during its bankruptcy case, and Bonds credits the new management for seeking to build a more cooperative relationship with the USW and the other unions. The unions representing workers at ASARCO in addition to the USW are the International Brotherhood of Electrical Workers, Machinists, Boilermakers, Teamsters, Operating Engineers, Millwrights and Pipefitters. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). (ASARCO Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) Judge Schmidt extended the Debtors' exclusive period to file a plan of reorganization to April 6, 2007, and their exclusive period to solicit acceptances of that plan to June 6, 2007. AVENTINE RENEWABLE: S&P Rates $300 Million Senior Notes at B- ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' rating of Aventine Renewable Energy Holdings Inc., a marketer and producer of ethanol, and assigned its 'B-' rating to Aventine's $300 million senior unsecured notes due 2017. The outlook is stable. Proceeds from the offering will be used to help finance two new facilities of 113 million gallons per year, increasing the company's total nameplate production to 433 million gallons per year. After using IPO proceeds to pay down debt last year, Aventine will raise its fully funded debt per gallon of pro forma capacity to $0.69 with the proposed issue. (The amount is $0.97 when adjusted for operating leases that are primarily attributable to the marketing business.) "Some of the key risks the company faces is overbuild risk in the ethanol industry, which is currently estimated at 5.4 billion gallons per year, exposure to volatile commodity prices, and permitting and construction risk," said Standard & Poor's credit analyst Justin Martin. "The stable outlook on Aventine reflects the current industry environment and expectations that permitting and construction will go smoothly," said Mr. Martin. BALLY TOTAL: Moody's Downgrades All Credit Ratings -------------------------------------------------- Moody's Investors Service downgraded all the credit ratings of Bally Total Fitness Holding Corporation. The rating outlook remains negative. Moody's downgraded these ratings: * $235 million 10.5% senior unsecured notes (guaranteed) due 2011, downgraded to Caa3 (LGD 4, 51%) from Caa1 (LGD 4, 51%) * $300 million 9.875% senior subordinated notes due 2007, downgraded to Ca (LGD 5, 88%) from Caa3 (LGD 5, 88%) * Corporate family rating, downgraded to Caa3 from Caa1 * Probability of default rating, downgraded to Caa3 from Caa1 The downgrade of Bally's credit ratings reflects: (i) the inability to timely file its 2006 Form 10-K with the Securities and Exchange Commission, which resulted in a default under its reporting obligation under its senior subordinated and senior note indentures; (ii) the announcement that Bally is considering whether or not it will make its next interest payments on its senior subordinated and senior notes in light of its current financial position; (iii) deterioration of cash collections of revenues and the prospect for further declines during the remainder of 2007; and (iv) decreasing liquidity. Bally stated in its recent Form 12b-25 filed with the SEC that it is unable to determine when it will file its 2006 Form 10-K because it has not yet completed the preparation of such financial statements. Bally identified potential errors and assumption changes related to the accounting for deferred revenues which could cause a restatement of previously filed financial statements. Absent a waiver from the lenders under its secured bank facility or its bondholders, Bally's inability to file its Form 10-K could cause its obligations under its credit facility and indentures to be declared immediately due and payable as early as April 2007. Bally stated that if an acceleration of its obligations or an interest payment default occurs, there is a substantial possibility the company would seek or could be forced to reorganize its operations under Chapter 11 of the U.S. bankruptcy code. Bally also stated in its recent Form 12b-25 that it is attempting to restructure or otherwise address its obligations under the senior subordinated notes in advance of their maturity. Bally may seek to achieve such a restructuring by securing an infusion of cash, negotiating a consensual exchange of the senior subordinated notes for shares of its common stock, or a combination of the foregoing, among other means. The negative rating outlook anticipates a continued decline in liquidity and financial performance and a possible Chapter 11 bankruptcy filing. Bally, through its wholly owned subsidiaries, is one of the largest publicly traded commercial operators of fitness centers in North America. Revenues for the 12 month period ending September 30, 2006 were approximately $1 billion. BEAR STEARNS: Moody's Rates Class B-5 Certificates at Ba2 --------------------------------------------------------- Moody's Investors Service has assigned Aaa ratings to the senior certificates issued by Bear Stearns Mortgage Funding Trust 2007- AR2, and ratings ranging from Aa1 to Ba2 to the subordinate certificates in the deal. The securitization is backed by first lien, adjustable-rate, negative amortization Alt-A mortgage loans acquired and originated by EMC Mortgage Corporation and Bear Stearns Residential Mortgage Corporation. The ratings are based primarily on the credit quality of the loans, and on protection against losses from subordination, overcollateralization, excess spread, and a rate cap. Moody's expects collateral losses to range from 0.90% to 1.10%. EMC will service the loans. Moody's has assigned EMC its servicer quality rating of SQ2 as primary servicer of prime loans. The complete rating actions are: Bear Stearns Mortgage Funding Trust 2007-AR2 Mortgage Pass-Through Certificates, Series 2007-AR2 * Cl. A-1, Assigned Aaa * Cl. A-2, Assigned Aaa * Cl. A-3, Assigned Aaa * Cl. B-1, Assigned Aa1 * Cl. B-2, Assigned Aa3 * Cl. B-3, Assigned A3 * Cl. B-4, Assigned Baa1 * Cl. B-5, Assigned Ba2 BERRY PLASTICS: Moody's Rates $1.2 Billion Senior Loan at (P)Ba3 ---------------------------------------------------------------- Moody's Investors Service assigned a provisional rating of (P)Ba3 to the proposed $1,200 million senior secured term loan facility of Berry Plastics Holdings Corporation, which will be used to finance its pending merger with Covalence Specialty Materials Corporation. The proposed secured term loan facility together with a $400 million asset based revolving credit facility (not rated by Moody's) will be used to refinance the outstanding credit facilities of CSMC (both first and second lien loans) and Berry (the first lien loans) as well as fund a small acquisition separate from the merger. Berry is expected to combine with CSMC to form a direct subsidiary, New Berry Holding, of New Berry Group. The merger is subject to regulatory approvals and other customary closing conditions and is expected to close in April 2007. The ratings of Berry and CSMC are under review for possible downgrade pending the completion of the merger. On or about the closing of the merger, Moody's expects to downgrade Berry's Corporate Family Rating to B2. Additional instrument rating actions are detailed below. The downgrade of Berry's Corporate Family Rating reflects weak pro forma leverage and interest coverage metrics for the rating category; the size, scale and potential integration difficulties of the acquisition; the difference in product lines between the two companies; and CSMC's difficulties operating as a recent standalone entity. The ratings are supported by the potential cost savings and increased scale of the combined entity and the sound liquidity over the near term. The (P)Ba3 rating on the proposed $1,200 million senior secured term loan is rated two notches above the anticipated corporate family rating reflecting its senior position in the capital structure with a first priority interest in fixed assets and a second lien on assets securing the asset based revolving credit facility (primarily accounts receivable and inventory). The rating contemplates a deficiency claim as the collateral is encumbered by the priority claim of the asset based revolver. Initially, Covalence Specialty Materials Corporation will be the borrower and upon consummation of the merger, New Berry Holding. The secured credit facilities are to be unconditionally guaranteed by New Berry Holding's immediate holding company parent, and each existing and subsequently acquired domestic subsidiary of the borrower, subject to exceptions. Security is to be provided by a perfected first priority pledge of substantially all tangible and intangible assets of the borrower and subsidiary guarantors, and all equity interests of the borrower and each subsidiary guarantor, with the exception that the stock pledge is to be limited to the 65% of the equity interests of material first tier foreign subsidiaries. Covenants were not finalized at the time of publication, but are expected to be usual and customary for this type of facility. The rating and outlook is subject to receipt and review of the final indenture. These ratings were assigned to New Berry Holding: * $1,200 million senior secured term loan, (P)Ba3 (LGD 2, 27%) The rating is subject to Moody's review of final documentation and conclusion of the review. If the transaction is completed on the terms and conditions described in the company's announcement, Moody's expects to take these rating actions for Berry: * The Corporate Family Rating of B1 -- is expected to be downgraded to B2; * The Probability of Default Rating of B1 -- is expected to be downgraded to B2; * The Ba1 (LGD 2, 18%) rated $200 million senior secured revolver due 2012 -- is expected to be withdrawn; * The Ba1 (LGD 2, 18%) rated $675 million senior secured first lien term loan B due 2013 -- is expected to be withdrawn; * The B2 (LGD 4, 62%) rated $225 million senior secured second lien FRN's due 2014 -- is expected to be downgraded to B3; * The B2 (LGD 4, 62%) rated $525 million senior secured second lien notes due 2014 -- is expected to be downgraded to B3 * The Speculative Grade Liquidity Rating is SGL-2 and it will be revisited upon conclusion of the proposed transaction. If the transaction is completed on the terms and conditions described in the company's announcement and the conditions above, Moody's expects to take these rating actions for CSMC: * The Corporate Family Rating of B1 -- is expected to be withdrawn; * The Probability of Default Rating of B1 -- is expected to be withdrawn; * The Ba3 (LGD 3, 34%) rated $300 million senior secured term loan C due 2013 -- is expected to be withdrawn; * The B2 (LGD 4, 62%) $175 million senior secured second lien term loan due 2013 -- is expected to be withdrawn; * The B3 (LGD 5, 86%) rated $265 million senior subordinated notes due 2016 -- is expected to be downgraded to Caa1; * The Speculative Grade Liquidity Rating of SGL-2 -- is expected to be withdrawn. Based in Evansville, Indiana, Berry Plastics Holdings Corporation is one of the world's leading suppliers of rigid plastic packaging products, serving customers in the food and beverage, healthcare, household chemicals, personal care, home improvement, and other industries. Net sales for the twelve months ended December 30, 2006 amounted to approximately $1.4 billion. Headquartered in Bedminster, New Jersey, Covalence Specialty Materials Corporation 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. Consolidated net revenue for the twelve months ended September 30, 2006 is approximately $1.7 billion. BORALEX INVESTMENT: Moody's Withdraws Ba3 Rating ------------------------------------------------ Moody's has withdrawn the Ba3 senior secured rating assigned to the proposed financing of Boralex Investment LP. The rating has been withdrawn because the proposed financing was not consummated. Boralex Investment LP is a wholly-owned subsidiary of Boralex Inc. which is based in Montreal, Canada. BOYD GAMING: To Redeem 8.75% Senior Subordinated Notes ------------------------------------------------------ Boyd Gaming Corporation had notified the trustee that it will redeem, in full, all outstanding 8.75% Senior Subordinated Notes due 2012, on April 16, 2007. The redemption price will be $1,043.75 per $1,000.00 principal amount of notes plus accrued and unpaid interest to the redemption date, subject to the right of holders of record on April 1, 2007 to receive the interest payment due on April 15, 2007. The redemption of the 8.75% Senior Subordinated Notes due 2012 will be funded from borrowings under the company's credit facility. About Boyd Gaming Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD) -- http://www.boydgaming.com/ -- is a leading diversified owner and operator of 16 gaming entertainment properties located in Nevada, New Jersey, Mississippi, Illinois, Indiana, and Louisiana. The company is also developing Echelon Place, a world class destination on the Las Vegas Strip, expected to open in the third quarter 2010. * * * Fitch Ratings affirmed Boyd Gaming's Issuer Default Rating at 'BB-', Senior Secured Credit Facility at 'BB', and Senior Subordinated Debt at 'B+'. The Rating Outlook is Stable. C-BASS 2007-CB2: Moody's Rates Class B-4 Certificates at Ba1 ------------------------------------------------------------ Moody's Investors Services has assigned a Aaa rating to the senior certificates issued by C-BASS 2007-CB2 Trust, and ratings ranging from Aa1 to Ba1 to the mezzanine and subordinate certificates in the deal. The securitization is backed by adjustable-rate and fixed-rate subprime mortgage loans acquired by C-BASS. The collateral was originated HSBC Consumer Lending (USA) Inc. (20.60%), New Century Mortgage Corporation (18.62%), The CIT Group/Consumer Finance Inc. (17.23%) and Sebring Capital Corp. (10.03%). No other originator has originated more than 10% of the mortgage loans. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization, excess spread, and a swap agreement. Moody's expects collateral losses to range from 4.20% to 4.70%. Litton Loan Servicing LP will service the loans. Moody's has assigned Litton Loan Servicing LP its top servicer quality rating of SQ1 as a primary servicer of subprime loans. The complete rating actions are: C-BASS 2007-CB2 Trust C-BASS Mortgage Loan Asset-Backed Certificates, Series 2007-CB2 * Cl. A1, Assigned Aaa * Cl. A2-A, Assigned Aaa * Cl. A2-B, Assigned Aaa * Cl. A2-C, Assigned Aaa * Cl. A2-D, Assigned Aaa * Cl. A2-E, 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. B-1, Assigned Baa1 * Cl. B-2, Assigned Baa2 * Cl. B-3, Assigned Baa3 * Cl. B-4, Assigned Ba1 CABELAS CREDIT: Fitch Holds BB+ Rating on Two Class Securities -------------------------------------------------------------- Fitch Ratings recently completed a portfolio review of 681 classes of securities rated by Fitch in the U.S. credit card asset-backed securities sector. While Fitch's surveillance efforts are continuous and include a review of monthly servicing reports to monitor transaction performance, formal portfolio reviews are also conducted periodically. The transactions were examined in order to compare performance across the industry and included an evaluation of the historical performance of the transactions, an examination of any changes to key metrics or trust composition, and an assessment of total available credit enhancement. As a result of the review, Fitch affirms these ratings as: Cabela's Credit Card Master Note Trust Series 2005-I -- Class A-1 at 'AAA'; -- Class A-2 at 'AAA'; -- Class B at 'A+'; -- Class C at 'BBB+'; -- Class D at 'BB+'. Series 2006-III -- Class A-1 at 'AAA'; -- Class A-2 at 'AAA'; -- Class B at 'A+'; -- Class C at 'BBB+'; -- Class D at 'BB+'. CARTER GRANDLE: Wants to Sell Substantially All Assets in Florida ----------------------------------------------------------------- CFI Manufacturing Inc. dba Carter Grandle, asks the United States Bankruptcy Court for the Middle District of Florida for authority to sell substantially all of its assets located at 2150 Whitfield Avenue in Sarasota, Florida, subject to higher and better offers. Failure to Obtain Financing The Debtor reminds the Court that on Feb. 9, 2007, it had obtained authority, on an interim basis, to use the cash collateral securing repayment of its obligation to LaSalle Business Credit LLC. LaSalle Business, in its capacity as agent for secured creditor LaSalle Bank Midwest, National Association, had asserted that the Debtor has an outstanding revolving loan in the original principal amount of up to $17.5 million. The Court had set a final hearing on the cash collateral motion on March 1, 2007. However, the Debtor filed a motion to sell its assets before the hearing. The Debtor explains the decision to sell its assets was prompted by its failure to obtain sufficient and acceptable financing to be able resume manufacturing operations. Sale Procedures Under the sale procedures, the Debtor proposes that if bidders are bidding on all or substantially all of its assets, bids will be made in increments of $10,000, while bids on a lesser amount of the assets will be in increments of $2,500. The Debtor anticipates closing the sale based on this projected time line: Internet/Brochure Advertising March 19, 2007 Newspaper Advertising April 2, 2007 Inspection Period April 12 & 13, 2007 Auction Date April 16, 2007 Asset Checkout, Final Collection of Funds April 16 - April 30, 2007 Final Sale Hearing April 16 - April 30, 2007 Prior to filing its motion for the sale of the Florida assets, the Debtor discloses that it entered into these purchase agreements for the sale of some of its personal properties: Proposed Buyer Asset Purchase Price -------------- ----- -------------- Patio Etc. . .Downtown patio furniture $2,400 Power Contracting LLC office furniture $2,200 Scrap-All 357,242 pounds of $0.61/pound aluminum materials (about $217,000) The personal properties are encumbered by liens in favor LaSalle Credit Bank LLC. The Debtor said LaSalle's liens will be transferred to the proceeds of the sale of those personal properties. The Debtor informs the Court that it will file a plan of liquidation, which will provide for the distribution of the sale proceeds. The Court is set to consider the Debtor's request at a hearing scheduled for April 3, 2007. Objections to the motion must be filed by March 28, 2007. 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. CARTER GRANDLE: Taps Michael Fox Int'l to Auction Florida Assets ---------------------------------------------------------------- CFI Manufacturing Inc. dba Carter Grandle asks permission from the U.S. Bankruptcy Court for the Middle District of Florida to employ Michael Fox International, Inc. dba Goindustry Michael Fox International, as auctioneer. Michael Fox International will: a) represent the Debtor as its selling agent in conduction of an auction and or sale of assets including equipment and any remaining inventory located at the Debtor's former manufacturing plant at 2150 Whitfield Ave., Sarasota, Florida; and b) provide consulting services and sales assistance to the Debtor regarding the sale of this property. Michael Fox International is willing to perform the said services for the Debtor with these terms of compensation: a) a guaranteed minimum return to the Debtor of the amount $495,000; b) a $50,000 risk premium for reimbursement for its expenses of the sale; c) a 10% commission for all sales proceeds obtained above $545,000, and d) a buyer's premium of 12.5% to onsite purchasers and a buyer's premium of 15% to online purchasers. Michael Fox does not hold any adverse interest to the Debtor's estates. Based in Sarasota, Florida, CFI Manufacturing Inc. dba Carter Grandle -- http://www.cartergrandle.com/-- manufactures casual outdoor furniture, cushions, and umbrellas. The company filed for Chapter 11 protection on Jan. 7, 2007 (Bankr. M.D. Fla. Case No. 07-00131). Benjamin G. Martin, Esq. represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $1 million to $100 million. CARTER GRANDLE: Files Schedules of Assets and Liabilities --------------------------------------------------------- CFI Manufacturing Inc. dba Carter Grandle, delivered to the U.S. Bankruptcy Court for Middle District of Florida, its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ---------- ----------- A. Real Property $0 B. Personal Property $3,727,781 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $1,146,732 E. Creditors Holding Unsecured Priority Claims $49,430 F. Creditors Holding Unsecured Nonpriority Claims $4,657,993 ---------- ----------- Total $3,727,781 $5,854,155 Based in Sarasota, Florida, CFI Manufacturing Inc. dba Carter Grandle -- http://www.cartergrandle.com/-- 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. CASCADES INC: Earns CDN$3 Million in Year Ended December 31 ----------------------------------------------------------- Cascades Inc. reported net earnings of CDN$3 million for the year ended Dec. 31, 2006, compared with a net loss of CDN$97 million for the year ended Dec. 31, 2005. Sales increased 3% to CDN$3.4 billion in 2006 from CDN$3.3 billion in 2005. For the fourth quarter ended Dec. 31, 2006, the company reported a net loss of CDN$46 million compared to a net loss of CDN$104 million for the fourth quarter of 2005. As a result of recent business acquisitions, better selling prices and shipments, sales increased by 8% during the fourth quarter of 2006, amounting to CDN$876 million compared with CDN$810 million for the same period in 2005. Commenting on the yearly results, Mr. Alain Lemaire, president and chief executive officer stated: "We are pleased with these results given we were able to prevail through a most challenging time, one of the most difficult we've ever experienced, characterized by increasing foreign competition, rising fiber costs and very Volatile energy prices. We very much rely on the efforts of our employees in pursuing the realization of our strategic plan. They are the reason behind our success in significantly improving our earnings and cash-flows and they are the ones which will allow us to better address tomorrow's challenges." Operating losses amounted to CDN$28 million for the fourth quarter ended Dec. 31, 2006, compared to operating losses of CDN$34 million for the same quarter last year. Operating income from continuing operations for the fourth quarter ended Dec. 31, 2006, excluding specific items, amounted to CDN$40 million and excludes the following items; a CDN$40 million pre-tax amount representing the impairment charge on certain assets of the Red Rock (Ontario) containerboard mill, a CDN$12 million pre-tax amount representing severance and other benefits payable to departing employees and a CDN$14 million pre- tax amount representing an impairment charge of the company's sole North-American sawmill assets (Scierie Lemay). In addition, the 2006 fourth quarter operating results also include a CDN$3 million pre-tax amount representing a refund of countervailing and anti-dumping duties in relation to the Scierie Lemay operations and a CDN$3 million positive adjustment of post- retirement benefits. Net earnings for the fourth quarter were also impacted by an additional income tax provision following the Norampac Inc. acquisition. About Cascades Inc. Founded in 1964, Cascades Inc. (TORONTO: CAS.TO) (Other OTC: CADNF.PK) -- http://www.cascades.com/-- produces, transforms and markets packaging and tissue products composed mainly of recycled fibers. Cascades employs close to 14 000 employees who work in more than 100 modern and flexible production units located in North America and Europe. * * * As reported in the Troubled Company Reporter on Jan. 18, 2007, Standard & Poor's Ratings Services affirmed its 'BB' long-term corporate credit rating on Cascades Inc. after reviewing the effects of the company's acquisition of the remaining 50% of Norampac Inc. that it did not previously own. CATHOLIC CHURCH: Court Approves Spokane's Pact with ACE Insurers ---------------------------------------------------------------- The Honorable Patricia C. Williams of the U.S. Bankruptcy Court for the Eastern District of Washington rules that the settlement agreement between the Diocese of Spokane and ACE Property and Casualty Insurance Company is approved. Judge Williams holds that if a Plan of Reorganization is confirmed in Spokane's case, the proceeds of the sale of the Alleged Aetna Policies will be reserved for the sole and exclusive benefit of holders of Tort Claims and to pay Plan Trust Costs and Expenses as set forth in the Plan. If a Plan of Reorganization is not confirmed, however, the proceeds of the sale of the Alleged Aetna Policies will remain deposited in an interest bearing account and will not be expended for purposes without Court order, or for Spokane's general operating purposes. Judge Williams clarifies that nothing modifies ACE's rights under the Settlement Agreement if the effective date of the Plan does not occur on or before Oct. 1, 2007. Moreover, nothing is intended to constitute a determination with respect to federal or state court jurisdiction over insurance coverage claims between ACE and Morning Star Boys' Ranch, Judge Williams adds. The provisions of the Order are non-severable and mutually dependent. As reported in the Troubled Company Reporter on July 12, 2006, the Diocese of Spokane and ACE Property and Casualty Insurance Company are parties to an insurance coverage action arising from a general liability insurance policy allegedly issued by Aetna Insurance Company -- Policy No. CPP 44-33-95 -- for the period from Feb. 1, 1981, to Feb. 1, 1982. ACE Property, formerly known as CIGNA Property and Casualty Insurance Company, formerly known as Aetna Insurance Company, is the successor-in-interest to the various rights and duties under the Alleged Aetna Policy. The Alleged Aetna Policy was lost and has never been found. ACE Property, therefore, disputes the existence of the Aetna Policy. Before its bankruptcy filing, the Diocese tendered to ACE Property the defense of certain tort claims arising during the term of the Alleged Aetna Policy. ACE accepted the defense of those claims subject to a reservation of rights. ACE has paid $179,651 to indemnify the Diocese under the Alleged Aetna Policy. Hence, in the Coverage Action, ACE Property maintained that if the Diocese can satisfy its burden of proving the existence and material terms of the Alleged Aetna Policy, its payments under a general aggregate limit to indemnify the Diocese for any remaining claims or suits will be $370,349. Morning Star Boys' Ranch, a separately incorporated nonprofit residential group home for boys, which is not a debtor in Spokane's Chapter 11 case, has asserted that a tort claim against it is covered under the Alleged Aetna Policy. ACE Property denied coverage for Morning Star's claim, asserting it is not an insured under the Alleged Aetna Policy. The Diocese has incurred over $1,000,000 in fees and expenses in pursuing the Coverage Action. To resolve all claims with respect to the Alleged Aetna Policy, including coverage for Tort Claims and any other present or future liabilities that might be covered, the Diocese and ACE Property entered into a settlement agreement. A full-text copy of the Settlement, Release and Buy Back Agreement between the Diocese and ACE Property is available for free at http://researcharchives.com/t/s?d8d The salient terms of the Settlement Agreement are: (a) ACE Property will deposit $1,500,000 into an interest bearing, separate asset account to indemnify the Diocese for any and all claims that have vested or may vest under the Alleged Aetna Policy, whether known or unknown, including but not limited to Tort Claims; (b) The Settlement Amount will be released to the Diocese on the effective date of the Settlement Agreement. The Diocese will not be entitled to withdraw any funds from the Account, except for certain administrative costs, until October 1, 2007, or on other dates as may be directed by the Bankruptcy Court; (c) The Diocese will use all sums received under the Settlement Agreement to indemnify tort claimants, except as may be otherwise directed by the Bankruptcy Court; (d) The Diocese, on its own behalf and on behalf of its related entities, will: * release and forever discharge ACE Property for all claims and obligations in any way related to the Alleged Aetna Policy, including all present and future Tort Claims; * release all rights under the Alleged Aetna Policy; * dismiss with prejudice its claims against ACE in the Coverage Action; and * sell the Alleged Aetna Policy back to ACE Property free and clear of all liens, claims encumbrances and other interests, except the rights, if any, held by Morning Star; (e) ACE Property's payment of the Settlement Amount will: * constitute ACE Property's full and complete performance of any and all obligations under the Alleged Aetna Policy owed to any Releasing Party; and * effect a complete sale, outright, of the Alleged Aetna Policy to ACE: (f) The effectivity of the settlement agreement is conditioned on the final orders of the: * Bankruptcy Court approving the Settlement Agreement; and * District Court dismissing and barring all equitable contribution or other claims against ACE Property by other parties to the Coverage Action; and (g) If the Diocese proposes a plan of reorganization that will channel Tort Claims to a trust, the Diocese will use its best efforts to include in that plan a channeling injunction that protects ACE Property against the assertion of Tort Claims. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. The Diocese of Spokane, the Tort Claimants Committee, the Future Claims Representative, and the Executive Committee of the Association of Parishes delivered an Amended Plan of Reorganization, and a Disclosure Statement describing that Plan to the Court on Feb. 1, 2007. The Honorable Patricia C. Williams approved the disclosure statement on March 8, 2007. (Catholic Church Bankruptcy News, Issue No. 81; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Court Approves Spokane's $5.25MM Pact with GICA ---------------------------------------------------------------- The Honorable Patricia C. Williams of the U.S. Bankruptcy Court for the Eastern District of Washington approves the settlement agreement between the Diocese of Spokane and General Insurance Company of America. In addition, Judge Williams rules that: -- if a Plan of Reorganization is confirmed in Spokane's case, the proceeds of the sale of the GICA Policies will be reserved for the sole and exclusive benefit of holders of Tort Claims and to pay Plan Trust Costs and Expenses as set forth in the Plan; -- if a Plan is not confirmed, the proceeds of the sale of the GICA Policies will remain deposited in an interest bearing account and will not be expended for purposes without Court order, or for Spokane's general operating purposes; -- nothing will modify GICA's rights under the Settlement Agreement if the effective date of the Plan does not occur on or before Oct. 1, 2007; -- nothing is intended to constitute a determination with respect to federal or state court jurisdiction over insurance coverage claims between GICA and Morning Star Boys' Ranch; and -- the provisions of the Order are non-severable and mutually dependent. As reported in the Troubled Company Reporter on July 12, 2006, General Insurance Company of America issued to, or for the benefit of, the Diocese of Spokane and certain parties several prepetition insurance policies covering the years from 1958 to 1972. The GICA Policies are "occurrence based" policies, providing coverage for "bodily injury" occurring within the coverage years regardless of when the claims are asserted. The GICA Policies differ from "claims made" policies, which provide coverage for claims asserted in the coverage years. Each Policy has: * a $200,000 per claimant limit; and * per occurrence limit capping how much GICA would pay for all claims arising out of the same occurrence. Before the Diocese's bankruptcy filing, it tendered to GICA the defense of certain tort claims allegedly arising within the coverage years of the Policies. GICA accepted the defense of those claims, subject to a reservation of all its rights. GICA paid out $1,360,000 in connection with defense and indemnity costs. In addition, Morning Star Boys' Ranch, a separately incorporated nonprofit residential group home for boys, which is not a debtor in Spokane's Chapter 11 case, also asserted that certain tort claims against it are covered by the GICA Policies. Thus, GICA also accepted the defense of certain of those claims, subject to a reservation of all its rights. Certain disputes between the Diocese and its insurers, including GICA, have arisen and would be likely to arise in the future concerning the insurers' position regarding the nature and scope of their responsibilities to provide coverage to the Diocese and the other parties under the Policies. To avoid the costs and risks of litigation, the Diocese and GICA entered into a settlement agreement to resolve their disputes. The principal terms of the Settlement Agreement are: (a) GICA will deposit as payment $5,250,000 into an interest bearing, separate asset, trust account to be released to the Diocese on the effective date of the Settlement Agreement. The Diocese will not be entitled to withdraw any funds from the Trust Account, except to pay certain administrative costs, until October 1, 2007, or other dates as may be directed by the U.S. Bankruptcy Court for the Eastern District of Washington; (b) The Diocese will use all sums received under the Settlement Agreement solely to indemnify Tort Claims related to individuals alleging injury; (c) The Diocese will: (1) release and forever discharge GICA for all claims and obligations in any way related to the GICA Policies, including all present and future Tort Claims; (2) release all rights under the actual or alleged GICA Policies; (3) dismiss with prejudice its claims against GICA in the Coverage Action; and (4) sell the Policies back to GICA free and clear of all liens, claims encumbrances and other interests, with the sole exception of the alleged rights, if any, held by Morning Star; and (d) The Settlement Agreement will take effect on: (1) the Bankruptcy Court's final order approving the settlement; and (2) the District Court's order barring all equitable contribution or other claims against GICA by other parties to the Coverage Action. A full-text copy of the Settlement, Release and Buy Back Agreement between the Diocese and GICA is available for free at http://researcharchives.com/t/s?d8b The Causal Link Claimants are those persons who know that they had an incident of sexual contact, sexual abuse, or sexual misconduct by an alleged agent of the Diocese while the claimant was a minor yet, who fail to make the connection between the incident and injuries. The Futures Claimant Representative represents the Causal Link Claimants. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. The Diocese of Spokane, the Tort Claimants Committee, the Future Claims Representative, and the Executive Committee of the Association of Parishes delivered an Amended Plan of Reorganization, and a Disclosure Statement describing that Plan to the Court on Feb. 1, 2007. The Honorable Patricia C. Williams approved the disclosure statement on March 8, 2007. (Catholic Church Bankruptcy News, Issue No. 81; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Oregon Class Action Settlement Hearing Set ----------------------------------------------------------- Catholic parishioners in western Oregon will receive notice this week of a proposed settlement in the class action lawsuit in the bankruptcy proceedings of the Archdiocese of Portland in Oregon. The Archdiocese of Portland filed for Chapter 11 Bankruptcy on July 6, 2004. On July 22, 2005, the U.S. Bankruptcy Court for the District of Oregon entered an order in a lawsuit certifying parishes and parishioners as a class of defendants. At issue in the lawsuit is whether Catholic parishes, schools and certain funds are available to the Archdiocese to pay settlements of tort claims and to other creditors: The main issues in the Lawsuit are whether Parishes, Schools and certain funds are unrestricted assets belonging to the Debtor and available to creditors of the Debtor. The Debtor, the Parishes and Schools contend, among other things, that such assets are restricted and are not available to pay creditors of the Debtor. The Tort Claimants Committee contends that such property is the unrestricted property of the Debtor and is available to pay creditors of the Debtor. Attorneys Douglas R. Pahl, Esq., and Steven M. Hedberg, Esq., at Perkins Coie, LLP, were appointed by the Court to represent the parishes, schools, missions, parishioners and other donors. Under the proposed settlement, in consideration for the Archdiocese's "payment in full of the allowed amount of all claims under the Second Amended and Restated Joint Plan of Reorganization the Lawsuit will be dismissed with prejudice on the Effective Date of the Plan." The attorneys representing the parishes, schools and parishioners "strongly recommend that the Class members support the Proposed Settlement." Parishioners will not need to respond to the Notice they receive in the mail, unless they object to the settlement or wish to submit other comments concerning the Court's decision. Any objections or comments must be submitted to the Court no later than April 5, 2007. Additional information is available in the full Standard Notice of the proposed settlement, which is available on the Archdiocese's web site -- http://www.archdpdx.org/bankruptcy/-- and on the web site of the parishioners committee -- http://www.parishionerscommittee.org/-- A Notice will also be posted in the churches of the Archdiocese of Portland until May 1, 2007. A hearing on the Proposed Class Action Settlement will be held on April 10, 2007, beginning at 9:00 a.m., at the U. S. Bankruptcy Court, 1001 Southwest Fifth Avenue, Seventh Floor in Portland, Oregon. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. D. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. The Court approved the Debtor's disclosure statement explaining its Second Amended Joint Plan of Reorganization on Feb. 27, 2007. CHIQUITA BRANDS: Pleads Guilty to Terrorist Payment Allegation -------------------------------------------------------------- Chiquita Brands International has pleaded guilty to one count of doing business with Colombian terrorists to protect its most profitable banana-growing operation, the Associated Press reports. Chiquita's guilty plea relates to the company's plea agreement with the United States Attorney's Office for the District of Colombia and the National Security Division of the U.S. Department of Justice which includes payment of a $25 million fine, payable in five equal annual installments, with interest. According to AP, prosecutors told a federal court Monday that the company agreed to pay about $1.7 million between 1997 and 2004 to the United Self-Defense Forces of Colombia. Chiquita, AP relates, has said it was forced to make the payments and was acting only to ensure the safety of its clients. However, AP says, federal prosecutors noted that from 2001 to 2004, when Chiquita made $825,000 in illegal payments, the Colombian banana operation earned $49.4 million and was the company's most profitable unit. The company is set to be sentenced June 1, the source says. As reported in the Troubled Company Reporter on Mar. 14, 2007, Chiquita and its operating subsidiary, Chiquita Brands L.L.C., entered into an amendment effective March 7, 2007, of their credit agreement dated as of June 28, 2005, with a syndicate of banks, financial institutions and other institutional lenders. The Amendment addressed the treatment under the Credit Agreement of a $25 million charge for the potential settlement of a contingent liability related to the U.S. Department of Justice's investigation of the company in connection with payments made by its former Colombian subsidiary. U.S. Department of Justice Probe In a press statement dated Feb. 22, 2007, Chiquita disclosed that in April 2003, the company's management and audit committee, in consultation with the board of directors, voluntarily disclosed to the U.S. Department of Justice that its former 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 the voluntary disclosure, the Justice Department undertook an investigation, including consideration by a grand jury. In March 2004, the Justice Department advised that, as part of its criminal investigation, it would be evaluating the role and conduct of the company and some of its officers in the matter. In September and October 2005, the company was advised that the investigation was continuing and that the conduct of the company and some of its officers and directors was within the scope of the investigation. 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 the discussions, and in accordance with the guidelines set forth in SFAS No. 5, the company has recorded a reserve of $25 million in its financial statements for the quarter and year ended Dec. 31, 2006. The amount reflects liability for payment of a proposed financial sanction contained in an offer of settlement made by the company to the Justice Department. The $25 million would be paid out in five equal annual installments, with interest, beginning on the date judgment is entered. The Justice Department has indicated that it is prepared to accept both the amount and the payment terms of the proposed $25 million sanction. According to the company, negotiations are ongoing, and there can be no assurance that a plea agreement will be reached or that the financial impacts of any such agreement, if reached, will not exceed the amounts currently accrued in the financial statements. Furthermore, the company said that the agreement would not affect the scope or outcome of any continuing investigation involving any individuals. In the event an acceptable plea agreement between the company and the Justice Department is not reached, the company believes the Justice Department is likely to file charges, against which the company would aggressively defend itself. The company is unable to predict the financial or other potential impacts that would result from an indictment or conviction of the company or any individual, or from any related litigation, including the materiality of such events. 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. * * * In November 2006, 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. CITIZENS COMMUNICATIONS: Inks $37.5 Million Settlement Agreement ---------------------------------------------------------------- Citizens Communications Company entered into a settlement of some litigated billing disputes on March 12, 2007, with a customer which provides for the payment of $37.5 million. The company said that within 3 business days of payment of the settlement amount, appropriate documentation will be filed to dismiss all claims and counterclaims in the litigation. Based in Stamford, Connecticut, Citizens Communications Company f.k.a. Citizens Utilities (NYSE: CZN) -- http://www.czn.net/-- provides phone, TV, and Internet services to more than two million access lines in parts of 23 states, primarily in rural and suburban markets, where it is the incumbent local-exchange carrier operating under the Frontier brand. * * * In December 2006, Standard & Poor's Ratings Services assigned a 'BB+' rating to $400 million of 7.875% senior unsecured notes due 2027 issued by Stamford, Connecticut-based Citizens Communications Co. At the same time, Fitch Ratings assigned a 'BB' rating and Moody's Investors Service assigned Ba2 rating to the company's proposed private placement of $250 million senior unsecured notes due 2027. COLLINS & AIKMAN: Court Okays Alan Miller as Special Counsel ------------------------------------------------------------ The Honorable Steven W. Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan gave Collins & Aikman Corp. and its debtor-affiliates authority to employ Alan B. Miller, Esq., as their special counsel. Judge Rhodes also approves Mr. Miller's Engagement Letter and for him to begin the investigation and preparation of certain causes of action for the benefit of the Litigation Trust in advance of the Effective Date of the Plan. The Debtors' First Amended Joint Plan provides for the establishment of a litigation trust and the appointment of a litigation trust administrator to pursue claims on behalf of the Litigation Trust beneficiaries. The Litigation Trust Administrator's duties include the investigation and commencement of the causes of action contained in the Litigation Trust agreement that are intended to preserve and protect the assets of Litigation Trust. The Causes of Action include those arising under Chapter 5 of the Bankruptcy Code that are not released under the Plan or Court-approved settlements. The agent for the Debtors' senior, secured prepetition lenders, in consultation with the Unofficial Steering Committee for the Debtors' senior, secured prepetition lenders, and the Official Committee of Unsecured Creditors, has advised the Debtors that Alan B. Miller has been selected to serve as the Litigation Trust Administrator. The United States Trustee for Region 9 has consented to the employment of Mr. Miller. The Debtors wish to retain Alan Miller as special counsel to begin the investigation and preparation of certain causes of action for the benefit of the Litigation Trust in advance of the effective date of the Plan. Pursuant to the engagement letter between Mr. Miller and the Debtors, the duties of Mr. Miller as special counsel to the Debtors will include: * perform the same duties and assume the same responsibilities prior to the effective date of the Plan that the Litigation Trust Administrator will perform and assume upon and after the Effective Date to preserve the Litigation Trust Assets; and * identify and retain counsel and other professionals for the Debtors and the Litigation Trust who will investigate and prepare to commence the Litigation Trust Claims against third parties as contemplated by the Plan. Mr. Miller retired as a senior partner at Weil, Gotshal & Manges LLP, but maintains the title of "senior counsel" at the firm and has specialized in business reorganizations for over 40 years. He has been involved in several Chapter 11 reorganizations, out- of-court restructurings, secured financings and investments for troubled companies, including the purchase of TWA by American Airlines, Rockefeller Center Properties, Mcorp and Thermadyne Corp., Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, informed the Court. Mr. Miller is also a member of the board of directors of Meridian Automotive Systems, Inc., and of the Senior Advisory Board of Chanin Capital Partners, Inc., an affiliate of Duff & Phelps, Inc. According to the Engagement Letter, Mr. Miller's engagement will start immediately and expire according to the Plan. He will be paid an annual retainer of $75,000 plus 3% of the net amounts of recoveries by the Litigation Trust to or for the account of the beneficiaries. Additionally, Mr. Miller will be paid $425 per hour for services related to the resolution of the Litigation Trust Claims. Reasonable expenses will be reimbursed. Mr. Miller is not aware of any connection with any of the potentially adverse parties in the Debtors' Chapter 11 cases. Mr. Miller stated that he does not hold or represent any adverse interest to the Debtors' estates and attests that he is a disinterested person, as the term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b). Mr. Schrock told the Court that it is essential that Mr. Miller begin the work to prepare the Causes of Action now due to the time-sensitive nature of several Causes of Action, the upcoming confirmation hearing, and to ensure maximum value for the Debtors' estates and the beneficiaries of the Litigation Trust. As Mr. Miller is not allowed to begin the investigation and preparation necessary to commence the actions before the Plan's effective date, he may not be able to institute all necessary actions to preserve and protect the Litigation Trust Assets before the expiration of the statute of limitations, which may be on May 17, 2007, absent substantial estate resources being expended in the interim, Mr. Schrock said. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. The Debtors' disclosure statement explaining their First Amended Joint Chapter 11 Plan was approved on Jan. 25, 2007. (Collins & Aikman Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). COLLINS & AIKMAN: Court Approves Agreement with Nissan ------------------------------------------------------ The Honorable Steven W. Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan approves an agreement between Nissan North America, Inc., and Collins & Aikman Corp. and its debtor-affiliates. Since the Debtors entered into the customer agreement with their principal customers, they have continued their efforts to ensure that the sale of their businesses, as contemplated in their First Amended Joint Plan, maximizes value for the Debtors' estates and creditors. The Debtors and Nissan North America, Inc., have negotiated and entered into an agreement that the Debtors believe will, in part, facilitate the orderly sale of their Carpet & Acoustics business. The settlement agreement will: * resolve all pre- and post-petition claims the parties could assert against each other, except for certain ordinary course amounts incurred after the Petition Date; * provide non-resourcing protections for certain Nissan business presently under contract with the Debtors; * ensure that the Debtors continue to receive beneficial payment terms from Nissan; and * provide for treatment of Nissan's claims so that the Debtors can obtain Nissan's support for the Debtors' Chapter 11 Plan. The Debtors have obtained Judge Rhodes' authorization to file the Settlement Agreement, as well as any portions of pleadings that references any information in the Settlement, under seal to prevent disclosure of confidential commercial information that could substantially harm the Debtors, their estates and stakeholders, and Nissan. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. The Debtors' disclosure statement explaining their First Amended Joint Chapter 11 Plan was approved on Jan. 25, 2007. (Collins & Aikman Bankruptcy News, Issue No. 53 & 55; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). COMMUNITY HEALTH: Inks $6.8 Bil. Merger Pact with Triad Hospitals ----------------------------------------------------------------- Community Health Systems, Inc., and Triad Hospitals, Inc., have entered into a definitive merger agreement pursuant to which CHS will acquire Triad for $54 per share in cash, or approximately $6.8 billion, including $1.7 billion of existing indebtedness. The merger will create the largest publicly traded hospital company in the United States. The combined company would own or operate approximately 130 hospitals in 28 states, with a total bed count of more than 18,700. The merger agreement was unanimously approved by the Board of Directors of CHS. Triad's Board of Directors, on the unanimous recommendation of a Special Committee composed entirely of disinterested directors, has approved the agreement and recommends that Triad stockholders approve the merger. All disinterested members of the Board voted in favor of the agreement, with two inside directors abstaining. The acquisition is subject to certain closing conditions including approval by Triad's stockholders, antitrust clearance and other regulatory approvals, and is expected to close in the third quarter of 2007. There is no financing condition to the consummation of the transaction. CHS has received financing commitments from Credit Suisse, Wachovia Capital Markets LLC, and certain of their affiliates. "This is a strategic growth opportunity for CHS," CHS Chairman, President and CEO Wayne T. Smith said. "This deal will substantially increase CHS's overall scale and enhance its geographic diversity. "The two companies have similar values and we are excited about the 54 Triad hospitals and the addition of six new states to our portfolio. This acquisition complements our rural strategy by adding mid-size markets in great locations and we look forward to working with the talented and experienced management professionals throughout the Triad organization." "The transaction with CHS validates Triad's strategy and I am proud of the value this brings to our shareholders. We look forward to working to ensure a smooth transition for our communities," Triad Chairman and CEO James D. Shelton said. Triad has terminated its previous merger agreement with a group led by affiliates of CCMP Capital Advisors and GS Capital Partners. In accordance with the terms of the original merger agreement, Triad paid a termination fee to the original purchaser. Credit Suisse and Wachovia Capital Markets LLC are acting as financial advisors to CHS and Credit Suisse delivered a fairness opinion to CHS. Kirkland & Ellis LLP is acting as legal advisor to CHS. Dewey Ballantine LLP is acting as legal advisor to Triad. Lehman Brothers Inc. is acting as financial advisor and delivered a fairness opinion to the special committee of the board of directors of Triad. Baker Botts L.L.P. is acting as the special committee's legal advisor. As a result of this transaction, CHS has withdrawn its 2007 guidance. A full-text copy of the companies' agreement and plan of merger is available for free at http://ResearchArchives.com/t/s?1bb7 About Triad Hospitals Plano, Tex.-based Triad Hospitals, Inc. (NYSE: TRI) -- http://www.triadhospitals.com/-- owns and manages hospitals and ambulatory surgery centers in small cities and selected larger urban markets. The Company currently operates 54 hospitals (including one under construction) and 13 ambulatory surgery centers in 17 states with approximately 9,855 licensed beds. In addition, through its QHR subsidiary, the company provides hospital management, consulting, and advisory services to more than 170 independent community hospitals and health systems throughout the United States. About Community Health Systems Located in the Nashville, Tenn., Community Health Systems Inc. (NYSE: CYH) -- http://www.chs.net/-- operates general acute care hospitals in non-urban communities throughout the country. Through its subsidiaries, the company currently owns, leases or operates 77 hospitals in 22 states. Its hospitals offer a broad range of inpatient medical and surgical services, outpatient treatment and skilled nursing care. COMMUNITY HEALTH: Triad Buy Prompts Moody's to Review Ratings ------------------------------------------------------------- Moody's Investors Service has placed the ratings of Community Health Systems, Inc. under review for possible downgrade following the report that the company will acquire Triad Hospitals, Inc. for $6.8 billion, including approximately $1.7 billion of existing Triad debt. The report follows the Feb. 5, 2006, report that Triad had entered into a definitive agreement to be acquired by affiliates of CCMP Capital Advisors and GS Capital Partners in a transaction valued at $6.4 billion. Moody's review will focus on changes in the credit metrics of Community Health as they are considered in the Global For-Profit Hospital Rating Methodology, including the increase in the financial leverage of Community Health resulting from the financing of the transaction. Moody's will also consider changes in other factors such as the increased scale and diversity of Community Health following the proposed transaction. Moody's notes that the combined company will be the largest publicly traded hospital operating company with estimated pro forma revenue of approximately $9.9 billion for the year ended Dec. 31, 2006. Moody's review will also consider the resulting capital structure of the combined company as those details become available. Moody's hopes to complete its review prior to the expected close of the transaction in the third quarter of 2007. Triad's ratings will remain under review for possible downgrade. However, if Triad's debt is repaid or redeemed, as Moody's expects, the rating agency would confirm and withdraw Triad's ratings at the close of the transaction. Summary of Moody's rating actions. Ratings placed under review for possible downgrade: * Community Health Systems, Inc. -- Corporate Family Rating, Ba3 -- Probability of Default Rating, Ba3 -- 6.5% Senior subordinated notes due 2012, B2, LGD6, 93% -- Speculative Grade Liquidity Rating, SGL-2 * CHS/Community Health Systems, Inc.: -- Senior secured revolving credit facility, Ba3, LGD3, 43% -- Senior secured term loan, Ba3, LGD3, 43% Ratings remaining under review for possible downgrade: * Triad Hospitals, Inc. -- Corporate Family Rating, Ba3 -- Probability of Default Rating, Ba3 -- Senior secured revolving credit facility due 2011, Ba1, LGD2, 18% -- Senior secured term loan due 2011, Ba1, LGD2, 18% -- 7.0% Senior notes due 2012, B1, LGD4, 64% -- 7.0% Senior subordinated notes due 2013, B2, LGD5, 89% -- Speculative Grade Liquidity Rating, SGL-2 Community Health is an operator of general acute care hospitals in non-urban communities. The company's affiliates own, operate or lease 77 hospitals in 22 states. For the fiscal year that ended Dec. 31, 2006, Community Health generated $4.4 billion in revenues. Triad, through its affiliates, owns and manages hospitals and ambulatory surgery centers in small cities and selected large urban markets. Triad recognized revenue of approximately $5.5 billion for the year ended Dec. 31, 2006. COVALENCE SPECIALTY: Moody's Puts Ratings Under Review ------------------------------------------------------ Moody's Investors Service assigned a provisional rating of (P)Ba3 to the proposed $1,200 million senior secured term loan facility of Berry Plastics Holdings Corporation, which will be used to finance its pending merger with Covalence Specialty Materials Corporation. The proposed secured term loan facility together with a $400 million asset based revolving credit facility (not rated by Moody's) will be used to refinance the outstanding credit facilities of CSMC (both first and second lien loans) and Berry (the first lien loans) as well as fund a small acquisition separate from the merger. Berry is expected to combine with CSMC to form a direct subsidiary, New Berry Holding, of New Berry Group. The merger is subject to regulatory approvals and other customary closing conditions and is expected to close in April 2007. The ratings of Berry and CSMC are under review for possible downgrade pending the completion of the merger. On or about the closing of the merger, Moody's expects to downgrade Berry's Corporate Family Rating to B2. Additional instrument rating actions are detailed below. The downgrade of Berry's Corporate Family Rating reflects weak pro forma leverage and interest coverage metrics for the rating category; the size, scale and potential integration difficulties of the acquisition; the difference in product lines between the two companies; and CSMC's difficulties operating as a recent standalone entity. The ratings are supported by the potential cost savings and increased scale of the combined entity and the sound liquidity over the near term. The (P)Ba3 rating on the proposed $1,200 million senior secured term loan is rated two notches above the anticipated corporate family rating reflecting its senior position in the capital structure with a first priority interest in fixed assets and a second lien on assets securing the asset based revolving credit facility (primarily accounts receivable and inventory). The rating contemplates a deficiency claim as the collateral is encumbered by the priority claim of the asset based revolver. Initially, Covalence Specialty Materials Corporation will be the borrower and upon consummation of the merger, New Berry Holding. The secured credit facilities are to be unconditionally guaranteed by New Berry Holding's immediate holding company parent, and each existing and subsequently acquired domestic subsidiary of the borrower, subject to exceptions. Security is to be provided by a perfected first priority pledge of substantially all tangible and intangible assets of the borrower and subsidiary guarantors, and all equity interests of the borrower and each subsidiary guarantor, with the exception that the stock pledge is to be limited to the 65% of the equity interests of material first tier foreign subsidiaries. Covenants were not finalized at the time of publication, but are expected to be usual and customary for this type of facility. The rating and outlook is subject to receipt and review of the final indenture. These ratings were assigned to New Berry Holding: * $1,200 million senior secured term loan, (P)Ba3 (LGD 2, 27%) The rating is subject to Moody's review of final documentation and conclusion of the review. If the transaction is completed on the terms and conditions described in the company's announcement, Moody's expects to take these rating actions for Berry: * The Corporate Family Rating of B1 -- is expected to be downgraded to B2; * The Probability of Default Rating of B1 -- is expected to be downgraded to B2; * The Ba1 (LGD 2, 18%) rated $200 million senior secured revolver due 2012 -- is expected to be withdrawn; * The Ba1 (LGD 2, 18%) rated $675 million senior secured first lien term loan B due 2013 -- is expected to be withdrawn; * The B2 (LGD 4, 62%) rated $225 million senior secured second lien FRN's due 2014 -- is expected to be downgraded to B3; * The B2 (LGD 4, 62%) rated $525 million senior secured second lien notes due 2014 -- is expected to be downgraded to B3 * The Speculative Grade Liquidity Rating is SGL-2 and it will be revisited upon conclusion of the proposed transaction. If the transaction is completed on the terms and conditions described in the company's announcement and the conditions above, Moody's expects to take these rating actions for CSMC: * The Corporate Family Rating of B1 -- is expected to be withdrawn; * The Probability of Default Rating of B1 -- is expected to be withdrawn; * The Ba3 (LGD 3, 34%) rated $300 million senior secured term loan C due 2013 -- is expected to be withdrawn; * The B2 (LGD 4, 62%) $175 million senior secured second lien term loan due 2013 -- is expected to be withdrawn; * The B3 (LGD 5, 86%) rated $265 million senior subordinated notes due 2016 -- is expected to be downgraded to Caa1; * The Speculative Grade Liquidity Rating of SGL-2 -- is expected to be withdrawn. Based in Evansville, Indiana, Berry Plastics Holdings Corporation is one of the world's leading suppliers of rigid plastic packaging products, serving customers in the food and beverage, healthcare, household chemicals, personal care, home improvement, and other industries. Net sales for the twelve months ended December 30, 2006 amounted to approximately $1.4 billion. Headquartered in Bedminster, New Jersey, Covalence Specialty Materials Corporation 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. Consolidated net revenue for the twelve months ended September 30, 2006 is approximately $1.7 billion. CREDIT SUISSE: Fitch Junks Rating on $12.6 Million Class S Certs. ----------------------------------------------------------------- Credit Suisse Commercial Mortgage Trust, Series 2007-C1, commercial mortgage pass-through certificates are rated by Fitch Ratings as: -- $40,000,000 class A-1 'AAA'; -- $139,000,000 class A-2 'AAA'; -- $98,301,000 class A-AB 'AAA'; -- $758,000,000 class A-3 'AAA'; -- $1,324,733,000 class A-1-A 'AAA'; -- $212,148,000 class A-M 'AAA'; -- $125,000,000 class A-MFL* 'AAA'; -- $286,576,000 class A-J 'AAA'; -- $3,158,284,000 class A-SP 'AAA'(notional amount and interest only); -- $3,371,478,040 class A-X 'AAA'(notional amount and interest only); -- $25,286,000 class B 'AA+'; -- $37,929,000 class C 'AA'; -- $33,715,000 class D 'AA-'; -- $21,071,000 class E 'A+'; -- $29,501,000 class F 'A'; -- $33,715,000 class G 'A-'; -- $37,929,000 class H 'BBB+'; -- $33,714,000 class J 'BBB'; -- $37,930,000 class K 'BBB-'; -- $8,428,000 class L 'BB+'; -- $12,643,000 class M 'BB'; -- $8,429,000 class N 'BB-'; -- $8,429,000 class O 'B+'; -- $8,428,000 class P 'B'; -- $8,429,000 class Q 'B-'; -- $12,643,000 class S 'CCC'. Fitch did not rate the $29,501,040 class T. Classes A-1, A-2, A-AB, A-3, A-1-A, A-M, A-MFL, A-J, A-SP are offered publicly, while classes A-X, B, C, D, E, F, G, H, J, K, L, M, N, O, P, Q, S, and T 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 251 fixed-rate loans having an aggregate principal balance of approximately $3,371,478,040, as of the cutoff date. CREDIT SUISSE: S&P Cuts Rating on Class B Certificates to B ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class B from CSFB ABS Trust Series 2001-HE30 to 'B' from 'BB'. The rating remains on CreditWatch with negative implications, where it was placed on March 10, 2006. At the same time, the 'A+' rating on class I-M-2 from loan group one of Credit Suisse First Boston Mortgage Securities Corp.'s series 2002-22 was placed on CreditWatch with negative implications. The downgrade of class B from CSFB ABS Trust Series 2001-HE30 reflects the continued erosion of credit support available for this class as monthly net losses continue to outpace monthly excess interest cash flow. As a result, the 0.20% overcollateralization currently available for this class is significantly below its target of 0.50%. In addition, this transaction had total delinquencies of approximately 48% as of the February 2007 distribution period, with severe delinquencies totaling more than 25%. Cumulative realized losses were 3.42%. Furthermore, this transaction is 61 months seasoned and has paid down its original pool balance to 8.57%. The rating on class I-M-2 from loan group one from CSFB Mortgage Securities Corp.'s series 2002-22 was placed on CreditWatch with negative implications because 8.86% of the current pool balance is in foreclosure. Additionally, an REO liquidation during the February 2007 distribution period that caused a 67% loss severity, reducing the O/C for this loan group to zero. As of the February distribution, this loan group had total delinquencies of about 18%, with serve delinquencies amounting to nearly 13%. This loan group had cumulative losses of approximately 0.86%. The loan group is 53 months seasoned and has paid down its original pool balance to approximately 4.40%. Standard & Poor's will continue to closely monitor the performance of the classes with ratings on CreditWatch negative. If losses decline to a point at with they no longer outpace excess interest, and the level of O/C has not been further eroded, we will affirm the ratings and remove them from CreditWatch. Conversely, if losses continue to outpace excess interest, S&P will take further negative rating actions on these classes. The collateral for these transactions consists of fixed- or adjustable-rate mortgage loans secured by first liens on residential properties. Credit support is provided by subordination, O/C and excess interest cash flow. Rating Lowered and Remaining on Creditwatch Negative CSFB ABS Trust Series 2001-HE30 Mortgage pass-through certificates series 2001-HE30 Rating ------ Class To From ----- -- ---- B B/Watch Neg BB/Watch Neg Rating Placed on Creditwatch Negative Credit Suisse First Boston Mortgage Securities Corp. Mortgage backed pass through certificates series 2002-22 Rating ------ Class To From ----- -- ---- I-M-2 A+/Watch Neg A+ CREST G-STAR: Moody's Upgrades Rating on $21 Million Class C Notes ------------------------------------------------------------------ Moody's Investors Service has upgraded the ratings of these classes of notes issued by Crest G-Star 2001-2, Ltd.: (1) $34,000,000 Class B-1 Second Priority Fixed Rate Term Notes Due 2032 Prior Rating: A3 (on watch for possible upgrade) Current Rating: Aa3 (2) $15,000,000 Class B-2 Second Priority Floating Rate Term Notes Due 2032 Prior Rating: A3 (on watch for possible upgrade) Current Rating: Aa3 (3) $21,000,000 Class C Third Priority Fixed Rate Term Notes Due 2032 Prior Rating: Ba2 (on watch for possible upgrade) Current Rating: Baa3 According to Moody's, the transaction's portfolio has experienced positive rating migration as well as benefiting from strong coverage ratios for the above classes of notes. DAIMLERCHRYSLER: Union Leaders Fight Chrysler Sale to Equity Buyer ------------------------------------------------------------------ Union leaders in Germany and in the U.S. oppose sale of DaimlerChrysler AG's Chrysler Group to a private equity buyer, the Wall Street Journal reports. "We wouldn't support a sale to a private-equity investor," DaimlerChrysler supervisory board member Gerd Rheude, who heads the works council at a Worth truck plant in southwestern Germany, says in an interview with WSJ. "It's important for us that Chrysler won't be cut in pieces, but that we find a way of securing the jobs of our American colleagues," Mr. Rheude adds. "We wouldn't support a solution such as a private equity firm that would cut out choice bits," DaimlerChrysler supervisory board member Helmut Lense tells The Detroit News in an interview. Mr. Lense is the main employee representative of a plant in Stuttgart that builds engines, suspensions and transmissions. According to WSJ, under German law, a sale of a division have to be approved by a public company's supervisory board, and half of its seats have to be occupied by worker representatives. The board chairman, a shareholder representative, can cast a second, tie-breaking vote in case of a deadlock, although German companies usually avoid such moves, WSJ adds. In a TCR story on March 15, 2007, United Auto Workers President Ron Gettelfinger said Chrysler Group should remain in the family, according to reports of various news agencies. "I've been around the process long enough to know that I'm not ready to concede that the Chrysler Group is going to come out of DaimlerChrysler," DaimlerChrysler supervisory board member Mr. Gettelfinger told radio station WJR-AM in Detroit in an interview. About DaimlerChrysler Based in Stuttgart, Germany, DaimlerChrysler AG (NYSE:DCX) (FRA: DCX) -- http://www.daimlerchrysler.com/-- develops, manufactures, distributes, and sells various automotive products, primarily passenger cars, light trucks, and commercial vehicles worldwide. It primarily operates in four segments: Mercedes Car Group, Chrysler Group, Commercial Vehicles, and Financial Services. The company's worldwide operations are located in: Canada, Mexico, United States, Argentina, Brazil, Venezuela, China, India, Indonesia, Japan, Thailand, Vietnam and Australia. The Chrysler Group segment offers cars and minivans, pick-up trucks, sport utility vehicles, and vans under the Chrysler, Jeep, and Dodge brand names. It also sells parts and accessories under the MOPAR brand. The Chrysler Group is facing a difficult market environment in the United States with excess inventory, non-competitive legacy costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles. At the same time, key competitors have further increased margin and volume pressures -- particularly on light trucks -- by making significant price concessions. In addition, increased interest rates caused higher sales & marketing expenses. In order to improve the earnings situation of the Chrysler Group as quickly and comprehensively, measures to increase sales and cut costs in the short term are being examined at all stages of the value chain, in addition to structural changes being reviewed as well. DANA CORP: Sells Bristol Plant Assets to Dana Canada for $1.9 Mil. ------------------------------------------------------------------ Dana Corp. and its debtor-affiliates notify the U.S. Bankruptcy Court for the Southern District of New York that they will transfer certain production equipment and associated assets from their plant in Bristol, Virginia, to a facility in Magog, Quebec, owned by non-debtor affiliate Dana Canada Corporation. In October 2005, the Debtors stated that the Bristol Plant will be closed and its operations will be transferred to other facilities to reduce overall production costs. Since 2005, the Debtors have transferred certain of the Assets to their plant in Mexico. The Debtors have also determined that ownership of the Assets should also be transferred to Dana Canada. The Debtors believe this is appropriate since Dana Canada owns and operates the Magog Plant and there currently is no plan to return the Assets to the United States, Corinne Ball, Esq., at Jones Day, in New York, relates. To set an appropriate sale price for the Assets, the Debtors and Dana Canada obtained a third-party appraisal of the Assets from AT Operations, Inc., doing business as GoIndustry. GoIndustry valued the Bristol Assets at $1,936,863. The Debtors then sold the Assets for the appraised asset value and executed a bill of sale with Dana Canada. Two entities hold liens or have other interests in the Assets: (a) Citicorp North America, Inc., as Administrative Agent under that the Senior Secured Superpriority DIP Credit Agreement, dated March 3, 2006; and (b) Citicorp USA, Inc., as Administrative Agent under a Security Agreement, dated November 18, 2005. Each Lienholder either has consented to the Magog Transfer or the Lienholder's lien or interest can be extinguished, has been waived or is capable of monetary satisfaction, according to Ms. Ball. No executory contracts are to be assumed and assigned in connection with the Magog Transfer. About Dana Corp. Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Sept. 30, 2005, the Debtors listed $7,900,000,000 in total assets and $6,800,000,000 in total debts. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. The Debtors' exclusive period to file a plan expires on Sept. 3, 2007. They have until Nov. 2, 2007, to solicit acceptances of that plan. (Dana Corporation Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). DANA CORP: Wants Amended Danacq Rochester Lease Assumed ------------------------------------------------------- Dana Corp. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to assume an amended lease from Danacq Rochester Hills, LLC. The Debtors lease from Danacq approximately 143,200 square feet of office space and research and development facilities located at 2910 Waterview, in Rochester Hills, Mich. The leased property is related to the Debtors' North American fluid business. The terms of the Lease includes: (a) a basic 20-year term, commencing on Oct. 26, 2001, and scheduled to expire on Oct. 26, 2021; (b) base monthly rent of $121,046 through Oct. 1, 2011; and $133,151 from Oct. 1, 2011, through the expiration of the Basic Term Lease; (c) conditions on the Debtors' assignment of the Lease, requiring them to, among other things, retain their obligations and liabilities under the Lease as principal obligor or certain indicia of the assignee's creditworthiness; and (d) prohibitions on the Debtors' consolidation or merger with another entity or the sale of all or substantially all of the Debtors' assets unless the surviving or purchasing entity performs all conditions under the Lease. As of March 14, 2007, the Debtors owe Danacq $59,569 under the Lease. To cut necessary costs and market the Fluid Business for sale, the Debtors determine that they do not require the entire space comprising the Property or the use of the entire remaining Basic Term. Accordingly, the Debtors negotiated and subsequently entered into an amendment of the Lease with Danacq. Among the provisions of the Amended Lease are: (a) The Basic Tem will end on the last day of the month of the third anniversary of the Amendment's effective date; (b) The Debtors will pay Danacq $67,183 per month through the remainder of the Basic Team, nunc pro tunc to Jan. 1, 2007; (c) Danacq will have an allowed general unsecured non-priority claim for $2,750,000 against Dana Corp.; (d) The Debtors may assign the Lease to any purchaser of the Fluid Business provided, among others, that: -- the assignment will not cause any portion of the Property to be tax-exempt; -- all defaults under the Lease have been cured; and -- adequate assurance for future performance have been provided; (e) The Debtors will immediately pay $59,569 to Danacq as cure for their prepetition defaults; and. (f) The Debtors will timely perform all of their future obligations under the Lease with all amounts owing entitled to administrative expense priority. About Dana Corp. Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Sept. 30, 2005, the Debtors listed $7,900,000,000 in total assets and $6,800,000,000 in total debts. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. The Debtors' exclusive period to file a plan expires on Sept. 3, 2007. They have until Nov. 2, 2007, to solicit acceptances of that plan. (Dana Corporation Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). DEUTSCHE ALT-A: Moody's Rates Class M-9 Certificates at Ba1 ----------------------------------------------------------- Moody's Investors Service has assigned a Aaa rating to the senior certificates issued by Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-RAMP1, and ratings ranging from Aa1 to Ba1 to the subordinate certificates in the deal. The securitization is backed by fixed-rate, adjustable-rate and hybrid adjustable-rate Alt-A mortgage loans originated by Residential Funding Company, LLC, GMAC Mortgage, LLC and other originators. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization, excess spread, and two interest rate swap agreements. Moody's expects collateral losses to range from 1.75% to 1.95%. Primary servicing will be provided by Homecomings Financial, LLC (Homecomings), GMAC Mortgage, LLC, and Residential Funding Company, LLC (GMAC-RFC). Wells Fargo Bank, N.A. will act as master servicer. cMoody's has assigned Homecomings its top servicer quality rating of SQ1 as a primary servicer of prime loans and a servicer quality rating of SQ2+ as a primary servicer of subprime loans. ermore, Moody's has assigned Wells Fargo Bank, N.A. its top servicer quality rating of SQ1 as master servicer. The complete rating actions are: Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-RAMP1 Mortgage Pass-Through Certificates, Series 2007-RAMP1 * Cl. A-1A, Assigned Aaa * Cl. A-1B, 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 A1 * Cl. M-4, Assigned A2 * Cl. M-5, Assigned A3 * Cl. M-6, Assigned Baa1 * Cl. M-7, Assigned Baa2 * Cl. M-8, Assigned Baa3 * Cl. M-9, Assigned Ba1 DEUTSCHE ALT-A: Moody's Rates Class M-10 Certificates at Ba2 ------------------------------------------------------------ Moody's Investors Service has assigned a Aaa rating to the senior certificates issued by Deutsche Alt-A Securities Mortgage Loan Trust 2007-BAR1 and ratings ranging from Aa1 to Ba2 to the subordinate certificates in the deal. The securitization is backed by American Home Mortgage Corp. (16%), Indymac Bank, F.S.B. (11%), DHI Mortgage (10%), and other mortgage lenders (63%, none individually exceeding 10%) originated, fixed-rate (47%) and hybrid adjustable-rate (53%), alt-a mortgage loans acquired by DB Structured Products, Inc. The ratings are based primarily on the credit quality of the loans and on protection against credit losses by subordination, excess spread, and overcollateralization. The ratings also benefit from the interest-rate swap agreement provided by Deutsche Bank AG New York Branch. Moody's expects collateral losses to range from 1.20% to 1.40%. GMAC Mortgage, LLC and Indymac Bank, F.S.B. will service the mortgage loans and Wells Fargo Bank, N.A. will act as master servicer. Moody's has assigned Indymac its servicer quality rating of SQ2 as a servicer of prime mortgage loans. Moody's has assigned Wells Fargo its servicer quality rating of SQ1 as a master servicer of mortgage loans. The complete rating actions are: Deutsche Alt-A Securities Mortgage Loan Trust 2007-BAR1 Mortgage Pass-Through Certificates * Cl. A-1, Assigned Aaa * Cl. A-2, Assigned Aaa * Cl. A-3, Assigned Aaa * Cl. A-4, Assigned Aaa * Cl. A-5, 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 DEUTSCHE ALT-A: Moody's Rates 2007-OA1 Class M-10 Certs. at Ba1 --------------------------------------------------------------- Moody's Investors Service has assigned Aaa ratings to the senior certificates and Class M-1 certificate issued by Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-OA1, and ratings ranging from Aa1 to Ba1 to the subordinate certificates in the securitization. The securitization is backed by first lien, adjustable-rate, negative amortization mortgage loans originated by Residential Funding Company LLC (61%) and Countrywide Home Loans, Inc.(39%). The ratings on the certificates are based primarily on credit quality of the loans and protection from subordination, overcollateralization and excess spread. In addition, the certificates will benefit from interest rate cap provided by Swiss Re Products Corporation. Moody's expects collateral losses to range from 0.90% to 1.10%. Residential Funding Company LLC and Countrywide Home Loans Servicing LP will service 61% and 39% of the loans, respectively, 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. The complete rating actions are: Issuer: Deutsche Alt-A Securities, Mortgage Loan Trust Series 2007-OA1 Mortgage Pass-Through Certificates Series 2007-OA1 * Cl. A-1, Assigned Aaa * Cl. A-2, Assigned Aaa * Cl. A-3, Assigned Aaa * Cl. M-1, Assigned Aaa * Cl. M-2, Assigned Aa1 * Cl. M-3, Assigned Aa1 * Cl. M-4, Assigned Aa2 * Cl. M-5, Assigned Aa3 * Cl. M-6, Assigned A1 * Cl. M-7, Assigned A2 * Cl. M-8, Assigned Baa2 * Cl. M-9, Assigned Baa3 * Cl. M-10, Assigned Ba1 DORAL FINANCIAL: Sells 11 Branches to New York Commercial Bank -------------------------------------------------------------- Doral Bank, FSB, Doral Financial Corporation's wholly owned New York City-based thrift subsidiary, entered into a definitive purchase and assumption agreement with New York Commercial Bank, the commercial bank subsidiary of New York Community Bancorp, pursuant to which New York Commercial Bank agreed to acquire Doral Bank NY's 11 existing branches in New York City. Pursuant to the terms of the agreement, New York Commercial Bank will assume certain of Doral Bank NY's assets and liabilities, including deposits of approximately $370 million. The purchase price for the transaction will be equal to the difference between the value of the assets sold and the liabilities assumed as of the closing date, plus a deposit premium of approximately 4% of the deposits assumed as of the closing date. The transaction is expected to result in a pre-tax profit to Doral Bank NY of approximately $10 million. Following the consummation of the transaction, Doral Financial intends to request the authorization of the Office of Thrift Supervision to distribute a substantial portion of Doral Bank NY's capital to Doral Financial. Doral Bank NY is organized under a federal thrift charter and operates independently of Doral Bank Puerto Rico, Doral Financial's principal banking subsidiary. "The sale of Doral Bank NY's branches will allow us to focus our efforts on our well capitalized core Puerto Rico banking operations and improve our liquidity as we continue to strengthen our franchise for the benefit of our customers, employees and shareholders," Glen R. Wakeman, Chief Executive Officer of Doral Financial, stated. "We have structured the transaction in a way that will allow us to retain Doral Bank NY's charter. We saw a unique opportunity to exit this non-core operation in a favorable market without losing the strategic value of our federal charter. "New York Commercial Bank is a solid institution that we anticipate will continue to provide excellent service to Doral Bank NY's customers. We thank Doral Bank NY's employees and customers for their loyalty over the years." The transaction, which is subject to regulatory approval and other customary conditions, is expected to be completed early in the third quarter of 2007. Credit Suisse acted as the sole financial advisor to Doral Financial in connection with this transaction. About New York Commercial Bank New York Commercial Bank is the commercial bank subsidiary of New York Community Bancorp, one of the leading financial institutions in the New York Metropolitan region, with assets of $28.5 billion at Dec. 31, 2006. About Doral Financial Corp. Based in New York City, Doral Financial Corp. (NYSE: DRL) -- http://www.doralfinancial.com/-- is a diversified financial services company engaged in mortgage banking, banking, investment banking activities, institutional securities and insurance agency operations. Its activities are principally conducted in Puerto Rico and in the New York City metropolitan area. Doral is the parent company of Doral Bank, a Puerto Rico based commercial bank, Doral Securities, a Puerto Rico based investment banking and institutional brokerage firm, Doral Insurance Agency Inc. and Doral Bank FSB, a federal savings bank based in New York City. * * * As reported in the Troubled Company Reporter on Jan. 8, 2007, Standard & Poor's Ratings Services lowered its long-term ratings on Doral Financial Corp., including the counterparty credit rating, to 'B' from 'B+'. The outlook remains negative. DOV PHARMA: Closes Exchange Offer for 2.5% Conv. Sub. Debentures ---------------------------------------------------------------- DOV Pharmaceutical, Inc. has accepted all of its 2.50% Convertible Subordinated Debentures due 2025 that were tendered in its exchange offer, which expired March 14, 2007, at 5:00 p.m., New York City time. The Exchange Offer, as amended, was conditioned upon the valid tender of at least 96.3% of the aggregate principal amount of outstanding Debentures. Through the expiration of the Exchange Offer, DOV received tenders of and accepted for exchange Debentures in the aggregate principal amount of $67,473,000, representing approximately 96.4% of the $70 million in aggregate principal amount of outstanding Debentures. As a result of the closing of the Exchange Offer and in exchange for the tendered Debentures, DOV delivered on March 15, 2007, to Wells Fargo Bank, N.A., the exchange agent for the Exchange Offer, an aggregate cash payment of $14.3 million and will issue and deliver today an aggregate of 439,784 shares of Series C Convertible Preferred Stock and an aggregate of 100,000 shares of Series D Convertible Preferred Stock to the holders who tendered their Debentures in the Exchange Offer. The Series C and D Convertible Preferred Stock will be convertible by the holders into shares of common stock following stockholder approval and filing of an amendment to DOV's charter increasing the number of shares of authorized common stock as necessary to accommodate such conversion and the Series C Convertible Preferred Stock also will automatically convert 30 days following the filing of the amendment to DOV's charter or earlier in certain circumstances. Generally, the Series C Convertible Preferred Stock votes with the common stock as a single class on an as-converted basis, and entitles the holders of a majority of the Series C Convertible Preferred Stock to initially appoint a majority of DOV's Board of Directors. The Series D Convertible Preferred Stock has no voting rights except as required by law, does not have any initial stated liquidation preference, does not mandatorily convert into common stock and restricts a holder's ability to convert if such holder would beneficially own in excess of 9.9% of the company's capital stock entitled to vote generally. The Debentures that were not tendered in this Exchange Offer will remain outstanding pursuant to the original terms of the Indenture governing the Debentures with a contractual interest rate of 2.5% per annum and a maturity of 2025. Additionally, DOV will issue to holders of its common stock 30,000,000 warrants to purchase additional shares of common stock with an exercise price of approximately $0.523 per share. Such warrants will be exercisable on and after July 1, 2007 until Dec. 31, 2009 and will be issued to holders as of a record date to be set by DOV's Board of Directors. "We thank our investors and employees for their support and patience throughout this restructuring," Barbara Duncan, Chief Executive Officer of DOV, said. "As a result of the successful closing of the Exchange Offer, we will continue our focus on the development of products emanating from our core areas of research and early stage clinical programs and work to build shareholder value." About DOV Pharmaceutical Somerset, New Jersey-based DOV Pharmaceutical Inc. (PS: DOVP.PK) -- http://www.dovpharm.com/-- is a biopharmaceutical company focused on the discovery, acquisition, and development of novel drug candidates for central nervous system disorders. The company's product candidates address some of the largest pharmaceutical markets in the world including depression, pain and insomnia. At Sept. 30, 2006, the company's balance sheet showed $54.528 million in total assets and $105.504 million in total liabilities, resulting in a $50.975 million stockholders' deficit. The company had a $19.301 million deficit at Dec. 31, 2005. EASI FINANCE: Fitch Expects to Put Low-B Ratings on 6 Note Classes ------------------------------------------------------------------ Fitch expects to assign these ratings to the notes issued by EASI Finance Limited Partnership 2007-1 and EASI Finance DE Corporation 2007-1: -- $3,951,892,656 class A risk band 'AAA'; -- $40,326,000 class B1 risk band 'AA'; -- $6,048,000 class B2 risk band 'AA-'; -- $2,016,000 class B3 floating-rate notes, due February 2039 'A+'; -- $4,032,000 class B4 floating-rate notes, due February 2039 'A'; -- $10,081,000 class B5 floating-rate notes, due February 2039 'BBB'; -- $2,016,000 class B6 floating-rate notes, due February 2039 'BBB-'; -- $2,016,000 class B7 floating-rate notes, due February 2039 'BB+'; -- $2,016,000 class B8 floating-rate notes, due February 2039 'BB'; -- $2,016,000 class B9 floating-rate notes, due February 2039 'BB'; -- $2,016,000 class B10 floating-rate notes, due February 2039 'BB-'; -- $2,016,000 class B11 floating-rate notes, due February 2039 'B+'; -- $2,016,000 class B12 floating-rate notes, due February 2039 'B'. EURONET WORLDWIDE: S&P Rates $265 Million Loans at BB ----------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' long-term counterparty credit rating to Euronet Worldwide Inc. The outlook is stable. At the same time, S&P assigned a bank loan rating of 'BB' to the company's senior secured bank loan ($190 million) and revolver ($75 million), indicating that there may be substantial, but not complete, recovery of principal in the event of a payment default. Euronet's Unsecured Convertible Senior Notes ($140 million) were rated 'B+' and its Unsecured Subordinated Convertible notes ($175 million) were rated 'B+'. "The ratings on Euronet are driven by strong, high-quality earnings, strategic advantages because of its first mover position in multiple markets, and our belief that funding will be solid following its acquisition of Ria Envia (Ria) later in 2007," said Standard & Poor's credit analyst Jeffrey Zaun. Offsetting factors include negative tangible equity levels, high debt relative to earnings, and exposure to exchange rate fluctuations. Finally, management has taken on considerable operational risk by moving first and fastest into markets where the competitive landscape is not yet fully formed. Management has captured valuable market positions for varied products in assorted locations. S&P expects earnings to support the rating through 2007, and we will monitor Euronet's debt service coverage as the industry structures in the firm's markets evolve. The stable outlook balances Euronet's strong, high-quality earnings against the hazards of rapid growth into inchoate markets. Positive ratings implications will follow a significant reduction in debt burdens or continued strong profitability that materially expands debt service metrics. Negative ratings implications would result from depressed profitability from deteriorating market structures, operational errors, or widespread, negative regulatory developments. FERRP CORP: Earns $20.1 Million in Year Ended December 31 --------------------------------------------------------- Ferro Corporation reported net income of $20.1 million on net sales of $2.041 billion for the year ended Dec. 31, 2006, compared with net income of $16.3 million on net sales of $1.882 billion for the year ended Dec. 31, 2005. Income from continuing operations for 2006 was $20.6 million, compared with income from continuing operations of $17.1 million in 2005. In 2006, operating income included net pre-tax expenses of $34.9 million primarily related to manufacturing rationalization activities and costs associated with an accounting investigation and restatement. In 2005, operating income was reduced by pre-tax expenses of $14.1 million, primarily related to expenses from restructuring and the accounting investigation and restatement. "We delivered substantial growth in sales, and a strong 29 percent increase in our total segment income in 2006," said chairman, president and chief executive officer James Kirsch. "We have initiated important restructuring programs that will provide significant future cost savings. And with a new senior team in place, we are committed to delivering sustained global growth and improved profitability in 2007 and beyond." Sales growth in 2006 was a result of strong performances in Ferro's electronic materials, performance coatings and color and glass performance materials segments. Sales in the polymer additives and specialty plastics segments were negatively impacted by weakness in the U.S. residential construction and automotive markets in the second half of the year. Increased prices, including higher precious metal prices, and improved product mix across all of the company's businesses, were the primary drivers of sales growth for 2006. Overall volume declined slightly as volume improvements in electronic materials and performance coatings were offset by declines in specialty plastics and polymer additives. Gross margins were 20.3 percent of sales for the year, compared with 20.4 percent of sales in 2005. The company's 2006 gross profit was reduced by $4.6 million of costs related to manufacturing rationalization activities. Gross margins were also negatively impacted by increased precious metal sales, compared to 2005. Precious metals costs are largely passed through to customers with minimal margin contribution. Selling, general and administrative expense was $305.2 million in 2006, or 15.0 percent of sales. Included in the 2006 SG&A expense were $8.2 million in charges, primarily related to the accounting investigation and restatement. SG&A expense in 2005 was $310.1 million, or 16.5 percent of sales, including charges of $10.5 million related to the accounting investigation and restatement. Total segment income for 2006 was $151.8 million, up 29 percent from the prior-year level of $118.0 million. The increase reflected higher income from all segments except polymer Additives. Interest expense increased in 2006, reflecting higher borrowing levels and higher interest rates on funds borrowed. Interest expense for 2006 was $64.4 million, compared with $46.9 million in 2005. The 2006 interest expense included a $2.5 million write- down of previously unamortized fees and discounts associated with the company's prior credit facility and debentures that were accelerated. The interest rate on the company's term loans and revolving credit borrowings declined by 50 basis points as a result of becoming current on its financial filings in December 2006. During 2006, the company's effective tax rate declined to 19.6 percent from 28.8 percent in 2005, largely as a result of a lower valuation reserve against certain deferred tax assets and reduced tax rates in certain foreign jurisdictions. These benefits were partially offset by a higher reserve for possible future U.S. taxes on accumulated foreign earnings that may be repatriated to the U.S. Total debt at the end of 2006 was $592.4 million, an increase of $38.7 million from the end of 2005. In addition, the company had $60.6 million in its accounts receivable securitization program as of Dec. 31, 2006, compared with $1 million at the end of 2005. An increase in working capital, including deposit requirements related to the company's precious metal consignments, was a primary driver of the higher borrowing. At Dec. 31, 2006, the company's balance sheet showed $1.732 billion in total assets, $1.191 billion in total liabilities, $16.8 million in series A convertible preferred stock, and $524.5 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?1b93 About Ferro Corporation Ferro Corp. (NYSE: FOE) -- http://www.ferro.com/-- is a global supplier of technology-based performance materials for anufacturers. Ferro materials enhance the performance of products in a variety of end markets, including electronics, telecommunications, pharmaceuticals, building and renovation, appliances, automotive, household furnishings, and industrial products. Headquartered in Cleveland, Ohio, the company has approximately 6,700 employees globally. * * * Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Ferro Corp. and raised the senior debt rating to 'B+' from 'B'. FIRST FRANKLIN: Moody's Rates Class B-4 Certificates at Ba1 ----------------------------------------------------------- Moody's Investors Service has assigned a Aaa rating to the senior certificates issued by First Franklin Mortgage Loan Trust 2007- FF2, and ratings ranging from Aa1 to Ba1 to the subordinate certificates in the deal. The securitization is backed by adjustable-rate and fixed-rate subprime mortgage loans originated and acquired by First Franklin Financial Corporation and Merrill Lynch Mortgage Lending, Inc. The ratings are based primarily on the credit quality of the loans, and on the protection offered by subordination, overcollateralization and excess spread, a swap agreement and rate cap between the trust and The Bank of New York. Moody's expects collateral losses to range from 4.05% to 4.55%. National City Home Loan Services, Inc. will service the loans. Moody's has assigned National City Home Loan Services, Inc. its servicer quality rating of SQ1- as a primary servicer of subprime loans. The complete rating actions are: First Franklin Mortgage Loan Trust 2007-FF2 Mortgage Loan Asset-Backed Certificates, Series 2007-FF2 * Cl. A-1, Assigned Aaa * Cl. A-2A, Assigned Aaa * Cl. A-2B, Assigned Aaa * Cl. A-2C, Assigned Aaa * Cl. A-2D, 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. B-1, Assigned Baa1 * Cl. B-2, Assigned Baa2 * Cl. B-3, Assigned Baa3 * Cl. B-4, Assigned Ba1 The Class B-4 Certificates were sold in privately negotiated transactions without registration under the Securities Act of 1944 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under Rule 144. FREEPORT-MCMORAN: Prices $16 Billion Senior Unsecured Notes ----------------------------------------------------------- Freeport-McMoRan Copper & Gold Inc. prices senior unsecured notes as part of the $17.5 billion of debt financing for the pending acquisition of Phelps Dodge Corp. The financing is comprised of $16 billion in funded debt, including $10 billion in senior secured term loans and $6 billion in senior unsecured notes. a) Description: Senior Secured Term A Amount: $2.5 Billion Maturity: Due March 2012 Pricing(1): LIBOR + 1.50% (2) b) Description: Senior Secured Term B Amount: $7.5 Billion Maturity: Due March 2014 Pricing(1): LIBOR + 1.75% c) Description: Senior Floating Rate Notes Amount: $1 Billion Maturity: Due April 2015 Pricing(1): LIBOR + 3.25% d) Description: 8-1/4% Senior Fixed Rate Notes Amount: $1.5 Billion Maturity: Due April 2015 Pricing(1): 8-1/4% e) Description: 8-3/8% Senior Fixed Rate Notes Amount: $3.5 Billion Maturity: Due April 2017 Pricing(1): 8-3/8% (1) The aggregate weighted average cost of these financings currently approximates 7.5%. (2) Subject to ratings based pricing grid. In addition, FCX has a $1.5 billion senior secured revolving credit facility, which is expected to be undrawn at closing. FCX will use the net proceeds from these offerings to fund a substantial portion of the cash consideration of its acquisition of Phelps Dodge Corporation and to pay related fees and expenses. The closing of each of the senior notes offering and the senior secured credit facility is conditioned on FCX's acquisition of Phelps Dodge. FCX expects the financing and acquisition transactions to close on March 19, 2007. The joint book-running managers for the senior notes offering are JPMorgan and Merrill Lynch & Co. JPMorgan and Merrill Lynch are also the joint lead arrangers and joint book-running managers in respect of the Term A loan, the Term B loan and the revolver. About Freeport-McMoran Copper & Gold Inc. Freeport-McMoRan Copper & Gold Inc. is a Louisiana based producer of copper and gold through its Grasberg mine in Indonesia. Freeport's revenue in 2006 was $5.8 billion. * * * As reported in the Troubled Company Reporter on March 19, 2007 Dominion Bond Rating Service downgraded the rating of Freeport- McMoRan Copper & Gold Inc.'s Senior Unsecured Notes to B (high) from BB (low) after the announcement by the company on Mar. 14, 2007 that shareholders of Freeport and Phelps Dodge Corporation have approved Freeport's $25.9 billion acquisition of Phelps. The trend is Stable. DBRS downgraded the rating on Phelps' Senior Unsecured Notes to BB (low) from BBB. The trend is Stable. As reported in the Troubled Company Reporter on March 14, 2007, Fitch assigned the ratings to Freeport-McMoRan Copper & Gold and downgraded the ratings of Phelps Dodge in connection with FCX's pending acquisition of Phelps Dodge for approximately $25.9 billion in cash and stock. Fitch assigned rating to Freeport-McMoRan Copper & Gold including a 'BB' Issuer Default Rating; a 'BB' $1 billion Secured Bank Revolver rating; a 'BB' rating for its $2.5 billion Secured Bank Term Loan A; 'BB' rating for its $7.5 billion Secured Bank Term Loan B; 'BB-' rating for its 7% convertible notes due 2011; 'BB-' rating for its FCX New Unsecured Notes due 2015 and 2017; and a B+ rating for its FCX Convertible Preferred Stock. FREEPORT-MCMORAN: Shareholders Approve Phelps Dodge Acquisition --------------------------------------------------------------- Shareholders of Freeport-McMoRan Copper & Gold Inc. and Phelps Dodge Corporation approved FCX's acquisition of Phelps Dodge at special meetings held March 14, 2007. At each meeting, approximately 98% of the votes cast supported the transaction. "We are pleased with the approval from shareholders which will allow us to complete the acquisition of Phelps Dodge," Richard C. Adkerson, FCX's President and Chief Executive Officer, said. "This is an exciting time for our company as we transform FCX into the world's largest publicly traded copper producer." Under the terms of the merger agreement, Phelps Dodge shareholders will receive $88 in cash and 0.67 of a share of FCX's common stock for each Phelps Dodge common share, which is equivalent to a value of $125.53 based on the closing price of FCX's common stock on March 13, 2007. The cash portion of $18 billion represents 70% of the total consideration. Following completion of the transaction, there will be approximately 334 million shares outstanding. The transaction is expected to close on March 19, 2007. FCX stockholders also approved an increase in the number of authorized shares of FCX common stock from 423.6 million to 700 million. Upon the closing of the merger, FCX will operate a geographically diverse portfolio of long-lived reserves of copper, gold and molybdenum. The Grasberg mine, the world's largest copper and gold mine in terms of reserves, will be the key asset of the combined company. FCX will operate significant mining operations in North and South America and will proceed with the initial development of the world-class Tenke Fungurume project in the Democratic Republic of Congo. About Phelps Dodge Corp. Phelps Dodge -- http://www.phelpsdodge.com/-- is among the world's largest producers of molybdenum, molybdenum-based chemicals, and manufacturer of wire and cable products. Phelps Dodge has operations in Venezuela, Thailand, China, Netherlands, Philippines, Japan, United Kingdom, among others. About Freeport-McMoran Copper & Gold Inc. Freeport-McMoRan Copper & Gold Inc. is a Louisiana based producer of copper and gold through its Grasberg mine in Indonesia. Freeport's revenue in 2006 was $5.8 billion. * * * As reported in the Troubled Company Reporter on March 19, 2007 Dominion Bond Rating Service downgraded the rating of Freeport- McMoRan Copper & Gold Inc.'s Senior Unsecured Notes to B (high) from BB (low) after the announcement by the company on Mar. 14, 2007 that shareholders of Freeport and Phelps Dodge Corporation have approved Freeport's $25.9 billion acquisition of Phelps. The trend is Stable. DBRS downgraded the rating on Phelps' Senior Unsecured Notes to BB (low) from BBB. The trend is Stable. As reported in the Troubled Company Reporter on March 14, 2007, Fitch assigned the ratings to Freeport-McMoRan Copper & Gold and downgraded the ratings of Phelps Dodge in connection with FCX's pending acquisition of Phelps Dodge for approximately $25.9 billion in cash and stock. Fitch assigned rating to Freeport-McMoRan Copper & Gold including a 'BB' Issuer Default Rating; a 'BB' $1 billion Secured Bank Revolver rating; a 'BB' rating for its $2.5 billion Secured Bank Term Loan A; 'BB' rating for its $7.5 billion Secured Bank Term Loan B; 'BB-' rating for its 7% convertible notes due 2011; 'BB-' rating for its FCX New Unsecured Notes due 2015 and 2017; and a B+ rating for its FCX Convertible Preferred Stock. FREMONT GENERAL: To Lay Off 2,400 Employees of Subprime Unit ------------------------------------------------------------ Fremont General Corp. said that it notified around 2,400 employees in its subprime mortgage unit that they will lose their jobs on May 18, Reuters reports. Reuters relates that on March 5, the company had put some of its unit's employees on paid leave while retaining some manager and operations personnel. Reuters cites Fremont as saying, "[t]he Company continues to aggressively pursue its options with respect to its business. Given the uncertainty of this situation and its impact on employment, the Company has given notice of termination to these employees on leave." Headquartered in Santa Monica, Calif., Fremont General Corporation (NYSE:FMT) -- http://www.fremontgeneral.com/-- is a financial services holding company. Fremont General's financial services operations are consolidated within Fremont General Credit Corporation, which is engaged in commercial and residential real estate lending nationwide through its California-chartered industrial bank subsidiary, Fremont Investment & Loan. FIL is primarily funded through deposit accounts that are insured up to the maximum legal limit by the Federal Deposit Insurance Corporation, and to a lesser extent, advances from the Federal Home Loan Bank. * * * As reported in the Troubled Company Reporter on March 7, 2007, Standard & Poor's Ratings Services lowered its counterparty credit rating on Fremont General Corp. to 'B-' from 'B+' and retained the rating on CreditWatch with negative implications. At the same time, Moody's Investors Service downgraded its debt ratings of Fremont General Corporation (senior to B3 from B2) and subsidiaries including its bank subsidiary, Fremont Investment & Loan (bank financial strength rating to E+ from D-, deposits to B1 from Ba3, issuer rating to B2 from B1), and Fremont General Financing I (preferred stock to Caa2 from Caa1). Moody's also kept the ratings under review for possible downgrade. Fitch Ratings downgraded Fremont General Corp.'s ratings as: Long- Term Issuer Default Rating to 'CCC' from 'B+'; Short-Term Issuer to 'C' from 'B'; Long-Term senior debt to 'CC' from 'B'; Individual to 'E' from 'D'. FREMONT GENERAL: DBRS Says Ratings Remain Under Negative Review --------------------------------------------------------------- Dominion Bond Rating Service stated that all the ratings of Fremont General Corporation and its subsidiaries, including Fremont's Issuer & Senior Debt rating at B (low), remain Under Review with Negative Implications. Ratings under review: * Deposits & Senior Debt Under Review - Negative B (high) * Issuer & Senior Debt Under Review - Negative B (low) * Trust Preferred Securities Under Review - Negative CCC (high) This follows the company's announcement that it will not file its annual report on Form 10-K for the fiscal year ended Dec. 31, 2006, before the extended deadline of March 16, 2007. According to Fremont's March 16, 2007, SEC form 8K filing, the company is working with its accounting firm to complete the audit of the Dec. 31, 2006, financial statements. The company and its accounting firm are continuing to evaluate the appropriate carrying value of the company's assets and the impact on its financial statements in light of the increased volatility in the subprime mortgage market and the company's reported exit of the subprime mortgage origination business. The company also announced that one of its lenders has increased its committed line of credit to Fremont Investment & Loan to $1 billion, which DBRS views as a positive to buttress the company's liquidity profile. Although Fremont has yet to file its Form 10-K, the company expects to report a net loss for the fourth quarter of 2006, attributed to an increase in provisions for loan repurchase and premium recapture as well as the valuation adjustment. Fremont is still assessing the full-year results. DBRS believes that these items may have a sizable negative impact on the company's financial flexibility; however, the extent of the impact remains uncertain until the form is actually filed. DBRS sees the impact of these uncertainties being exacerbated by the current deteriorating market conditions in the residential subprime mortgage industry. Importantly, DBRS is concerned that this new delay and any prolonged delay in filing its financial results will have a significant impact on the company's ability to access funding. The Under Review with Negative Implications status is based on the uncertainties associated with the delay in releasing financial results and the liquidity ramifications. DBRS's review will focus on the company's progress in releasing its financial results and filing its Form 10-K, on its progress in exiting the subprime business and on its ability to manage its liquidity and limit deposit outflows given the headlines and constraints on the broker deposits included in the cease and desist order, as well as the company's success in curtailing the pace of early payment default repurchase activity and improving credit quality. FREMONT HOME: Moody's Review Ratings on Four Certificates --------------------------------------------------------- Moody's Investors Service has placed on review for possible downgrade four certificates from a transaction, issued by Fremont Home Loan Trust. The transaction is backed by second lien loans. The projected pipeline loss has increased over the past few months and may affect the credit support for these certificates. These certificates are being placed on review for possible downgrade based on the fact that the bonds' current credit enhancement levels, including excess spread, may be too low compared to the current projected loss numbers at the current rating level. Complete rating actions are: Issuer: Fremont Home Loan Trust Review for Possible Downgrade: * Series 2006-B Class SL-M7, current rating Baa1, under review for possible downgrade * Series 2006-B Class SL-M8, current rating Baa2, under review for possible downgrade * Series 2006-B Class SL-M9, current rating Baa3, under review for possible downgrade * Series 2006-B Class SL-B1, current rating Ba1, under review for possible downgrade FREMONT HOME: S&P Cuts Rating on Two Classes and Places Neg. Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on classes SL-B1 and SL-M9 classes from Fremont Home Loan Trust 2006-B. In addition, the ratings on these classes, along with the rating on class SL-M8, were placed on CreditWatch with negative implications. At the same time, the ratings were affirmed on the remaining 24 classes from this transaction. The lowered ratings and CreditWatch placements are based on a combination of factors: recent losses that have started to erode credit support; the amount of loans that are severely delinquent; and high loss severity expectations for second-lien mortgages. This pool experienced a $4.2 million loss in February, which lowered the overcollateralization amount to $11.9 million. Before this loss, the O/C level had been building toward its target of $24.0 million. In addition, there are $21.4 million in loans that are 90-plus-days delinquent. S&P expects these to liquidate over the next few months. This level of delinquency suggests the credit support may erode further. The affirmations are based on sufficient credit support to maintain the current ratings on the certificates. Standard & Poor's will closely monitor the performance of the classes with ratings on CreditWatch. If the delinquency pipeline improves and further losses do not erode the amount of O/C, S&P will affirm these ratings and remove them from CreditWatch. Conversely, if losses outpace excess interest and the level of O/C declines, S&P will take additional negative rating actions. This transaction is made up of two pools of mortgage loans. Pool I consists of 30-year first-lien mortgages. Pool II consists of 30-year second-lien mortgages. Ratings Lowered and Placed on Creditwatch Negative Fremont Home Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-B SL-M9 BB/Watch Neg BBB- 2006-B SL-B1 B/Watch Neg BB+ Ratings Placed on Creditwatch Negative Fremont Home Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-B SL-M8 BBB/Watch Neg BBB Ratings Affirmed Centex Home Equity Loan Trust Series Class Rating ------ ----- ------ 2006-B 2-A-1, 2-A-2, 2-A-3, 2-A-4 AAA 2006-B 1-A, SL-A AAA 2006-B M-1, SL-M1 AA+ 2006-B M-2, SL-M2 AA 2006-B M-3, SL-M3 AA- 2006-B M-4, SL-M4 A+ 2006-B M-5, SL-M5 A 2006-B M-6, SL-M6 A- 2006-B M-7, SL-M7 BBB+ 2006-B M-8, M-9 BBB 2006-B SL-M9, M-10 BBB- 2006-B M-11 BB+ GATEHOUSE MEDIA: To Buy 9 Publications from Copley for $380 Mil. ---------------------------------------------------------------- GateHouse Media, Inc. has signed a definitive stock and asset purchase agreement to acquire 9 publications from The Copley Press, Inc., for a net purchase price, including working capital adjustments, of $380 million. The transaction is expected to close on or before the end of April and is subject to regulatory approval and customary closing conditions. The 9 publications are comprised of 7 daily and 2 weekly newspapers organized in 3 clusters around Springfield, IL, Peoria, IL and Canton, OH. The total combined daily circulation of these papers is 241,060. The 2 weekly newspapers have a combined circulation of 34,918. "We are delighted to add these superb publications to the GateHouse Media organization. These businesses and their employees are a wonderful addition to our company, and we look forward to continuing the outstanding stewardship of Copley Press," said Michael E. Reed, GateHouse Media's CEO. "These newspapers are dominant local news providers in the markets they serve, with a rich tradition of journalistic excellence and local advertising reach, and therefore fit perfectly into the business strategy of GateHouse Media. We are excited about this opportunity to continue to accretively deploy capital in the local media sector." Headquartered in Fairport, New York, GateHouse Media, Inc. (NYSE: GHS), is one of the largest publishers of locally based print and online media in the United States as measured by number of daily publications. GateHouse Media currently owns over 445 community publications, including 7 white and yellow page directory publications located in 18 states across the country, and more than 235 related websites reaching approximately 9 million people on a weekly basis. GATEHOUSE MEDIA: $380 Mil. Purchase Cues Moody's to Review Ratings ------------------------------------------------------------------ Moody's has placed ratings of GateHouse Media Operating, Inc. under review for possible downgrade, following the company's announcement that it has signed a definitive stock and asset purchase agreement to acquire 9 publications from The Copley Press, Inc. for a net purchase price, including working capital adjustments, of $380 million. The transaction is expected to close on or before the end of April and is subject to regulatory approval and customary closing conditions. The ratings placed under review comprise: * $40 million senior secured first lien revolving credit facility, due 2014 -- B1 * $670 million senior secured term loan B, due 2014 -- B1 * $250 million senior secured delayed draw term loan, due 2014 -- B1 * Corporate Family rating -- B1 * Probability of Default rating -- B2 The review for possible downgrade reflects Moody's view that the proposed acquisition will likely be funded in part by debt (including drawings under GateHouse's delayed draw term loan), which could lead to a weakening of its financial metrics. The review will consider a number of factors, including: (1) the terms and conditions of the proposed acquisition, (2) a review of the funding contemplated for the acquisition, (3) the anticipated impact that the acquisition will have on GateHouse's financial and operating profile over time, (4) the strategic merits and the likely cost synergies presented by the acquisition, and (5) the likelihood that GateHouse will continue to engage in additional acquisition activity. Headquartered in Fairport, New York, GateHouse Operating, Inc. is a leading US publisher of local newspapers and related publications. Pro forma for recent acquisitions (but excluding Copely Press), the company recorded sales of approximately $450 million in the fiscal year ended December 2006. GNC PARENT: Completes $1.6 Billion Ares and Teacher's Private Buy ----------------------------------------------------------------- GNC Parent Corp. has completed the acquisition of the company by affiliates of Ares Management LLC and Teachers' Private Capital, for a total enterprise value of $1.65 billion, subject to certain adjustments. The company reported the merger agreement with GNC Acquisition Holdings Inc. and GNC Acquisition, Inc., affiliates of Ares Management and Teachers' Private Capital, pursuant to which the company is the surviving corporation and is now a wholly owned subsidiary of GNC Acquisition Holdings Inc. J.P. Morgan Securities Inc. and Goldman Sachs Credit Partners L.P. acted as co-lead arrangers. J.P. Morgan Securities Inc., Goldman Sachs Credit Partners L.P. and Merrill Lynch, Pierce, Fenner & Smith Inc. acted as joint book-running managers. Goldman Sachs Credit Partners L.P. is the syndication agent and J.P. Morgan Chase Bank, N.A. is the administrative agent. In conjunction with the merger, General Nutrition Centers, Inc., a wholly owned subsidiary of the company entered into a $735 million Credit Agreement with a syndicate of financial institutions. The agreement provides for a $675 million term loan and a $60 million revolving credit facility. The loans are secured by first priority pledges of the equity interests of centers, its domestic subsidiaries and certain of its foreign subsidiaries and first priority liens on all of the assets of the domestic subsidiaries of the company, including centers. The term loan matures in September 2013 and the revolving loan matures in March 2012. The term loan and an initial borrowing of $10.4 million under the revolving credit facility provide for alternative interest rates at centers' election, including interest at a rate of Libor plus 2.25%, which is the effective rate under the term loan. Centers also reported the closing of its offering of $300 million in aggregate principal amount of senior floating rate toggle notes due 2014 and $110 million in aggregate principal amount of 10.75% senior subordinated notes due 2015. The Senior Notes were issued at 99% of par, and the Senior Subordinated Notes were issued at par. The offering of the Notes was conditioned on the closing of the acquisition of the company. The proceeds from the sale of the Notes, together with borrowings by centers under the new senior credit facility described above, were used to finance a portion of the transactions in connection with the acquisition, including repayment of certain of Centers' and the Company's existing debt. Interest on the Senior Notes is payable and reset semiannually. Centers may elect to pay interest on the Senior Notes entirely in cash, entirely by increasing the principal amount of the Senior Notes or issuing new notes, or on 50% of the outstanding principal amount of the Senior Notes in cash and on 50% of the outstanding principal amount of the Senior Notes in PIK Interest. Cash interest on the Senior Notes accrues at six-month LIBOR plus 4.5%, and PIK Interest, will accrue at six-month LIBOR plus 5.25%. The Senior Subordinated Notes bear interest, payable semiannually and entirely in cash, at a rate per annum equal to 10.75%. The Senior Notes are unsecured senior obligations of Centers, and are guaranteed on an unsecured senior basis by each of centers' United States subsidiaries. The Senior Subordinated Notes are senior subordinated unsecured obligations of Centers, and are guaranteed on a senior subordinated unsecured basis by each of Centers' United States subsidiaries. The Notes have not been registered under the Securities Act of 1933, as amended, and, unless so registered, may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws. The company also reported the cash tender offer to purchase any and all of its outstanding Floating Rate Senior PIK Notes due 2011 expired on March 15, 2007 with 100% of the PIK Notes tendered. On March 5, 2007, the company received tenders and consents from a majority in principal amount of the PIK Notes. A supplemental indenture to the indenture governing the PIK Notes was executed on March 5, 2007 and is operative. The company made payment for the PIK Notes validly tendered pursuant to the terms of the tender offer. Based on the 100% tender, the company effected a cancellation and discharge of the PIK Notes. In addition, centers reported a cash tender offer to purchase any and all of each of its outstanding 85/8% Senior Notes due 2011 and 81/2% Senior Subordinated Notes due 2010 expired at the Expiration Time with 100% of the Centers Senior Notes tendered and 98.9% of the Centers Senior Subordinated Notes tendered. On March 5, 2007, centers received valid tenders and consents representing a majority of the aggregate principal amount of each of the centers Notes. Supplemental indentures to the indentures governing each of the Centers Notes were executed on March 5, 2007 and are operative since then. Centers made payment for the centers Notes validly tendered pursuant to the terms of the tender offers. Based on the 100% tender of the Centers Senior Notes, centers effected a cancellation and discharge of the Centers Senior Notes. Centers also elected to effect a covenant defeasance and redemption of all of the outstanding Centers Senior Subordinated Notes not purchased in its cash tender offer. The company has deposited cash in an irrevocable trust with U.S. Bank National Association, as trustee, in an amount sufficient to provide for the redemption of the Centers Senior Subordinated Notes on Dec. 1, 2007, in accordance with their terms at 104.25% of their principal amount, plus accrued and unpaid interest. Centers has filed a Form 15 with the SEC to formally suspend its reporting requirements based on cancellation and discharge or defeasance of the Centers Notes. Pursuant to the terms of the indentures governing the Notes, Centers will furnish the holders of the Notes reports that would be required to be filed with the SEC. Centers intends to provide noteholders with a Form 10-K Equivalent on or before April 15, 2007, which will be posted on GNC's website. About Ares Management Founded in 1997, Ares Management -- http://www.aresmgmt.com/-- is a private investment firm with $12 billion of assets under management. Ares Management specializes in managing assets in both the private equity and leveraged finance markets. Ares Management's private equity activities are conducted through the Ares Corporate Opportunities Funds. ACOF's retail and consumer product portfolio companies include National Bedding Co., Samsonite Corp., Orchard Supply Hardware Stores Corp., Maidenform Brands, Inc. and Anchor Blue Retail Group, Inc. Ares Management's leveraged finance activities in the U.S. and Europe are conducted through its Capital Market Group and its management of Ares Capital Corp., a publicly traded business development corporation. Ares Management's expertise enables the firm to structure investments to meet the specific needs of companies rather than the less flexible demands of the public markets. The firm has over 150 employees and offices in Los Angeles, New York and London About Ontario Teachers' Pension Teachers' Private Capital is the private investment arm of the $85 billion Ontario Teachers' Pension Plan, an independent corporation responsible for investing the fund and administering the pensions of Ontario's 264,000 active and retired teachers. With more than US$12 billion in assets, Teachers' Private Capital is one of North America's private investors, providing capital for large and mid-cap companies, infrastructure assets well as venture capital for developing industries. It has completed a number of major retail and consumer product transactions, including Shoppers Drug Mart Corp., Easton-Bell Sports Inc., Samsonite Corp., National Bedding Co. and Doane Pet Care Co. About GNC Headquartered in Pittsburgh, Pennsylvania, GNC -- http://www.gnc.com/-- is a global specialty retailer of nutritional products, vitamin, mineral, herbal and other specialty supplements and sports nutrition, diet and energy products. GNC has more than 4,800 retail locations throughout the United States and franchise operations in 48 international markets. The company is dedicated to helping consumers Live Well, also offers products and product information online. * * * Moody's Investors Service's assigned 'B3' on GNC Parent Corp's LT Corporate Family rating, 'Caa3' on Senior Unsecured Credit Debt rating and 'B3' on Probability of Default rating. The outlook is Stable. GRAHAM PACKAGING: High Leverage Cues Moody's Negative Outlook ------------------------------------------------------------- Moody's Investors Service affirmed the existing Corporate Family Rating of B2 for Graham Packaging, L.P., but changed the outlook to negative. According to Moody's, the negative outlook reflects Graham's high financial leverage, modest interest coverage and weak free cash flow. Free cash flow is insufficient to cover term loan amortizations and the current credit profile leaves little room for any operational missteps or exogenous shocks. The ratings are supported by Graham's competitive position, long-standing, customer relationships and new management team. Based in York, Pennsylvania, Graham Packaging Company, L.P. is a leading global designer and manufacturer of customized blow-molded plastic containers for branded food and beverages, household and personal care products, and automotive lubricants. Revenue for the twelve months ended September 30, 2006 was approximately $2.5 billion. GREENPOINT MORTGAGE: Moody's Rates Class B-2 Notes at Ba1 --------------------------------------------------------- Moody's Investors Service has assigned a Aaa rating to the senior notes and ratings ranging from Baa2 to Ba1 to the subordinate notes issued by Greenpoint Mortgage Funding Trust 2007-HE1. The securitization is backed by second lien, adjustable-rate revolving credit loans originated by Greenpoint Mortgage Funding, Inc. The ratings on the senior notes for Greenpoint Mortgage Funding Trust 2007-HE1 are based primarily on a financial guaranty insurance policy issued by XL Capital Assurance Inc., whose insurance financial strength is rated Aaa. Greenpoint Mortgage Funding Trust 2007-HE1 Notes also receive protection against losses from subordination, overcollateralization and excess spread. Moody's expects collateral losses to range from 6.00% to 6.50%. Primary servicing will be provided by Greenpoint Mortgage Funding, Inc. LaSalle Bank National Association will act as master servicer. Moody's has assigned LaSalle Bank National Association its servicer quality rating of SQ3 as a master servicer. The complete rating actions are: Greenpoint Mortgage Funding Trust 2007-HE1 Mortgage-Backed Notes, Series 2007-HE1 * Class A-1, rated Aaa * Class A-2, rated Aaa * Class B-1, rated Baa2 * Class B-2, rated Ba1 GSAMP TRUST: Moody's Junks Ratings on Four Loans ------------------------------------------------ Moody's Investors Service has downgraded and placed under review for possible downgrade, certain certificates from three GSAMP Trust deals, issued in 2006. The transactions consist of subprime second-lien fixed-rate loans. The primary originators on the three transactions are Fremont Investment & Loans, Long Beach Mortgage Company, and New Century Mortgage Company. The eleven most subordinate certificates from the three transactions have been downgraded and placed on review for possible downgrade because existing credit enhancement levels are low given the current projected losses on the underlying pool. The pools of mortgages have seen a spike in losses in recent months with high loss severity. Future loss on the loans are likely to cause a more significant erosion of the overcollateralization. Complete rating actions are: Issuer: GSAMP Trust Downgrades: * Series 2006-S1; Class B-2, downgraded to Caa2 from Ba2; * Series 2006-S2; Class B-2, downgraded to Caa2 from Ba2; * Series 2006-S5; Class M-6, downgraded to Ba3 from Baa2; * Series 2006-S5; Class M-7, downgraded to B2 from Baa3; * Series 2006-S5; Class B-1, downgraded to Ca from Ba1; * Series 2006-S5; Class B-2, downgraded to C from Ba2. Review for Possible Downgrade: * Series 2006-S1; Class B-1, current rating Ba1, under review for possible downgrade; * Series 2006-S2; Class M-7, current rating Baa3, under review for possible downgrade; * Series 2006-S2; Class B-1, current rating Ba1, under review for possible downgrade; * Series 2006-S5; Class M-4, current rating A3, under review for possible downgrade; * Series 2006-S5; Class M-5, current rating Baa1, under review for possible downgrade. GSAMP TRUST: S&P Junks Rating on 2006-S5 Class B-1 and B-2 Certs. ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class B-2 mortgage pass-through certificates from GSAMP Trust 2006-S2 to 'B' from 'BB' and placed it on CreditWatch with negative implications. Concurrently, the ratings on classes B-1 and B-2 from series 2006- S5 were lowered to 'CCC' and removed from CreditWatch, where they were placed with negative implications Feb. 14, 2007. At the same time, the rating on class M-7 from series 2006-S5 was lowered to 'BB' from 'BBB-' and remains on CreditWatch negative, where it was also placed Feb. 14, 2007. In addition, the ratings on classes B-1 and M-6 from series 2006-S2 and 2006-S5, respectively, were placed on CreditWatch with negative implications. Lastly, the ratings on the remaining classes from these two transactions were affirmed. The lowered ratings and CreditWatch placements reflect realized losses that have continuously reduced overcollateralization. During the previous three remittance periods, realized losses have exceeded excess interest by approximately 3.07x for series 2006-S2 and 3.15x for series 2006-S5. As of the February 2007 distribution date, O/C was below its target balance by approximately 60% for series 2006-S2 and 90% for series 2006-S5. Serious delinquencies (90-plus days, foreclosure, and REO) represent 5.27% of the current pool balance for series 2006-S2 and 8.13% of the current pool balance for series 2006-S5. Cumulative realized losses represent 3.24% of the original pool balance for series 2006-S2 and 3.48% of the original pool balance for series 2006-S5. Standard & Poor's will continue to monitor the performance of these two transactions. If realized losses continue to outpace excess interest, and the level of O/C continues to decline, S&P will take further negative rating actions. Conversely, if realized losses no longer outpace monthly excess interest, and the level of O/C rebuilds to its target balance, S&P will affirm the ratings and remove them from CreditWatch. The ratings on the class B-1 and B-2 certificates were removed from CreditWatch because they 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 for these transactions is provided through a combination of excess spread, O/C, and subordination. The collateral consists primarily of fixed-rate, closed-end second- lien mortgage loans secured by one- to four-family residential properties. Rating Lowered and Placed on Creditwatch Negative GSAMP TRUST Rating ------ Series Class To From ------ ----- -- ---- 2006-S2 B-2 B/Watch Neg BB Ratings Lowered and Removed from Creditwatch Negative GSAMP TRUST Rating ------ Series Class To From ------ ----- -- ---- 2006-S5 B-1 CCC BB+/Watch Neg 2006-S5 B-2 CCC BB+/Watch Neg Rating Lowered and Remaining on Creditwatch Negative GSAMP TRUST Rating ------ Series Class To From ------ ----- -- ---- 2006-S5 M-7 BB/Watch Neg BBB-/Watch Neg Ratings Placed on Creditwatch Negative GSAMP TRUST Rating ------ Series Class To From ------ ----- -- ---- 2006-S2 B-1 BB+/Watch Neg. BB+ 2006-S5 M-6 BBB/Watch Neg BBB Ratings Affirmed GSAMP TRUST Series Class Rating ------ ----- ------ 2006-S2 A-1A, A-1B, A-2, A-3 AAA 2006-S2 M-1 AA 2006-S2 M-2 AA- 2006-S2 M-3 A 2006-S2 M-4 A- 2006-S2 M-5 BBB+ 2006-S2 M-6 BBB 2006-S5 A-1, A-2 AAA 2006-S5 M-1 AA 2006-S5 M-2 AA- 2006-S5 M-3 A 2006-S5 M-4 A- 2006-S5 M-5 BBB+ HALEKUA DEV'T: Secures $97.9 Million Loan to Pay Secured Creditors ------------------------------------------------------------------ Canyon Capital Realty Advisors and California Mortgage and Realty funded a $97.9 million senior bridge loan to Halekua Development Corporation, a chapter 7 debtor redeeming its own property from its bankruptcy estate. Canyon Capital funded a $55 million senior tranche and California Mortgage and Realty funded a $42.9 million junior tranche in the loan. The loan is secured by 161 acres of residential zoned land on the hillside overlooking Pearl Harbor in the Royal Kunia master planned community approximately 30 minutes west of Honolulu. The Loan will repay all of HDC's secured creditors, and provide nearly $20 million for pre-development expenses and infrastructure for the development. Royal Kunia Phase II, which stalled in 2003 when HDC filed for bankruptcy, is planned for the development of approximately 2,000 homes, including 600 affordable units. The first homes are expected to be available by late 2009. Halekua Development is owned by Herbert Horita, the original developer of Ko Olina, Royal Kunia Phase I (through a joint venture with Castle & Cooke) and Village Park. Mr. Horita has built more than 13,500 homes in Hawaii. "I am very gratified to be given this new opportunity to resume what has been my life's work -- the building of homes for Hawaii's working class families," Mr. Horita said. Halekua Development has arranged for Stanford Carr Development to serve as project manager for the pre-development and portions of the actual development of Royal Kunia Phase II. "This transaction highlights Canyon's commitment to provide capital for developments that benefit the Hawaii community and economy," Jonathan Roth, Principal of Canyon, said. "Canyon believes in the strength of the Hawaii housing market and is pleased to provide financing that will advance the development of much-needed affordable housing units on the Island of Oahu," Michael Fleischer, Director of Canyon, said. "California Mortgage and Realty is pleased to assist Mr. Horita and Halekua Development in re-launching Royal Kunia Phase II to provide housing, schools and recreation for families on the Island of Oahu," James C. Gala, CEO of California Mortgage, said. "We're happy to have co-originated the funding with Canyon Capital and look forward to more joint opportunities." This is the first deal that Canyon Capital and California Mortgage have funded together. About Canyon Capital Realty Advisors Based in Beverly Hills, California, Canyon Capital Realty Advisors LLC -- http://www.canyonpartners.com/-- and its affiliate Canyon Capital Advisors LLC are registered investment advisors and money management firms with more than $14 billion of capital under management. Canyon's real estate funds include the Canyon Value Mortgage Fund, the Canyon Value Opportunity Fund and the Canyon- Johnson Urban Funds, a joint venture with Earvin "Magic" Johnson focused on the development of retail and residential properties in densely populated, ethnically diverse communities. About California Mortgage and Realty Founded in 1958, San Francisco-based California Mortgage & Realty, Inc. -- http://www.cmrfund.com/-- is a nationally recognized leader in arranging private commercial real estate loans on office, multi-family, retail and mixed-use properties throughout the United States. With assets including investment portfolios of its affiliated entities totaling over $600 million, California Mortgage and Realty has successfully served the financing needs of the real estate community through its rigorously-underwritten loans funded by the lending capital of the company and its private investment clients. About Halekua Development Halekua Development Corporation filed for chapter 11 protection on April 25, 2003 (Bankr. Hawaii Case No. 03-01279). Steven Guttman, Esq., at Kessner Duca Umebayashi Bain & Matsunaga represents the Debtor. When the Debtor filed for protection from its creditors, it listed assets of less than $50,000 and debts of over $50 million. On April 15, 2004, the Court converted the Chapter 11 case to a Chapter 7 proceeding. James B. Nicholson was appointed as the Debtor's Chapter 7 Trustee. HAWKER BEECHCRAFT: S&P Holds BB- Rating on $1.95 Bil. Financing --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' bank loan rating and '1' recovery rating on Hawker Beechcraft Acquisition Co. LLC's, a wholly owned subsidiary of Hawker Beechcraft Inc., proposed $1.95 billion bank financing. The financing now consists of a $400 million senior secured revolving credit facility, a $1.3 billion senior secured term loan, and a $250 million pre-funded synthetic letter-of-credit facility. The facilities are rated 'BB-', one notch higher than the corporate credit rating on Hawker Beechcraft Inc., with a recovery rating of '1', indicating high expectation of full (100%) recovery of principal in the event of a payment default. At the same time, S&P affirmed its 'B-' rating on Hawker Beechcraft Acquisition Co. LLC's and Hawker Beechcraft Notes Co.'s (co-issuers) proposed $800 million senior unsecured notes due 2015 and 'B-' rating on the $300 million subordinated notes due 2017, both offered under Rule 144A with registration rights. The amount of the term loan had been expected to be $1.2 billion and subordinated notes $400 million. Higher demand for the term loan resulted in a modest reallocation of the proposed financings. Those changes decrease only modestly recovery prospects from our original analysis. The corporate credit rating on Wichita, Kan.-based Hawker Beechcraft Inc. is 'B+' and the outlook is stable. "The rating reflects high debt leverage, weak credit protection measures, risks associated with cyclical demand for general aviation planes, and modest, albeit improving, profit margins," said Standard & Poor's credit analyst Roman Szuper. Those factors outweigh the firm's position as a well-established major manufacturer of business jets, turboprops, and piston aircraft, currently favorable industry conditions, and adequate liquidity. Rating List Ratings Affirmed Hawker Beechcraft Inc. Corporate Credit Rating B+/Stable/-- Hawker Beechcraft Acquisition Co. LLC $400 Mil. Senior Secured Revolving Credit Facility BB- Recovery Rating 1 $1.3 Bil. Senior Secured Term Loan BB- Recovery Rating 1 $250 Mil. Synthetic Letter-of-Credit Facility BB- Recovery Rating 1 Hawker Beechcraft Acquisition Co. LLC Hawker Beechcraft Notes Co. $800 Mil. Senior Unsecured Notes Due 2015 B- $300 Mil. Subordinated Notes Due 2017 B- HAYES LEMMERZ: Board Approves Equity Rights Offering ---------------------------------------------------- Hayes Lemmerz International, Inc.'s Board of Directors has approved a rights offering of up to $180 million of common stock to its stockholders. The subscription price for the common stock offered in the rights offering will be $3.25 per share, which represents a 31.8% discount to the average closing price for our common stock during the past 10 trading days. The rights offering is subject to approval of stockholders at a Special Meeting and the effectiveness of a registration statement which is being filed today with the Securities and Exchange Commission and, therefore, no record date has been set yet. The company will use the net proceeds of the rights offering to repurchase the outstanding 10-1/2% Senior Notes due 2010 issued by its subsidiary, HLI Operating Company, Inc., and to pay any required fees and expenses related to the rights offering. Backstop Commitment The Company also disclosed that it has entered into an Equity Purchase and Commitment Agreement with Deutsche Bank Securities, Inc. pursuant to which Deutsche Bank has agreed to backstop the rights offering by purchasing all shares of common stock offered in the rights offering and not purchased at the close of the rights offering. SPCP Group L.L.C., an affiliate of Silver Point Capital, L.P., has agreed with Deutsche Bank to acquire one-half of the shares of common stock that Deutsche Bank is obligated to purchase pursuant to its backstop obligation. The Equity Agreement also gives Deutsche Bank the option to make a direct investment of up to $18 million in the company's common stock at the subscription price of $3.25 per share. To the extent that Deutsche Bank exercises this option, the amount of the rights offering will be proportionally reduced but the gross proceeds to the Company will remain unchanged. The backstop commitment is subject to several conditions and limitations including, among others, the amendment of the company's Amended and Restated Credit Agreement, or the refinancing of the debt subject thereto, to permit the repurchase of the Senior Notes and the placement of a portion of the Company's debt outside the United States. The company intends to amend its Amended and Restated Credit Agreement or refinance the debt subject thereto in conjunction with the closing of the rights offering. The rights offering will be made only by means of a prospectus. When available, copies of the prospectus may be obtained from Hayes Lemmerz International, Inc., 15300 Centennial Drive, Northville, Michigan 48168, (734) 737-5000, Attention: Corporate Secretary. The proposed issuance of shares to Deutsche Bank and SPCP Group will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Hayes Lemmerz International, Inc. (Nasdaq: HAYZ) is a leading global supplier of automotive and commercial highway wheels, brakes and powertrain components. The company has 30 facilities and approximately 8,500 employees worldwide. HAYES LEMMERZ: Planned Debt Repurchase Cues S&P's Positive Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B-' corporate credit rating and related issue ratings on Hayes Lemmerz International Inc. on CreditWatch with positive implications, following the company's announcement that it plans to repurchase its senior unsecured debt with proceeds from an equity rights offering. Hayes' recovery ratings were not placed on CreditWatch. Northville, Mich.-based Hayes, a manufacturer of steel and aluminum wheels, has total debt of about $1 billion including Standard & Poor's adjustments for postretirement benefits, accounts receivable securitizations, and the present value of operating leases. Hayes announced Fridday that its board of directors has approved a rights offering of up to $180 million common stock. Proceeds would be used to repurchase the approximately $157 million outstanding of Hayes' 10.5% senior unsecured notes due 2013, which are issued by subsidiary HLI Operating Co. Inc., and to pay related fees and expenses. Deutsche Bank and an affiliate of Silver Point Capital L.P. have agreed to purchase all shares that are part of the offering but not acquired by other investors. The offering is subject to approval of Hayes' stockholders at an upcoming special meeting. In its CreditWatch review, Standard & Poor's will assess the industry challenges facing Hayes, as well as the benefits of lower leverage and improved credit metrics that likely would result from completion of the proposed transactions. Hayes is likely to remain highly leveraged despite the improvement from debt reduction. Still, a modest upgrade is possible. HMSC CORPORATION: Increased Borrowing Cues Moody's to Cut Rating ---------------------------------------------------------------- Moody's Investors Service has lowered the corporate family rating of HMSC Corporation, the holding company for the Swett & Crawford Group, to B2 from B1, in light of the company's plans to increase its borrowing level. Moody's has assigned a B2 rating to the proposed new first-lien credit facilities and a B3 rating to the proposed new second-lien credit facility. At the same time, Moody's has lowered the rating on the existing first-lien credit facility to B2 from B1 and affirmed rating on the existing second-lien credit facility at B3. The outlook for HMSC's ratings is stable. The proposed credit facilities include a: * $20 million first-lien revolving credit, * $265 million first-lien term loan and * $110 million second-lien term loan. Net proceeds from the proposed transaction will be used to repay existing debt of approximately $259 million, to fund a dividend to owners, to pay related fees and expenses, and for general corporate purposes. The credit facilities will be secured by substantially all assets of HMSC and guaranteed by substantially all subsidiaries of HMSC. According to Moody's, the ratings reflect Swett & Crawford's strong position in the wholesale brokerage market, its expertise in various specialty business lines and its strong operating margins. The firm also benefits from broad ownership participation among core producers, underwriters and managers. These strengths are offset by the broker's considerable financial leverage, its modest fixed charge coverage and its limited operating history as stand-alone entity. Moody's cited these factors that could lead to an upgrade of HMSC's ratings: (i) adjusted EBITDA coverage of interest consistently exceeding 3.0 times, (ii) free-cash-flow-to-debt ratio consistently exceeding 8%, and (iii) adjusted debt-to-EBITDA ratio consistently below 4.0 times. Moody's cited these factors that could lead to a downgrade of the ratings: (i) adjusted EBITDA coverage of interest below 1.5 times, (ii) adjusted debt-to-EBITDA ratio above 5.5 times, or (iii) a prolonged period with no organic growth. Moody's last rating action on HMSC took place on October 12, 2005, when Moody's assigned the B1 corporate family rating as well as the B1 rating on the existing first-lien credit facilities and the B3 rating on the existing second-lien credit facility. Swett & Crawford, based in Atlanta, Georgia, is the largest US wholesale insurance broker based on revenues. Wholesale brokers act as intermediaries between retail brokers and insurance carriers on unusual risks. The wholesalers place most such risks with excess & surplus carriers or other specialty carriers. Swett & Crawford generates business through more than 30 branch offices across the US. The company placed premiums of $2.6 billion during 2006, generating revenues in excess of $200 million. HUNTER FAN: S&P Junks Rating on $75 Million Second-Lien Loan ------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Hunter Fan Co. The outlook is negative. In addition, Standard & Poor's assigned senior secured bank loan and recovery ratings to Hunter Fan's planned $220 million first-lien bank loan due 2014 (which includes a maximum $15 million delayed draw term loan), and the company's planned $75 million second-lien term loan due 2014. The first-lien debt was rated 'B', the same as the corporate credit rating, with a recovery rating of '2', indicating an expectation of substantial (80%-100%) recovery of principal in the event of a default. The second-lien debt was rated 'CCC+', two notches below the corporate credit rating, with a '5' recovery rating indicating an expectation of negligible (0%-25%) recovery of principal in the event of a payment default. "Proceeds from this transaction will be used to help fund the acquisition of Hunter Fan by MidOcean Partners," said Standard & Poor's credit analyst Patrick Jeffrey. The ratings on the Memphis, Tenn.-based ceiling fan designer and marketer Hunter Fan reflect the company's leveraged capital structure, narrow product focus, small size, and customer and supplier concentration. IELEMENT CORP: Post $577,781 Net Loss in 3rd Quarter Ended Dec. 31 ------------------------------------------------------------------ iElement Corporation fka Mailkey Corporation reported a $577,781 net loss applicable to common stockholders on $881,466 of operating revenues for the fiscal third quarter ended Dec. 31, 2006. For the three months ended Dec. 31, 2005, the company reported a $328,262 net loss applicable to common stockholders on $1,119,772 of operating revenues. The company said the decrease in revenue was due to customer attrition resulting from not employimg a dedicated sales force. It plans to hire a dedicated sales force this year. At Dec. 31, 2006, the company's balance sheet showed $2,204,049 in total assets and $2,716,849 in total liabilities, resulting in a $512,800 stockholders' deficit. The company's Dec. 31, 2006, balance sheet also showed strained liquidity with $475,896 in total current assets available to pay $2,298,106 in total current liabilities. Full-text copies of the company's fiscal third quarter financials are available for free at http://ResearchArchives.com/t/s?1ba9 About iElement Corporation iElement Corporation fka Mailkey Corporation (OTCBB: IELM) -- http://www.ielement.com/-- provides telecommunications services to small and medium sized businesses. IElement provides broadband data, voice and wireless services by offering integrated T-1 lines as well as a Layer 2 Private Network and VOIP solutions. IElement has a network presence in 18 major markets in the United States, including facilities in Los Angeles, Dallas, and Chicago. Going Concern Doubt As reported in the Troubled Company Reporter on July 5, 2006, Bagell, Josephs Levine & Company, L.L.C., in Gibbsboro, N.J., raised substantial doubt about IElement Corporation, fka Mailkey Corporation's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended March 31, 2006. The auditor pointed to the company's operating losses and capital deficits. ISLE OF CAPRI: Financial Restatement Cues Nasdaq Delisting Notice ----------------------------------------------------------------- Isle of Capri Casinos Inc. received a NASDAQ Staff Determination letter on March 13, 2007, because of its intention to restate certain of its financial statements, and its resulting inability to file its Quarterly Report on Form 10-Q by the March 9 due date. The company plans to request a hearing before the NASDAQ Listing Qualifications Panel, which the delisting will be suspended. The company's common stock will continue to trade on the NASDAQ Global Select Market without interruption. As a result, the company is not in compliance with the filing requirements for continued listing of its common stock on the NASDAQ Global Select Market as set forth in Marketplace Rule 4310(c)(14). Financial Results Restatement On March 12, the company restated its financial statements for the fiscal years ended April 25, 2004; April 24, 2005 and April 30, 2006, and the quarterly results for fiscal 2005 and 2006 included therein, and for the first two quarters of fiscal 2007. The company is assessing the time frame in which it expects to complete and file the restated financial statements and its Form 10-Q for the fiscal quarter ended Jan. 28, 2007, but expects that the restatements and Form 10-Q filing will be completed prior to any final NASDAQ delisting determination. About Isle of Capri Based in Biloxi, Miss., Isle of Capri Casinos Inc. (Nasdaq: ISLE) -- http://www.islecorp.com/-- develops and owns gaming and entertainment facilities. The Company owns and operates riverboat and dockside casinos in Biloxi, Vicksburg, Lula and Natchez, Miss.; Bossier City and Lake Charles (two riverboats), La.; Bettendorf, Davenport and Marquette, Iowa; and Kansas City and Boonville, Mo. The Company also owns a 57% interest in and operates land-based casinos in Black Hawk (two casinos) and Cripple Creek, Colorado. Isle of Capri's international gaming interests include a casino that it operates in Freeport, Grand Bahama, and a 2/3 ownership interest in casinos in Dudley, Walsal and Wolverhampton, England. The company also owns and operates Pompano Park Harness Racing Track in Pompano Beach, Fla. * * * Moody's Investors Service affirmed its Ba3 Corporate Family Rating on Isle of Capri Casinos in connection with its implementation of the new Probability-of-Default and Loss-Given-Default rating methodology for the Gaming, Lodging & Leisure sector. Moody's assigned LGD ratings to four of the Company's debts including a LGD5 rating on its 9% Sr. Sub. Notes, suggesting debt holders will experience a 76% loss in the event of a default. As reported in the Troubled Company Reporter on Nov. 8, 2006, Standard & Poor's Ratings Services affirmed ratings on Isle of Capri Casinos Inc., including its 'BB-' corporate credit rating. At the same time, Standard & Poor's removed the ratings from CreditWatch, where they were placed on Oct. 4, 2006, with negative implications. The outlook is stable. J.G. WENTWORTH: Moody's Junks Rating on New $100MM 2nd-Lien Loan ---------------------------------------------------------------- Moody's Investors Service affirmed the Corporate Family Rating of J.G. Wentworth, LLC at B2 upon the company's announcement of a debt financed distribution to the company's owners. Moody's also assigned a B2 rating to the new $325 million First Lien Senior Secured Term Loan and a Caa1 rating to the new $100 million Second Lien Senior Secured Term Loan. A portion of the proceeds from the total $425 million debt issuance will be used to repay the existing $225 million senior secured term loan; the rating on the existing term loan will be withdrawn upon repayment. The outlook remains stable. Moody's affirmation of JGW's CFR reflects its view that although the increase in debt and corresponding dividend weakened JGW's credit profile, it was not sufficient to result in a downgrade. Moody's expects the company will meet revenue and cash flow growth targets in 2007 which would reduce the firm's leverage to a level more consistent with the B2 CFR. An inability to achieve these targets would result in downward rating pressure. JGW's CFR is supported by the company's demonstrated ability to operate with no tangible equity while generating sufficient cash flow for debt service. This is driven by the favorable attributes, including high margins of the firm's primary product - structured settlements. Additionally, structured settlements are readily securitizable and generate substantial cash gains on sale to the firm. This is due to the annuity structure of the payments (no prepayment risk) and the highly rated nature of the annuity providers; hence, defaults are not a major concern. Since Moody's initial rating in March, 2006, JGW has performed well, surpassing internal revenue targets while increasing its investment in marketing, which can lead to greater growth in the company's customer database. The company's extensive customer database gives it an advantage over other industry peers given the hurdles in developing such a database, including the extensive use of advertising. As the primary strategic investment, Moody's expects the customer database will continue to be a foundation for new business as well as a principal source for amendments to existing structured settlement contracts. The rating is also supported by the company's experienced management team, which had several key additions during 2006 and 2007, including a new CFO and Chief Legal Officer. Moody's said that there are a number of risks that balance these positive attributes. First, JGW is adding substantial leverage to the capital structure. While the company has demonstrated an ability to operate in a benign environment without equity, there are risks that could cause the company to need additional capital, should a legal, regulatory, or other unforeseen development arise. The lack of tangible equity removes a cushion that would benefit bondholders in a time of stress, and requires the company to service the larger debt obligation exclusively with cash flow. In Moody's view, the substantial increase in leverage and debt service burden associated with the transaction weakens JGW's positioning in the B2 rating category. Moody's also noted that for JGW to be able to service the increased debt obligation it must continue to generate new structured settlement purchases, as cash flows from previous purchases are either encumbered in securitizations or distributed out of the company to the equity owners. This requires that the current business and operating environment continue to function relatively unchanged from its current state, without legal, regulatory, or competitive pressures. Moody's believes that the strength of JGW's cash flows could be meaningfully diminished should this key operating assumption be challenged. Though JGW continues to be the leading purchaser in the structured settlement market, the attractive yields and high margins make the industry susceptible to competition, barriers to entry (marketing costs and the development of a customer database) notwithstanding. The company's scale and large customer database mitigate this risk to some extent. It will be key for JGW to maintain margins in order to service the larger interest expense obligation with an acceptable cushion and to reduce leverage to levels more consistent with the B2 rating category. JGW's failure to meet its 2007 debt to EBITDA expectations of below 6x would put downward pressure on the firm's Corporate Family Rating. Finally, Moody's notes that JGW's majority owner was effectively cashed-out of its original equity investment after JGW paid its first dividend in 2006. The current proposed dividend and lack of deleveraging continue to show a more aggressive approach to the business and the firm's financial profile, which constrains the rating. With respect to the individual ratings on the term loans, Moody's rated the first lien senior secured term loan in-line with the Corporate Family Rating, reflecting its majority standing in the capital structure. The second lien senior secured term loan was rated two notches below the CFR, due to its junior standing in the capital structure. Because the vast majority of receivables are housed in bankruptcy-remote entities, the senior secured term loans are primarily supported by intangible assets and stock in subsidiaries which Moody's believes limits recovery prospects in a stress scenario. What Could Change the Rating -- Up Sustained improvements in interest coverage and leverage levels as a result of increasing cash flow generation at the operating company and a continued demonstration of operating without legal or regulatory challenges could put upward pressure on the rating. What Could Change the Rating -- Down Ratings could go down if JGW has a decrease in net yield or a loss in market share as a result of greater competition or an adverse legal ruling that impairs the franchise. In addition, as mentioned above, failure to bring debt to EBITDA levels to below 6x by year-end 2007, could also lead to a lower rating. This rating was affirmed: J.G. Wentworth, LLC * Corporate Family Rating -- B2 These ratings were assigned: * First Lien Senior Secured Term Loan -- B2 * Second Lien Senior Secured Term Loan -- Caa1 J.G. Wentworth is located in Bryn Mawr, Pennsylvania, and reported assets of approximately $291 million at December 31, 2006. JOCKS & JILLS: Files for Bankruptcy in Georgia ---------------------------------------------- Jocks & Jills Restaurants LLC and nine affiliates filed for protection under Chapter 11 of the Bankruptcy Code with the U.S. Bankruptcy Court for the Northern District of Georgia. The company decided to pursue bankruptcy citing that its business would be "impaired" by the $1.05 million it owes to a former worker, the Atlanta Journal-Constitution reports. The same former worker had recently won a sexual harassment claim against the company. The company is appealing the verdict although a stay hasn't been granted, AJC relates. Headquartered in Atlanta, Jocks & Jills Restaurants LLC -- http://www.jocksandjills.com/-- has seven stores in Georgia and locations in Charlotte and Parker, Colo. The company also operates Frankies Sports Grill on Roswell Road and 1420 Room, an events facility in Dunwoody. The company and nine affiliates filed for chapter 11 protection on March 19, 2007 (Bankr. N.D. Ga. Case No. 07-64355). G. Frank Nason, IV, Esq., at Lamberth, Cifelli, Stokes & Stout, P.A., represents the Debtors. When they filed for bankruptcy, they estimated assets and debts between $1 million and $100 million. JOCKS & JILLS: Case Summary & 122 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Jocks & Jills Restaurants, L.L.C. Suite 1500 400 Colony Square 1201 Peachtree Street Atlanta, GA 30361 Bankruptcy Case No.: 07-64355 Debtor-affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Jocks & Jills Restaurants, LLC 07-64355 Jocks & Jills Charlotte, Inc. 07-64356 Jocks & Jills CNN, Inc. 07-64358 Jocks & Jills Duluth, Inc. 07-64360 Jocks & Jills Galleria, Inc. 07-64363 Jocks & Jills Prado, Inc. 07-64365 Jocks & Jills, Inc. 07-64367 Divine Events Transportation, Inc. 07-64369 Divine Events Catering, Inc. 07-64370 Type of Business: The Debtor owns and operates a chain of casual sports-themed restaurants. See http://www.jocksandjills.com/ Chapter 11 Petition Date: March 19, 2007 Court: Northern District of Georgia (Atlanta) Judge: Margaret Murphy Debtors' Counsel: G. Frank Nason, IV, Esq. Lamberth, Cifelli, Stokes & Stout, P.A. Suitte 550 3343 Peachtree Road Northeast Atlanta, GA 30326 Tel: (404) 262-7373 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million A. Jocks & Jills Restaurants, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Tracey L. Tomczyk civil judgment $1,050,000 37 Picketts Forge Drive in USDC civil Acworth, GA 30101 action file no. 1:00-cv-3417-JOF Frank Thomas $500,000 3101 Towercreek Parkway Suite 560 Atlanta, GA 30339 Joe Atkinson $489,965 1100 Riverbend Club Drive Atlanta, GA 30339 Janet Mertz $250,000 3348 Peachtree Road Northeast Suite 500 Atlanta, GA 30326 Sana S. Thomas $250,000 3101 Towercreek Parkway Suite 500 Atlanta, GA 30339 Ted W. Gibson $150,000 Shanaz Rastegar $100,000 Dara Rastegar $100,000 Lela Brown $100,000 E.W. Brown Jr. $100,000 Javelin Southeast Inc. $50,000 W. Bradford Kacher $50,000 Mel Vukas $50,000 Wells Fargo business credit $40,319 Card Holman and Company $15,970 Blue Cross Blue Shield group insurance $11,857 of Georgia Copy Cat Printing $1,615 Slaughter & Virgin $1,422 Citysearch $1,310 Bell South $901 B. Jocks & Jills Charlotte, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Tracey L. Tomczyk $1,050,000 37 Picketts Forge Drive Acworth, GA 30101 U.S. Foods Service $43,398 7950 Spence Road Fairburn, GA 30213 Duke Energy $3,047 P.O. Box 1090 Charlotte, NC 28201 Alsco $1,962 Mecklenberg County $1,818 Trinity Mech. Systems $1,654 City of Charlotte - Water & Sewerage $790 Allied Waste $571 Public Storage $407 The Brickman Group $375 Knight Cleaning $300 Ecolab $291 Citysearch $280 Ecolab Pest $214 NuCo2 $138 Payphone Partners $130 Earthlink $104 MJM Sports $95 Facilitec $92 Sedgefield Interiors $90 C. Jocks & Jills CNN, Inc.'s Nine Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Tracey L. Tomczyk $1,050,000 37 Picketts Forge Drive Acworth, GA 30101 U.S. Foods Service $132,781 7950 Spence Road Fairburn, GA 30213 Grime Busters $1,710 3283 La Ventura Drive Atlanta, GA 30341 Classic Commercial Services $410 Sparkling Image $195 Everclear Enterprises $150 The Blade-Smith, LLC $104 Training Institute $50 Humitech $30 D. Jocks & Jills Duluth, Inc.'s 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Tracey L. Tomczyk $1,050,000 37 Picketts Forge Drive Acworth, GA 30101 U.S. Foods Service $36,932 7950 Spence Road Fairburn, GA 30213 Georgia Power $3,941 11675 Wills Road Alpharetta, GA 30004 MX Energy $2,370 Fulton County $1,398 Alsco $1,218 Comcast $849 Universal Entertainment $450 Waste Management/Atl North $380 Ackerman Security $228 ADP, Inc. $212 Sparkling Image $212 Real Clean $200 Steritech $180 The Blade-Smith, L.L.C. $116 Ecolab $111 Cintas $108 Cecil, Inc. $102 Humitech $60 E. Jocks & Jills Galleria, Inc.'s 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Tracey L. Tomczyk $1,050,000 37 Picketts Forge Drive Acworth, GA 30101 U.S. Foods Service $48,807 7950 Spence Road Fairburn, GA 30213 MX Energy $1,929 P.O. Box 4911 Houston, TX 77210-4911 ADP, Inc. $1,289 Retail Data Systems $1,059 Industrial Stearn Cleaning/Atl $328 Steritech $258 The Blade-Smith, L.L.C. $98 Customer Security Services $60 Humitech $60 Sunshine Window Cleaning $35 F. Jocks & Jills Prado, Inc.'s 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Tracey L. Tomczyk $1,050,000 37 Picketts Forge Drive Acworth, GA 30101 U.S. Foods Service $61,968 7950 Spence Road Fairburn, GA 30213 Retail Data Systems $4,279 1341 Capital Circle South Suite E Marietta, GA 30067 MX Energy $1,853 Comcast $1,010 DirecTV $387 NuCo2 $273 Apex $135 Sign A Rama $130 United Draft Services $100 Ecolab $76 G. Jocks & Jills Inc.'s 16 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Tracey L. Tomczyk $1,050,000 37 Picketts Forge Drive Acworth, GA 30101 U.S. Foods Service $38,959 7950 Spence Road Fairburn, GA 30213 Georgia Power Company #79438-71008 $3,520 805-BRD Abernathy Boulevard ($1,071);#04678- Atlanta, GA 30310 7200($398);#04888- 7200($1,535); #46888-72008(515) MX Energy $1,757 Retail Data Systems $1,038 United Waste Service $618 Comcast $366 City of Atlanta $351 Infinite Energy, Inc. $328 Apex $195 Sparkling Image $160 NuCo2 $142 Ecolab $76 The Blade-Smith, L.L.C. $71 Steritech $56 Humitech $50 H. Divine Events Transportation, Inc.'s Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Tracey L. Tomczyk $1,050,000 37 Picketts Forge Drive Acworth, GA 30101 I. Divine Events Catering, Inc.'s 15 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Tracey L. Tomczyk $1,050,000 37 Picketts Forge Drive Acworth, GA 30101 U.S. Foods Service $27,774 7950 Spence Road Fairburn, GA 30213 Georgia Power Company $2,123 6317 Peachtree Industrial Boulevard Atlanta, GA 30360 MX Energy Natural Gas $898 Retail Data Systems $550 Concit Carpet Care $389 Dekalb County Government $370 Apex $300 Ecolab $190 ADP $125 Allgood Pest Solutions $115 DirecTV, Inc. $103 The Cleaning Authority $82 Sunshine Window Cleaning $60 Ackerman Security Systems $57 KARA HOMES: Affiliate Inks DIP Financing Pact with Valley National ------------------------------------------------------------------ Kara Homes Inc. and its debtor-affiliate, Sterling Acres at Monroe LLC, ask the U.S. Bankruptcy Court for the District of New Jersey in Trenton for authority to obtain, on a final basis, postpetition financing from Valley National Bank for purposes of winterizing and completing construction of homes. Valley agreed to extend loans and other financial accommodations to Sterling in the aggregate amount of $210,867. Before the Debtors filed for bankruptcy, Valley was the primary secured lender of Sterling. Valley is a New Jersey limited liability company that owns real property and improvements in the Monroe Township, Middlesex County, New Jersey. Sterling is obligated to Valley under a loan in the original principal amount of $7,000,000, as evidenced by a note dated Sept. 23, 2004, to finance Sterling's costs of acquiring, developing, improving and constructing a residential project in the Monroe Township. The note is secured by first priority security interests in and liens upon substantially all of Sterling's assets. Plainfield DIP Facility On Jan. 18, 2007, the Court authorized the Debtors, on an interim basis, to obtain postpetition financing from Plainfield Specialty Holdings II Inc. for limited purposes, including funding expenses to complete construction of homes, and to sell, transfer, lease or otherwise dispose of property in the ordinary course of business. That order also authorized the Debtors to seek, with Plainfield's consent, third party financing. Plainfield has stated that it does not object to the new financing. The Court will convene a hearing to consider Sterling's request on April 9, 2007, at 1:00 p.m. Headquartered in East Brunswick, New Jersey, Kara Homes Inc. aka Kara Homes Development LLC, builds single-family homes, condominiums, town homes, and active-adult communities. The company filed for chapter 11 protection on Oct. 5, 2006 (Bankr. D. N.J. Case No. 06-19626). On Oct. 9, 2006, nine affiliates filed separate chapter 11 petitions in the same Bankruptcy Court. On Oct. 10, 2006, 12 more affiliates filed chapter 11 petitions. David L. Bruck, Esq., at Greenbaum, Rowe, Smith, et al., represents the Debtors. Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard represents the Official Committee of Unsecured Creditors. Traxi LLC serves as the Debtors' crisis manager. The Debtors engaged Perry M. Mandarino as chief restructuring officer, and Anthony Pacchia as chief financial officer. When Kara Homes filed for protection from its creditors, it listed total assets of $350,179,841 and total debts of $296,840,591. KID CASTLE: Brock Schechter's Expresses Going Concern Doubt ----------------------------------------------------------- Brock Schechter & Polakoff LLP expressed substantial doubt on Kid Castle Educational Corp.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2005. The auditing firm pointed to the company's recurring losses from operations and capital deficiency. For the year ended Dec. 31, 2005, the company reported a net loss of $1,698,282 on net operating revenues of $10,232,334 for the year ended Dec. 31, 2005, versus a net loss of $1,254,592 on net operating revenues of $9,729,113 for the year ended Dec. 31, 2004. The company's balance sheet showed total assets of $10,982,937, total liabilities of $12,280,881, and minority interests of $28,627, resulting to total stockholders' deficit of $1,326,571 as of Dec. 31, 2005. The company's balance sheet also showed strained liquidity with total current assets of $6,954,257 available to pay total current liabilities of $8,436,284 as of Dec. 31, 2005. Accumulated deficit in 2005 was $9,010,356, as compared with accumulated deficit in 2006 of $7,312,074. A full-text copy of the company's annual report for 2005 is available for free at http://ResearchArchives.com/t/s?1b8d About Kid Castle Kid Castle Educational Corp. (PNK: KDCE) provides English language instruction and educational services in China and Taiwan to children between two and 12 years old for whom Chinese is the primary language. Its principal subsidiaries are its wholly owned subsidiary, Higoal Developments Ltd., and its wholly owned subsidiaries, Kid Castle Internet Technologies Ltd. and Kid Castle Educational Software Development Company, Ltd. The company has worked with numerous universities to introduce foreign teachers into Taiwan from countries such as the U.S., Canada and England. Kid Castle also provides management and consulting services to its franchised kindergarten and language schools and sells educational tools and equipment that are complementary to its business. KRONOS INTERNATIONAL: Earns $73.6 Million in Year Ended Dec. 31 --------------------------------------------------------------- Kronos International, Inc. reported in its annual report for the year ended Dec. 31, 2006, net sales of $914.22 million and net income of $73.67 million. The company had net sales of $850.87 million and net income of $60.25 million during the year 2005. The company's balance sheet showed total assets of $1.08 billion, total liabilities of $869.08 million, and minority interests of $41,000, resulting to total stockholders' equity of $211.44 million as of Dec. 31, 2006. Cash flows from operating activities provided $62.5 million for 2006, as compared with $92.7 million for 2005. Capital expenditures were $47.1 million in 2006, up from $39.5 million in 2005, which were used primarily for improvements and upgrades to existing facilities. The company's financing activities during 2006 include, issuance of EUR400 million principal amount of 6.5% Notes at 99.306%, that is $498.5 million when issued; and redemption of the company's EUR375 million principal amount of 8.875% Senior Secured Notes, that is $470.5 million when redeemed, using the proceeds from the issuance of the 6.5% Notes. At Dec. 31, 2006, the company's consolidated debt was comprised of EUR400 million principal amount of its 6.5% Senior Secured Notes, which amounted to $525 million at Dec. 31, 2006, due in 2013; and about $4.8 million of other debts. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1ba5 Outlook The company expects that its income from operations in 2007 will be lower than 2006, due to continued downward pricing pressures and increased energy costs and raw materials costs, offset in part by the effect of higher expected sales and production volumes. About Kronos International Headquartered in Dallas, Texas, Kronos International, Inc. is engaged in European value-added titanium dioxide pigments operations. * * * As reported in the Troubled Company Reported on Nov. 9, 2006, Moody's Investors Service's confirmed its B1 Corporate Family Rating for Kronos International, Inc., as well as its B2 rating on the company's EUR400 million Senior Secured Notes due 2013. LANDRY'S RESTAURANTS: S&P Places BB- Rating on Negative Watch ------------------------------------------------------------- Standard & Poor's Ratings Services placed the ratings for Landry's Restaurants Inc., including its 'BB-' corporate credit rating, on CreditWatch with negative implications. This action reflects the company's delivery of a new letter to the Smith & Wollensky Restaurant Group Inc. offering to acquire S&W for around $84 million, or $9.75 per share in cash. This represents a $.50 premium to the offer of the Patina Restaurant Group. On Feb. 26, 2007, S&W signed an agreement and plan of merger with Patina Restaurant Group LLC for $79.5 million, or $9.25 a share in cash. "Even if this acquisition is not successful, ratings may be lowered by one notch to reflect the company's more aggressive financial policy and acquisition appetite," said Standard & Poor's credit analyst Stella Kapur, "Landry's pro forma consolidated credit metrics will be weak for the current ratings and could be lowered as a result." Standard & Poor's will monitor this development and hopes to resolve the CreditWatch listing soon. LAZARD GROUP: Improved Capital Base Cues Fitch to Lift Rating ------------------------------------------------------------- Fitch Ratings has upgraded the long-term senior debt rating from 'BB+' to 'BBB-' and affirms Lazard Group LLC's Issuer Default Rating at 'BBB-'. Approximately $988 million of senior debt is affected by upgrade. All ratings are listed at the end of this press release. The Rating Outlook is Stable. The upgrade of the long-term senior debt rating is based on Lazard's improved capital base, a byproduct of additional equity offerings and higher retained earnings. Lazard's IDR rating is based on the firm's highly leveraged post-IPO capital structure, well-established global investment banking business (specializing in M&A and restructurings), consistent prior profitability, and minimal expected future capital needs. Lazard's recent financial performance in both Financial Advisory and Asset Management has been good and the firm appears well positioned for continued success in 2007. Cash flow coverage was satisfactory throughout 2006 and is projected to remain so in the near term. Lazard's current ratings assume some variability in performance and continued high leverage. Material improvements in cash flow coverage and expansion in the Asset Management business could have a positive effect on the Rating Outlook. Fitch upgrades this ratings: Lazard Group LLC -- Senior rating from 'BB+' to 'BBB-'. Fitch affirms this rating: Lazard Group LLC -- Long-term Issuer Default Rating at 'BBB-'. LE-NATURE'S INC: Court Bars Harbinger, et al. from Suing Wachovia ----------------------------------------------------------------- A state court judge in Charlotte, N.C. issued an order temporarily blocking Harbinger Capital Partners and 13 other investment funds from filing lawsuits against Wachovia Bank NA over their stakes in the bank's syndicated $265 million loan to Le-Nature's Inc., Bill Rochelle of Bloomberg News reports. According to Bloomberg, the state court judge ruled that investors may not file lawsuits against Wachovia because North Carolina law prohibits selling "personal tort claims." Wachovia, when it sought an order barring the investors from suing the bank, asserted that the investors bought parts of the sydicated loan at a discount after it became public knowledge that Le-Nature's "engaged in a massive fraud." A further hearing on the matter is set for Thursday, March 22, 2007. Headquartered in Latrobe, Pennsylvania, Le-Nature's Inc. -- http://www.le-natures.com/-- makes bottled waters, teas, juices and nutritional drinks. Its brands include Kettle Brewed Ice Teas, Dazzler fruit juice drinks and lemonade, and AquaAde vitamin-enriched water. Four unsecured creditors of Le-Nature's filed an involuntary chapter 7 petition against the company on Nov. 1, 2006 (Bankr. W.D. Pa. Case No. 06-25454). On Nov. 6, 2006, two of Le-Nature's subsidiaries, Le-Nature's Holdings Inc., and Tea Systems International Inc., filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. Judge McCullough converted Le Nature's Inc.'s case to a chapter 11 proceeding. The Debtors' cases are jointly administered. The Debtors' schedules filed with the Court showed $40 million in total assets and $450 million in total liabilities. Douglas Anthony Campbell, Esq., at Campbell & Levine, LLC, represents the Debtors in their restructuring efforts. The Court appointed R. Todd Neilson as Chapter 11 Trustee. Dean Z. Ziehl, Esq., and Debra Grassgreen, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub LLP, represent the Chapter 11 Trustee. David K. Rudov, Esq., at Rudov & Stein, and John K. Sherwood, Esq., Sharon L. Levine, Esq., and Kenneth A, Rosen, Esq., at Lowenstein Sandler PC, represent the Official Committee of Unsecured Creditors. Edward S. Weisfelner, Esq., Robert J. Stark, Esq., and Andrew Dash, Esq., at Brown Rudnick Berlack Israels LLP, and James G. McLean, Esq., at Manion McDonough & Lucas represent the Ad Hoc Committee of Secured Lenders. Thomas Moers Mayer, Esq., and Matthew J. Williams, Esq. at Kramer Levin Naftalis & Frankel LLP, represent the Ad Hoc Committee of Senior Subordinated Noteholders. LEGACY ESTATE: Court Confirms Joint Chapter 11 Liquidation Plan --------------------------------------------------------------- The U.S. Bankruptcy Court for Northern District of California has confirmed the Chapter 11 Plan of Liquidation co-proposed by The Legacy Estate Group LLC and its Official Committee of Unsecured Creditors. The Court determined that the Plan satisfies the 16 standards for confirmation under Section 119(a) of the Bankruptcy Code. As reported in the Troubled Company Reporter on Feb. 28, 2007, to facilitate confirmation of its Joint Liquidation Plan, Legacy Estate entered into separate settlement agreements with its parent, Connaught Capital Partners LLC, and John M. Bryan and Red Barn Ranch LLC. Connaught Capital, together with Legacy Estate, sought chapter 11 protection in November 2005. Andrea Wirum is the chapter 11 trustee appointed in Connaught Capital's case. Red Barn Settlement Agreement On Aug. 22, 2006, Legacy Estate obtained authority from the U.S. Bankruptcy Court for Northern District of California to sell substantially all of its assets to Kendall-Jackson Wine Estates Ltd. The sale was closed on Sept. 13, 2006. Subsequently, John M. Bryan and Red Barn jointly filed Claim No. 122 in Legacy's bankruptcy case, in an amount not exceeding $20 million, for damages allegedly caused by Legacy's rejection of an agreement dated Aug. 31, 2001, for the purchase and sale of grapes. Mr. Bryan and Red Barn also opposed the confirmation of the Plan asserting that their claims are secured by statutory and consensual liens. On Nov. 17, 2006, the Committee, on behalf of Legacy, commenced an adversary proceeding commonly known as Official Committee of Unsecured Creditors of The Legacy Estate Group LLC v. John M. Bryan, et al., AP No. 06-01773, with respect to transactions and events involving the Debtors' current and former "insiders" and "affiliates." The Committee contended that prior to the Debtors' bankruptcy filing, the defendants in the Bryan Action arranged or received fraudulent conveyances and improper distributions amounting, in the aggregate, to over $13 million, to the detriment of Legacy, its creditors, and its shareholders. The Committee also objected to Red Barn's claim arguing that the claim is only entitled to a $258,000 payment, with respect to the 2006 grape harvest and all future crops to be delivered under Red Barn's agreement with Legacy. To resolve the dispute, the parties entered into a settlement agreement, which was approved by the Court in a hearing held Feb. 23, 2007. Under the compromise, Legacy will pay to Red Barn the sum of $750,000 in full and final settlement and compromise of any and all claims. Connaught Capital Settlement Agreement Prior to the commencement of the Debtors' respective bankruptcy cases, Connaught and other insiders managed and controlled the finances, assets and operations of Legacy. Subsequently, in Legacy's chapter 11 case, Connaught's Chapter 11 Trustee filed a proof of claim asserting claims relating to management of the Debtors. The Trustee also opposed confirmation of the Plan. The Committee objected to the Trustee's claim contending that the insiders, including Connaught, breached their respective fiduciary duties to Legacy, causing damage to Legacy in an amount that may exceed $30 million. The Trustee asserted that at least a portion of the $30 million mismanagement damages were not the responsibility of Connaught and involved conduct harmful to Connaught's estate and note holders, as well as Legacy's estate, and thus should properly be asserted or prosecuted by the Connaught estate. To resolve the dispute, Legacy through the Committee and Connaught through its Chapter 11 Trustee, agreed among others, that: 1) they will jointly control and prosecute any and all claims that may be asserted by either or both of the Debtors' estates against any insider, including, without limitation, all transfer claims and all mismanagement claims; 2) all proceeds arising from judgments or settlements obtained will be apportioned between the Debtors' estates, with 50% allocated to Legacy's estate and 50% to Connaught's estate; 3) Legacy will hold an $8,500,000 allowed general unsecured claim against Connaught's estate; and 4) the Trustee's objection to the Plan will be deemed withdrawn with prejudice. Liquidation Plan As reported in the Troubled Company Reporter on Nov. 23, 2006, the Plan provides for the distribution of Legacy's cash on hand, including the net proceeds from the sale of its assets, in accordance of the priorities established by the Bankruptcy Code. Any excess of the proceeds will be distributed to equity security holders. Laminar Subordinated Claim Laminar Direct Capital L.P. made loans to the Debtor to finance its acquisition of two wineries, Byron Vineyard & Winery in Santa Maria, California and Arrowood Vineyards & Winery in Glen Ellen, California from Constellation Brands, Inc. Liens and security interests in substantially all of the Debtor's assets secured the loans. As a result of the debt incurred to finance the acquisitions, the Debtor became over-leveraged, was unable to service that debt and eventually defaulted in its obligations to Laminar. Laminar was entitled to enforce its legal rights and remedies against the Debtor, including foreclosure of its liens and security interests. The Court on Aug. 16, 2006, approved a stipulation among the Debtor, Laminar, the Committee and Connaught fixing the amount of Laminar's claims. Laminar received $87.2 million from the sale proceeds. Its remaining subordinated claim amounted to $1.3 million. Treatment of Claims Holders of tax claims will receive a cash payment of the allowed amount of those claim. In addition, if all allowed unsecured claims are paid in full, then each allowed tax claim holder would receive a pro rate basis of interest on that claim. Red Barn's Claims will be paid in full, including interest and attorneys' fees, if any. If a Red Barn Claim is known to be an allowed administrative claim or an allowed unsecured claim, that Red Barn Claim will receive the same treatment provided to other creditors holding similar allowed claims. Each holder of an allowed Class 2 Secured Claim will receive, at the Debtor's option: (a) 100% of the net proceeds from the sale of its collateral; (b) the return of the collateral; or (c) other less favorable treatment as agreed by the Debtor and secured claim holder. Priority claims will be paid in full. In addition, if all allowed unsecured claims are paid in full, then each holder of an allowed priority claim will receive interest on that claim at the legal rate of 4.35% from the bankruptcy filing through the date of payment in full to the extent of remaining available cash, on a pro rata basis with holders of allowed tax and unsecured claims and the Laminar Subordinated Claim. Holders of Allowed Class 5 Timely Filed Unsecured Claim will receive their pro rata share of available cash under one or more distributions, until paid in full. In addition, if all allowed class 7 Late Filed Claims are in full payment, then each holder of Allowed Class 5 claim, will receive interest on that claim at the legal rate of 4.35% from the bankruptcy filing through the date of payment in full to the extent of remaining available cash, on a pro rata basis with holders of allowed tax, priority and late filed unsecured claims and the Laminar Subordinated Claim. Pursuant to the Laminar Stipulation, holders of the Laminar Subordinated Claim will receive half of each additional dollar in excess of $1.15 million available for distribution to allowed Class 5 claims, until paid in full of the Laminar Subordinated Claim. In addition, if all allowed class 7 Late Filed Claims are in full payment, then each holder of Laminated Subordinated Claim, will receive interest on that claim at the legal rate of 4.35% from the bankruptcy filing through the date of payment in full to the extent of remaining available cash, on a pro rata basis with holders of allowed tax, priority and unsecured claims. All Allowed Class 7 Late Filed Claim holders will receive its pro rata share of all available cash remaining after payment in full of Class 5 and 6. In addition, if all allowed class 7 Late Filed Claims are in full payment, then each holder of Allowed Class 7 claim, will receive interest on that claim at the legal rate of 4.35% from the bankruptcy filing through the date of payment in full to the extent of remaining available cash, on a pro rata basis with holders of allowed tax, priority and Timely Filed Unsecured Claims and the Laminar Subordinated Claim. Equity Interest holders, who will lose all rights to control the management and governance of the Debtor, will receive its pro rata share of all available cash remaining after payment in full of all allowed claims. A full-text copy of the Debtor's Amended Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=061121204459 About The Legacy Estate Group Headquartered in Saint Helena, California, The Legacy Estate Group LLC -- http://www.freemarkabbey.com/-- owns Freemark Abbey Winery, which produces a range of red, white, and dessert wines. Legacy Estate and its parent, Connaught Capital Partners LLC, filed for chapter 11 protection on November 18, 2005 (Bankr. N.D. Calif. Case No. 05-14659). John Walshe Murray, Esq., Lovee Sarenas, Esq., and Robert A. Franklin, Esq., at the Law Offices of Murray and Murray represent the Debtors in their restructuring efforts. Lawyers at Winston & Strawn LLP represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts between $50 million and $100 million. LEHMAN XS: Moody's Rates Class A-4 Notes at B2 ---------------------------------------------- Moody's Investors Service has assigned ratings ranging from A3 to B2 to the notes issued by Lehman XS Net Interest Margin Notes, Series 2007-QO8. The notes are backed by Class SB cash flows from the underlying securitization of payment option mortgage loans securitized in RALI Series 2006-QO8, and Class P-2 cash flows from SASCO 2006-12. Class P-2 in SASCO 2006-12 transaction represents the junior claim on the prepayment charge to the loans in RALI Series 2006-QO8. The cash flows available to repay the notes are most significantly impacted by the level of prepayments, as well as the timing and amount of losses on the underlying mortgage pool. Moody's applied various combinations of loss and prepayment scenarios to evaluate the adequacy of cash flows to fully amortize the rated notes. The complete rating actions are: Lehman XS Net Interest Margin Notes, Series 2007-QO8 * Cl. A-1, Assigned A3 * Cl. A-2, Assigned Baa3 * Cl. A-3, Assigned Ba3 * Cl. A-4, Assigned B2 The Notes are being offered in a privately negotiated transaction without registration under the 1933 Act. The issuance was designed to permit resale under Rule 144A and, in the case of certain certificates, under Regulation S. LENOX GROUP: Deloitte & Touche Raises Going Concern Doubt --------------------------------------------------------- Deloitte & Touche, LLP, in Minneapolis, Minnesota, raised substantial doubt about Lenox Group Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2006. The auditor pointed to the company's difficulties in meeting its loan agreement covenants and financing needs. The company discloses that it would not have been in compliance with certain financial covenants as of Dec. 30, 2006, had it not temporarily amended its revolving credit facility, term loan credit facility, and temporarily waived certain covenants. The company reported a $49,268,000 loss on $502,506,000 of total revenues for the year ended Dec. 31, 2006. At Dec. 31, 2006, the Company's balance sheet showed $373,797,000 in total assets and $232,118,000 in total liabilities, resulting in a $141,679,000 stockholders' equity. Credit Facility Waiver The company entered into waivers and amendments to the revolving credit facility and the term loan credit facility on Feb. 9, 2007, in connection with the company's noncompliance with the financial covenants under the credit agreements for the period ended December 30, 2006. Pursuant to the waivers and amendments, the lenders granted the company a limited waiver of noncompliance through and including April 30, 2007, and temporarily amended the agreements to adjust the leverage ratio and interest coverage ratio levels for the first quarter of 2007. In addition, the amendment to the term loan facility increased the applicable margin for loans by 0.25% per annum. As consideration for the amendments, the company paid amendment fees of $0.2 million. The company had to negotiate amendments to the revolving and term credit facilities or obtain new credit agreements with other lenders on or before April 30, 2007, to avoid defaulting its existing credit facilities. At present, the company is currently in discussions with the agent under its existing credit facilities as well as with other potential lenders regarding a modified or new lending arrangement. While the company is optimistic that it will be able to amend its existing facilities or enter into new facilities. A full-text copy of the company's 2006 Annual Report is available for free at http://ResearchArchives.com/t/s?1b9a About Lenox Group Based in Eden Prarie, Minnesota, Lenox Group Inc (NYSE: LNX) was formed on Sept. 1, 2005, when Department 56 Inc., a designer, wholesaler and retailer of collectibles and giftware products purchased Lenox Inc., a designer, manufacturer and marketer of fine china, dinnerware, silverware, crystal, and giftware products. The company sells its products through wholesale customers who operate gift, specialty and department store locations in the United States and Canada, company-operated retail stores, and direct-to-the-consumer through catalogs, direct mail, and the Internet. LID LTD: Files for Bankruptcy in New York ----------------------------------------- L.I.D., Ltd., filed for protection under Chapter 11 of the Bankruptcy Code with the U.S. Bankruptcy Court for the Southern District of New York. "We had to take this action in order to protect our assets and the integrity of the business in face of what we believe to be unreasonable demands and actions taken by our bank lenders," L.I.D.'s Chief Executive Officer, Lyle M. Rose stated. "Our business will continue substantially as it has in the past and our customers should expect no significant changes in our business, quality of our product and customer satisfaction. It is most unfortunate that despite the fact that L.I.D. has dramatically reduced its bank debt, and has no significant debt to the trade, our bank lenders are unwilling to let us operate, as we need to do, in order to continue our adjustment to a changing market. We expect that our Chapter 11 filing will enable us to better service our customers and ultimately emerge as a highly profitable concern once again." A case summary of the company's bankruptcy filing was published in yesterday's Troubled Company Reporter. Headquartered in New York City, L.I.D. Ltd. manufactures diamond jewelry and polished diamonds. The company filed for Chapter 11 protection on March 17, 2007 (Bankr. S.D.N.Y. Case No. 07-10725). Avrum J. Rosen, Esq., represents the Debtor. When the Debtor filed for protection from its creditors, it listed total assets of $157,784,935 and total debts of $143,867,465. LONG BEACH: Moody's Puts Low-B Ratings Under Review --------------------------------------------------- Moody's Investors Service has placed on review for possible downgrade three certificates from a transaction, issued by Long Beach Mortgage Loan Trust. The transaction is backed by second lien loans. The projected pipeline loss has increased over the past a few months and may affect the credit support for the three certificates. The certificates are being placed on review for possible downgrade based on the fact that the bonds' current credit enhancement levels, including excess spread, may be too low compared to the current projected loss numbers for the current rating levels. Complete rating actions are: Issuer: Long Beach Mortgage Loan Trust Review for Possible Downgrade: * Series 2006-A Class M-7, current rating Baa3, under review for possible downgrade * Series 2006-A Class B-1, current rating Ba1, under review for possible downgrade * Series 2006-A Class B-2, current rating Ba2, under review for possible downgrade MACDERMID INC: Moody's Holds B2 Rating and Revises LGD Assessments ------------------------------------------------------------------ Moody's Investors Service affirmed MacDermid, Incorporated's B2 corporate family rating and revised the loss given default assessments and LGD rates on MacDermid's proposed debt to reflect a revision to the company's proposed debt financings. Proceeds from the new debt offerings combined with private equity investments from funds managed by Court Square Capital Partners and Weston Presidio, along with an investment from MacDermid's CEO, Daniel Leever, and management will be used to purchase all of MacDermid's outstanding stock in a transaction valued at approximately $1.3 billion. The ratings outlook remains stable. The revisions to the proposed debt financing structure include: * elimination of the $250 million guaranteed senior unsecured notes due 2014-2015 (ratings withdrawn), * a $100 million increase in the term loan principal amount to the US dollar equivalent of $610 million (the term loan will now have both a $360mm tranche and a Euro tranche) and * a $135 million increase in the senior subordinated notes due 2017 to $350 million. In addition to these changes, the company will have $15 million in Japanese senior secured bank debt. The revisions to the debt structure have not impacted the issue ratings, but do impact the LGD assessments and LGD rates. The following summarizes the ratings activity: MacDermid, Incorporated Ratings affirmed: * Corporate family rating -- B2 * Probability of default rating -- B2 * $50 million Gtd sr sec revolving credit facility due 2013 - B1, LGD3, 34% * $360 million Gtd sr sec term loan due 2014 -- B1, LGD3, 34% * Euro Gtd sr sec term loan due 2014 -- B1, LGD3, 34% * $350 million Gtd sr subordinated notes due 2017 -- Caa1, LGD5, 87% Ratings withdrawn: * $250 million Gtd sr unsec notes due 2014-2015 -- WR MacDermid's B2 corporate family rating reflects the company's high leverage, elevated interest expense and limited growth opportunities in certain businesses. The company has grown top line sales over the past three years, however earnings have not kept pace. While the overall EBITDA for the company has been relatively stable over the past three years, certain of the company's businesses (primarily in the Advanced Surface Finishing segment) have grown sales and profits, and other businesses (primarily in the Printing Solutions segment) have turned in lackluster returns. Moody's expect that MacDermid should be better positioned to grow after the introduction of certain new products and the integration of the 2005 Autotype acquisition. T he notes will be privately placed and the company does not plan to register the notes at a later time. As a result, the company does not anticipate that it will file public financial statements, but will provide more abbreviated disclosure to debtholders. The ratings are supported by MacDermid's relatively stable EBITDA margins that have remained positive despite some adverse market conditions over the past seven years, geographic, operation and product diversity, strong market positions in certain niche markets, modest capital expenditure requirements and limited exposure to volatile raw materials costs. The stable outlook reflects Moody's expectation that MacDermid will be able to grow its sales and apply positive free cash flow to debt reduction. The outlook also assumes that MacDermid will smoothly transition to a private ownership structure and be capable of shouldering the significant new debt burden. Before an upgrade could be considered, Moody's would expect to see MacDermid demonstrate the ability to generate EBITDA greater than $160 million per year and maintain a Debt / EBITDA ratio less than 7.0 times on a sustained basis as well as generate meaningful free cash flow. Should the company not be successful in improving profitability and generating meaningful free cash flow to be applied towards debt reduction, the ratings could come under negative pressure. MacDermid, headquartered in Denver, Colorado, is a global producer of a wide variety of specialty chemicals (coatings, lubricants, strippers, cleaners, etc.) and equipment for use in industries ranging from plastic and metal surface treatment, off-shore oil and gas exploration, to printing. Revenues were $0.8 billion for the LTM ended December 31, 2006. MALDEN MILLS: Inks Exit Facility Deal with GECC, Stays in Chap. 11 ------------------------------------------------------------------ Malden Mills Industries Inc. will now be liquidated under chapter 11 and not in a Chapter 7 proceeding as a result of last-minute agreement with General Electric Capital Corp., Bill Rochelle of Bloomberg News reports. The source says that under the agreement, GECC will provide $500,000 to fund distribution for Malden's unsecured creditors. Prior to the GECC exit financing agreement, Malden and its debtor- affiliates sought conversion of their chapter 11 cases to chapter 7 pursuant to a wind-down order issued by the U.S. Bankruptcy Court for the District of Massachusetts. The Debtors previously obtained Court authority to sell their business to Chrysalis Capital Partners LLC for $44 million plus assumed Liabilities but the sale did not generate enough cash to fund a chapter 11 liquidation, Mr. Rochelle relates. Polartec Acquisition As reported in the Troubled Company Reporter on Mar. 15, 2007, Polartec LLC completed the acquisition of the assets of Malden Mills. Polartec will continue manufacturing operations at its Lawrence and Methuen, Massachusetts, Hudson, New Hampshire, and Shanghai, China plants. Michael Spillane, who served as chief executive officer of Malden Mills during the past three years, has been named the CEO of Polartec. The balance of the management team from Malden Mills will transition to their respective positions within the new company. About Malden Mills Based in Lawrence, Massachusetts, Malden Mills Industries, Inc. -- http://www.polartec.com/-- develops, manufactures, and markets Polartec(R) performance fabrics. Polartec(R) products range from lightweight wicking base layers to insulation to extreme weather protection and are utilized by the best clothing brands in the world. In addition, Polartec(R) fabrics are used extensively by all branches of the United States military, including the Army, Navy, Marine Corps, Air Force, and Special Operations Forces. The company also has operations in Germany, Spain, France and the U.K. The company filed for chapter 11 protection on Nov. 29, 2001 (Bankr. Mass. Case No. 01-47214). The Court confirmed the Debtor's plan on Aug. 14, 2003. The company and four of its affiliates filed their second chapter 11 petitions on Jan. 10, 2007 (Bankr. D. Del. Case Nos. 07-10048 through 07-10052). Laura Davis Jones, Esq., and Michael Seidl, Esq., at Pachulski, Stang, Ziehl Young, Jones & Weintraub, PC, represent the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets between $1 million to $100 million and estimated debts of more than $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on May 10, 2007. On Jan. 12, 2007, the Delaware Bankruptcy Court transferred the case to the U.S. Bankruptcy Court for the District of Massachusetts (Case No. 07-40124). MASTR SECOND: Moody's Junks Rating on 2006-1 Class M-8 Loans ------------------------------------------------------------ Moody's Investors Service has downgraded three tranches and has placed under review for possible downgrade one tranche from two deals issued by MASTR Second Lien Trust in 2005 and 2006. The underlying collateral for these deals consists of second-lien, fixed-rate residential mortgage loans. The collateral in the 2005-1 was primarily originated by Accredited Home Lender (42%) and the collateral in the 2006-1 was primarily originated by Fremont Investment & Loans (47%) and American Home (31%). The loans are serviced by Irwin Union Bank and Trust Company. The certificates have been downgraded and placed on review for possible downgrade based upon the weaker than anticipated performance of the mortgage collateral and the resulting erosion of credit support. The overcollateralization in the 2005-1 deal has been fully exhausted and the unrated M-10 tranche is currently realizing losses. In addition, the overcollateralization in the 2006-1 deal is almost fully depleted and the M-8 tranche is likely to experience losses in the near future. Furthermore, existing credit enhancement levels may be low given the current projected losses on the underlying pools. Complete rating actions are: Issuer: MASTR Second Lien Trust Downgrade: * Series 2005-1, Class M-8, downgraded from Ba2 to B1 * Series 2006-1, Class M-7, downgraded from Ba1 to B3 * Series 2006-1, Class M-8, downgraded from Ba2 to Caa2 Review for Possible Downgrade: * Series 2006-1, Class M-6, current rating Baa3, under review for possible downgrade MERRILL LYNCH: Moody's Places Ba2 Ratings Under Review ------------------------------------------------------ Moody's Investors Service has placed on review for possible upgrade four certificates issued by Merrill Lynch Mortgage Investors Trust Series 2004-SL1 and 2004-SL2. The 2004-SL1 transaction is failing its cumulative loss trigger and delinquency trigger, and the 2004-SL2 is failing its delinquency trigger, allowing both transactions to pay sequentially. Moody's Investors Service has also placed on review for possible downgrade two subordinated certificates from Merrill Lynch Mortgage Investors Trust Series 2004-SL1 and 2004-SL2. These actions are based on the analysis of the credit enhancement provided by subordination, overcollateralization and excess spread relative to the expected loss. These transactions are backed by sub-prime second-liens, and have seen recent losses that have exceeded the excess spread available thereby depleting the overcollateralization. Complete rating actions are: Issuer: Merrill Lynch Mortgage Investors Trust Review for Possible Upgrade: * Series 2004-SL1 Class B-1, current rating Baa2, under review for possible upgrade * Series 2004-SL1 Class B-2, current rating Baa3, under review for possible upgrade * Series 2004-SL2 Class-M-3, current rating A3, under review for possible upgrade * Series 2004-SL2 Class B-1, current rating Baa1, under review for possible upgrade Review for Possible Downgrade: * Series 2004-SL1 Class B-3, current rating Ba2, under review for possible downgrade * Series 2004-SL2 Class B-4, current rating Ba2, under review for possible downgrade METRIS MASTER: Fitch Holds BB+ Rating on 2005-2 Class D Securities ------------------------------------------------------------------ Fitch Ratings recently completed a portfolio review of 681 classes of securities rated by Fitch in the U.S. credit card asset-backed securities sector. While Fitch's surveillance efforts are continuous and include a review of monthly servicing reports to monitor transaction performance, formal portfolio reviews are also conducted periodically. The transactions were examined in order to compare performance across the industry and included an evaluation of the historical performance of the transactions, an examination of any changes to key metrics or trust composition, and an assessment of total available credit enhancement. As a result of the review, Fitch affirms these outstanding ratings as: Metris Master Trust Series 2002-4 -- Class A at 'AAA'. Series 2004-1 -- Class A at 'AAA'. Series 2005-1 -- Class A at 'AAA'; -- Class B at 'AA-'; -- Class M 'AA+'; -- Secured Notes C at 'BBB+'; -- Secured Notes D at 'BBB'. Series 2005-2 -- Class A at 'AAA'; -- Class B at 'A'; -- Class C at 'BBB'; -- Class D at 'BB+'; -- Class M at 'AA'. MTI TECHNOLOGY: Has Until April 9 to Regain Compliance with Nasdaq ------------------------------------------------------------------ MTI Technology Corp. received a Nasdaq Staff Deficiency Letter, saying that the company's market value of listed securities was below the $35,000,000 minimum required for continued listing on the Nasdaq Capital Market for 10 consecutive trading days, as required in Nasdaq Marketplace Rule 4310(c)(2)(B)(ii). In accordance with Nasdaq Marketplace Rule 4310(c)(8)(C), the company is given 30 calendar days from the date of notification, or until April 9, 2007, to regain compliance with Marketplace Rule 4310(c)(2)(B)(ii). If, at any time before April 9, 2007, the market value of the company's listed securities is $35,000,000 or more for a minimum of 10 consecutive business days, Nasdaq will determine if MTI complies with Marketplace Rule 4310(c)(2)(B)(ii). Otherwise, Nasdaq will provide written notice to the company that its securities will be delisted. At that time, MTI would be permitted to appeal Nasdaq's determination to a Listing Qualifications Panel. The Nasdaq Deficiency Letter also stated that, based on information contained in MTI's periodic reports filed with the Securities and Exchange Commission, the company does not comply with Marketplace Rules 4310(c)(2)(B)(i) or 4310(c)(2)(B)(iii), which require minimum stockholders' equity of $2,500,000 or net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years. Pursuant to Marketplace Rule 4310(c)(2)(B), for continued listing MTI must satisfy either the minimum stockholders' equity requirement, the minimum market value of listed securities requirement or the minimum net income from continuing operations requirement. As previously disclosed, MTI was notified by Nasdaq on Nov. 7, 2006, that it failed to comply with the $1.00 minimum bid price requirement for continued listing on the NASDAQ Capital Market under Nasdaq Marketplace Rule 4310(c)(4). MTI remains subject to a 180-day "grace" period within which to regain compliance with the minimum bid price requirement for continued listing on the NASDAQ Capital Market, which expires on May 7, 2007. The "grace" period only applies to the minimum bid price requirement. If MTI's closing bid price is at least $1.00 for a period of at least 10 consecutive trading days prior to May 7, 2007, it will be deemed to have regained compliance with the minimum bid price requirement. Otherwise, the company will have an additional 180- day period to evidence compliance with that requirement if it satisfies the initial listing requirements for the Nasdaq Capital Market. MTI intends to monitor the market value of its listed securities and consider available options if its common stock does not trade at a level likely to result in MTI regaining compliance with the minimum market value of listed securities requirement and the minimum bid price requirement within the required timeframes. About MTI Technology MTI Technology Corporation -- http://www.mti.com/-- is a multi- national provider of professional services and comprehensive data storage solutions for mid to large-size organizations. As a strategic partner of EMC (NYSE:EMC), MTI offers the best data storage, protection and management solutions available today. MTI currently serves more than 3,000 customers throughout North America and Europe. * * * MTI Technology's balance sheet at Dec. 31, 2005, showed a stockholders' deficit of $2.6 million. NEW CENTURY: DBSP Wants Immediate Payment Loan ---------------------------------------------- New Century Financial Corporation disclosed in a regulatory filing with the Securities and Exchange Commission that it has received a subsequent termination and acceleration relating to repurchase agreement notice from DB Structured Products Inc., dated March 14, 2007. The company previously received a reservation of rights notice from DBSP, dated March 10, 2007, alleging that certain events of default have occurred pursuant to a master repurchase agreement dated Sept. 2, 2005, by and among certain of the company's subsidiaries; and DBSP, Aspen Funding Corp., Newport Funding Corp., Tucson Funding LLC and Gemini Securitization Corp. LLC. According to the company, the March 14 notice reiterates DBSP's allegations that events of default have occurred and purports to accelerate the obligation of the company's subsidiaries to repurchase all outstanding mortgage loans financed under the 2005 DBSP Agreement. Under the 2005 DBSP Agreement, the acceleration would require the immediate repayment of the repurchase obligation. The company estimates that the aggregate repurchase obligation (the outstanding mortgage loans financed) of its subsidiaries under the 2005 DBSP Agreement was approximately $0.7 billion as of March 12, 2007. Additionally, New Century Financial received a termination and acceleration relating to repurchase agreement notice from DBSP, dated March 15, 2007. The company previously received two reservation of rights notices from DBSP, each dated March 10, 2007, alleging that certain events of default have occurred pursuant to the master repurchase agreement dated April 14, 2006, by and among certain of the company's subsidiaries; and DBSP, Aspen Funding Corp., Newport Funding Corp. and Gemini Securitization Corp. LLC. The company says that the March 15 notice reiterates DBSP's allegations that events of default have occurred and purports to accelerate the obligation of the company's subsidiaries to repurchase all outstanding mortgage loans financed under the 2006 DBSP Agreement. Under the 2006 DBSP Agreement, the acceleration would require the immediate repayment of the repurchase obligation. The company estimates that the aggregate repurchase obligation (the outstanding mortgage loans financed) of its subsidiaries under the 2006 DBSP Agreement was approximately $0.2 billion as of March 12, 2007. Repurchase Obligations In certain of the company's recent current reports on Form 8-K, the company disclosed the amount of its "repurchase obligations" under certain of its repurchase credit facilities. According to the company, the "repurchase obligations" refer to the amount of outstanding mortgage loans financed under the repurchase credit facilities, as opposed to the company's obligation to repurchase whole loans that have been sold to third parties if: -- a payment default by the underlying borrower occurs within a certain period of time following such a whole loan sale, which the Company refers to as "early payment defaults;" or -- the company breaches its representations and warranties made to the purchasers of whole loans under a loan sale agreement. In the aggregate, the company says it is subject to indebtedness under its credit facilities, the vast majority of which are structured as repurchase credit facilities, of approximately $8.2 billion. In comparison, the company relates that it has been notified that purchasers of whole loans have submitted claims requesting that the company repurchase an aggregate of approximately $0.5 billion of whole loans sold to third parties as a result of early payment defaults and breaches of representations and warranties. About New Century Founded in 1995 and headquartered in Irvine, California, New Century Financial Corporation (NYSE: NEW) -- http://www.ncen.com/ -- is a real estate investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The company offers a broad range of mortgage products designed to meet the needs of all borrowers. * * * As reported in the Troubled Company Reporter on Mar. 13, 2007, Standard & Poor's Ratings Services lowered its counterparty credit rating on New Century Financial Corp. to 'D' from 'CC'. The ratings on the senior unsecured debt and preferred stock remain on CreditWatch with negative implications. In addition, Dominion Bond Rating Service downgraded the Issuer Rating of New Century Financial Corporation to C from CCC. The rating remains Under Review with Negative Implications. As reported in the Troubled Company Reporter on Mar. 9, 2007, Fitch Ratings downgraded New Century Mortgage Corporation's, a subsidiary of New Century Financial Corp., residential primary servicer rating for subprime product to 'RPS4' from 'RPS3+', and places the rating on Watch Negative. According to Fitch, an 'RPS4' rated servicer may not be acceptable for new residential mortgage-backed security transactions unless additional support or structural features are incorporated. The Rating Watch Negative indicates that further downgrades are possible, depending upon the stability of the servicer's portfolio and financial condition and the company's ability to obtain satisfactory amendments to or waivers of the covenants in its financing arrangements from a sufficient number of its lenders, or obtain alternative funding. NEW CENTURY: Receives Cease & Desist Orders from Four More States ----------------------------------------------------------------- New Century Financial Corporation disclosed in a regulatory filing with the Securities and Exchange Commission that on March 14 and 15, 2007, the company received additional cease and desist orders from the states of Connecticut, Maryland, Rhode Island and Tennessee. On March 13, 2007, New Century received cease and desist orders from the States of Massachusetts, New Hampshire, New Jersey and New York. Consistent with the March 13 Orders, the March 14-15 Orders contain allegations that certain of the company's subsidiaries have engaged in violations of applicable state law, including, among others, failure to fund mortgage loans after closing. Additionally, on March 14, 2007, NCMC and Home123 Corporation, an indirect wholly owned subsidiary of the company, entered into a consent agreement and order, dated March 14, 2007, with the Commonwealth of Pennsylvania Department of Banking, Bureau of Supervision and Enforcement. Consistent with the March 13 Orders, the March 14-15 Orders and the Consent Agreement seek to restrain the company's subsidiaries from taking certain actions, including, among others, engaging in alleged violations of state law and taking new applications for mortgage loans in the relevant jurisdiction. The March 14-15 Orders and the Consent Agreement also seek to cause the subsidiaries to affirmatively take certain actions, including the creation of escrow accounts to hold fees relating to pending mortgage applications, the transfer to other lenders of the outstanding mortgage applications and unfunded mortgage loans held by the subsidiaries, and the provision of regular information to the state regulators regarding the subsidiaries' activities in the applicable state, including the status of all outstanding mortgage applications and unfunded mortgage loans in that state. Certain of the March 14-15 Orders also seek to revoke the licenses of one or more of the company's subsidiaries or assess administrative penalties. The March 14-15 Orders generally become permanent if not promptly appealed by the applicable subsidiaries. The company and its subsidiaries are reviewing the March 14-15 Orders and accordingly have not yet determined whether they will appeal all or any portion of the March 14-15 Orders. Ohio State Court Issues TRO On March 14, 2007, in connection with a civil action filed against the company, NCMC, and Home123 on March 14, 2007 in an Ohio state court by the Attorney General of Ohio and the Ohio Division of Commerce, Division of Financial Institutions, that Ohio state court issued a temporary restraining order, which was subsequently modified by the court on March 16, 2007, against the company, NCMC, and Home123. The complaint and the TRO contain allegations that the company, NCMC, and Home123 have engaged in violations of applicable state law, including, among others, failure to fund mortgage loans after closing. The TRO restrains the company, NCMC, and Home123 from taking certain actions, including, among others: a) engaging in violations of state law; b) soliciting applicants and taking new applications for mortgage loans in Ohio; and c) initiating, prosecuting or enforcing foreclosure actions in Ohio. The TRO also requires the defendants to confer with the Ohio Attorney General and Division of Commerce by March 22, 2007, regarding the treatment of Ohio loans that are more than 60 days delinquent and are held for sale. According to the company, the restraints imposed by the TRO could further harm its business. The company says it is reviewing the complaint and the TRO and accordingly has not yet determined whether it will appeal all or any portion of the TRO. Subject to its funding limitations, the company intends to comply with the TRO pending any such appeal. The company anticipates that cease and desist orders will continue to be received by the company and its subsidiaries from additional states in the future and that the company and its subsidiaries may enter into additional consent agreements similar to the Consent Agreement. The company says it does not undertake, and expressly disclaims, any obligations to update the disclosure for any additional cease and desist orders or consent agreements or for any developments with respect to the March 14-15 Orders, the Consent Agreement or the Complaint and the TRO. The company intends to continue to cooperate with its regulators in order to mitigate the impact on consumers resulting from the company's funding constraints. About New Century Founded in 1995 and headquartered in Irvine, California, New Century Financial Corporation (NYSE: NEW) -- http://www.ncen.com/ -- is a real estate investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The company offers a broad range of mortgage products designed to meet the needs of all borrowers. * * * As reported in the Troubled Company Reporter on Mar. 13, 2007, Standard & Poor's Ratings Services lowered its counterparty credit rating on New Century Financial Corp. to 'D' from 'CC'. The ratings on the senior unsecured debt and preferred stock remain on CreditWatch with negative implications. In addition, Dominion Bond Rating Service downgraded the Issuer Rating of New Century Financial Corporation to C from CCC. The rating remains Under Review with Negative Implications. As reported in the Troubled Company Reporter on Mar. 9, 2007, Fitch Ratings downgraded New Century Mortgage Corporation's, a subsidiary of New Century Financial Corp., residential primary servicer rating for subprime product to 'RPS4' from 'RPS3+', and places the rating on Watch Negative. According to Fitch, an 'RPS4' rated servicer may not be acceptable for new residential mortgage-backed security transactions unless additional support or structural features are incorporated. The Rating Watch Negative indicates that further downgrades are possible, depending upon the stability of the servicer's portfolio and financial condition and the company's ability to obtain satisfactory amendments to or waivers of the covenants in its financing arrangements from a sufficient number of its lenders, or obtain alternative funding. NEW CENTURY HOME: Moody's Reviews Ratings and May Downgrade ----------------------------------------------------------- Moody's Investors Service has placed on review for possible downgraded five certificates from a transaction, issued by New Century Home Equity Loan Trust. The transaction is backed by second lien loans. The projected pipeline loss has increased over the past few months and may affect the credit support for these certificates. The certificates are being placed on review for possible downgrade based on the fact that the bonds' current credit enhancement levels, including excess spread, may be too low compared to the current projected loss numbers at the current rating level. Complete rating actions are: Issuer: New Century Home Equity Loan Trust Review for Downgrade: * Series 2006-S1 Class M4, current rating Baa1, under review for possible downgrade * Series 2006-S1 Class M5, current rating Baa2, under review for possible downgrade * Series 2006-S1 Class M6, current rating Baa3, under review for possible downgrade * Series 2006-S1 Class M7, current rating Ba1, under review for possible downgrade * Series 2006-S1 Class M8, current rating Ba2, under review for possible downgrade NEWPOWER HOLDINGS: Court Approves Final Distribution ---------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia, Newnan Division entered an order authorizing NewPower Holdings, Inc. to make a final distribution, pursuant to the company's Second Amended Chapter 11 Plan, to holders of the company's common stock, warrants and options. The amount of the final distribution and the record date for determining holders of allowed interests eligible for such distribution will be determined following the approval by the Bankruptcy Court of the aggregate proposed reserve. Pursuant to the Final Distribution Order, the company will file its aggregate proposed reserve with the Bankruptcy Court on or before March 21, 2007. If there are no objections to the proposed reserve, the company expects to make the final distribution on or about May 10, 2007. Pursuant to the Final Distribution Order, the company is also authorized to effect its dissolution under Delaware General Corporate Law and to take steps to facilitate the closure of the company's chapter 11 cases. NewPower Holdings Inc. and its debtor-affiliates filed for chapter 11 protection on June 11, 2002 (Bankr. N.D. Ga. 02-10836). Paul K. Ferdinands, Esq., at King & Spalding and William M. Goldman, Esq., at Sidley Austin Brown & Wood LLP represent the Debtors. When the Debtors filed for chapter 11 protection, they reported $231,837,000 in assets and $87,936,000 in debts. On Aug. 15, 2003, the U.S. Bankruptcy Court for the Northern District of Georgia, Newnan Division, confirmed the Second Amended Chapter 11 Plan with respect to NewPower Holdings, Inc., and TNPC Holdings, Inc., a wholly owned subsidiary. That Plan became effective on Oct. 9, 2003, with respect to the company and TNPC. On Feb. 28, 2003, the Bankruptcy Court confirmed The New Power Company's Plan, and that Plan has been effective as of March 11, 2003 with respect to New Power. The New Power Company is a wholly owned subsidiary of the company. NORTEL NETWORKS: Posts $80 Mil. Net Loss in Quarter Ended Dec. 31 ----------------------------------------------------------------- Nortel Networks Corp. reported a net loss of $80 million for the fourth quarter ended Dec. 31, 2006, compared with a net loss of $2.286 billion for the fourth quarter of 2005. Fourth quarter 2006 results included a gain of $164 million on the sale of assets, a shareholder litigation expense of $234 million reflecting a mark-to-market adjustment of the share portion of the global class action settlement and special charges of $29 million for restructuring. Fourth quarter 2005 results included a litigation expense of $2.474 billion, a tax benefit of $134 million and special charges of $24 million. Revenues for the fourth quarter of 2006 were $3.32 billion. Nortel achieved year over year revenue increases of 10 percent in the quarter as it continued to drive its core strategy and expand its business through growth in the company's four operating segments. For the year 2006, revenues were $11.42 billion compared to $10.51 billion for the year 2005. The company reported net earnings for the year 2006 of $28 million, compared with a net loss of $2.61 billion for the year 2005. Net earnings for the year 2006 included a shareholder litigation recovery of $219 million reflecting mark-to-market adjustments of the share portion of the global class action settlement, special charges of $105 million primarily related to restructuring activities, a benefit of approximately $43 million related to the changes to the North American employee benefit plans and a benefit of $206 million related to the sale of assets. The year 2005 results included a litigation expense of $2.474 billion, special charges of $169 million and $47 million of costs related to the sale of businesses and assets. "A relentless focus on execution in 2006 delivered solid progress on our Business Transformation plan and laid the foundations upon which Nortel will build its future. I am particularly pleased with the progress made in the fourth quarter as we grew revenues by 10 percent, grew our backlog, and improved operating margin and operating cash flow performance. In fact, the fourth quarter operating margin, was the highest in eight quarters and the operating cash flow performance for 2006 was the best since 1998," said Mike Zafirovski, Nortel president and chief executive officer. "We are 100% focused on the future and are taking the necessary steps to reduce costs, grow revenues faster than the market in key next-generation solutions and position the company for profitable growth. There is a significant amount of work left to be done, but today Nortel is stronger than it has been in years." Gross margin was 40 percent of revenue in the fourth quarter of 2006, reflecting a strong contribution from the LG-Nortel joint venture and code division multiple access (CDMA) solutions. This compares to gross margin of 39 percent for the fourth quarter of 2005. Compared to the fourth quarter of 2005, there were significant improvements in Mobility and Converged Core Networks (MCCN) gross margins due to the negative impact of certain contracts in the fourth quarter of 2005 not repeated in the fourth quarter of 2006, partially offset by a significant decline in Metro Ethernet Networks (MEN) margins due to product mix and lower margins in Enterpise Solutions (ES) and Global Services (GS). Selling, general and administrative expenses were $694 million in the fourth quarter of 2006, compared to $683 million for the fourth quarter of 2005. Compared to the fourth quarter of 2005, SG&A was impacted by the consolidation of the LG-Nortel joint venture, higher accruals for commission and bonus payments, and higher costs related to the company's business transformation initiatives, partially offset by lower restatement related and employee benefit plan costs. Research and Development expenses were $488 million in the fourth quarter of 2006, compared to $457 million for the fourth quarter of 2005. R&D expenses in the fourth quarter of 2006 was impacted by increased investment in targeted product areas, higher accruals for bonus payments and the impact of the consolidation of the LG- Nortel joint venture, partially offset by lower employee benefit plan costs. Special charges in the fourth quarter of 2006 of $29 million included $13 million related to the company's prior restructuring plans and $17 million for the restructuring program announced on June 27, 2006. Other income was $34 million of income for the fourth quarter of 2006, which primarily included interest and dividend income of $47 million. Minority interest expense was $58 million in the fourth quarter of 2006, compared to $2 million for the fourth quarter of 2005. The increase in minority interest expenses was primarily driven by the profitability of the LG-Nortel joint venture in the fourth quarter of 2006 resulting from the recognition of previously deferred revenue. Interest expense on long term debt was $84 million in the fourth quarter of 2006, compared to $54 million for the fourth quarter of 2005. Interest expense on long term debt was up due to the increase in interest costs associated with the $2 billion aggregate principal amount of senior notes issued in July 2006. Cash balance at the end of the fourth quarter of 2006 was $3.49 billion, up from $2.6 billion at the end of the third quarter of 2006. This increase was primarily driven by positive cash from operations of $520 million as well as $306 million in cash received upon the closing of the sale of certain assets and liabilities related to the UMTS Access business. At Dec. 31, 2006, the company's balance sheet showed $18.979 billion in total assets, $17.079 billion in total liabilities, $779 million in minority interests in subsidiary companies, and $1.121 billion in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the year ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?1ba8 About Nortel Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. * * * Nortel Network's 4-1/4% Convertible Senior Notes due Sept. 1, 2008 carry Moody's Investors Service's and Standard & Poor's single-B ratings. NOVELIS INC: Posts $275 Million Net Loss in Year Ended December 31 ------------------------------------------------------------------ Novelis Inc. reported a net loss of $275 million on net sales of $9.849 billion for the year ended Dec. 31, 2006, compared with net income of $90 million on net sales of $8.363 billion for the year ended Dec. 31, 2005. In 2006, the company reduced its total debt by $195 million. Despite a challenging metal price environment, Novelis has reduced its debt by $516 million since the company's inception in January 2005. Cash and cash equivalents as of Dec. 31, 2006, were $73 million. Total rolled products shipments increased to 2,960 kilotonnes in 2006 from 2,873 kilotonnes in 2005. This increase was primarily due to increased shipments to the can market in North and South America and Europe, as well as increased shipments of hot- and cold-rolled intermediate products in Europe. The 2006 net loss includes almost no tax benefit largely because the company recorded $71 million of additional valuation allowances related primarily to tax losses in certain jurisdictions where it does not expect to be able to utilize those losses. Additionally, the company incurred added tax expense associated with certain exchange items for which there was no pre- tax benefit. Cash taxes paid in 2006 were $68 million. Novelis' earnings in 2006 were adversely affected by higher metal prices, which the company was unable to completely pass through to certain customers as a result of metal price ceilings on a portion of its can sheet sales in North America. In 2006, Novelis was unable to pass through approximately $475 million of metal price increases associated with sales under these contracts. This impact was partially offset by internal and external hedges, including $63 million of gains from the change in fair value of derivative instruments. Additional items adversely affecting earnings include higher energy and transportation costs; the adverse effects of currency exchange rates; and expenses related to the company's restatement and review process, delayed financial reporting and continued reliance on third- party consultants to support its financial reporting requirements. Ed Blechschmidt, acting chief executive officer of Novelis, said, "In the past year we made significant progress in strengthening the company for the future. We have taken steps to streamline the manufacturing operations and to introduce supply chain improvements. We have also improved our financial controls and procedures and our risk management capabilities. At the same time, we have strengthened our focus on customer satisfaction, supported by innovations such as the Novelis Fusion(TM) technology for multi-alloy sheet products. We believe that the fundamentals of the business, our operations and our market position are strong, and that we are well positioned to build on our accomplishments as we look forward to our acquisition by Hindalco." On Feb. 11, 2007, Hindalco Industries Limited and Novelis announced that they have entered into a definitive agreement for Hindalco to acquire the outstanding shares of Novelis. Under the terms of the agreement, Novelis shareholders will receive $44.93 in cash for each outstanding common share upon the closing of the sale transaction. At Dec. 31, 2006, the company's balance sheet showed $5.792 billion in total assets, $5.439 billion in total liabilities, $158 million in minority interests in equity of consolidated affiliates, and $195 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?1b96 About Novelis Inc. Based in Atlanta, Georgia, Novelis Inc., (NYSE: NVL) (TSX: NVL) -- http://www.novelis.com/-- is the global leader in aluminum rolled products and aluminum can recycling. The company operates in 11 countries and has approximately 12,900 employees. Novelis has the capability to provide its customers with a regional supply of technologically sophisticated rolled aluminum products throughout Asia, Europe, North America and South America. Through its advanced production capabilities, the company supplies aluminum sheet and foil to the automotive and transportation, beverage and food packaging, construction and industrial, and printing markets. * * * Novelis Inc. carries Moody's Investors Service's B1 rating. PENN NATIONAL: Earns $327.1 Million in Year Ended December 31 ------------------------------------------------------------- Penn National Gaming Inc. reported net income of $327.1 million on net revenues of $2.244 billion for the year ended Dec. 31, 2006, compared with net income of $120.9 million on net revenues of $1.369 billion for the year ended Dec. 31, 2005. Net revenues increased $875.4 million, or 63.9%, for the year ended Dec. 31, 2006, as compared to the year ended Dec. 31, 2005, primarily due to the acquisition of Argosy Gaming Company, growth at several of the company's properties, including the Charles Town Entertainment Complex, and the contribution of Hollywood Slots at Bangor. During the year ended Dec. 31, 2006, financial results benefited from a settlement agreement with the company's property and business interruption insurance providers for a total of $225 million for Hurricane Katrina-related losses at the Hollywood Casino Bay St. Louis and Boomtown Biloxi properties, as well as minor proceeds related to the company's National Flood Insurance coverage and auto insurance claims. Reflecting the settlement agreement, the company recorded a pre-tax gain of $128.3 million. As a result of the company's entry into the Second Amendment to the Purchase Agreement and Release of Claims ("Amendment and Release") with the Mohegan Tribal Gaming Authority (MTGA), the company recorded a net book gain on the $250 million sale of The Downs Racing Inc. and its subsidiaries to the MTGA of $114 million during the year ended Dec. 31, 2006. As a result of the increased asset values resulting from the reconstruction at Hollywood Casino Bay St. Louis, the company determined that all of the goodwill associated with the original purchase of the property was impaired. Accordingly, the company recorded a pre-tax charge of $34.5 million during the year ended Dec. 31, 2006. Gaming revenue increased by $846.3 million, or 69.9%, to $2.057 billion in 2006, due to the Argosy acquisition, growth at the Charles Town Entertainment Complex, Hollywood Casino Aurora and Hollywood Casino Baton Rouge (formerly known as Casino Rouge), and the introduction of the Hollywood Slots at Bangor temporary facility. The increase in gaming revenue in 2006 was offset by a decrease at Hollywood Casino Bay St. Louis. The addition of the Argosy properties increased gaming revenues by $761.6 million in 2006. Gaming expenses increased by $416.8 million, or 64.5%, to $1.063 billion in 2006, due to the Argosy acquisition, increases at the Charles Town Entertainment Complex and Hollywood Casino Aurora, and the introduction of the Hollywood Slots at Bangor temporary facility. The increase in gaming expenses in 2006 was offset by a decrease at Hollywood Casino Bay St. Louis. The addition of the Argosy properties increased gaming expenses by $385.8 million in 2006. Food, beverage and other expenses increased by $78.2 million, or 47.3%, to $243.7 million in 2006. The addition of the Argosy properties increased food, beverage and other expenses in 2006 by $92 million. The increase observed in 2006 was offset by decreases at Hollywood Casino Bay St. Louis and Boomtown Biloxi, where food, beverage and other expenses declined by $9.2 million and $2.2 million, respectively. General and administrative expenses increased by $137.8 million, or 71.8%, to $329.7 million in 2006. The addition of the Argosy properties increased general and administrative expenses by $86 million in 2006. Hollywood Casino Baton Rouge recorded one-time settlement costs of $28.2 million during the year ended Dec. 31, 2005. The charge was part of the $30.5 million Settlement and Property Purchase Agreement, which terminated litigation between the parties, terminated the lease and mutually released all claims of the parties. The property acquired consists of land on the Mississippi River on which Hollywood Casino Baton Rouge conducts a significant portion of its dockside operations. Depreciation and amortization expense increased by $51.4 million, or 70.9%, to $124 million in 2006. The addition of the Argosy properties increased depreciation and amortization expense by $45.4 million in 2006. Interest expense increased by $107 million, or 119.7%, to $196.3 million in 2006, as a result of the company's entry into a new senior secured credit facility in late 2005. The proceeds of the senior secured credit facility were used to, among other things, fund the consummation of the acquisition of Argosy, repay the company's and Argosy's existing credit facilities, fund Argosy's repurchase of all of its 9% senior subordinated notes and 7% senior subordinated notes tendered in the previously-announced tender offers and pay certain fees and expenses in connection the aforementioned transactions. The company recorded a $10 million loss on early extinguishment of debt during the year ended Dec. 31, 2006, as a result of the redemption of $175 million in aggregate principal amount of its outstanding 8 7/8% senior subordinated notes due March 15, 2010. In 2005, the company recorded an $18 million loss on early extinguishment of debt as a result of the following: $14 million loss for the redemption of the company's $200 million 11 1/8% senior subordinated notes and a $5.7 million loss for the write- off of deferred finance charges relating to the termination of the company's previous senior secured credit facility, offset by a $1.7 million pre-tax gain for the termination of swap contracts related to the repaid loans. The increase in the company's effective tax rate to 42.4% for the year ended Dec. 31, 2006, as compared to 38.5% for the year ended Dec. 31, 2005, reflects the impact of operating results in jurisdictions with higher state income tax, an adjustment for items identified in preparation of the company's tax returns, and the non-deductibility of permanent differences. These items were partially offset by the state income tax impact of the insurance gain, which occurred in a jurisdiction with a lower state income tax rate. Discontinued operations reflect the results of Hollywood Casino Shreveport, The Downs Racing Inc, and the sale of Argosy Casino Baton Rouge. The company had a net loss, net of tax benefit, from discontinued operations of $4.1 million in 2005. At Dec. 31, 2006, the company's balance sheet showed $4.514 billion in total assets, $3.592 billion in total liabilities, and $921.2 million in total stockholders' equity. At Dec. 31, 2006, the company's balance sheet showed strained liquidity with $402 million in total current assets available to pay $415.7 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?1b90 Cash Flows Net cash provided by operating activities was $281.8 million and $150.5 million for 2006 and 2005, respectively. Net cash provided by operating activities for 2006 included net income of $327.1 million, non-cash reconciling items, such as depreciation, amortization and the tax benefit from the exercise of stock options, of $900,000, offset by net changes in current asset and liability accounts of $46.2 million. Net cash used in investing activities totaled $302.3 million and $1.978 billion for 2006 and 2005, respectively. Net cash used in investing activities for 2006 included expenditures for property and equipment totaling $408.9 million, offset by insurance proceeds from Hurricane Katrina of $104.1 million and proceeds from the sale of property and equipment totaling $2.4 million. Net cash provided by financing activities totaled $56.4 million and $1.873 billion for 2006 and 2005, respectively. Net cash provided by financing activities for 2006 included proceeds from the sale of stock options totaling $12.2 million, proceeds from the issuance of long-term debt equaling $195.7 million, and principal payments on the long-term debt totaling $177.1 million. Net cash provided by financing activities for 2006 also included $32.5 million in proceeds from insurance financing, offset by $19.3 million in payments on insurance financing, as well as the tax benefit from stock options exercised which equaled $12.4 million. About Penn National Gaming Penn National Gaming Inc. -- http://www.pngaming.com/-- owns and operates casino and horse racing facilities with a focus on slot machine entertainment. The company presently operates sixteen facilities in thirteen jurisdictions including Colorado, Illinois, Indiana, Iowa, Louisiana, Maine, Mississippi, Missouri, New Jersey, Ohio, Pennsylvania, West Virginia, and Ontario. In aggregate, Penn National's operated facilities feature approximately 21,000 slot machines, over 400 table games, approximately 1,500 hotel rooms and approximately 750,000 square feet of gaming floor space. * * * As reported in the Troubled Company Reporter on Nov. 10, 2006, Moody's Investors Service's affirmed on Oct. 5 Penn National Gaming Inc.'s Ba2 Corporate Family Rating and revised its Ba3 rating on the company's 6-7/8% senior subordinated notes to B1. PENN TREATY: S&P Retains Negative CreditWatch on B Rating --------------------------------------------------------- Standard & Poor's Ratings Services said that it would keep its 'B' counterparty credit and financial strength ratings on Penn Treaty Network America Insurance Co. on CreditWatch with negative implications. "This announcement follows parent company Penn Treaty American Corp.'s (NYSE:PTA) 8-K filing with the SEC, containing all of the material to be included in the company's 10-K filing for 2005, with the exception of the auditor's opinion," said Standard & Poor's credit analyst Neal Freedman. The ratings were placed on CreditWatch negative on Aug. 1, 2006, due to PTA's delay in releasing year-end 2005 audited financial statements. PTA expects to receive an unqualified auditor's opinion for its year-end 2005 GAAP financial statements by March 21, 2007. PTA's 2005 results, included in the 8-K, were supportive of the current ratings on PTNA, but they lacked an auditor's opinion. Standard & Poor's will keep PTNA on CreditWatch negative pending the review of PTA's audited year-end 2005 and 2006 results. In the interim, we will continue to monitor and analyze PTNA's filed statutory financial statements and review transactions necessary to assess the company's creditworthiness. PENTON MEDIA: Proposed PIK Loan Offering Cues S&P's Negative Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'B' corporate credit rating on Penton Media Holdings Inc. on CreditWatch with negative implications. The action followed the company's announcement of a proposed offering of a $150 million floating-rate high-coupon pay- in-kind loan due 2015, to finance a special dividend. At the same time, Standard & Poor's placed all ratings, including the 'B' corporate credit ratings, on the operating entities and coborrowers -- Penton Business Media Inc. (formerly known as Prism Business Media Inc.) and Penton Media Inc. -- on CreditWatch with negative implications. The additional debt would raise not only consolidated leverage but also the refinancing risk of the senior secured facilities when they mature in 2012 and 2013. Penton is offering the loan at its newly created super holding company, Penton Media Group Holdings Inc. Penton Media Group Holdings' total consolidated debt, pro forma for the February 2007 acquisition of Penton Media Inc. by Prism Business Media Inc. and the holding company note transaction, was $1 billion at Dec. 31, 2006. "The transaction increases the company's pro forma leverage," said Standard & Poor's credit analyst Tulip Lim. "We believe that the company's traditional businesses face mature, slow growth prospects, and that leverage will remain high because of the rapid accretion of the holding company notes." Standard & Poor's will lower the corporate credit ratings to 'B-' upon completion of the transaction, and the outlooks will likely be stable. PHELPS DODGE: Shareholders Approve Freeport-McMoran Copper Merger ----------------------------------------------------------------- Shareholders of Freeport-McMoRan Copper & Gold Inc. and Phelps Dodge Corporation approved FCX's acquisition of Phelps Dodge at special meetings held March 14, 2007. At each meeting, approximately 98% of the votes cast supported the transaction. "We are pleased with the approval from shareholders which will allow us to complete the acquisition of Phelps Dodge," Richard C. Adkerson, FCX's President and Chief Executive Officer, said. "This is an exciting time for our company as we transform FCX into the world's largest publicly traded copper producer." Under the terms of the merger agreement, Phelps Dodge shareholders will receive $88 in cash and 0.67 of a share of FCX's common stock for each Phelps Dodge common share, which is equivalent to a value of $125.53 based on the closing price of FCX's common stock on March 13, 2007. The cash portion of $18 billion represents 70% of the total consideration. Following completion of the transaction, there will be approximately 334 million shares outstanding. The transaction is expected to close on March 19, 2007. FCX stockholders also approved an increase in the number of authorized shares of FCX common stock from 423.6 million to 700 million. Upon the closing of the merger, FCX will operate a geographically diverse portfolio of long-lived reserves of copper, gold and molybdenum. The Grasberg mine, the world's largest copper and gold mine in terms of reserves, will be the key asset of the combined company. FCX will operate significant mining operations in North and South America and will proceed with the initial development of the world-class Tenke Fungurume project in the Democratic Republic of Congo. About Freeport-McMoran Copper & Gold Inc. Freeport-McMoRan Copper & Gold Inc. is a Louisiana based producer of copper and gold through its Grasberg mine in Indonesia. Freeport's revenue in 2006 was $5.8 billion. About Phelps Dodge Corp. Phelps Dodge -- http://www.phelpsdodge.com/-- is among the world's largest producers of molybdenum, molybdenum-based chemicals, and manufacturer of wire and cable products. Phelps Dodge has operations in Venezuela, Thailand, China, Netherlands, Philippines, Japan, United Kingdom, among others. * * * As reported in the Troubled Company Reporter on March 14, 2007, Fitch assigned the ratings to Freeport-McMoRan Copper & Gold and downgraded the ratings of Phelps Dodge in connection with FCX's pending acquisition of Phelps Dodge for $25.9 billion in cash and stock. Fitch downgraded Phelps Dodge's Cyprus Amax 7.375% Notes due May 2007, to be secured and to be guaranteed by FCX from 'BBB' to 'BB-'; and its Senior Unsecured Notes and Debentures to be guaranteed by FCX from 'BBB' to 'BB-'. PHOTRONICS INC: Earns $7.58 Million in Quarter Ended January 28 --------------------------------------------------------------- Photronics, Inc., during the first quarter of fiscal year 2007, reported a net income of $7.58 million on net sales of $105.98 million, versus a net income of $9.69 million on net sales of $111.94 million during the first quarter of fiscal year 2006. The company listed $962.73 million in total assets, $287.1 million in total liabilities, and $47.94 million in minority interests, resulting to $627.69 million in total shareholders' equity as of Jan. 28, 2007. The company's working capital increased to $142.7 million at Jan. 28, 2007, as compared with $127.7 million at Oct. 29, 2006, primarily as a result of cash generated from operations. Cash, cash equivalents and short-term investments at Jan. 28, 2007 were $132.43 million, as compared with $199.32 million at Oct. 29, 2006. As of Jan. 28, 2007, Photronics had commitments outstanding for capital expenditures of about $100 million. Full-text copies of the company's 2007 first quarter financials are available for free at http://ResearchArchives.com/t/s?1b89 About Photronics, Inc. Photronics, Inc. -- http://www.photronics.com/-- is a worldwide manufacturer of photomasks, which are high precision quartz plates that contain microscopic images of electronic circuits. A key element in the manufacture of semiconductors and flat panel displays, photomasks are used to transfer circuit patterns onto semiconductor wafers and flat panel substrates during the fabrication of integrated circuits, a variety of flat panel displays and, to a lesser extent, other types of electrical and optical components. They are produced in accordance with product designs provided by customers at strategically located manufacturing facilities in Asia, Europe, and North America. In Europe, the company maintains operations in Dresden, Germany and Manchester, U.K. * * * Photronics, Inc. carries Moody's Investors Service's B1 Corporate Family Rating, B1 Probability of Default Rating, and B2 rating on the company's $190 million 4.75% convertible subordinated notes due 2006. The company carries Standard & Poor's BB- Long-term Foreign and Local Issuer Credit Ratings. RALI SERIES: Moody's Rates Class B Certificates at Ba1 ------------------------------------------------------ Moody's Investors Service has assigned a Aaa rating to the senior certificates issued by RALI Series 2007-QO2 Trust, and ratings ranging from Aaa to Ba1 to the mezzanine certificates in the deal. The securitization is backed by adjustable-rate option ARM Alt-A mortgage loans. The securitization was originated by Homecomings Financial, LLC (30.7%), and various other originators, none of which originated more than 10% of the mortgage loans. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization, excess spread and a swap and rate cap agreement. Moody's expects collateral losses to range from 1.05% to 1.25%. Primary servicing will be provided by Homecomings Financial, LLC. (Homecomings) (83.6%) and GMAC Mortgage, LLC (16.4%). Residential Funding Company, LLC (GMAC-RFC) will act as master servicer. the complete rating actions are: RALI Series 2007-QO2 Trust Mortgage Asset-Backed Pass-Through Certificates, Series 2007-QO2 * Cl. A-1, Assigned Aaa * Cl. A-2, Assigned Aaa * Cl. A-3, Assigned Aaa * Cl. M-1, Assigned Aaa * Cl. M-2, Assigned Aa1 * Cl. M-3, Assigned Aa1 * Cl. M-4, Assigned Aa2 * Cl. M-5, Assigned Aa3 * Cl. M-6, Assigned A1 * Cl. M-7, Assigned A3 * Cl. M-8, Assigned Baa1 * Cl. M-9, Assigned Baa2 * Cl. B, Assigned Ba1 RAMP SERIES: Moody's Rates Class M-10 Certificates at Ba1 --------------------------------------------------------- Moody's Investors Service has assigned a Aaa rating to the senior certificates issued by RAMP Series 2007-RS1 Trust, and ratings ranging from Aa1 to Ba1 to the mezzanine certificates in the deal. The securitization is backed by adjustable-rate and fixed-rate first lien mortgage loans and originated by SunTrust Mortgage, Inc. (42.2%), GMAC Mortgage, LLC (11.1%) and various originators. The loans are acquired through RFC's Negotiated Conduit Asset Program, which was established for the acquisition of loans that do not comply with some of the criteria of RFC's standard programs. The ratings are based primarily on the credit quality of the loans and on the protection from subordination, overcollateralization, excess spread and a swap agreement. Moody's expects collateral losses to range from 1.85% to 2.35%. Primary servicing will be provided by Homecomings Financial, LLC, GMAC Mortgage, LLC and SunTrust Mortgage, Inc. Residential Funding Company, LLC will act as master servicer. The complete rating actions are: RAMP Series 2007-RS1 Trust Mortgage Asset-Backed Pass-Through Certificates, Series 2007-RS1 * Cl. A-1, Assigned Aaa * Cl. A-2, Assigned Aaa * Cl. A-3, Assigned Aaa * Cl. A-4, Assigned Aaa * Cl. A-5, 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 Ba1 RCN CORP: Debt-Financed Dividend Cues Moody's to Review Ratings --------------------------------------------------------------- Moody's Investors Service placed RCN's ratings under review for downgrade following the company's announcement of a potential $350 - $400 million debt-financed dividend to shareholders. During the review process, Moody's will evaluate the added risks associated with a meaningful increase in leverage while the company pursues a capital intensive expansion strategy in several of its markets. In Moody's view, the company's B1 corporate family rating has some room for incremental debt. However, should the company decide to go ahead with the dividend, it is very likely that the company's current Ba2 bank debt rating will be lowered regardless of whether the corporate family rating is also lowered given the material increase in first lien debt and Moody's corresponding expectation of higher loss severity under our Loss Given Default methodology. On Review for Possible Downgrade: RCN Corporation * Corporate Family Rating, Placed on Review for Possible Downgrade, currently B1 * Senior Secured Bank Credit Facility, Placed on Review for Possible Downgrade, currently Ba2 * Outlook, Changed To Rating Under Review From Stable RCN Corporation is a communications company marketing video, voice and data services to residential and commercial customers located in high-density northeast and Midwest markets, predominantly in competition with leading incumbent service providers. REFCO INC: Plan Administrators want $15MM Admin Claims Disallowed ----------------------------------------------------------------- RJM, LLC, as Plan Administrator of the Reorganized Refco Inc.'s Chapter 11 cases, and Marc S. Kirschner, as Plan Administrator and Chapter 11 Trustee of Refco Capital Markets, Ltd.'s case, ask the U.S. Bankruptcy Court for the Southern District of New York to rule on 31 administrative expense claims, totaling approximately $15,000,000. Specifically, the Plan Administrators ask Judge Drain to disallow and expunge 11 claims that are inconsistent with the books and records of the Reorganized Debtors and RCM: Claimant Claim No. Claim Amount -------- --------- ------------ Illinois Department of Revenue 4974 $379 Joe Damouni 3091 - Michelle Y. Coe 3333 - 3446 - Qwest Communications Corp. 3396 19,528 State of Connecticut 14285 400 Connecticut Revenue Service Dept. 14286 250 Tennessee Department of Revenue 14288 1,409 129 1,655 14287 521 128 350 The Plan Administrators also ask Judge Drain to reduce and allow, and in certain cases, reclassify, six claims asserting overstated amounts: Claim Claim Modified Claimant Number Amount Amount -------- ------ ------ -------- Equity Trust Co. Cust. FBO 2982 $8,022 $8,022 Orange County Tax Collector 14421 6,783 6,783 Pitney Bowes Credit Corp. 2316 3,853 3,853 4420 834 834 Telecommunications System, Inc. 14245 5,613 5,613 The City of New York 14298 12,017,928 125,000 The Plan Administrators also want nine claims disallowed and expunged because they fail to assert any basis in satisfying administrative expense status: Claimant Claim No. Claim Amount -------- --------- ------------ Fimat USA, LLC, and Fimat 14300 $46,397 3413 46,397 NDC Online, Ltd. 3020 428,745 Living Water Fund L.P. 3402 1,809,972 Andrei Popov 14436 31,938 14437 31,938 Frances R. Dittmer 4268 75,000 Runyun He 14439 5,579 SNC Investments, Inc. 14441 146,477 Furthermore, the Plan Administrators ask Judge Drain to disallow Claim No. 3417 filed by West Loop Associates, LLC, for $398,270, because it has already been addressed by the Reorganized Debtors' Chapter 11 Plan and the Confirmation Order. The Plan Administrators want four claims disallowed as duplicate, amended, or superseded claims: Claim Claim Remaining Claimant Number Amount Claim -------- ------ ------ --------- Charles Fenton III IRA 14289 $8,023 2982 14290 8,023 2982 Orange County Tax Collector 73 8,278 14421 14394 6,731 14421 The Plan Administrators reserve the right to amend, modify, or file additional objections to the Administrative Claims on any grounds. 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. 59; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). REFCO INC: Plan Administrators want Cross-Border Protocol Fixed --------------------------------------------------------------- RJM, LLC, as Plan Administrator of the Reorganized Refco Inc.'s Chapter 11 cases, and Marc S. Kirschner, as Plan Administrator and Chapter 11 Trustee of Refco Capital Markets, Ltd.'s case, ask the U.S. Bankruptcy Court for the Southern District of New York to approve a cross-border insolvency protocol with the joint provisional liquidators to ensure that the Parallel Proceedings pending in the U.S. and Bermuda are conducted in an efficient and effective manner so as to protect the interests of stakeholders of the RCM and RGF estates; avoid duplication of effort and expense; and implement the Plan. Refco Capital Markets, Ltd., and Russia Growth Fund, Ltd., each filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Delaware on Oct. 17, 2005. Two days after, RCM and RGF filed voluntary winding-up petitions in the Supreme Court of Bermuda. The Bermuda Court subsequently appointed Michael W. Morrison of KPMG Financial Advisory Services Limited in Bermuda, and Richard Heis of KPMG LLP in the United Kingdom, as joint provisional liquidators in the Bermuda Proceedings. In April 2006, Marc S. Kirschner was appointed as Chapter 11 trustee for the RCM estate. Timothy B. DeSieno, Esq., at Bingham McCutchen LLP, in New York, relates that as of Feb. 22, 2007, neither the Joint Provisional Liquidators nor their professionals have received payment or reimbursement of any fees or expenses incurred in connection with the U.S. and Bermuda Proceedings. Mr. DeSieno notes that on Dec. 12, 2006, the Bermuda Court ruled that the categories of actions undertaken by the Joint Provisional Liquidators are within the scope of their duties under Bermuda law, and that the hourly rates charged by them are consistent with those charged in previous cases. Pursuant to the confirmed Chapter 11 Plan of Refco, Inc., and its debtor-affiliates, RJM, LLC, has been appointed Plan Administrator of RGF, and serves as the corporate governance of RGF under U.S. law, with full power and authority to manage RGF's affairs and administer RGF's assets under the Plan and auspices of the Bankruptcy Court. On Jan. 17, 2007, the Bankruptcy Court issued an order providing for the same allocation of fee approval responsibilities between the Bankruptcy and Bermuda Courts in accordance with the Dec. 8 Bermuda Order. The Plan Administrators assert that the Protocol also resolves the dispute concerning the appropriate amount and proper forum for determination of the JPL fees. Mr. DeSieno tells the Bankruptcy Court that the Protocol is consistent with the purposes of and principles incorporated in the Cross-Border Insolvency Concordat adopted by the Council of the International Bar Association on May 31, 1996. The Protocol recognizes that the U.S. Proceedings are the main proceedings for RCM and RGF. He states that the relative duties and rights of the Plan Administrators and JPLs are apportioned according to those principles with respect to: -- their legal responsibilities; -- the domiciles of RCM and RGF; and -- the sovereignty of the U.S. and Bermuda courts. Since the U.S. Proceedings are the Main Proceeding, the Protocol provides that Mr. Kirschner and the Refco Administrator, as applicable, will be responsible for the claims review process, and proof and allowance of claims will be coordinated through the U.S. Proceedings and the Bankruptcy Court. Reimbursement of fees and expenses of the JPLs and their professional advisors will be: -- a total of $1,790,000 in full and final payment and satisfaction of all fees and expenses incurred through the date of effectiveness of the Protocol; and -- up to an additional $20,000 in full and final payment and satisfaction of all fees and expenses incurred in connection with securing the withdrawal of the winding-up petition of RGF in the Bermuda Court. Furthermore, the Refco Administrator and the JPLs have agreed that RGF is solvent following the Plan implementation. At the earliest possible time, RGL will seek leave from the Bermuda Court to withdraw its winding-up petition in Bermuda, which would, in turn, result in the dismissal of the order appointing the JPLs. At the same time, the JPLs will seek their release from the Bermuda Court. 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. 59; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). RESORTS INT'L: Notes Redemption Cues Moody's to Withdraw Ratings ---------------------------------------------------------------- Moody's Investors Service has withdrawn the existing ratings of Resorts International Hotel and Casino, Inc., including the compnay's Caa1 Corporate Family Rating and Negative outlook. The rating action follows the following the defeasement and redemption of the company's $180 million 11.5% first mortgage notes. SACO I: Moody's Junks Rating on 2004-3 Class B-3 Certificates ------------------------------------------------------------- Moody's Investors Service has placed on review for possible upgrade four certificates issued by SACO I Trust 2004-1 and 2004-2. These two transactions are failing their cumulative loss triggers allowing them to pay sequentially. Moody's Investors Service has downgraded one certificate from a deal issued by SACO I Trust 2004-3 and has also placed on review for possible downgrade nine other certificates from various deals issued by SACO I Trust originated in 2004 and 2005. These actions are based on the analysis of the credit enhancement provided by subordination, overcollateralization and excess spread relative to the expected loss. These transactions are backed by closed end second loans, and have seen recent losses that have exceeded the excess spread available thereby depleting the overcollateralization. Complete rating actions are: Issuer: SACO I Trust Downgrade: * 2004-3, Class B-3, Downgraded from B3 to Caa2, Review for Possible Downgrade: * 2004-2, Class B-2, Current rating Ba2, under review for possible downgrade * 2005-1, Class B-3, Current rating Ba2, under review for possible downgrade * 2005-2, Class B-3, Current rating Baa3, under review for possible downgrade * 2005-2, Class B-4, Current rating Ba3, under review for possible downgrade * 2005-4, Class B-2, Current rating Baa2, under review for possible downgrade * 2005-4, Class B-3, Current rating Baa3, under review for possible downgrade * 2005-4, Class B-4, Current rating Ba2, under review for possible downgrade * 2005-WM1, Class B-4, Current rating Ba1, under review for possible downgrade * 2005-WM1, Class B-5, Current rating Ba2, under review for possible downgrade Review for Possible Upgrade * 2004-1, Class B-1, Current rating A2, under review for possible upgrade * 2004-2, Class M-1, Current rating Aa2, under review for possible upgrade * 2004-2, Class M-2, Current rating A2, under review for possible upgrade * 2004-2, Class B-1, Current rating Baa2, under review for possible upgrade SEMCO ENERGY: Earns $10.4 Million in Year Ended December 31 ----------------------------------------------------------- Semco Energy Inc. reported net income of $10.4 million on revenues of $640.5 million for the year ended Dec. 31, 2006, compared with net income of $12.3 million on revenues of $615.1 million for the year ended Dec. 31, 2005. For the fourth quarter of 2006, net income was $7.1 million on revenues of $207.8 million, compared with net income of $9.3 million on revenues of $230.6 million for the fourth quarter of 2005. The company's results for 2005 included an after-tax charge of $8.2 million associated with the repurchase and retirement of the company's convertible preference stock and certain common stock warrants. The primary factors that negatively impacted earnings for 2006, when compared to 2005, were: (i) an increase in operations and maintenance expense for the gas distribution business; (ii) warmer temperatures and customer conservation; and (iii) the inclusion in 2005 results of $500,000 of income from discontinued operations. The increase in operations and maintenance expense for the gas distribution business, which decreased 2006 net income by approximately $3.6 million when compared to 2005, was due primarily to an increase in employee benefit costs and uncollectible customer accounts and an $800,000 charge, net of income taxes, associated with the sublease of the company's former headquarters. Warmer temperatures and customer conservation reduced 2006 net income by approximately $2.9 million, when compared to 2005. The decrease in earnings for the fourth quarter of 2006, when compared to the fourth quarter of 2005, was due primarily to higher operating expenses (principally employee benefit costs and professional fees), combined warmer-than-normal temperatures and customer conservation in markets served by the company, a debt extinguishment charge, and higher business taxes. These items were partially offset by the impact of customer growth and lower financing-related costs. George A. Schreiber, Jr., company president and chief executive officer, said, "I am very pleased with the company's results for 2006. We achieved these results, despite warmer-than-normal temperatures and continued customer conservation, which, when combined, adversely impacted 2006 earnings by an estimated $3.5 million." Schreiber added, "One way we overcame the impact of the weather and customer conservation was to keep spending under control. Despite an increase in operations and maintenance expense and capital expenditures compared to 2005, we ended 2006 under our budgeted spending levels in these areas." Schreiber continued, "There were other accomplishments in 2006. During the year, we completed several initiatives to improve the company's financial condition. We repurchased nearly 111,000 shares of the company's 5% Series B convertible cumulative preferred stock in exchange for over 1.55 million shares of the company's common Stock and approximately $12.6 million in cash. We also refinanced approximately $59 million of 8 percent long- term debt with new lower cost long-term debt." Schreiber added, "The recent implementation of a new customer information system in Michigan should help us interact with customers more effectively and efficiently. We are very pleased that this system was implemented smoothly, on schedule and under budget. We closed 2006 by settling our Michigan base rate case, with an expected annualized base rate revenue increase of approximately $10.6 million and progress on rate design, particularly a more realistic way of setting the volumetric component of residential rates. Considering all of these factors, 2006 was a year of solid performance." At Dec. 31, 2006, the company's balance sheet showed $1.031 billion in total assets, $326.2 million in total liabilities, and $705.3 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?1b8e Exchange Agreement On Feb. 23, 2007, the company entered into a definitive exchange agreement under which Cap Rock Holding Corporation would acquire all of the outstanding common stock and 5% Series B Preferred Stock of Semco. Under the terms of the agreement, Semco's shareholders will receive $8.15 in cash for each share of common stock they hold, representing a premium of approximately 37 percent over Semco's average closing share price during the five trading days ended Feb. 22, 2007. The holders of the Series B preferred stock will receive $213.07 per share plus a "make-whole" premium calculated at closing. The Board of Directors of Semco, upon the unanimous recommendation of its Finance Committee, has approved the agreement and has recommended that the holders of Semco's common stock approve the transaction at a meeting to be held at a future date determined in accordance with the agreement. The transaction is subject to approval by holders of Semco's common stock, as well as other customary closing conditions, including the receipt of applicable regulatory approvals. About Semco Energy Based in Port Huron, Michigan, Semco Energy Inc. (NYSE: SEN) -- http://www.semcoenergy.com/-- distributes natural gas to more than 400,000 customers combined in Michigan, as Semco Energy Gas Company, and in Alaska, as Enstar Natural Gas Company. It also owns and operates businesses involved in propane distribution, intrastate pipelines and natural gas storage. * * * As reported in the Troubled Company Reporter on Feb. 27, 2007, Standard & Poor's Ratings Services placed its 'BB-' corporate credit rating on Semco Energy Inc. on CreditWatch with developing implications. SERVICEMASTER CO: Okays $5.5 Billion Clayton Dubilier Buyout ------------------------------------------------------------ The ServiceMaster Company disclosed Monday that it has entered into a definitive merger agreement to be acquired by an investment group led by Clayton, Dubilier & Rice, Inc. for a total enterprise value of approximately $5.5 billion, including the assumption of existing ServiceMaster debt. Under the terms of the agreement, ServiceMaster's stockholders will receive $15.625 in cash for each outstanding ServiceMaster share. This represents a premium of approximately 16% over ServiceMaster's closing share price of $13.47 on Friday, March 16, 2007 and a premium of approximately 31% over ServiceMaster's closing share price of $11.90 on November 27, 2006, the last trading day before the announcement by the company that the Board of Directors would explore strategic alternatives. The ServiceMaster Board of Directors has approved the merger agreement and recommends adoption of the agreement by ServiceMaster's stockholders. Completion of the transaction is contingent upon customary closing conditions, including the approval of a majority of ServiceMaster's outstanding shares and regulatory approval. Stockholders will be asked to vote on the proposed merger at a special meeting which the company currently expects to be held during the second quarter. Until the closing of the transaction, the company anticipates continuation of its existing dividend policy. "The Board of Directors, with the aid of management and our financial advisors, conducted a thorough review of strategic alternatives available to the company and concluded that this transaction is in the best interests of our stockholders," said J. Patrick Spainhour, Chairman and Chief Executive Officer of ServiceMaster. "The Board's support is based on the conviction that this transaction will deliver value to shareholders that is superior to what the company could achieve under its current business plan," said Mr. Spainhour. "We are a company with a unique heritage and a very bright future, which we believe will be enhanced by the new ownership structure. CD&R will bring valuable insight to our business and contribute to the acceleration of profitable growth." Donald J. Gogel, Chief Executive Officer of CD&R, said, "We have been interested in ServiceMaster for years, and have always felt that its management team, unique mix of market leading brands and leading industry positions were a great fit with CD&R's investment approach. We believe the company will be better positioned as a non-public enterprise to pursue management's long-term growth plans and to further enhance its attractive collection of market- leading service businesses." "Working with the ServiceMaster team, we intend to invest in the key strategic initiatives that will accelerate growth in each business unit, while maintaining a strong stewardship of the core values that have been the foundation of the company," concluded Mr. Gogel. Richard J. Schnall, the CD&R partner who led the transaction, said, "We believe our past success working with large, branded, multi-location service businesses will prove to be of significant value as we partner with ServiceMaster's management team to move the company forward over the long term." After completion of the transaction, Clayton, Dubilier & Rice announced that George W. Tamke, CD&R Operating Partner, will assume the position of Chairman of the ServiceMaster Board of Directors. Mr. Spainhour will continue to serve as Chief Executive Officer. Mr. Tamke is former co-CEO of Emerson Electric and previously served as the lead operating partner for CD&R investments in Kinko's, Culligan and Hertz. Morgan Stanley and Goldman Sachs acted as financial advisors to ServiceMaster. Both firms, as well as Greenhill & Co., provided fairness opinions to the ServiceMaster Board of Directors. Sidley Austin served as legal adviser to ServiceMaster in connection with the transaction. Banc of America, Citigroup Global Markets Inc., JPMorgan and Wachovia Securities provided strategic advisory services to CD&R and Banc of America Securities LLC, Citigroup Global Markets Inc., and JPMorgan Chase Bank, N.A. have committed to provide debt financing for the transaction. In addition, Banc of America Capital Investors, Citigroup Private Equity and JPMorgan have committed to provide equity financing. Debevoise & Plimpton is acting as legal advisor to CD&R. About Clayton, Dubilier & Rice, Inc. Clayton, Dubilier & Rice, Inc. -- http://www.cdr-inc.com/-- is a leading private equity investment firm that has earned consistent, superior investment returns using an integrated operational and financial approach to building and growing portfolio businesses. Since its founding in 1978, CD&R has managed investments of over $8 billion in 39 U.S. and European subsidiaries or divisions of large multi-business corporations with revenues exceeding $40 billion, representing an aggregate transaction value of over $40 billion. CD&R led a group of investors in the purchase of The Hertz Corporation from Ford Motor Company in December 2005. The firm's investments have also included Kinko's, which was sold to FedEx in February 2004; Culligan International, leading global provider of water treatment product and services; and Scotts, a leader in do-it-yourself lawn and garden consumer products. CD&R is based in New York and London. About ServiceMaster The ServiceMaster Company -- http://www.servicemaster.com/-- (NYSE:SVM) currently serves residential and commercial customers through a network of over 5,500 company-owned and franchised locations. The company's brands include TruGreen, TruGreen LandCare, Terminix, American Home Shield, InStar Services Group, ServiceMaster Clean, Merry Maids, Furniture Medic and AmeriSpec. The core services of the company include lawn care and landscape maintenance, termite and pest control, home warranties, disaster response and reconstruction, cleaning and disaster restoration, house cleaning, furniture repair, and home inspection. SERVICEMASTER CO: $5.5 Bil. CD&R Buyout Cues Fitch to Cut Ratings ----------------------------------------------------------------- Fitch Ratings has downgraded ServiceMaster Co. as: -- Issuer Default Rating (IDR) to 'BB-' from 'BBB-'; -- Senior unsecured to 'BB-' from 'BBB-'. The ratings remain on Rating Watch Negative. The rating action reflects today's announcement that ServiceMaster has agreed to be acquired by a group led by Clayton Dubilier & Rice in a transaction valued at approximately $5.5 billion, including the assumption of approximately $700 million of debt. Given the information available at this time, Fitch believes the rating will be no higher than 'BB-' and could be downgraded further. A multiple-notch downgrade upon closing of the transaction is possible as preliminary pro forma credit metrics are reflective of a low 'B' rating. As part of its rating evaluation, Fitch will review ServiceMaster's financial and operating strategies with the company's management. The resolution of the Rating Watch will be determined by an evaluation of ServiceMaster's strategic direction, ultimate transaction structure including the use of the proceeds, as well as pro forma credit metrics and overall financial policies. All outstanding debentures and notes were issued under the 1997 Indenture, which does not provide any material restrictions related to additional debt, change of control, or sale of assets. Fitch notes that the ServiceMaster Indenture does contain a Negative Pledge covenant that allows for liens up to 10% of consolidated net worth, which provides some level of protection for bondholders. However, given actions that some other companies across the corporate space have taken recently to subvert certain protections, Fitch is generally skeptical regarding the potential effectiveness of some covenants in corporate bond indentures. SOVRAN SELF STORAGE: Earns $9.2 Million in Quarter Ended Dec. 31 ---------------------------------------------------------------- Sovran Self Storage Inc. reported net income of $9.2 million on total operating revenues of $44.6 million for the fourth quarter ended Dec. 31, 2006, compared with net income of $8.5 million on total operating revenues of $36.1 million for the same period ended Dec. 31, 2005. For the year ended Dec. 31, 2006, net income was $36.6 million on total operating revenues of $166.3 million, as compared to net income of $34.8 million on total operating revenues of $138.3 million for the year ended Dec. 31, 2005. The company acquired one self-storage facility during the quarter at a cost of $4.8 million. During 2006, a total of 42 such properties were acquired at a total cost of $166 million. David Rogers, the company's chief financial officer, commented, "We had a good quarter and a great year. We've acquired some tremendous stores in strong markets, we've taken a big step toward enhancing many of our existing properties, and operations are solid across the board." Total company net operating income for the fourth quarter grew 21.5% compared with the same quarter in 2005 to $28.6 million. This growth was the result of improved operating performance and the income earned from additional stores acquired in 2006. Overall average occupancy for the quarter was 84.5% and average rent per square foot for the portfolio was $10.16. Revenues at the 278 stabilized stores owned (and/or operated) for the entire 4th quarter in both years increased 4% over the fourth quarter of 2005, the result of a 4% increase in rental rates and a 10.9% increase in other income which offset a 1.5% drop in occupancy. Same store operating expenses increased by 4.7%, primarily because of increased property insurance costs, which rose 175% over last year's fourth quarter. Net operating income improved in 2006 by 3.6% on a same store basis over the prior fourth quarter. On a year over year basis, the company achieved 5.5% revenue growth at its 266 same store pool. Property tax expense increased by 5.4% and other operating expenses, primarily as a result of increased property insurance costs, grew by 5.9%. This resulted in a 5.3% increase in net operating income for the full year 2006. Strong performance was shown at the company's stores throughout the Georgia, Texas and North Carolina markets, while some of the New England stores experienced slower than expected growth during the quarter. As has been anticipated, most of the company's Florida stores suffered a drop in occupancy, as many customers who rented spaces after suffering hurricane damage in 2004 and 2005 have been able to move back into permanent residences, eliminating their need for emergency storage. The Florida market remains very strong, but has declined from the record high levels of the prior seven quarters. At Dec. 31, 2006, the company's balance sheet showed $1.053 billion in total assets, $495.4 million in total liabilities, $26.9 million in minority interests, and $530.9 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?1b92 Acquisitions The company acquired one property during the quarter at a total cost of $4.8 million. The store is located in Concord, New Hampshire, and is the 4th Uncle Bob's facility in that market. At Dec. 31, 2006, the company was in negotiations to acquire 10 properties at a total cost of $31 million. Capital Transactions On Nov. 30, 2006, the company completed an offering of 2.3 million shares of its common stock at a price of $56.25 per share, netting $122.4 million in proceeds. $80 million of the proceeds were used to pay down the company's line of credit; the balance will be used to fund property purchases in the first quarter of 2007. During the quarter, the company issued 53,463 shares through its dividend reinvestment program, direct stock purchase plan and employee option plan and received a total of $2.9 million in proceeds. Proceeds from these stock issuances were used to acquire the Concord, New Hampshire property. The company has a $100 million line of credit in place through September, 2007, with an option to extend the facility through September, 2008. The line provides an interest rate of LIBOR plus 0.9% and is expandable to $200 million. Presently, there is no outstanding balance on the line. About Sovran Self Storage Sovran Self Storage Inc. (NYSE: SSS) -- http://www.sovranss.com/ -- is a self-administered and self-managed equity real estate investment trust whose business is acquiring, developing and managing self-storage facilities. The company owns and manages 328 stores in 22 states under the name Uncle Bob's Self Storage(R). * * * Sovran Self Storage, Inc.'s preferred stock carries Moody's Investors Service's Ba1 rating. SPECTRUM BRANDS: Launches Exchange Offer for 8-1/2% Senior Notes ---------------------------------------------------------------- Spectrum Brands, Inc. has commenced its offer to exchange any and all of the $350 million in aggregate principal amount outstanding of its 8-1/2% Senior Subordinated Notes due Oct. 1, 2013 (CUSIP No. 755081AD8) for new senior subordinated notes due Oct. 2, 2013. In conjunction with the Exchange Offer, the company is also soliciting consents from the holders of the Existing Notes to effect proposed amendments to the indenture for the Existing Notes that would eliminate substantially all of the restrictive covenants and certain events of default contained therein and a waiver of certain alleged or existing defaults or events of default under the indenture for the Existing Notes. The Exchange Offer will expire at 12:00 A.M. on April 13, 2007 and the Consent Solicitation will expire at 5:00 P.M. on March 29, 2007. Holders validly tendering and not validly withdrawing Existing Notes will receive $950 in principal amount of New Notes for each $1000 principal amount of Existing Notes validly tendered and accepted for exchange, plus accrued and unpaid interest on such principal amount of Existing Notes up to, but not including, April 1, 2007. Subject to certain conditions, the company will have the option to pay interest on the New Notes entirely in cash or by increasing the principal amount of the New Notes. The New Notes will bear interest at an initial rate of 11.00%, increasing to 11.25% on April 2, 2007 (or 11.75% if interest is added to the principal amount of the New Notes) and thereafter increasing semi annually based on a specified schedule and other provisions. The New Notes will begin accruing interest from and including April 1, 2007. 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. The company expects that the indenture for the New Notes will contain similar restrictive covenants and substantially the same events of default as those pertaining to the Existing Notes. Holders of Existing Notes who deliver their consents to the proposed amendments and waiver prior to the expiration of the Consent Solicitation will also receive $50 in principal amount of New Notes per $1000 principal amount of Existing Notes for which consent is validly delivered (and not validly revoked). Holders who tender Existing Notes prior to the expiration of the Consent Solicitation are required to consent to the proposed amendments and waiver. 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 consummation of the Exchange Offer is subject to various terms and conditions, including the refinancing of the company's existing senior credit facility and customary conditions for an exchange offer and consent solicitation. The company will complete an early exchange for Existing Notes tendered prior to expiration of the Consent Solicitation as soon after the expiration of the Consent Solicitation as the refinancing of its senior credit facility occurs and the other conditions to the Exchange Offer are satisfied or waived. 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. SPECTRUM BRANDS: Fitch Holds Ratings & Revises Outlook to Negative ------------------------------------------------------------------ Fitch Ratings has affirmed the ratings of Spectrum Brands, Inc. as: -- Issuer default rating 'CCC'; -- Senior secured bank facility 'B/RR1'; -- Senior subordinated debentures 'CCC-/RR5'. The Rating Outlook has been revised to Negative from Stable. Approximately $2.38 Billion of debt is covered by these actions. On March 12, 2007, SPC announced that Goldman Sachs and Bank of America will refinance the current bank facility. The current bank facility consists of term loans of $1.158 billion and up to $300 million of revolving credit for a total of $1.458 billion at Dec. 31, 2006. This facility is expected to be refinanced by a new facility totaling $1.65 billion which provides potentially $192 million more in credit availability. The new bank facility is expected to be rated 'B/RR1' subject to final terms and conditions. SPC also announced an exchange offer where the current holders of the $350 8.5% million senior subordinated notes due 2013 will receive a Variable Rate Toggle Interest Pay-In-Kind senior subordinated note with an interest rate that begins at 11% and matures in 2013. The new bank facility is expected to close on March 30, 2007. The initial settlement on the exchange offer is expected on the same day. When these facilities are closed, Fitch expects to rate them the same as the existing facilities being replaced if, as seen in the March 9 SEC filing, the new bonds have similar indenture terms as the $700 million 7-3/8% notes and the terms and conditions of the new bank facility are relatively the same except for pricing - which is most likely to be higher. The rating reflects SPC's high leverage with FFO adjusted leverage of 9 times (x) as well as debt/EBITDA of 8.3x for the last 12 months (LTM) ending Dec. 31, 2006. The company made three major acquisitions since 2003 to lessen its dependence on batteries. The acquisitions were funded with debt and SPC became highly leveraged. In August 2006, management stated that they were uncomfortable with leverage and had engaged Goldman Sachs to assist in selling assets to delever. The company's credit metrics, diverse portfolio and minimal debt amortizations are encapsulated in the 'CCC' IDR. However, the Rating Outlook has been revised to Negative. The company's financial performance and credit protection measures have shown a negative trend since 2004 and liquidity has tightened at a time when the company is trying to restructure operations. The company's lessened liquidity limits its competitiveness on a number of fronts one of which was shown by its need to obtain waivers to spend in front of the new Remington shaver launch. Importantly, the timing and proceeds related to potential asset sales which should increase financial flexibility are uncertain as is the company's potential scale and business lines. It is noted that the Home & Garden segment, which represented more than 30% of SPC's EBITDA, is slated for sale but that other asset sales would be needed as well to reduce leverage. SPC last had positive organic volume growth during FY04. In FY05 and FY06 top line growth was derived from acquisitions with F/X buttressing the top line in 1Q07. For the most part, battery operations (34% of FY06 revenues) have been mired in zero or negative growth on a quarter over quarter basis since 2Q05 - though there was a strong retailer uptake with the 'more performance better price' re-launch in 3Q06 of 16%. Much of the remaining issues within batteries appear to be the result of the structural change in the European market but it will take several quarters to address it. Remington has uneven performance. The EBITDA margin has declined from 15% in FYE04 to 11.5% at LTM Dec. 31, 2006 due to mix and commodity pricing. With leverage from acquisitions and declining margins, FFO Adjusted Leverage rose from 5x to 9x in the similar period. Of concern, is the marked decline in cash flow from operations which has declined by $183 million to $44.5 million at FYE06. After being free cash flow positive (cash flow from operations less capital expenditures) since FYE03, a negative $15.8 million was recorded at FYE06. With the seasonal build-up in working capital and despite very small capital expenditures for 1Q07, free cash flow was negative $78.4 million with LTM Dec. 31, 2006 a negative $86.4 million. Debt balances increased by $103 million from the fiscal year-end and revolving credit availability declined to $138 million at Dec. 31, 2006. Given increased working capital requirements for the Home & Garden in Q207, it is expected that revolver availability will have declined even further. At present, except for the steady performance of Global Pet, which itself just took a $271 million impairment charge, there is very little in the near term that would indicate a solid up-tick is forthcoming in the rest of the businesses (excluding the discontinued Home & Garden). While the company continues to restructure its operations, there is a cash component in the short to medium term that will need funding. Additionally, the new facilities will add more debt service to an already pressured cash flow. If there are large unexpected shocks to the business model, the company may not have the financial flexibility to respond. Fitch views the expected financing as positive in that it takes away a legal uncertainty with the bondholders, the imminent requirement for covenant waivers on the existing bank facility, adds some limited liquidity and also buys time to complete the transition. With Goldman leading both the bank facility and the asset sale process, it is expected that future covenants will provide the appropriate flexibility to work through the transition. Additionally, the Home & Garden segment should also provide cash throughout the Spring and Summer as it typically does in its seasonal cycle. However, the uneven business trends and the need for some measure of brand support and investment in working capital for the next seasonal build up in working capital towards the holiday season will continue to pressure liquidity and credit metrics in the medium term. The Recovery Ratings and notching in the debt structure reflect Fitch's recovery expectations under a scenario in which distressed enterprise value is allocated to the various debt classes. The recovery ratings for the bank facility ('RR1', reflecting 91%-100% recovery) benefit from an enterprise value which more than covers maximum outstanding. The senior subordinated debentures of 'RR5' (10%-30%) reflect the expectation of below average recovery prospects in a distressed case. SPC is a global branded consumer products company with operations in seven product categories: consumer batteries; home & garden (discontinued); pet supplies; electric shaving and grooming; household insect control; electric personal care products, and portable lighting. STATSURE DIAGNOSTIC: Restated 2005 Report Shows Lower Net Loss -------------------------------------------------------------- StatSure Diagnostic Systems, Inc. restated its annual report for the year 2005 to reflect corrections on certain accounting principles. The company also restated its quarterly reports for the period ended March 31, 2005, June 30, 2005, and Sept. 30, 2005. The restated 2005 annual report versus the previous report, showed: -- lower net loss of $2,560,673, from a previously reported net loss of $4,868,854; -- lower total liabilities of $3,028,376, from $4,351,779; -- lower accumulated deficit of $46,330,962, from $48,639,143; and -- lower total shareholders' deficit of $1,756,802, from $3,080,205. A full-text copy of the company's restated 2005 annual report is available for free at http://ResearchArchives.com/t/s?1b9d Reasons for Restatements The company had said that the conclusion to restate its financial statements arose from the incorrect application of generally accepted accounting principles related to the beneficial conversion feature on the issuance of the convertible debt by the Company, and revised calculations of the Employee Stock Options pursuant to FIN 28: Accounting for Stock Appreciation Rights and Other Variable Stock Options or Award Plans. The company had further said that the restatement is not expected to have any impact on its statements of cash flows. The company recorded a $1,510,000 debenture debt discount from the beneficial conversion feature computation. This amount is limited to the proceeds of the convertible debt instrument in accordance with EITF 98-5. The debenture debt discount is being amortized over the life of the debentures with the unamortized discount of $1,323,403 is being netted with the gross amount of the debenture payable of $1,510,000. The result of the restatement was to reflect the sale of the debentures as additional paid-in capital of $1,510,000 and to amortize the beneficial conversion feature for the year ended Dec. 31, 2005, of $186,597. Further, the company also revalued warrants issued during the first quarter 2005 as payment for services rendered for which the company had used a 30 percent discount for various restrictions. This revaluation increased related expense to $399,622 from $280,000. The company accounts for warrants granted to its non-employee consultants using the fair value cost in accordance with SFAS 123 and EITF No. 96-18, "Accounting for Equity Instruments That Are Issued to Other Than Employees." The fair value of warrants granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: expected volatility of 200.4 percent, risk-free interest rate of 3.71 percent, and expected life of 4.93 years for the year ended Dec. 31, 2005. The effect of this restatement was to increase expenses and additional paid-in capital by $119,622. About StatSure Diagnostic Based in Framingham, Massachusetts, StatSure Diagnostic Systems, Inc. (SSUR.OB) -- http://www.statsurediagnostics.com/-- develops, manufactures, and markets rapid immunoassay tests for the detection of sexually transmitted and other infectious diseases. In addition, the company has developed and is marketing a product line of patented, oral-fluid collection devices. * * * As reported in the Troubled Company Reported on Dec. 19, 2006, Lazar Levine & Felix LLP expressed substantial doubt about Statsure Diagnostic Systems, Inc.'s ability to continue as a going concern after it audited the company's financial statements for the years ended Dec. 31, 2005, and Dec. 31, 2004. The auditing firm pointed to the company's recurring losses from operations, negative working capital and net capital deficiency. STRATUS SERVICES: Fiscal 1st Qtr. Net Income Decreases to $21,976 ----------------------------------------------------------------- Stratus Services Group Inc. reported $21,976 of net income available to common stockholders on $1,862,854 of revenues for the fiscal first quarter ended Dec. 31, 2006. For the three months ended Dec. 31, 2005, the company earned $1,849,942 on $1,233,858 of revenues. The company said the increase in revenue was primarily a result of an increase in billable hours and expansion of its customer base. At Dec. 31, 2006, the company's balance sheet showed $2,510,044 in total assets and $10,532,438 in total liabilities, resulting in an $8,022,394 stockholders' deficit. The company's Dec. 31 balance sheet also showed strained liquidity with $2,357,279 in total current assets available to pay $9,745,783 in total current liabilities. Full-text copies of the company's fiscal first quarter financials are available for free at http://ResearchArchives.com/t/s?1baa About Stratus Services Group Headquartered in Manalapan, N.J., Stratus Services Group Inc. (OTCBB: SSVG.OB) -- http://www.stratusservices.com/-- provided a wide range of staffing and productivity consulting services nationally through a network of offices located throughout the United States until December 2005. The company plans on expanding its information technology staffing solutions business through its 50% owned consolidated joint venture, Stratus Technology Services LLC. Going Concern Doubt As reported in the Troubled Company Reporter on Jan. 15, 2007, Gruber & Company LLC in Lake Saint Louis, Mo., expressed substantial doubt about Stratus Services Group Inc.'s ability to continue as a going concern after auditing the company's financial statements for the years ended Sept. 30, 2006, and 2005. The auditing firm pointed to the company's recurring losses from operations and net capital deficiency. STRUCTURED ASSET: S&P Downgrades Ratings on Two Class Certificates ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating on the class B2 certificates from Structured Asset Securities Corp. Mortgage Loan Trust's series 2006-S1 to 'B' from 'BB' and placed it on CreditWatch with negative implications. At the same time, the rating on class B3 from series 2006-BC1 was lowered to 'B' from 'BB' and remains on CreditWatch negative, where it was placed Feb. 14, 2007. Concurrently, the rating on class M9 from series 2006-OW1 was placed on CreditWatch negative. Lastly, the ratings on the remaining classes from these transactions were affirmed. The downgrades and negative CreditWatch placements reflect worse-than-expected collateral pool performance. For series 2006- OW1, a realized loss of $1.414 million during the February 2007 remittance period reduced overcollateralization (O/C) to $4.802 million, which is below its target of $5.508 million. In addition, serious delinquencies (90-plus days, foreclosures, and REO), as a percentage of the current pool balance, were 8.61% ($73.932 million). Based on severely delinquent loans, loss projections indicate that the adverse performance trend is likely to continue. While series 2006-S1 is only 12 months seasoned, cumulative realized losses total 1.80% ($7.948 million) of the original pool balance. In addition, total delinquencies, as a percentage of the current principal balance, were 6.18% ($17,129 million). Based on delinquent loans and recent performance, S&P's loss projections indicate a potential principal write-down on the B2 class within 15 months. The CreditWatch placement of class M9 from series 2006-OW1 reflects the amount of loans that are severely delinquent compared with the available credit support provided by excess interest cash flow and O/C. This series has 7.29% in severe delinquencies ($28.552 million), an amount that is significantly more than the hard credit support provided by O/C ($2.351 million). Standard & Poor's will continue to closely monitor the performance of the certificates with ratings on CreditWatch. If monthly losses continue to outpace monthly excess interest cash flow, S&P will take additional negative rating actions. Conversely, if pool performance improves and credit support is not further compromised, we will affirm the ratings and remove them from CreditWatch. The affirmations are based on credit support percentages that are sufficient to maintain the current ratings. The collateral consists of subprime, fixed- or adjustable-rate, first- or second-lien mortgage loans, secured by one- to four- family residential properties. Rating Lowered and Placed on Creditwatch Negative Structured Asset Securities Corp. Mortgage Loan Trust Mortgage pass-through certificates Rating ------ Series Class To From ------ ----- -- ---- 2006-S1 B2 B/Watch Neg BB Rating Lowered and Remaining on Creditwatch Negative Structured Asset Securities Corp. Mortgage Loan Trust Mortgage pass-through certificates Rating ------ Series Class To From ------ ----- -- ---- 2006-BC1 B3 B/Watch Neg BB/Watch Neg Rating Placed on Creditwatch Negative Structured Asset Securities Corp. Mortgage Loan Trust Mortgage pass-through certificates Rating ------ Series Class To From ------ ----- -- ---- 2006-OW1 M9 BBB-/Watch Neg BBB- Ratings Affirmed Structured Asset Securities Corp. Mortgage Loan Trust Mortgage pass-through certificates Series Class Rating ------ ----- ------ 2006-BC1 A1, A2, A3, A4, A5, A6 AAA 2006-BC1 M1, M2, M3 AA+ 2006-BC1 M4 AA 2006-BC1 M5 AA- 2006-BC1 M6 A+ 2006-BC1 M7 A 2006-BC1 M8 A- 2006-BC1 M9 BBB+ 2006-BC1 B1 BBB 2006-BC1 B2 BB+ 2006-OW1 A1, A2, A3, A4, A5, A-6M AAA 2006-OW1 M1 AA+ 2006-OW1 M2 AA 2006-OW1 M3 AA- 2006-OW1 M4 A+ 2006-OW1 M5 A 2006-OW1 M6 A- 2006-OW1 M7 BBB+ 2006-OW1 M8 BBB 2006-S1 A1 AAA 2006-S1 M1 AA 2006-S1 M2 AA- 2006-S1 M3 A+ 2006-S1 M4 A 2006-S1 M5 A- 2006-S1 M6 BBB+ 2006-S1 M7 BBB 2006-S1 M8 BBB- 2006-S1 B1 BB+ STRUCTURED ASSET: Moody's Puts Reviews Ratings and May Downgrade ---------------------------------------------------------------- Moody's Investors Service has placed under review for possible downgrade three subordinate certificates from the Structured Asset Securities Corp. Trust, Series 2006-S3 securitization. The underlying collateral backing this transaction consists of second lien residential mortgage loans. Credit enhancement for this transaction is provided through a combination of excess spread, overcollateralization and subordination. However, recent losses and the buildup in the delinquency pipeline have the potential to significantly erode overcollateralization and result in credit enhancement levels tha may be too low in light of the existing ratings. The complete rating action is: Issuer: Structured Asset Securities Corp. Trust * Series 2006-S3, Class M-9, current rating Baa3, under review for possible downgrade; * Series 2006-S3, Class B-1, current rating Ba1, under review for possible downgrade; * Series 2006-S3, Class B-2, current rating Ba2, under review for possible downgrade; STRUCTURED ASSET: Moody's Rates Class I-B-5 Certificates at Ba2 --------------------------------------------------------------- Moody's Investors Service has assigned Aaa ratings to the senior certificates issued by Structured Asset Mortgage Investment II Trust 2007-AR2, and ratings ranging from Aa1 to Ba2 to the subordinate certificates in the deal. The securitization is backed by first lien, adjustable-rate, negative amortization Alt-A mortgage loans. The collateral in Group I was originated by SouthStar Funding, LLC, Impac Funding Corporation, EMC Mortgage Corporation, and various other originators, none of which originated more than 10% of the mortgage loans. The collateral in Group II was originated by Bank of America, National Association. The ratings are based primarily on the credit quality of the loans and on protection against credit losses from subordination. In addition, the collateral for Group I receives protection from excess spread, overcollateralization, and a rate cap. Moody's expects collateral losses to range from 0.90% to 1.10% for Group I and collateral losses to range from 0.50% to 0.70% for Group II. EMC Mortgage Corporation (and Bank of America, National Association will service the mortgage loans and Wells Fargo Bank, National Association will act as master servicer. Moody's has assigned EMC its servicer quality rating of SQ2 as a primary servicer of prime mortgage loans and Bank of America its top servicer quality rating of SQ1 as primary servicer of prime mortgage loans. Furthermore, Moody's has assigned Wells Fargo its top servicer quality rating of SQ1 as a master servicer of mortgage loans. The complete rating actions are: Structured Asset Mortgage Investment II Trust 2007-AR2 Mortgage Pass-Through Certificates, Series 2007-AR2 * Cl. I-A-1, Assigned Aaa * Cl. I-A-2, Assigned Aaa * Cl. I-A-3, Assigned Aaa * Cl. II-A-1, Assigned Aaa * Cl. II-A-2, Assigned Aaa * Cl. II-A-3, Assigned Aaa * Cl. I-B-1, Assigned Aa1 * Cl. I-B-2, Assigned Aa3 * Cl. I-B-3, Assigned A3 * Cl. I-B-4, Assigned Baa1 * Cl. I-B-5, Assigned Ba2 * Cl. II-X, Assigned Aaa * Cl. II-MX, Assigned Aa1 * Cl. II-B-1, Assigned Aa1 * Cl. II-B-2, Assigned Aa3 * Cl. II-B-3, Assigned A3 STRUCTURED ASSET: Poor Performance Cues S&P to Cut Ratings ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on four classes of certificates from three transactions issued by Structured Asset Investment Loan Trust. All four of the lowered ratings remain on CreditWatch with negative implications. In addition, the rating on class B1 from series 2006-2 was placed on CreditWatch with negative implications. Lastly, the ratings on the remaining 39 classes from the affected transactions were affirmed. The downgrades and negative CreditWatch placements reflect the continued weaker-than-expected collateral pool performance. Recent adverse performance has caused overcollateralization levels to be at least 24% below their respective O/C targets. As of the February 2007 remittance report, cumulative realized losses were $5,170,346, $5,566,448, and $7,348,394 for series 2006-1, 2006-2, and 2006-BNC1, respectively. In addition, all three series have sizeable loan amounts that are severely delinquent (90-plus days, foreclosure, REO), which strongly suggests that the negative performance is likely to continue. The severe delinquencies are: -- Series 2006-1: 9.11%, $98.644 million; -- Series 2002-2: 9.83%, $96.766 million; and -- Series 2006-BNC1: 10.40%, $89.149 million. Standard & Poor's will continue to closely monitor the performance of the certificates with ratings on CreditWatch. If monthly losses continue to outpace monthly excess interest cash flow, additional negative rating actions can be expected. Conversely, if pool performance improves and credit support is not further compromised, we will affirm the ratings and remove them from CreditWatch. The affirmations are based on credit support percentages that are sufficient to maintain the current ratings, despite the unfavorable performance trend. The collateral consists of subprime, fixed- or adjustable-rate, first- or second-lien mortgage loans, secured by one- to four- family residential properties. Ratings Lowered and Remaining on Creditwatch Negative Structured Asset Investment Loan Trust Mortgage pass-through certificates Rating ------ Series Class To From ------ ----- -- ---- 2006-1 B1 BB/Watch Neg BBB-/Watch Neg 2006-1 B2 B/Watch Neg BB+/Watch Neg 2006-2 B2 B/Watch Neg BB/Watch Neg 2006-BNC1 B2 B/Watch Neg BB+/Watch Neg Rating Placed on Creditwatch Negative Structured Asset Investment Loan Trust Mortgage pass-through certificates Rating ------ Series Class To From ------ ----- -- ---- 2006-2 B1 BB+/Watch Neg BB+ Ratings Affirmed Structured Asset Investment Loan Trust Mortgage pass-through certificates Series Class Rating ------ ----- ------ 2006-1 A1, A2, A3, A4 AAA 2006-1 M1 AA+ 2006-1 M2, M3 AA 2006-1 M4 AA- 2006-1 M5 A+ 2006-1 M6 A 2006-1 M7 A- 2006-1 M8 BBB+ 2006-1 M9 BBB 2006-2 A1, A2, A3, A4 AAA 2006-2 M1 AA 2006-2 M2 AA- 2006-2 M3 A+ 2006-2 M4 A 2006-2 M5 A- 2006-2 M6 BBB+ 2006-2 M7 BBB 2006-2 M8 BBB- 2006-BNC1 A1, A2, A3, A4, A5 AAA 2006-BNC1 M1 AA 2006-BNC1 M2 AA- 2006-BNC1 M3 A+ 2006-BNC1 M4 A 2006-BNC1 M5 A- 2006-BNC1 M6 BBB+ 2006-BNC1 M7 BBB 2006-BNC1 M8 BBB- 2006-BNC1 B1 BB+ SUPERCLICK INC: Jan. 31 Balance Sheet Upside-down by $2.5 Million ----------------------------------------------------------------- Superclick, Inc. reported a net loss of $61,471 on net revenues of $761,635 for the three months ended Jan. 31, 2007, as compared with a net loss of $790,496 on net revenues of $662,141 for the three months ended Jan. 31, 2006. Net loss in the quarter ended Jan. 31, 2006, was largely due to the large total costs and expenses that the company incurred totaling $702,529 of which, $618,645 were selling, general and administrative costs. The company's total costs and expenses in the quarter ended Jan. 31, 2007, totaled $358,576. Selling, general and administrative costs in 2006 were $304,578. The company's balance sheet as of Jan. 31, 2007, showed total assets of $1,499,246 and total liabilities of $4,008,482, resulting to total stockholders' deficit of $2,509,236. The company's balance sheet as of January 31 also showed strained liquidity with total current assets of $1,275,656 available to pay total current liabilities of $3,985,634 coming due within the next 12 months. Full-text copies of the company's quarter financials are available for free at http://ResearchArchives.com/t/s?1b8c Going Concern Doubt As reported in the Troubled Company Reported on Feb. 6, 2007, Bedinger & Company in Concord, California, raised substantial doubt about Superclick, Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Oct. 31, 2006. The auditing firm pointed to the company's recurring losses from operations. About Superclick, Inc. Superclick, Inc. -- http://www.superclick.com/-- and its wholly owned Montreal-based subsidiary, Superclick Networks, Inc., develop, manufactures, markets and supports the Superclick Internet Management System in worldwide hospitality, multi-tenant unit and hospital markets. Superclick provides hotels, MTU residences and hospital patients and visitors with cost-effective Internet access and IP-based services utilizing high-speed DSL, CAT5 wiring, wireless and dial-up modem technologies. Over 100 InterContinental Hotels Group properties have Superclick systems including Candlewood Suites, Crowne Plaza, Holiday Inn, Holiday Inn Express, Holiday Inn SunSpree, InterContinental and Staybridge Suites in Canada and the United States. TENNECO INC: Fitch Rates New $831 Million Senior Facility at BB+ ---------------------------------------------------------------- Fitch Ratings has assigned a rating of 'BB+' to Tenneco Inc.'s new senior secured bank facility. The new facility replaces TEN's existing bank facility. As such, there is no impact to Fitch's current ratings of the existing debt or Rating Outlook, which are: -- Issuer Default Rating 'BB-'; -- Senior secured bank facility 'BB+'; -- Senior secured second lien notes 'BB'; -- Senior subordinated notes 'B'. The Rating Outlook is Positive. Including the existing undrawn revolver, Fitch's ratings affect approximately $1.8 billion in total debt. TEN's new $830 million senior credit facility replaces its existing $831 million facility and enhances the company's financial flexibility by extending the revolver and the term loan maturities as well as loosening and removing certain covenants. The new bank facility includes a: * five-year revolving line of credit of approximately $550 million; * five-year term loan A facility of approximately $150 million; and * seven-year synthetic letter of credit facility of approximately $130 million. The synthetic facility can also be used as a revolver for working capital and other cash requirements. TEN will use the new facility to retire approximately $356 million in term loans due December 2010 and to replace its existing $320 million revolver expiring December 2008 as well as its $155 million synthetic letter of credit facility expiring December 2010. Applicable margins on the new facility generally range between 50 - 125 basis points lower than the existing facility. The new bank facility is the obligation of Tenneco, Inc. and guaranteed by certain domestic subsidiaries. Collateral includes substantially all of the domestic assets and 65% of the stock of the first-tier foreign subsidiaries. Terms include maximum consolidated net leverage and minimum interest coverage ratios but no minimum fixed charge coverage ratio and no capital expenditure covenant as in the last facility. The new facility also contains baskets allowing the company to incur certain additional indebtedness and liens subject to certain restrictions. Permitted additional indebtedness includes an amendment to allow the borrower to give unsecured guarantees for the obligations of its subsidiaries. Baskets of permitted indebtedness include; $150 million for general indebtedness, general guarantees up to $100 million, $125 million related to indebtedness for capital leases and foreign subsidiaries indebtedness up to $150 million but can be $200 million if the proceeds are used to repay the second lien notes. Permitted liens include the following baskets; up to $125 million on capital leases, a general basket of up to $100 million, certain receivables financing up to $250 million, and certain liens of foreign subsidiaries up to $150 million but can be $200 million if the proceeds are used to repay the second lien notes. Other covenants include change-in-control, restricted payments, investment limitations, sale of assets restrictions and a sale/leaseback covenant. Fitch's ratings are based on TEN's track record of strong operating discipline and working capital management, consistent cash flow generation and subsequent capital structure improvement, as well as continued expansion and customer diversification across its business segments. Fitch expects TEN to be free cash flow positive in 2007. Throughout 2006, TEN faced the same headwinds as other suppliers, including higher steel prices, lower and unsteady customer production volumes, exposure to the slowdown in SUV demand, and tightening trade credit. However, TEN was able to offset these challenges with increased revenue from new business launched, gains in manufacturing efficiency, close attention to working capital requirements, and a geographically diverse customer base compared with other North American suppliers. Going forward, TEN is expected to benefit from its technology position and entry into new growth markets. Given TEN's track record, Fitch expects that TEN's backlog was booked within solid cost/pricing parameters, translating into improved earnings growth. TEN is expected to benefit from tighter air quality standards and from the demand for safety-related products. TEN has several light-vehicle and commercial diesel exhaust programs booked for 2007 in both the U.S. and Europe. TEN has also introduced an electronically adjustable ride control product which improves vehicle stability - an added safety feature for consumers. Concerns include total debt levels, margin pressures from price competition and raw materials, customers' production volumes, potential labor stoppage due to customers' critical union negotiations and a financially stressed base of automotive suppliers other than TEN. Including the cash and marketable securities balance of $202 million, total liquidity at the end of 4Q06 was approximately $658 million. At year-end, TEN had $320 million of availability under its revolver and approximately $121 million after $34 million in outstanding LOCs under its synthetic facility. The company also has a US securitization facility of approximately $100 million of which $15 million was available at year-end. In addition, the company had $48 million outstanding under its uncommitted European receivable facilities, the availability of which Fitch does not include in liquidity since the facilities are cancelable at any time. As of Dec. 31, total adjusted debt-to- EBITDA was reduced to 3.3 times (x) from 3.5x in 2005. TERWIN MORTGAGE: Moody's Puts Low-B Rating Under Review ------------------------------------------------------- Moody's Investors Service has placed the ratings of five classes from three Terwin Mortgage Trust securitizations on review for possible downgrade. The underlying collateral backing these transactions largely consists of second lien residential mortgage loans. The watchlisting action is driven by the fact that recent losses have led to an erosion of overcollateralization and as a result the current levels of credit enhancement may be too low to support the existing ratings. The complete rating action is: Issuer: Terwin Mortgage Trust * Series 2005-7SL, Class B-6, current rating Ba2, under review for possible downgrade; * Series 2005-7SL, Class B-7, current rating Ba3, under review for possible downgrade; * Series 2005-11, Class I-B-7, current rating Ba3, under review for possible downgrade; * Series 2005-11, Class II-B-5, current rating Ba1, under review for possible downgrade; * Series 2006-4SL, Class B-6, current rating Ba2, under review for possible downgrade; Series 2005-1D -- Class D at 'BB'. TOWER AUTOMOTIVE: Wants Deutsche Bank's 2nd Lien L/Cs Extended -------------------------------------------------------------- Tower Automotive Inc. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to enter into and perform under a Second Extension Agreement and to pay Deutsche Bank' fees. The Debtors also ask the Court to approve a proposed "affirmation and consent" of various Debtors. The Court previously authorized the replacement of Comerica Bank with Deutsche Bank Trust Company Americas as the issuer of Second Lien Letters of Credit under the Prepetition Credit Agreement. On Nov. 1, 2006, the Debtors and Deutsche Bank agreed to extend the maturity dates of the Second Lien L/Cs from Feb. 7, 2007, to not later than June 7, 2007. As of March 9, 2007, there are 10 outstanding undrawn and unpaid Second Lien L/Cs under the Second Lien Facility in the aggregate amount of approximately $97,200,000. The Second Lien L/Cs are set to expire on June 7. According to Anup Sathy, Esq., at Kirkland & Ellis LLP, in Chicago, in light of the pending expiry of the Second Lien L/Cs, the Debtors negotiated an extension agreement, and certain related agreements, which extend the expiry of the L/Cs to the earlier of: (a) October 9, 2007; and (b) the effective date of the Debtors' plan of reorganization. However, the Debtors have the right not to request the extension of the expiry date of one or more of the Second Lien L/Cs, or to request the extension of the expiry date of one or more of the Second Lien L/Cs to a date before Oct. 9, 2007, in their sole discretion, Mr. Sathy explains. Mr. Sathy notes that the Second Extension Agreement is subject to certain conditions, including the agreement of Silver Point Capital Fund, L.P., as the successor administrative agent under the Second Lien Facility, and LaSalle Bank National Association, as the escrow agent. Mr. Sathy relates that in exchange for Deutsche Bank's commitment to extend the expiry of the Second Lien L/Cs, Deutsche Bank has requested, and the Debtors have agreed to pay: (i) Deutsche Bank's legal expenses related to the negotiation, documentation and implementation of the Second Extension Agreement, and otherwise related to the Second Lien L/Cs; and (ii) a non-refundable, fully-earned extension fee for $243,219. Mr. Sathy asserts that if the Second Extension Agreement and Affirmation are not authorized, each of the beneficiaries will most likely draw on their Second Lien L/Cs. He explains that this could have serious adverse consequences to the Debtors' estates because the Debtors are generally current on amounts owed to the beneficiaries, and a full draw of the Second Lien L/Cs may over- collateralize certain of the beneficiaries. Furthermore, the Debtors' budget under the DIP credit agreement was negotiated with the assumption that the Second Lien L/Cs would continue, generally undrawn and unpaid, throughout the Debtors' Chapter 11 cases, Mr. Sathy explains. The DIP Credit Agreement's revolving credit facility limits L/Cs under it to $100,000,000. If the Second Extension Agreement and the Affirmation are not approved and the beneficiaries fully draw the Second Lien L/Cs, the Debtors believe that many of the beneficiaries would nevertheless require replacement L/Cs that would have to be issued under the DIP Credit Agreement. In this case, Mr. Sathy says, there would be insufficient availability under the DIP Credit Agreement to issue both replacement L/Cs to beneficiaries under the Second Lien Facility as well as new letters of credit as may become required during the Debtors' Chapter 11 cases. A full-text copy of the proposed Second Extension Agreement, together with a proposed Affirmation and Consent of various Debtors, is available for free at: http://ResearchArchives.com/t/s?1b94 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. 56; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). TOWER AUTOMOTIVE: Increases Payment to Equity Investors to $3.2MM+ ------------------------------------------------------------------ Richard M. Cieri, Esq., at Kirkland & Ellis LLP, in New York, notifies the U.S. Bankruptcy Court for the Southern District of New York that Tower Automotive Inc. and its debtor-affiliates have decided to increase the Due-Diligence Amount -- the amount the Debtors may pay to prospective equity investors and lenders -- up to $3,225,000. The Increase of the Due-Diligence Amount from $2,000,000 to $3,225,000 was made: * with the consent of the Official Committee of Unsecured Creditors; and * pursuant to the Dec. 21, 2006, order issued by Judge Gropper authorizing the Debtors to increase payments upon notice to the Court. 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. 56; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). TOWER AUTOMOTIVE: Wants Lease-Decision Period Extended to July 31 ----------------------------------------------------------------- Tower Automotive Inc. and its debtor-affiliates ask the Honorable Allen L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York to further extend the time by which they must assume or reject their unexpired nonresidential real property leases through and including July 31, 2007. Anup Sathy, Esq., at Kirkland & Ellis LLP, in Chicago, relates that the Debtors are party to more than 18 major facility lease agreements, including leases for office space locations and key production centers. The Debtors are current on all postpetition obligations under the unexpired Leases, Mr. Sathy relates. The Leased Facilities will factor heavily into the Debtors' ongoing operational restructuring, Mr. Sathy notes. According to Mr. Sathy, the Debtors have already made significant progress evaluating the Unexpired Leases. As of March 9, 2007, the Debtors have rejected nine different leases. However, Mr. Sathy explains that while the Debtors have made substantial progress, they remain in active negotiations with the landlords regarding certain of the Leased Facilities and require additional time to assume or reject the Unexpired Leases. The Debtors reserve their rights to evaluate whether any of the Unexpired Leases are secured financing arrangements. Nothing will constitute an admission that any of the contracts are properly categorized as lease arrangements, Mr. Sathy says. 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. 56; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). TRIAD HOSPITALS: Inks $6.8 Bil. Merger Pact with Community Health ----------------------------------------------------------------- Community Health Systems, Inc., and Triad Hospitals, Inc., have entered into a definitive merger agreement pursuant to which CHS will acquire Triad for $54 per share in cash, or approximately $6.8 billion, including $1.7 billion of existing indebtedness. The merger will create the largest publicly traded hospital company in the United States. The combined company would own or operate approximately 130 hospitals in 28 states, with a total bed count of more than 18,700. The merger agreement was unanimously approved by the Board of Directors of CHS. Triad's Board of Directors, on the unanimous recommendation of a Special Committee composed entirely of disinterested directors, has approved the agreement and recommends that Triad stockholders approve the merger. All disinterested members of the Board voted in favor of the agreement, with two inside directors abstaining. The acquisition is subject to certain closing conditions including approval by Triad's stockholders, antitrust clearance and other regulatory approvals, and is expected to close in the third quarter of 2007. There is no financing condition to the consummation of the transaction. CHS has received financing commitments from Credit Suisse, Wachovia Capital Markets LLC, and certain of their affiliates. "This is a strategic growth opportunity for CHS," CHS Chairman, President and CEO Wayne T. Smith said. "This deal will substantially increase CHS's overall scale and enhance its geographic diversity. "The two companies have similar values and we are excited about the 54 Triad hospitals and the addition of six new states to our portfolio. This acquisition complements our rural strategy by adding mid-size markets in great locations and we look forward to working with the talented and experienced management professionals throughout the Triad organization." "The transaction with CHS validates Triad's strategy and I am proud of the value this brings to our shareholders. We look forward to working to ensure a smooth transition for our communities," Triad Chairman and CEO James D. Shelton said. Triad has terminated its previous merger agreement with a group led by affiliates of CCMP Capital Advisors and GS Capital Partners. In accordance with the terms of the original merger agreement, Triad paid a termination fee to the original purchaser. Credit Suisse and Wachovia Capital Markets LLC are acting as financial advisors to CHS and Credit Suisse delivered a fairness opinion to CHS. Kirkland & Ellis LLP is acting as legal advisor to CHS. Dewey Ballantine LLP is acting as legal advisor to Triad. Lehman Brothers Inc. is acting as financial advisor and delivered a fairness opinion to the special committee of the board of directors of Triad. Baker Botts L.L.P. is acting as the special committee's legal advisor. As a result of this transaction, CHS has withdrawn its 2007 guidance. A full-text copy of the companies' agreement and plan of merger is available for free at http://ResearchArchives.com/t/s?1bb7 About Community Health Systems Located in the Nashville, Tenn., Community Health Systems Inc. (NYSE: CYH) -- http://www.chs.net/-- operates general acute care hospitals in non-urban communities throughout the country. Through its subsidiaries, the company currently owns, leases or operates 77 hospitals in 22 states. Its hospitals offer a broad range of inpatient medical and surgical services, outpatient treatment and skilled nursing care. About Triad Hospitals Plano, Tex.-based Triad Hospitals, Inc. (NYSE: TRI) -- http://www.triadhospitals.com/-- owns and manages hospitals and ambulatory surgery centers in small cities and selected larger urban markets. The Company currently operates 54 hospitals (including one under construction) and 13 ambulatory surgery centers in 17 states with approximately 9,855 licensed beds. In addition, through its QHR subsidiary, the company provides hospital management, consulting, and advisory services to more than 170 independent community hospitals and health systems throughout the United States. TRIAD HOSPITALS: Moody's Holds Ratings on Review & May Downgrade ---------------------------------------------------------------- Moody's Investors Service has placed the ratings of Community Health Systems, Inc. under review for possible downgrade following the report that the company will acquire Triad Hospitals, Inc. for $6.8 billion, including approximately $1.7 billion of existing Triad debt. The report follows the Feb. 5, 2006, report that Triad had entered into a definitive agreement to be acquired by affiliates of CCMP Capital Advisors and GS Capital Partners in a transaction valued at $6.4 billion. Moody's review will focus on changes in the credit metrics of Community Health as they are considered in the Global For-Profit Hospital Rating Methodology, including the increase in the financial leverage of Community Health resulting from the financing of the transaction. Moody's will also consider changes in other factors such as the increased scale and diversity of Community Health following the proposed transaction. Moody's notes that the combined company will be the largest publicly traded hospital operating company with estimated pro forma revenue of approximately $9.9 billion for the year ended Dec. 31, 2006. Moody's review will also consider the resulting capital structure of the combined company as those details become available. Moody's hopes to complete its review prior to the expected close of the transaction in the third quarter of 2007. Triad's ratings will remain under review for possible downgrade. However, if Triad's debt is repaid or redeemed, as Moody's expects, the rating agency would confirm and withdraw Triad's ratings at the close of the transaction. Summary of Moody's rating actions. Ratings placed under review for possible downgrade: * Community Health Systems, Inc. -- Corporate Family Rating, Ba3 -- Probability of Default Rating, Ba3 -- 6.5% Senior subordinated notes due 2012, B2, LGD6, 93% -- Speculative Grade Liquidity Rating, SGL-2 * CHS/Community Health Systems, Inc.: -- Senior secured revolving credit facility, Ba3, LGD3, 43% -- Senior secured term loan, Ba3, LGD3, 43% Ratings remaining under review for possible downgrade: * Triad Hospitals, Inc. -- Corporate Family Rating, Ba3 -- Probability of Default Rating, Ba3 -- Senior secured revolving credit facility due 2011, Ba1, LGD2, 18% -- Senior secured term loan due 2011, Ba1, LGD2, 18% -- 7.0% Senior notes due 2012, B1, LGD4, 64% -- 7.0% Senior subordinated notes due 2013, B2, LGD5, 89% -- Speculative Grade Liquidity Rating, SGL-2 Community Health is an operator of general acute care hospitals in non-urban communities. The company's affiliates own, operate or lease 77 hospitals in 22 states. For the fiscal year that ended Dec. 31, 2006, Community Health generated $4.4 billion in revenues. Triad, through its affiliates, owns and manages hospitals and ambulatory surgery centers in small cities and selected large urban markets. Triad recognized revenue of approximately $5.5 billion for the year ended Dec. 31, 2006. TRIPOS INC: Shareholders Vote to Sell Unit and Liquidate Company ---------------------------------------------------------------- Tripos, Inc., disclosed that its proposals to sell the assets of its Discovery Informatics business to Vector Capital and to adopt a plan of dissolution and liquidation of the company following completion of that sale were each approved by the required stockholder vote on March 16, 2007. Closing of the Vector Capital sale is expected to occur early this week. Liquidation of the company will occur following resolution of all corporate debts and obligations, and will commence approximately six months from now. About Vector Capital Based in San Francisco, California, Vector Capital -- http://www.vectorcapital.com/-- is a private equity boutique specializing in buyouts, spinouts and recapitalizations of established technology businesses. About Tripos Inc. Headquartered in St. Louis, Missouri, Tripos, Inc. (Nasdaq:TRPS) - - http://www.tripos.com/-- combines leading-edge technology and innovative science to deliver consistently superior chemistry- research products and services for the biotechnology, pharmaceutical and other life science industries. Within Tripos' Discovery Informatics business, the company provides software products and consulting services to develop, manage, analyze and share critical drug discovery information. Within Tripos' Discovery Research business, Tripos' medicinal chemists and research scientists partner directly with clients in their research initiatives, leveraging state-of-the-art information technologies and research facilities. TRW AUTO: To Issue $1.1 Billion and EUR275 Million Senior Notes --------------------------------------------------------------- TRW Automotive Holdings Corp., through its subsidiary TRW Automotive Inc., has finalized the terms of its Senior Notes offering. The company will issue: * $500,000,000 in principal amount of 7% Senior Notes due 2014, * EUR275,000,000 in principal amount of 6-3/8% Senior Notes due 2014, and * $600,000,000 in principal amount of 7-1/4% Senior Notes due 2017. The company anticipates that consummation of the offering will occur on March 26, 2007. The company intends to use the proceeds from this offering to consummate its tender offers and consent solicitations for its outstanding $825 million 9-3/8% Senior Notes due 2013, Euro 130 million 10-1/8% Senior Notes due 2013, $195 million 11% Senior Subordinated Notes due 2013 and its euro 81 million 11-3/4% Senior Subordinated Notes due 2013, as well as to pay for related fees and expenses. The Notes will be issued in a private placement and are expected to be resold by the initial purchasers to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended, and to non-U.S. persons outside the United States pursuant to Regulation S under the Securities Act. The offer of the Notes will be made only by means of an offering memorandum to qualified investors and has not been registered under the Securities Act, and the Notes may not be offered or sold in the United States absent registration under the Securities Act or an applicable exemption from the registration requirements of the Securities Act. About TRW Headquartered in Livonia, Michigan, TRW Automotive Holdings Corp. (NYSE:TRW) -- http://www.trwauto.com/-- is an automotive supplier. Through its subsidiaries, the company employs approximately 63,800 people in 26 countries including Brazil, China, Germany and Italy. TRW Automotive products include integrated vehicle control and driver assist systems, braking systems, steering systems, suspension systems, occupant safety systems (seat belts and airbags), electronics, engine components, fastening systems and aftermarket replacement parts and services. * * * Fitch Ratings affirmed TRW Automotive Holdings Corp.'s BB Issuer Default Rating, BB+ Senior secured bank lines, BB- Senior unsecured notes, and B+ Senior subordinated unsecured Notes on September 2006. TXU CORP: Units Plan to Issue $1.8 Billion Senior Unsec. Notes -------------------------------------------------------------- TXU Corp. reported that its subsidiaries TXU Energy Company LLC and TXU Electric Delivery Company plan to issue an aggregate $1.8 billion of senior unsecured floating rate notes maturing by September 2008, which includes $1 billion principal amount of senior unsecured floating rate notes at TXU Energy Company LLC, and $800 million principal amount of senior unsecured floating rate notes at TXU Electric Delivery Company. The company said that the notes will be used to replace existing short-term borrowings. The proceeds from these offerings will not be used to fund the reported merger transaction involving TXU Corp. In addition, the notes will be mandatorily redeemable upon closing of the merger transaction and will not be outstanding after the closing. About TXU Corp. Headquartered in Dallas, Texas, TXU Corp. (NYSE: TXU) -- http://www.txucorp.com/-- is an energy company that manages a portfolio of competitive and regulated energy businesses in North America. In TXU Corp.'s unregulated business, TXU Energy provides electricity and related services to 2.5 million competitive electricity customers in Texas, more customers than any other retail electric provider in the state. TXU Power has over 18,300 megawatts of generation in Texas, including 2,300 MW of nuclear and 5,837 MW of lignite/coal-fired generation capacity. * * * As reported in the Troubled Company Reporter on March 6, 2007, Standard & Poor's Ratings Services lowered its corporate credit rating on Dallas, Texas-based TXU Corp. to 'BB' from 'BBB-'. Standard & Poor's also lowered its senior unsecured debt rating on the company to 'B+' from 'BB+'. The ratings on TXU remain on CreditWatch with negative implications. TXU CORP: Blackstone, Carlyle & Riverstone Plan to Make Rival Bid ----------------------------------------------------------------- The Blackstone Group, The Carlyle Group and Riverstone Holdings are planning to make a rival offer for TXU Corp, Michael Flaherty and Megan Davies of Reuters report citing a source familiar with the situation. As reported in the Troubled Company Reporter on Mar. 1, 2007, private equity firms Kohlberg Kravis Roberts & Co. and Texas Pacific Group, and Goldman Sachs & Co., a private investment bank, ink definitive merger agreement with TXU Corp. in a transaction valued at $45 billion. GS Capital Partners, Lehman Brothers, Citigroup and Morgan Stanley intend to be equity investors at closing. Under the terms of the merger agreement, shareholders will be offered $69.25 per share at closing, which represents a 25% premium to the average closing share price over the 20 days ending Feb. 22, 2007. Under the merger agreement, TXU may solicit proposals from third parties through April 16, 2007. According to the Financial Times, if Blackstone's consortium of private equity groups will submit a formal offer for TXU, it could create a bidding war. According to Reuters' source, the new consortium's talks are still in the early stage. TXU will pay a $375 million break-up fee to the KKR group if it will accept a better offer before April 16, 2007. The termination fee, however, increases to $1 billion after that date, Reuters adds. About TXU Corp. Headquartered in Dallas, Texas, TXU Corp. (NYSE: TXU) -- http://www.txucorp.com/-- is an energy company that manages a portfolio of competitive and regulated energy businesses in North America. In TXU Corp.'s unregulated business, TXU Energy provides electricity and related services to 2.5 million competitive electricity customers in Texas, more customers than any other retail electric provider in the state. TXU Power has over 18,300 megawatts of generation in Texas, including 2,300 MW of nuclear and 5,837 MW of lignite/coal-fired generation capacity. * * * As reported in the Troubled Company Reporter on March 6, 2007, Standard & Poor's Ratings Services lowered its corporate credit rating on TXU Corp. to 'BB' from 'BBB-'. S&P also lowered its senior unsecured debt rating on the company to 'B+' from 'BB+'. The ratings on TXU remain on CreditWatch with negative implications. As reported in the Troubled Company Reporter on March 5, 2007, Fitch Ratings expects that the IDRs for TXU Corp, TXU US Holdings, Inc., and TXU Energy Co. LLC would be lowered to approximately the 'B' category. As reported in the Troubled Company Reporter on Feb. 28, 2007, Moody's Investors Service has placed the ratings of TXU Corp. and its primary operating subsidiaries, TXU Electric Delivery Company and TXU Energy Company LLC, on review for possible downgrade. The ratings for TXU US Holdings Company have also been placed on review for possible downgrade. UNITED CUTLERY: Creditors Committee Files Liquidation Plan ---------------------------------------------------------- The Official Committee of Unsecured Creditors of United Cutlery Corporation delivered to the U.S. Bankruptcy Court for the Eastern District of Tennessee on March 15, 2007, its Plan of Liquidation for the Debtor. Under the Plan, a Plan Administrator will be appointed to liquidate the Debtor's assets and distribute the proceeds to creditors. The Plan Administrator will also object to claims, as needed, and prosecute or settle Avoidance Action Claims. Early this year, the Debtor sold approximately 1.295 acres of land to Hardy Management Company for $200,000 -- 84 Lumber Sale. The Debtor also sold substantially all of its inventory and other personal property to Bud K Worldwide Inc. for $2,025,000. After the Plan Effective Date, the Debtor will deposit the Bud K Proceeds -- the $50,000 allocated to the Debtor's unencumbered vehicles as part of Bud K Sale -- into the Plan Expense Reserve. The Debtor will also deposit the 84 Lumber Proceeds -- the $200,000 allocated to the Debtor's unencumbered parcel of real property as part of the 84 Lumber Sale -- into the Plan Fund. Treatment of Claims The Creditors' Committee believes there are no administrative expense claims except for compensation and reimbursement claims of professionals. The Plan Administrator will pay to each holder of an Allowed Priority Tax Claim Cash in an amount equal to the Claim as soon as reasonably practicable after the Effective Date: Sevier County Trustee $5,412 Tennessee Department of Revenue $330,679 Office of the Attorney General $640 Non-priority tax claims will also be paid in full. Holders of Allowed General Unsecured Claims and SunTrust Bank, N.A., with respect to its deficiency claim, will receive their pro rata distribution of the remaining cash after: -- the Effective Date has passed; -- all objections to claims have either been allowed, withdrawn, or denied; -- there are no disputed, unliquidated or contingent claims that would be in Class B, General Unsecured Claims; or Class C, SunTrust Deficiency Claim; and -- All recoveries from Avoidance Action Claims have been deposited in the Plan Fund. Holders of Equity Interests will not receive a distribution under the Plan, and the shares of equity will be deemed cancelled upon entry of the Final Confirmation Order. A full-text copy of the Creditors Committee's Plan is available for free at http://ResearchArchives.com/t/s?1bb5 Based in Sevierville, Tennessee, United Cutlery Corp. -- http://www.unitedcutlery.com/-- manufactured hunting, camping, fishing, military, utility, collectible, and fantasy knives. The company also marketed fantasy-based swords, weapons and armor under license from movie studios. The company and two of its affiliates filed for chapter 11 protection on Oct. 2, 2006 (Bankr. E.D. Tenn. Case No. 06-50884). Maurice K. Guinn, Esq., at Gentry, Tipton & McLemore P.C., represents the Debtors. Ingrid S. Palermo, Esq., at Harter Secrest & Emery LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed total assets of $9,964,288 and total debts of $26,361,930. UNITED CUTLERY: Wants Case Converted to Chapter 7 ------------------------------------------------- United Cutlery Corporation asks the U.S. Bankruptcy Court for the Eastern District of Tennessee to convert its chapter 11 case to a chapter 7 proceeding. The Debtor points out that it has sold its tangible personal property and its real property. Early this year, the Debtor sold approximately 1.295 acres of land to Hardy Management Company for $200,000. The Debtor also sold substantially all of its inventory and other personal property to Bud K Worldwide Inc. for $2,025,000. Thus, the Debtor asserts, it is eligible to be a debtor under Chapter 7 of the Bankruptcy Code. Based in Sevierville, Tennessee, United Cutlery Corp. -- http://www.unitedcutlery.com/-- manufactured hunting, camping, fishing, military, utility, collectible, and fantasy knives. The company also marketed fantasy-based swords, weapons and armor under license from movie studios. The company and two of its affiliates filed for chapter 11 protection on Oct. 2, 2006 (Bankr. E.D. Tenn. Case No. 06-50884). Maurice K. Guinn, Esq., at Gentry, Tipton & McLemore P.C., represents the Debtors. Ingrid S. Palermo, Esq., at Harter Secrest & Emery LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed total assets of $9,964,288 and total debts of $26,361,930. USA COMMERCIAL: Compass Partners Buys Loan Portfolio for $67 Mil. ----------------------------------------------------------------- USA Commercial Mortgage Co. completed its Chapter 11 Plan of Liquidation after Compass Partners LLC paid $67 million for the company's loan portfolio, Bill Rochelle of Bloomberg News reports. According to the report, Compass Partners topped Silver Point Capital's $46.5 million opening offer at an auction in December. USA Commercial and its debtor-affiliates' Chapter 11 Liquidation Plan, confirmed in January 2007, provided that each holder of an Allowed Secured Claim will receive, at the option of the relevant Debtor, in full satisfaction, settlement, release and discharge of and in exchange for their claim, either: a) cash from the Distribution Account of the relevant Debtor equal to the present value of the unpaid portion of their secured claim; b) the return of the collateral securing the allowed secured claim; or c) any other treatment agreed upon by the relevant Debtor and secured claim holder. Holders of Allowed General Unsecured Claim in will receive their Pro Rata share of all cash available for distribution, at the sole discretion of USACM or the USACM Estate Administrator, from the USACM Distribution Account up to the full amount of the claim after payment of USACM's Liquidation Expenses, Allowed Secured Claims, Allowed Administrative Expense Claims, Allowed Priority Tax Claims, and Allowed Priority Non-Tax Claims in accordance with the Plan and the provisions of the Bankruptcy Code. Based in Las Vegas, Nevada, USA Commercial Mortgage Company, dba USA Capital -- http://www.usacapitalcorp.com/-- provides more than $1 billion in short-term and permanent financing to homebuilders, commercial developers, apartment owners and institutions nationwide. The Company and its debtor-affiliates filed for chapter 11 protection on April 13, 2006 (Bankr. D. Nev. Case Nos. 06-10725 to 06-10729). Lenard E. Schwartzer, Esq., at Schwartzer & Mcpherson Law Firm, and Annette W. Jarvis, Esq., at Ray Quinney & Nebeker, P.C., represent the Debtors in their restructuring efforts. Thomas J. Allison, a senior managing director at Mesirow Financial Interim Management LLC, has been employed as Chief Restructuring Officer for the Debtors. Susan M. Freeman, Esq., and Rob Charles, Esq., at Lewis and Roca LLP represent the Official Committee of Unsecured Creditors of USA Commercial Mortgage Company. Edward M. Burr at Sierra Consulting Group, LLC, gives financial advice to the Creditors Committee of USA Mortgage. Marc A. Levinson, Esq., and Jeffery D. Hermann, Esq., at Orrick, Herrington & Sutcliffe LLP, and Bob L. Olson, Esq., and Anne M. Loraditch, Esq., at Beckley Singleton, Chartered, represent the Official Committee of Equity Security Holders of USA Capital Diversified Trust Deed Fund, LLC. FTI Consulting, Inc., gives financial advice to the Equity Committee of USA Diversified. Candace C. Carlyon, Esq., and Shawn w. Miller, Esq., at Shea & Carlyon, Ltd., and Jeffrey H. Davidson, Esq., Frank A. Merola, Esq., and Eve H. Karasik, Esq., at Stutman, Treister & Glatt, PC, represent the Official Committee of Equity Security Holders of USA Capital First Trust Deed Fund, LLC. Matthew A. Kvarda, at Alvarez & Marsal, LLC, gives financial advise to the Equity Committee of USA First. When the Debtors filed for protection from their creditors, they estimated assets of more than $100 million and debts between $10 million and $50 million. WASHINGTON MUTUAL: Fitch Holds BB Rating on 2005-1D Class D Loans ----------------------------------------------------------------- Fitch Ratings recently completed a portfolio review of 681 classes of securities rated by Fitch in the U.S. credit card asset-backed securities sector. While Fitch's surveillance efforts are continuous and include a review of monthly servicing reports to monitor transaction performance, formal portfolio reviews are also conducted periodically. The transactions were examined in order to compare performance across the industry and included an evaluation of the historical performance of the transactions, an examination of any changes to key metrics or trust composition, and an assessment of total available credit enhancement. As a result of the review, Fitch affirms these outstanding ratings as: Washington Mutual Master Note Trust Series 2005-1A -- Class A at 'AAA'. Series 2005-1B -- Class B at 'A'. Series 2005-1C -- Class C at 'BBB'. Series 2005-1D -- Class D at 'BB'. Series 2005-1M -- Class M at 'AA'. Series 2005-2A -- Class A at 'AAA'. Series 2005-2B -- Class B at 'A'. Series 2005-2C -- Class C at 'BBB'. Series 2005-2D -- Class D at 'BB-'. Series 2005-2D-2 -- Class D-2 at 'BB-'. Series 2005-2M -- Class M at 'AA'. Series 2006-1A -- Class A at 'AAA'. Series 2006-1B -- Class B at 'A'. Series 2006-1C -- Class C at 'BBB'. Series 2006-1M -- Class M at 'AA'. Series 2006-2A -- Class A at 'AAA'. Series 2006-2C -- Class C at 'BBB'. Series 2006-3A -- Class A at 'AAA'. Series 2006-3C -- Class C at 'BBB'. Series 2006-4A -- Class A at 'AAA'. Washington Mutual Master Trust Series 2001-D -- Class A at 'AAA'. Series 2001-G -- Class A at 'AAA'. Series 2004-A -- Class A at 'AAA'; -- Class B at 'AA+'; -- Class C at 'AA-'; -- Class D at 'A-'; -- Class E at 'BB+'. Series 2004-C -- Class E 'BB-'. Series 2004-D -- Class A at 'AAA'; -- Class B at 'AA+'; -- Class C at 'AA-'; -- Class D at 'A-'; -- Class E at 'BB+'. Series 2004-E -- Class A at 'AAA'; -- Class B at 'AA+'; -- Class C at 'AA-'; -- Class D at 'A-'; -- Class E at 'BBB-'. Series 2004-F -- Class A at 'AAA'; -- Class B at 'AA+'; -- Class C at 'AA-'; -- Class D at 'A-'; -- Class E at 'BBB-'. Series 2004-G -- Class E at 'BB-'. WCI COMMUNITIES: Icahn Offer Prompts S&P's Negative CreditWatch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on WCI Communities Inc. on CreditWatch with negative implications following the announcement that affiliates of Carl Icahn plan to make a hostile tender offer for WCI's shares. The negative CreditWatch placements reflect uncertainty regarding WCI's strategic direction and ultimate capitalization. While the company's senior subordinated notes are protected by a change of control provision, there is no assurance that WCI will have the capacity to fund the repurchase of those notes before they mature. Mr. Icahn recently announced his intent to offer $22 per share, a 16% premium to recent trading levels and indicative of a $2.9 billion enterprise value. The offer is conditioned upon the removal of the company's poison pill. If WCI's board of directors leave the poison pill in place, Mr. Icahn's tender offer will remain effective until shareholders have an opportunity to elect his previously nominated slate of directors. While a date has not been set for a shareholder vote, WCI has historically held its annual shareholders' meeting in mid-May. Bonita Springs, Fla.-based WCI is a mid-sized regional homebuilder, offering luxury high-rise and single-family homes to affluent and active adult homebuyers in Florida (93% of closings), and the Northeast and mid-Atlantic regions. In 2006, WCI's sales were sharply curtailed by its affluent consumers' increasing reluctance to commit to discretionary luxury purchases. Negative order trends got progressively worse throughout the year and will continue to weaken WCI's financial profile in the near term. Earlier this year, the company engaged Goldman Sachs to explore strategic alternatives. Ratings Placed On CreditWatch WCI Communities Inc. To From Corporate credit B+/Watch Neg/-- B+/Negative/-- Senior subordinated B-/Watch Neg B WESTERN OIL SANDS: Earns CDN$63.4 Million in Year Ended Dec. 31 --------------------------------------------------------------- Western Oil Sands Inc. reported net earnings of $63.4 million on revenues of $983.6 million for the year ended Dec. 31, 2006, compared with net earnings of $149.4 million on revenues of $910.3 million in 2005. This year-over-year decrease in net earnings is in large part due to the full turnaround completed during 2006, together with a $72.1 million unrealized risk management loss associated with marking to market Western's strategic crude oil hedging program for 2007 through to 2009 compared to an unrealized risk management gain of $13.5 million in 2005. Earnings for the year also reflect $300,000 of unrealized foreign exchange gains on Western's $450 million Senior Secured Notes and option premium liability and a future income tax expense of $16.7 million. Western achieved record gross crude oil sales revenue of $983.6 million in fiscal 2006 compared to $910.3 million in 2005, including $825.4 million from proprietary production at an average realized price of $60.51 per barrel. Record sales revenues were achieved largely due to a 21 per cent increase in Western's realized crude oil price as a result of the continued strength in world crude oil prices partially offset by a 14 per cent decrease in bitumen production due to the full planned plant turnaround and repair of a conveyor belt during the year. During 2006, Western had no proprietary barrels subject to financial hedge instruments and, consequently, enjoyed the full appreciation of the underlying in West Texas Intermediate (WTI) through its synthetic crude oil sales. A careful and deliberate decision was made to not hedge any barrels in 2006 as the capital expenditures were not large relative to the capital spending profile in subsequent years. In 2005, gross revenues were reduced by $110.4 million due to out-of-the-money fixed priced swap contracts on a portion of Western's proprietary production and, as a result, Western's crude oil price realization was reduced by $7.11 per barrel. Western's crude oil sales were subject to an overall quality differential of $12.82 per barrel (2005 - $12.27 per barrel) off of the Edmonton PAR benchmark crude oil price of $73.33 per barrel in 2006. The quality differential has increased marginally from the prior year due to a heavier than normal sales mix associated with the period prior to, and immediately following, the full plant turnaround. During this period, the Upgrader was not running at optimal conversion rates resulting in a heavier blend of synthetic crude oil. This was offset by a general narrowing of the heavy crude oil differential during 2006 which helped maintain higher oil sands revenues and realized synthetic crude oil sales prices. The heavy crude oil differential averaged 35 per cent of WTI prices, or $22.58 per barrel in 2006 compared to 39 per cent or $21.83 per barrel in 2005. Western's share of the Athabasca Oil Sands Project's operating costs totaled $286.3 million in 2006 (2005 - $250.4 million) including $40.2 million associated with the cost of the turnaround. Also included in this amount are costs associated with removing overburden at the Muskeg River Mine (Mine) and transporting bitumen from the Mine to the Upgrader. On a per processed barrel of bitumen basis, unit operating costs were $28.38 per barrel based on average production of 27,500 barrels per day in 2006 compared to $22.06 per barrel based on average production of 31,994 barrels per day in 2005. Excluding the impact of the turnaround, operating costs were $24.50 per processsed barrel for 2006 compared to $22.06 per processed barrel for the prior year period. At Dec. 31, 2006, the company's balance sheet showed $1.794 billion in total assets, $1.002 billion in total liabilities, and $791.7 million in total stockholders' equity. The company's balance sheet at Dec. 31, 2006, also showed strained liquidity with $155 million in total current assets available to pay $185.4 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the year ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?1b9c Liquidity and Financial Position Cash flow from operations, before changes in non-cash working capital, was $228.4 million in 2006 compared to $244.2 million in 2005. During 2006, Western's capital costs of $301.3 million were funded primarily through cash flow from operations. The balance was funded by $36 million of incremental borrowings under the Revolving Credit Facility and working capital. Total amounts drawn under the Revolving Credit Facility were $77 million at year-end. At Dec. 31, 2006, Western had $253 million in unused working capital capacity. Capital Expenditures Net capital expenditures totaled $301.3 million in 2006 compared to $46.8 million in 2005. Of this total, Athabasca Oil Sands Project initiatives accounted for $251 million, including $187.4 million for Expansion 1 which includes $2.8 million in capitalized interest. Capital expenditures of $15.2 million related to WesternZagros' Limited's initiative in Kurdistan were also incurred in 2006. About Western Oil Sands Western Oil Sands Inc. (TORONTO: WTO.TO) (Other OTC: WTOIF.PK) -- http://www.westernoilsands.com/-- holds a 20% undivided interest in the Athabasca Oil Sands Project located in the Athabasca region of northeastern Alberta. Shell Canada Limited and Chevron Canada Limited hold the remaining 60 per cent and 20 per cent interests, respectively.. WesternZagros Limited, a wholly-owned subsidiary of Western, is pursuing conventional oil and gas exploration opportunities in the Federal Region of Kurdistan in Northern Iraq. * * * Moody's Investors Service affirmed its Ba2 Corporate Family Rating for Western Oil Sands Inc. WESTLB AG: Closes $1.1 Billion Longview Power Financing ------------------------------------------------------- WestLB AG's Global Energy Group closed $1.1 billion Senior Secured Credit Facilities for the financing of Longview Power, a 695 MW coal-fired power project currently under construction in West Virginia and the first privately built coal-fired project in the Eastern United States. WestLB acted as Joint Lead Arranger and Joint Bookrunner. The Longview Power plant also meets the Best Available Control Technology Standards air emissions control standards and provides lower emissions per MWH generated, creating lower emission costs compared to other plants. The Plant's lower heat rate and state- of-the-art fuel-gas clean-up equipment is up to 30% more environmentally efficient than the existing coal-fired plants in the U.S. The Longview Power plant also has an advanced air quality control system that reduces stack emissions and meets the most stringent regulatory requirements. The $1.1 billion credit facilities consist of a $350 million delayed-draw term loan; a $300 million term loan B; a $250 million construction bank loan; a $100 million revolving credit facility and a $100 million synthetic letter of credit. The credit facility was structured to appeal to both the institutional loan market and commercial bank market. The deal was approximately two times oversubscribed. About Longview Power Longview Power, a wholly owned subsidiary of GenPower Holdings, L.P., is a joint venture between First Reserve Corporation and GenPower LLC. First Reserve Corporation is the oldest and largest private equity firm focused exclusively on energy investments with $12.5 billion under management. GenPower LLC is an experienced developer of greenfield power projects both in the U.S. and abroad. 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. ZOOMERS HOLDING: Has Until June 1 to File Amended Plan ------------------------------------------------------ The United States Bankruptcy Court for the Middle District of Florida gave Zoomers Holding Company LLC until June 1, 2007, to file an amended disclosure statement and an amended plan of reorganization. The Court also extended the Debtor's exclusive solicitation deadline to June 6, 2007. The Debtor timely filed its Disclosure Statement and Plan of Reorganization on Nov. 27, 2006. Florida Community Bank objected to the Disclosure Statement. The Debtor and the Bank agreed that the Debtor would file an amended disclosure statement and plan and that the disclosure statement would be conditionally approved if no further objections were filed by the Bank. The Court conditionally approved the amended disclosure statement on January 29, 2007. The Court will convene a hearing on July 12, 2007, at 10:30 a.m. to consider final approval of the Disclosure Statement and confirmation of the Plan. The Debtor says it is actively negotiating for debtor-in- possession financing that will (a) satisfy the administrative claims and the Bank's secured claim; (b) provide a distribution to the unsecured creditors; and (c) allow the Debtor to complete its family amusement park in Fort Myers. If the DIP financing is successful, the Debtor will seek approval of the lending relationship on an expedited basis, prior to confirmation. The Debtor has employed two commercial realtors, Kevin Jursinski and Anthony Gorgano. Overview of the Plan The Debtor is the holding company of an 18-acre parcel of real property located at 17051 Safety Street in Fort Myers, Florida. It is the location of a family amusement park. The Park is 95% completed. To complete the project, the Debtor estimates it needs $718,705, excluding prepetition balances due to contractors. As completed, the Park has an appraised value of $15,720,000. The Debtor plans to auction the Park if it does not secure DIP financing or other capital infusion. The Debtor intends to pay its creditors through the refinancing, sale or auction of the Park. The Debtor will pay administrative claims in cash, in full. The Debtor does not believe there are any priority claims. If there are, they will also be paid in full. First Community Bank's secured claim will be paid from the proceeds of the sale or auction of the Park. If the Bank's secured claim is not paid in full, the deficiency claim will be a general unsecured claim. The state court will determine the priority of subcontractor claims. If the subcontractors prevail, the subcontractors will be fully secured and will be paid in full from the proceeds of the sale or auction of the Park. General unsecured claims will be paid from any remaining proceeds from the sale or auction of the Park. Holders of equity interests will retain its ownership interest in the Reorganized Debtor post-confirmation for the purposes of auctioning the Debtor's assets. The corporation will be dissolved once all actions contemplated under the Plan are completed. A full-text copy of the Disclosure Statement is available for free at http://ResearchArchives.com/t/s?1b9f A full-text copy of the Plan of Reorganization is available for free at http://ResearchArchives.com/t/s?1ba0 About Zoomers Headquartered in Osprey, Florida, Zoomers Holding Company, LLC, filed for chapter 11 protection on Apr. 28, 2006 (Bankr. M.D. Fla. Case No. 06-02008). Richard J. McIntyre, Esq., at Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis, P.A., represents the Debtor. No Official Committee of Unsecured Creditors has been appointed in this case. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Accuray Inc ARAY (55) 144 (5) AFC Enterprises AFCE (31) 163 7 Alaska Comm Sys ALSK (25) 562 13 Alliance Imaging AIQ (18) 674 30 AMR Corp. AMR (606) 29,145 (1,603) Atherogenics Inc. AGIX (153) 178 112 Bare Essentials BARE (228) 156 54 Blount International BLT (105) 430 118 CableVision System CVC (5,289) 9,844 (763) Carrols Restaurant TAST (104) 497 (25) Centennial Comm CYCL (1,092) 1,422 112 Choice Hotels CHH (62) 303 (53) Cincinnati Bell CBB (791) 2,014 28 Clorox Co. CLX (33) 3,624 (540) Compass Minerals CMP (65) 706 165 Corel Corp. CRE (12) 130 31 Crown Holdings CCK (266) 6,358 106 Crown Media HL CRWN (478) 768 48 CV Therapeutics CVTX (46) 421 303 Dayton Superior DSUP (101) 322 82 Deluxe Corp DLX (66) 1,267 (462) Denny's Corporation DENN (231) 454 (73) Domino's Pizza DPZ (565) 380 11 Dun & Bradstreet DNB (396) 1,360 (161) Echostar Comm DISH (219) 9,768 1,008 Embarq Corp EQ (468) 9,091 (241) Emeritus Corp. ESC (115) 713 (34) Empire Resorts NYNY (25) 61 (3) Enzon Pharmaceutical ENZN (56) 404 150 Extendicare Real EXE-U (24) 1,315 (112) Foamex Intl FMXI (404) 607 21 Ford Motor Co F (3,773) 290,217 (2,171) Gencorp Inc. GY (96) 1,021 4 General Motors GM (4,251) 186,192 7,426 Graftech International GTI (110) 906 349 Guidance Software GUID (2) 22 (1) HCA Inc HCA (10,332) 23,611 2,502 Healthsouth Corp. HLS (1,526) 3,359 (381) I2 Technologies ITWO (25) 190 17 ICOS Corp ICOS (18) 285 112 IDEARC Inc IAR (8,846) 1,318 15 IMAX Corp IMAX (33) 243 84 Immersion Corp. IMMR (23) 50 34 Immunomedics Inc IMMU (24) 45 15 Incyte Corp. INCY (85) 354 278 Indevus Pharma IDEV (133) 91 51 Interstate Bakeries IBCIQ (293) 1,147 (423) Investools Inc. IEDU (62) 132 (75) IPG Photonics IPGP (31) 115 24 Koppers Holdings KOP (80) 649 162 Life Sciences LSR (25) 205 23 Lodgenet Entertainment LNET (58) 263 20 Maxxam Inc MXM (201) 992 26 McMoran Exploration MMR (18) 431 (27) Mediacom Comm MCCC (95) 3,652 (266) Movie Gallery MOVI (221) 1,166 (816) Navisite Inc. NAVI (2) 101 (9) New River Pharma NRPH (110) 151 (19) Nexstar Broadcasting NXST (78) 679 27 NPS Pharm Inc. NPSP (182) 237 150 Obagi Medical OMPI (51) 50 12 ON Semiconductor ONNN (205) 1,417 268 Paetec Holding PAET (287) 238 7 Protection One PONN (80) 444 (5) Qwest Communication Q (1,445) 21,239 (1,506) Radnet Inc. RDNT (79) 131 2 Regal Entertainment RGC (20) 2,469 (315) Riviera Holdings RIV (29) 222 10 Rural Cellular RCCC (580) 1,385 160 Rural/Metro Corp. RURL (89) 305 51 Savvis Inc. SVVS (138) 467 25 Sealy Corp. ZZ (152) 1,003 57 Sirius Satellite SIRI (389) 1,658 (258) St. John Knits Inc. SJKI (52) 213 80 Station Casinos STN (187) 3,716 (50) Sun-Times Media SVN (322) 905 (383) Town Sports Int. CLUB (18) 424 (58) Unisys Corp. UIS (64) 4,037 307 Weight Watchers WTW (68) 1,002 (82) Western Union WU (315) 5,321 869 Worldspace Inc. WRSP (1,574) 604 140 WR Grace & Co. GRA (485) 3,637 920 XM Satellite XMSR (253) 2,027 (115) ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Marie Therese V. Profetana, Shimero R. Jainga, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Jason A. Nieva, Cherry A. Soriano-Baaclo, Melvin C. Tabao, Melanie C. Pador, Ludivino Q. Climaco, Jr., 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 ***