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/raid1/www/Hosts/bankrupt/TCR_Public/070501.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, May 1, 2007, Vol. 11, No. 102 Headlines ACCESS WORLDWIDE: Dec. 31 Balance Sheet Upside-Down by $1 Million AJAY SPORTS: Court OKs Dykema Gossett as Special Franchise Counsel ALASKA COMMS: S&P Holds B+ Corp. Credit Rating with Stable Outlook AMERICAN-CANADIAN OIL: Killman Murrell Raises Going Concern Doubt ARES IIIR/IVR: Moody's Rates $31.5 Million Class E Notes at Ba2 ATLANTIC EXPRESS: S&P Rates Proposed $165 Mil. Senior Notes at B- BEAR STEARNS: Moody's Puts Ba1 Ratings on Five Securities BEST MANUFACTURING: Ct. OKs Gelber Organization as Tax Consultant BEST MANUFACTURING: Court Okays Norris as Committee's Co-Counsel BETCASCADE: Withdrawal of Financial Support Leads to Bankruptcy BROADWAY GEN: Moody's Holds B1 Rating on First-Lien Facilities CABLEVISION SYSTEMS: Sells Stake in Two Sports Network to Comcast CASH TECHNOLOGIES: Posts $1 Million Net Loss in Qtr Ended Feb. 28 CBRL GROUP: Redemption of Outstanding Option Notes is on June 4 CENTRAL PARKING: High Leverage Cues S&P to Cut Credit Rating to B CHAMBERS STREET: S&P Withdraws BB Rating on $5.5MM Class E Notes CHARTERWOOD ASSOCIATES: Case Summary & 20 Largest Unsec. Creditors CIFC FUNDING: Moody's Rates $24 Million Class D Notes at Ba2 COMCAST CORP: Buys Cablevision's Sports Network Stakes for $570MM COMSTOCK HOMEBUILDING: Posts $39.8 Mil. Net Loss in Full Year 2006 D&E COMMUNICATIONS: Earns $6.7 Million in Year Ended December 31 DAIMLERCHRYSLER AG: UAW Doesn't Favor Magna as Chrysler's Buyer DAVID DEVOUT: Case Summary & 19 Largest Unsecured Creditors DAVITA INC: Earns $76.6 Million Net Income in Quarter Ended Mar 31 DELTA AIR: Emerges from Chapter 11 Bankruptcy Protection DRESDNER RCM: Good Credit Quality Cues Moody's to Upgrade Ratings EVERGREEN HOMES: Case Summary & 58 Largest Unsecured Creditors FIRST FRANKLIN: Moody's Cuts Ratings on Seven Certificates FORSTER DRILLING: Posts $838,243 Net Loss in Quarter Ended Feb. 28 FOUR SEASONS: Court Approves Plan of Arrangement for Privatization FTS GROUP: Recurring Losses Cue Bassie & Co.'s Going Concern Doubt FURNITURE DIRECT: Files for Bankruptcy; Customers Won't Get Orders GERALD MATTICKS: Declares Bankruptcy Due to Unpaid Taxes GLASSMASTER CO: Case Summary & 14 Largest Unsecured Creditors GSMPS MORTGAGE: Moody's Cuts Rating on Class B4 & B5 Certificates GSRPM MORTGAGE: Moody's Rates Class B-4 Certificates at Ba1 HALCYON LOAN: Moody's Rates $15.5 Million Class D Notes at Ba2 HAMILTON BEACH: S&P Rates Proposed $125 Million Sr. Term Loan at B HAMILTON BEACH: Moody's Puts Corporate Family Rating at B1 HANGER ORTHOPEDIC: Good Performance Cues Moody's to Up All Ratings HARMAN INTERNATIONAL: Inks Merger Agreement with KHI Parent HARTCOURT COMPANIES: Posts $1.3 Mil. Net Loss in Qtr Ended Feb. 28 HERITAGE PROPERTY: Moody's Cuts Ratings and Retains Review HERTZ GLOBAL: Revenue Increases by 7.9% in Year Ended December 31 INFOUSA INC: $75 Mil. Increase in Senior Loan Cues S&P's BB Rating INSIGHT HEALTH: Extends Senior Sub. Notes Exchange Offer to May 3 INTEGRAL NUCLEAR: Taps Cole Schotz as Bankruptcy Counsel INTEROCEANICA IV: S&P Rates $562 Mil. Senior Secured Notes at BB IPC SYSTEMS: Increased Leverage Cues S&P to Cut Credit Rating to B IPCS INC: Stockholders Get Special Cash Dividend of $11 Per Share KIRKLAND KNIGHTSBRIDGE: Court Approves Hartman as Special Counsel KLIO II: Credit Support Improvement Cues S&P to Hold BB+ Rating LIMEROCK CLO: Moody's Rates $20 Million Class D Notes at Ba2 MARLBOROUGH STREET: Moody's Rates $9 Million Notes at Ba2 MARYLAND ECONOMIC: Moody's Cuts Rating on Revenue Bonds to Ba2 MASSACHUSETTS DEV'T: Poor Liquidity Cues S&P to Cut Rating to BB+ MERRILL LYNCH: S&P Rates CDN$1.08 Million Class L Certs. at B- MICHAEL BRETZEL: Case Summary & 11 Largest Unsecured Creditors MOSAIC CO: Planned Loan Reduction Cues S&P's Positive Outlook MRF CARBON CANYON: Case Summary & 10 Largest Unsecured Creditors NATIONAL RETAIL: S&P Holds BB+ Preferred Stock Rating NESTOR INC: Common Stock's Market Value Falls Below Nasdaq's Limit NEW CENTURY: Court Okays Richards Layton as Delaware Counsel NEW CENTURY: DB Structured Alleges Breach of Repurchase Agreements NORANDA ALUMINUM: S&P Rates $750 Million Credit Facilities at BB- NORTHWEST AIRLINES: Posts $292 Mil. Net Loss in Qtr Ended March 31 PACIFIC LUMBER: Court Rules Against Transfer of Cases to Calif. PALMER ABS: Moody's Rates $22.5 Million Class D Notes at Ba1 PARAMOUNT RESOURCES: CDN$2.2 Bil. Offer Cues S&P's Positive Watch QTC MANAGEMENT: Credit Pact Amendment Cues Moody's to Hold Ratings RADIOSHACK CORP: Earns $42.5 Million in Quarter Ended March 31 RARE RESTAURANT: Moody's Junks Rating on $100 Million Senior Notes REAL ESTATE: Moody's Puts Low-Ratings on Six Securities REICHMANN REAL: Voluntary Chapter 11 Case Summary ROSEMARY ROMO: Case Summary & Seven Largest Unsecured Creditors RUNNING HORSE: Case Summary & 20 Largest Unsecured Creditors SOLUTIA INC: Panel Wants Monsanto & Pharmacia to File Final Claims SOLUTIA INC: Gets Okay to Acquire Akzo Nobel's 50% Flexsys Stake SOURCE ENTERTAINMENT: Voluntary Chapter 11 Case Summary SOUTHPARK COMMUNITY: Exclusive Plan Filing Extended Until July 28 SPECTRUM SIGNAL: Courts OK Arrangement Plan with Vecima Networks STANDARD MGT: Files Amended 10Q for Quarter Ended September 30 STERLING CENTRECORP: Shareholders OK Plan of Arrangement with SCI STRUCTURED ASSET: Moody's Puts Ratings on Two Certs. Under Review STRUCTURED ASSET: Moody's Cuts Rating on 27 Loan Classes SUPERIOR ESSEX: Moody's Upgrades Ratings on Improved EBITDA TARGUS GROUP: High Interest Burden Cues Moody's to Cut All Ratings TOWER RECORDS: WEA Corporation Objects to Disclosure Statement TRW AUTOMOTIVE: S&P Affirms BB+ Long-Term Corporate Credit Rating VANSON LEATHERS: Voluntary Chapter 11 Case Summary WERNER LADDER: Court Approves $265-Mil. Asset Sale to New Werner WERNER LADDER: Pact Creating Litigation Trust for Asset Sale OK'd WESTAR ENERGY: Former CEO David Wittig Undergoing Third Trial WESTAR ENERGY: William Moore Promoted to President and CEO WHOLE FOODS: S&P to Cut Rating Upon Completion of Wild Oats Deal YELL GROUP: Intense Competition Prompts US Profit Warning ********* ACCESS WORLDWIDE: Dec. 31 Balance Sheet Upside-Down by $1 Million ----------------------------------------------------------------- Access Worldwide Communications Inc. reported total stockholders' deficit of $1,180,464 as of Dec. 31, 2006. The company also listed total assets of $14,859,608 and total liabilities of $16,040,072 in its balance sheet as of Dec. 31, 2006. Unrestricted cash and restricted cash as of Dec. 31, 2006, were $2,836,980 and $123,000, respectively, as compared with $1,755,926 and $314,000, respectively, as of Dec. 31, 2005. For the years ended Dec. 31, 2006, and 2005, the company generated revenues of $27,711,626 and $14,809,486, respectively. The company had a net income of $2,886,072 for the year 2006 as compared with a net loss of $4,680,724 for the year 2005. The company's primary source of liquidity has been cash flows from operations, supplemented by borrowing under its note payable and funding from the issuance of convertible debt via private placements. For the year ended Dec. 31, 2006, and 2005, the company had a positive working capital of $4,131,572 and a negative working capital of $4,095,879, respectively. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1e22 About Access Worldwide Headquartered in Arlington, Virginia, Access Worldwide Communications Inc. (OTCBB: AWWC) -- http://www.accessww.com/-- provides sales, communication and medical education services. The Company has about 700 employees in offices throughout the United States and the Philippines. AJAY SPORTS: Court OKs Dykema Gossett as Special Franchise Counsel ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of Michigan gave Ajay Sports Inc. and its debtor-affiliates permission to employ Dykema Gossett PLLC as their special franchise counsel. The firm is expected to: a. update Uniform Offering Franchise Circular; b. register with state franchise authorities; and c. provide general legal advice regarding franchise law issues. Howard Iwrey, a franchise member of the firm, will bill $460 per hour for this engagement. The firm's other professional billing rates are: Designation Hourly Rate ----------- ----------- Associates $210-$275 Legal Specialists $160-$195 Mr. Iwrey assures the Court that the firm does not hold any interest adverse to the Debtors estate and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Court. Mr. Iwrey can be reached at: Howard Iwrey Franchise Member Dykema Gossett PLLC 400 Renaissance Center Detroit, Michigan 48243 Tel: (313) 568-6800 Fax: (313) 568-6893 http://www.dykema.com/ Headquartered in Farmington, Mich., Ajay Sports Inc. operates the franchise segment of its business through Pro Golf International, a 97% owned subsidiary, which was formed during 1999 and owns 100% of the outstanding stock of Pro Golf of America, and 80% of the stock of ProGolf.com, which sells golf equipment and other golf- related and sporting goods products and services over the Internet. The company and its affiliates filed for chapter 11 protection on Dec. 27, 2006 (Bankr. E.D. Mich. Case Nos. 06-529289 through 06-529292). Arnold S. Schafer, Esq., and Howard M. Borin, Esq., at Schafer and Weiner, PLLC, represent the Debtor in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets less than $10,000 and debts between $1 million to $100 million. ALASKA COMMS: S&P Holds B+ Corp. Credit Rating with Stable Outlook ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its ratings, including its 'B+' corporate credit rating, on Alaska Communications Systems Holdings Inc. The outlook is stable. Total balance sheet debt as of March 31, 2007, was approximately $438 million. "The affirmation follows ACS' announcement that the company is considering building fiber facilities between Alaska and the lower 48 states to increase its presence in the long distance and carrier services market," said Standard & Poor's credit analyst Allyn Arden. The company, an Anchorage, Alaska-based incumbent local exchange carrier, estimates the project will cost between $75 million and $90 million, which would be financed with new debt. "While we anticipate operating lease-adjusted leverage will increase modestly to low- to mid-4x area from 3.8x at year-end 2006, we believe this metric is still supportive of the current rating," said Mr. Arden. Although discretionary cash flow generation will be suppressed in the intermediate term, S&P expect the investment to be spread out over the next few years and ACS does have the ability to curtail its investment plans if operating conditions deteriorate. The ratings on ACS continue to reflect significant competitive pressure within the limited Alaskan telecommunications market, a shareholder-oriented financial policy, and expectations for near- term negative discretionary cash flow. Tempering factors include the company's strong position as the largest incumbent wireline carrier in Alaska, expectations for healthy growth in the wireless business, and adequate liquidity. AMERICAN-CANADIAN OIL: Killman Murrell Raises Going Concern Doubt ----------------------------------------------------------------- Killman, Murrell & Company, P.C. raised substantial doubt about Australian-Canadian Oil Royalties Ltd.'s ability to continue as a going concern after auditing the company's financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's recurring losses from operations and its limited capital resources. For the years ended Dec. 31, 2006, and 2005, the company had operating revenues of $42,145 and $21,151, respectively. Revenues were generated from oil and gas. The company incurred net losses for 2006 and 2005 of $620,354 and $614,874, respectively. The company listed total assets of $1,085,996 and total liabilities of $345,769, resulting in a total stockholders' equity of $740,227 as of Dec. 31, 2006. The company's December 31 balance sheet showed strained liquidity with total current assets of $14,181 and total current liabilities of $345,769. A large portion of the $1,012,520 in current assets is $1,000,000 in certificates of deposit, which are restricted as to use. The $1,000,000 note payable to bank and a certificate of deposit were not renewed in 2006. Cash on hand as of Dec. 31, 2005 was $3,791, as compared with $2,956 on hand as of Dec. 31, 2006. The company plans to meet its operating expenditures from a private placement of its restricted common stock. It is seeking exploration partners on its various oil and gas concessions located in Australia. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1e24 About Australian-Canadian Oil Australian-Canadian Oil Royalties Ltd. (OTC BB: AUCAF) -- http://www.aussieoil.com/-- purchases, holds and sells both overriding royalty interests and working interests on an international and domestic basis in Australia, Canada, and the U.S. ACOR's business is related to the principal products of oil and gas. The company has continued to be active in working interests and royalty opportunities both domestically and internationally. The business of ACOR during 2006 was to make a study of available oil and gas development acreage in Australia and select and apply for the exploration permits on the areas, which demonstrate a high probability of success with the maximum rate of return for dollars invested. ARES IIIR/IVR: Moody's Rates $31.5 Million Class E Notes at Ba2 --------------------------------------------------------------- Moody's Investors Service has assigned these ratings to Notes and Combination Securities issued by Ares IIIR/IVR CLO Ltd.: (1) Aaa to the $50,000,000 Class A-1 Variable Funding Floating Rate Notes; (2) Aaa to the $446,300,000 Class A-2 Senior Secured Floating Rate Notes; (3) Aa2 to the $42,000,000 Class B Senior Secured Floating Rate Notes; (4) A2 to the $42,000,000 Class C Senior Secured Deferrable Floating Rate Notes; (5) Baa2 to the $35,000,000 Class D Secured Deferrable Floating Rate Notes; (6) Ba2 to the $31,500,000 Class E Secured Deferrable Floating Rate Notes; and (7) Baa2 to the $4,000,000 Combination Notes. The Moody's ratings of the Notes address the ultimate cash receipt of all required interest and principal payments, as provided by the Notes' governing documents, and are based on the expected loss posed to Noteholders, relative to the promise of receiving the present value of such payments. The Moody's rating of the Combination Notes addresses only the ultimate receipt of the "Rated Balance." Ares CLO Management IIIR/IVR, L.P. will manage the selection, acquisition and disposition of collateral on behalf of the Issuer. ATLANTIC EXPRESS: S&P Rates Proposed $165 Mil. Senior Notes at B- ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' rating to Atlantic Express Transportation Corp.'s proposed $165 million senior secured floating-rate notes offering due 2012. S&P's 'CCC+' corporate credit rating and 'CCC+' rating on the existing senior secured notes remain on CreditWatch with positive implications. Upon the successful completion of the new notes offering, S&P will remove the ratings from CreditWatch, raise the corporate credit rating to 'B-', and withdraw the rating on the old notes. The outlook will be stable. The Staten Island, New York-based school bus transportation company has about $220 million of lease-adjusted debt outstanding. "The expected upgrade of the corporate credit rating and the rating on the new notes offering-which anticipates the upgrade- reflect the company's improved financial performance over the past year and its enhanced liquidity position, which is bolstered by refinancing activities under way," said Standard & Poor's credit analyst Lisa Jenkins. Ratings on Atlantic Express reflect the company's highly leveraged financial profile, significant customer concentration, and vulnerability to unanticipated cost increases. Atlantic Express is currently benefiting from the improved terms it negotiated with the New York City Department of Education in mid-2005. Atlantic Express derives just over half of its revenues from this contract. In June 2005, Atlantic Express extended its contract with the DOE for an additional five years through June 30, 2010. The new contract terms included price increases, the recapture of increases tied to changes in the Consumer Price Index not given in prior years, full annual CPI increases, the full reimbursement of all costs related to escorts (adult bus monitors), plus a 5% administrative fee. While benefits from the new contract terms have contributed to improved performance at Atlantic Express, the company remains exposed to increases in fuel prices beyond what is covered by the CPI increase and other unexpected cost increases. Recently improved operating performance and the debt refinancing have bolstered Atlantic Express's liquidity position, although it remains somewhat constrained given the seasonality and capital intensity of the business and the company's highly leveraged capital structure. Much of the company's cash flow will continue to be spent on debt service requirements. Financial pressures could escalate if actual costs exceed the projected costs used in contract negotiations. Such unanticipated cost increases created significant cost pressures in the past and led Atlantic Express to seek bankruptcy court protection in December 2003. Atlantic Express is the fourth-largest provider of school bus transportation in the U.S. and the leading provider in New York City. School bus services account for about 88% of revenues. The company also provides paratransit services for physically and mentally disabled passengers and other services, including express commuter lines and tour buses. BEAR STEARNS: Moody's Puts Ba1 Ratings on Five Securities --------------------------------------------------------- Moody's Investors Service has assigned definitive ratings to securities issued by Bear Stearns Commercial Mortgage Securities Trust 2007-BBA8. The provisional ratings issued on March 27, 2007 have been replaced with these definitive ratings: - Cl. A-1, $887,019,375, rated Aaa - Cl. A-2, $295,673,125, rated Aaa - Cl. X-1A, $1,483,000,000*, rated Aaa - Cl. X-1B, $1,483,000,000*, rated Aaa - Cl. X-2, $34,700,000*, rated Aaa - Cl. X-3, $51,500,000*, rated NR - Cl. X-1M, $835,000,000*, rated Aaa - Cl. X-2M, $598,400,000*, rated Aaa - Cl. B, $40,782,500, rated Aa1 - Cl. C, $40,782,500, rated Aa2 - Cl. D, $40,782,500, rated Aa3 - Cl. E, $42,636,250, rated A1 - Cl. F, $25,952,500, rated A2 - Cl. G, $24,098,750, rated A3 - Cl. H, $18,514,262, rated Baa1 - Cl. J, $19,588,010, rated Baa2 - Cl. K, $24,925,228, rated Baa3 - Cl. L, $22,245,000, rated Ba1 - Cl. MS-1, $26,700,000, rated A1 - Cl. MS-2, $31,040,496, rated A2 - Cl. MS-3, $27,259,503, rated A3 - Cl. MS-4, $55,700,000, rated Baa1 - Cl. MS-5, $29,800,000, rated Baa2 - Cl. MS-6, $48,407,965, rated Baa3 - Cl. MS-7, $17,692,036, rated Ba1 - Cl. MS-X, $236,600,000*, rated A1 - Cl. PH-1, $4,500,000, rated Ba1 - Cl. PH-2, $11,250,000, rated Ba2 - Cl. PH-3, $4,540,000, rated Ba3 - Cl. MA-1, $4,900,000, rated Baa1 - Cl. MA-2, $3,400,000, rated Baa2 - Cl. MA-3, $3,500,000, rated Baa3 - Cl. MA-4, $5,700,000, rated Ba1 - Cl. CA-1, $2,500,000, rated Baa2 - Cl. CA-2, $1,500,000, rated Baa3 - Cl. CA-3, $1,000,000, rated Ba1 * Approximate notional amount Moody's has also assigned definitive ratings to this additional class of certificates: - Class X-4, $62,500,000*, rated Aaa * Approximate notional amount BEST MANUFACTURING: Ct. OKs Gelber Organization as Tax Consultant ----------------------------------------------------------------- The Honorable Donald H. Steckroth of the U.S. Bankruptcy Court for the District of New Jersey gave Best Manufacturing Group LLC and its debtor-affiliates permission to employ Gelber Organization LLC as their tax consultant. The firm is expected to assist the Debtors to address and attempt to reduce the unsecured priority claims. The firm's professional billing rates are: Designation Hourly Rate ----------- ----------- Members $550 Managers $400 In addition, the firm will seek reimbursement for reasonable and necessary out-of-pocket expense incurred in connection with the Debtors' case. Arthur Gelber, CPA, founder and president of the firm, assures the Court that the firm does not hold any interest adverse to the Debtors estate and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Mr. Gelber can be reached at: Arthur Gelber, CPA Founder and President Gelber Organization LLC Raritan Plaza I, Raritan Center Edison, NJ 08837 Tel: (732) 417-440 Fax: (732) 417-5933 http://www.gelberorg.com/ Headquartered in Jersey City, New Jersey, Best Manufacturing Group LLC -- http://www.bestmfg.com/-- and its subsidiaries manufacture and distribute textiles, career apparel and other products for the hospitality, healthcare and textile rental industries with satellite operations located across the United States, Canada, Mexico and Asia. The Company and four of its subsidiaries filed for chapter 11 protection on Aug. 9, 2006 (Bankr. D. N.J. Case No. 06-17415). Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., represents the Debtors. Scott L. Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen, and Brian L. Baker, Esq., and Stephen B. Ravin, Esq., at Ravin Greenberg PC, represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. BEST MANUFACTURING: Court Okays Norris as Committee's Co-Counsel ---------------------------------------------------------------- The Honorable Donald H. Steckroth of the U.S. Bankruptcy Court for District of New Jersey gave the Official Committee of Unsecured Creditors in Best Manufacturing Group LLC and its debtor-affiliates' bankruptcy cases permission to retain Norris McLaughlin & Marcus P.A., as its co-counsel. The Committee tells the Court that it requires continued representation of its interest in the Debtors' Chapter 11 proceedings. The firm is expected to: a. appear, research, prepare and draft pleadings and other legal document; b. prepare hearing-related work; and c. negotiate and advice with respect to the Debtors' Chapter 11 proceeding. Morris S. Bauer, Esq., will bill $415 per hour for this engagement. The firm's other professional's compensation rates are: Designation Hourly Rate ----------- ----------- Members $251-$515 Associates $175-$285 Paralegals $125-$150 Mr. Bauer assures the Court that the firm does not hold any interest adverse to the Debtors' estate and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Mr. Bauer can be reached at: Morris S. Bauer, Esq. Norris, McLaughlin & Marcus P.A. 721 Route 202-206 Bridgewater, NJ 08807 Tel: (908) 722-0700 Fax: (908) 722-0755 http://www.nmmlaw.com/ Headquartered in Jersey City, New Jersey, Best Manufacturing Group LLC -- http://www.bestmfg.com/-- and its subsidiaries manufacture and distribute textiles, career apparel and other products for the hospitality, healthcare and textile rental industries with satellite operations located across the United States, Canada, Mexico and Asia. The Company and four of its subsidiaries filed for chapter 11 protection on Aug. 9, 2006 (Bankr. D. N.J. Case No. 06-17415). Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., represents the Debtors. Scott L. Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen, and Brian L. Baker, Esq., and Stephen B. Ravin, Esq., at Ravin Greenberg PC, represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. BETCASCADE: Withdrawal of Financial Support Leads to Bankruptcy --------------------------------------------------------------- Costa Rican sources told TOW Industry Newswire that BetCascade sportsbook's business has collapsed. According to TOW Industry, BetCascade's business started to weaken when its former financial backer pulled out his support and one of the original associates in the business retired at the end of the football season. TOW Industry notes that BetCascade was in a "slow pay mode" at the start of February 2007 and has stopped paying since the middle of April 2007. BetCascade owes hundreds of players, agents and vendors well in excess of US$2 million, TOW Industry says, citing Costa Rican sources. Professional players represent over 65% of the company's debtors. BetCascade owner's personal assets account for 30% of the debt, Costa Rican sources told TOW Industry. TOW Industry says that the company tried looking for new financial partners but failed, and the "total loss of goodwill" cancelled out chances of a "last minute deal." Despite its collapse, BetCascade continues to advertise on some Web sites, TOW Industry states. The Cascade Sportsbook & Casino or BetCascade -- http://www.cascadesportsbook.com/ -- is an online betting site. BROADWAY GEN: Moody's Holds B1 Rating on First-Lien Facilities -------------------------------------------------------------- Moody's Investors Service has affirmed the ratings of B1 and B3 assigned to Broadway Gen Funding, LLC's (formerly referred to as LS Power Acquisition Co. LLC) first and second lien credit facilities, respectively. The affirmation follows receipt of additional information regarding the terms and conditions of the debt as well as changes to the capital structure of the transaction. While there are fewer lender protections and slightly higher leverage than initially anticipated, Moody's believes that this issuer's risk profile remains consistent with the originally assigned ratings. The terms and conditions lack certain lender protections typically associated with project financings, and the issuer will have greater flexibility to manage its business in a manner that in Moody's view is more consistent with a corporate finance structure. As a result, Moody's notes that there is a greater potential for the issuer's fundamental business and risk profile to change than is typical for most project financings. As a result, the ratings may experience correspondingly greater volatility going forward, particularly, if the issuer were to take advantage of its flexibility to incur a substantial amount of additional debt without offsetting cash flows of sufficient quantity and quality. Lender protections include a debt service reserve requirement equal to the lesser of $40 million or six months interest on the first and second lien term debt which is expected to fulfilled with a letter of credit written under the first lien LC facility. However, the transaction does not contain an independently administered waterfall of accounts, a structural protection that Moody's considers fundamental to a project financing. However, the issuer is required to sweep a minimum of 75% of excess cash flow, as defined in the credit agreement, annually to repay first lien debt. In addition, it must sweep 100%, if necessary, to reach target amortization levels or if the following year's gross margins are projected to be less than 50% contracted. The terms under which the issuer may make distributions are sufficiently restrictive that the risk that the issuer could divert monies required to repay or prepay debt is significantly constrained. While the company has the ability to dispose of any of its assets, it will be required to utilize 100% of the proceeds of any asset sales to prepay debt, including pledged additional equipment the replacement value of which has been estimated at $120 million by the Independent Engineer, unless existing ratings affirmation is received in which case 25% of the proceeds from the sale any of the facilities except Bosque and Apex may be distributed to the equity holders. Moody's also notes that the company has not covenanted to sell any unused excess equipment by 2008 as previously understood. Furthermore, the issuer is able to make partial dispositions of any of its facilities except Bosque or Apex, which would effectively convert the collateral from a hard asset to an undivided interest. The issuer has the ability to incur a relatively large amount of additional debt. In addition to 1st lien term loan baskets totaling $385 million, which may be issued to finance expansions and acquisitions, the issuer may also incur up to $75 million in separately secured debt or capitalized lease obligations and $200 million in unsecured or subordinated PIK debt, as well as permitted junior debt (also PIK), non-recourse debt, and debt associated with acquisitions in amounts limited only by the financial covenants, which address consolidated leverage and interest coverage. While there is likely to be substantial headroom under these covenants, Moody's expects it will be difficult for this issuer to raise significant amounts of either senior unsecured or junior lien PIK debt. Furthermore, we note that the likelihood that the issuer will incur a substantial amount of additional debt associated with expansions or acquisitions is limited by the requirement that it obtain ratings affirmation prior to borrowing under the $300 million first lien basket as well as its inability to utilize operating cash flows to finance any investment activity prior to meeting the cash sweep requirements. The issuer will also be able to refinance any of the assets in the portfolio on a non-recourse basis provided it utilizes 100% of the proceeds to prepay 1st lien debt (subject to the same provisions as asset sales). Nevertheless, if the issuer were to undertake such a financing, and the non-recourse subsidiary subsequently filed bankruptcy (or was filed against), it would trigger a cross default under the credit agreements. While this provision can be considered as providing protection to the secured lenders, it could also potentially increase the company's risk of default. Lastly, Moody's notes that in addition to the various types of indebtedness outlined above, in order to fulfill collateral requirements under its hedge agreements, the issuer may also grant its hedging counterparties a first lien interest that will be marked-to-market without any cap. However, the risk that lenders' claims could be diluted as a result may be viewed as "right-way risk" in that the value of the collateral claims increases in line with market power prices, which would theoretically result in an offsetting increase in the value of the collateral and a decreased risk of default. Changes to the capital structure include an increase in the first lien term loan to $800 million from $700 million, while the second lien term loan and the equity contribution have been decreased by $50 million each, to $250 million and $350 million, respectively. As a result, total leverage has increased by $50 million, or approximately 5%. Notwithstanding the increase in debt, consolidated FFO/Debt and EBITDA/interest are both expected to improve marginally due to a reduction in interest rates, though first lien metrics will be slightly weaker than previously projected. Consolidated DSCR will also decline slightly (though this is partly due to the addition of a mandatory 1% annual principal amortization). As a result, both the probability of default and the loss given default rates should both be slightly higher than they were in the structure previously reviewed by Moody's. However, as noted above, Moody's does not deem these changes significant enough to merit a revision of the assigned ratings. Broadway Gen Funding, LLC is an independent power generation company headquartered in East Brunswick, New Jersey. It is owned by LS Power Equity Partners, a private equity fund managed by the LS Power Group. CABLEVISION SYSTEMS: Sells Stake in Two Sports Network to Comcast ----------------------------------------------------------------- Cablevision Systems Corp. has sold its stakes in two regional sports network to Comcast Corp. for $570 million in cash, the Wall Street Journal reports. WSJ relates that with the agreement, the company has now completed unwinding its sports and entertainments assets that it holds jointly with News. Corp. WSJ further adds the Comcast will now own 100% of Fox Sports Net New England and 60% of Fox Sports Net Bay Area. About Comcast Headquartered in Philadelphia, Pennsylvania, Comcast Corporation (Nasdaq: CMCSA, CMCSK) -- http://www.comcast.com/-- provides cable, entertainment and communications products and services. With 24.2 million cable customers, 11.5 million high-speed Internet customers, and 2.5 million voice customers, Comcast is principally involved in the development, management and operation of broadband cable networks and in the delivery of programming content. Comcast's programming networks and investments include E! Entertainment Television, Style Network, The Golf Channel, VERSUS (formerly OLN), G4, AZN Television, PBS KIDS Sprout, TV One and four regional Comcast SportsNets. Comcast also has a majority ownership in Comcast-Spectacor, whose major holdings include the Philadelphia Flyers NHL hockey team, the Philadelphia 76ers NBA basketball team and two large multipurpose arenas in Philadelphia. About Cablevision Systems Corp. Headquartered in Bethpage, New York, Cablevision Systems Corp., (NYSE: CVC) -- http://www.cablevision.com/-- operates as a media, entertainment and telecommunications company in the U.S. It has three segments, Telecommunications Services, Rainbow, and Madison Square Garden. Telecommunications Services operates in cable television business. The Rainbow segment consists of its interests in national programming services, regional programming businesses, regional sports and news network business, and local advertising sales representation business. The Madison Square Garden segment owns and operates professional sports teams, as well as the MSG Networks sports programming business, and an entertainment business. It owns programming assets through its Rainbow National Services LLC subsidiary, including American Movie Classics, WE tv and Independent Film Channel. At Dec. 31, 2006, the company's balance sheet showed $9,844,857,000 in total assets and $15,184,110,000 in total liabilities, resulting in a $5,339,253,000 stockholders' deficit. The company's stockholders' deficit at Dec. 31, 2005, stood at $2,493,380,000. CASH TECHNOLOGIES: Posts $1 Million Net Loss in Qtr Ended Feb. 28 ----------------------------------------------------------------- Cash Technologies Inc. reported a net loss of $1,081,380 on net revenues of $103,858 for the third quarter ended Feb. 28, 2007, compared with a net loss of $1,118,070 on net revenues of $1,460 for the same period in fiscal 2006. Results for the third quarter of fiscal 2007 and for the third quarter of fiscal 2006, include losses from discontinued operations of $124,161 and $119,818, respectively, relating to the company's subsidiary, Tomco Auto Products, the major portion of whose assets were sold on Oct. 31, 2006. At Feb. 28, 2007, the company's balance sheet showed $17.3 million in total assets, $10.4 million in total liabilities, ($92,535) in total minority interest, and $6.9 million in total stockholders' equity. The company's balance sheet at Feb. 28, 2007, also showed strained liquidity with $2.5 million in total current assets available to pay $10.4 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Feb. 28, 2007, are available for free at http://researcharchives.com/t/s?1e1d Going Concern Doubt Vasquez & Company LLP, in Los Angeles, California, expressed substantial doubt about Cash Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended May 31, 2006, and 2005. The auditing firm pointed to the company's significant recurring losses. About Cash Technologies Headquartered in Los Angeles, Cash Technologies, Inc. (AMEX: TQ) -- http://www.cashtechnologies.com/-- develops and markets innovative data processing solutions in the healthcare and financial services industries. CBRL GROUP: Redemption of Outstanding Option Notes is on June 4 --------------------------------------------------------------- CBRL Group Inc. has directed the trustee of its outstanding Liquid Yield Option Notes due 2032 (Cusip Nos. 12489VAB2 and 12489VAA4) to send to all holders of Existing Notes notice that the Existing Notes will be redeemed on or about June 4, 2007. The trustee has been instructed to send the redemption notice not later than May 4, 2007. As of April 25, 2007, there were $422.03 million in principal amount at maturity of Existing Notes outstanding and the aggregate redemption price will be approximately $201 million, assuming that no holders of Existing Notes either convert their notes into common stock or exchange Existing Notes pursuant to the company's pending exchange offer. Holders of Existing Notes converted the Notes into the company's common stock at the rate of 10.86 shares of common stock per $1,000 in principal amount at maturity of Notes. Also, on April 30, 2007, holders of Notes exchanged all or a portion of their Notes for an equal amount of a new issue of Zero Coupon Senior Convertible Notes due 2032 (Cusip No. 12489VAC0) plus an exchange fee. The company paid the redemption price of the Existing Notes through a draw on its existing delayed-draw term loan facility and cash on hand. A Form T-3 Application for Qualification of Indenture covering the New Notes was filed with the Securities and Exchange Commission and has been declared effective. Also, in connection with the Exchange Offer, the company has filed with the SEC Tender Offer Statements on Schedule TO. Holders of Existing Notes and other interested parties may obtain a free copy of these and other relevant documents from: CBRL Group Inc. Attn: General Counsel P.O. Box 787 No. 305 Hartmann Drive Lebanon, Tennessee 37088-0787 Additional information concerning the terms of the Exchange Offer and copies of the exchange circular and other documents relating to the Exchange Offer may be obtained from the information agent: Global Bondholder Services Corporation Attn: Corporate Actions Suite 704 No. 65 Broadway New York, NY 10006 Tel: (212) 430-3774 (Banks and Brokers) (866) 470-4300 About CBRL Group Inc. Headquartered in Lebanon, Tennessee, CBRL Group Inc. (Nasdaq: CBRL)-- http://www.cbrlgroup.com/-- presently operates 557 Cracker Barrel Old Country Storer restaurants and gift shops located in 41 states. * * * CBRL Group Inc.'s Zero-Coupon Senior Liquid Yield Option Notes due 2032 carry Moody's Investors Service's 'Ba2' rating and Standard & Poor's 'B+' rating. CENTRAL PARKING: High Leverage Cues S&P to Cut Credit Rating to B ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Nashville, Tennessee-based Central Parking Corp. to 'B' from 'B+', and removed the ratings from CreditWatch with negative implications. Standard & Poor's also assigned its bank loan and recovery ratings to CPC's proposed first- and second-lien credit facilities. The company's $355 million first-lien credit facility was rated 'B', with a recovery rating of '3', indicating first-lien lenders could expect meaningful (50%-80%) recovery of principal in the event of a payment default or bankruptcy. The $50 million second- lien facility was rated 'CCC+', with a recovery rating of '5', indicating our expectation that second-lien lenders can expect negligible (0%-25%) recovery of principal in the event of a payment default. The ratings are based on preliminary terms and are subject to review upon final documentation. The rating on the company's existing $300 million senior secured credit facility was also lowered to 'B+' from 'BB-', and the rating on Central Parking Finance Trust's convertible trust issued preferred securities was lowered to 'CCC' from 'CCC+'. Both ratings will be withdrawn upon the completion of the transaction. The outlook is negative. "The downgrade reflects CPC's substantially more aggressive financial policy and more highly leveraged capital structure following KCPC Holdings Inc. completing its acquisition of CPC," said Standard & Poor's credit analyst Mark Salierno. On Feb. 20, 2007, KCPC entered into a definitive agreement to acquire CPC for $22.53 per share, or a total purchase price of $883.2 million, inclusive of fees and expenses. Proceeds from the new credit facilities will be used to finance a substantial portion of the transaction. CPC is a private owner, operator, and manager of surface lots and multilevel garages. Despite its somewhat narrow business focus, it is the largest private provider of parking services, with more than 2,800 parking facilities, representing more than one million spaces. CHAMBERS STREET: S&P Withdraws BB Rating on $5.5MM Class E Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings on the class A, B, C, D, and E notes issued by Chambers Street CDO II Ltd., a synthetic corporate investment-grade CDO transaction, following the complete redemption of the notes. The rating withdrawals follow the paydown of the notes by the issuer on the April 10, 2007, distribution date. Ratings Withdrawn Chambers Street CDO II Ltd. Rating Balance ------ ------- Class To From Current Previous ----- -- ---- ------- -------- A NR AAA $0.00 $41,500,000 B NR AA $0.00 $20,000,000 C NR A $0.00 $12,000,000 D NR BBB $0.00 $7,500,000 E NR BB $0.00 $5,500,000 * NR -- not rated. CHARTERWOOD ASSOCIATES: Case Summary & 20 Largest Unsec. Creditors ------------------------------------------------------------------ Debtor: Charterwood Associates, Ltd. dba Tivoli Apartments 10110 Charterwood Drive Houston, TX 77070 Bankruptcy Case No.: 07-32931 Type of Business: The Debtor operates an apartment complex. Chapter 11 Petition Date: April 30, 2007 Court: Southern District of Texas (Houston) Judge: Letitia Z. Clark Debtor's Counsel: Edward L. Rothberg, Esq. Hugh Massey Ray, III, Esq. Weycer Kaplan Pulaski & Zuber 11 Greenway Plaza, Suite 1400 Houston, TX 77046 Tel: (713) 961-9045 Fax: (713) 961-5341 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Tim Lam Loan $240,000 10A Humphreys, 4th Floor Kowloon, Hong Kong 1818 Ventures Loan $100,000 4608 Northwest Marine Drive Vancouver BC, Canada V6R 1B8 Appliance Warehouse Trade Debt $76,296 2225East Beltline Road Suite 321 Carrollton, TX 75006 O'Connor & Associates Trade Debt $67,958 Time Warner Telecom Trade Debt $11,806 Reliant Energy Trade Debt $10,010 Home Depot Credit Services Trade Debt $8,563 Empire Contractors Trade Debt $7,000 Direct TV Trade Debt $6,397 ACN Energy Trade Debt $5,809 RASA Floors Trade Debt $5,562 Hughes Trade Debt $4,565 Carpet Source Inc. Trade Debt $3,704 Apartment Finder Trade Debt $3,489 Office Depot Trade Debt $2,842 Allegiance Telecom Trade Debt $1,701 Z Intelligent Systems, LLC Trade Debt $1,575 Hi Tech Pest Control Trade Debt $1,553 Presto Maintenance Supply Trade Debt $1,425 Texas Home Group Trade Debt $1,082 CIFC FUNDING: Moody's Rates $24 Million Class D Notes at Ba2 ------------------------------------------------------------ Moody's Investors Service has assigned these ratings to Notes issued by CIFC Funding 2007-II, Ltd.: (1) Aaa to the $236,000,000 Class A-1-S Senior Secured Floating Rate Notes due April 2021; (2) Aaa to the $100,000,000 Class A-1-R Senior Secured Variable Funding Notes due April 2021; (3) Aaa to the $84,000,000 Class A-1-J Senior Secured Floating Rate Notes due April 2021; (4) Aa2 to the $56,500,000 Class A-2 Senior Secured Floating Rate Notes due April 2021; (5) A2 to the $35,000,000 Class B Senior Secured Deferrable Floating Rate Notes due April 2021; (6) Baa2 to the $28,000,000 Class C Senior Secured Deferrable Floating Rate Notes due April 2021 and (7) Ba2 to the $24,000,000 Class D Secured Deferrable Floating Rate Notes due April 2021. The Moody's ratings of the Notes address the ultimate cash receipt of all required interest and principal payments, as provided by the Notes' governing documents, and are based on the expected loss posed to Noteholders, relative to the promise of receiving the present value of such payments. Commercial Industrial Finance Corp. will manage the selection, acquisition and disposition of collateral on behalf of the Issuer. COMCAST CORP: Buys Cablevision's Sports Network Stakes for $570MM ----------------------------------------------------------------- Comcast Corp will buy Cablevision Systems Corp.'s stakes in two regional sports network for $570 million in cash, the Wall Street Journal reports. WSJ relates that with the acquisition, the company will own 100% of Fox Sports Net New England and 60% of Fox Sports Net Bay Area. With the deal, Cablevision completed the unwinding of its sports and entertainments assets that it holds jointly with News. Corp. About Cablevision Systems Corp. Headquartered in Bethpage, New York, Cablevision Systems Corp., (NYSE: CVC) -- http://www.cablevision.com/-- operates as a media, entertainment and telecommunications company in the U.S. It has three segments, Telecommunications Services, Rainbow, and Madison Square Garden. Telecommunications Services operates in cable television business. The Rainbow segment consists of its interests in national programming services, regional programming businesses, regional sports and news network business, and local advertising sales representation business. The Madison Square Garden segment owns and operates professional sports teams, as well as the MSG Networks sports programming business, and an entertainment business. It owns programming assets through its Rainbow National Services LLC subsidiary, including American Movie Classics, WE tv and Independent Film Channel. About Comcast Headquartered in Philadelphia, Pennsylvania, Comcast Corporation (Nasdaq: CMCSA, CMCSK) -- http://www.comcast.com/-- provides cable, entertainment and communications products and services. With 24.2 million cable customers, 11.5 million high-speed Internet customers, and 2.5 million voice customers, Comcast is principally involved in the development, management and operation of broadband cable networks and in the delivery of programming content. Comcast's programming networks and investments include E! Entertainment Television, Style Network, The Golf Channel, VERSUS (formerly OLN), G4, AZN Television, PBS KIDS Sprout, TV One and four regional Comcast SportsNets. Comcast also has a majority ownership in Comcast-Spectacor, whose major holdings include the Philadelphia Flyers NHL hockey team, the Philadelphia 76ers NBA basketball team and two large multipurpose arenas in Philadelphia. * * * Moody's Investors Service assigned a Ba1 rating to Comcast Corporation's preferred stock on April 2005. COMSTOCK HOMEBUILDING: Posts $39.8 Mil. Net Loss in Full Year 2006 ------------------------------------------------------------------ Comstock Homebuilding Companies Inc. revealed results of operations for 12 months ended Dec. 31, 2006, including a net loss of $39.8 million, as compared with a net income of $27.6 million for the 12 months ended Dec. 31, 2005. Total revenue was $245.9 million for the year with $240.1 million of revenue from homebuilding, as compared with $224.3 million with $216.3 million of revenue derived from homebuilding for the 12 months ended Dec. 31, 2005. This represents a 9.6% increase in total revenue and an 11% increase in revenue from homebuilding over the 12 months ended Dec. 31, 2005. Balance sheet of the company at Dec. 31, 2006, showed total assets of $517.4 million, total liabilities of $393.2 million, and minority interest of $371,000, resulting in a total stockholders' equity of $123.9 million. At Dec. 31, 2006, the company had $21.3 million of unrestricted cash on hand and $4.6 million of accounts receivable, which are substantially comprised of settlement proceeds in transit from settlement attorneys. By comparison, the company had $42.2 million of unrestricted cash on hand at Dec. 31, 2005, with $6.4 million of accounts receivable outstanding. At Dec. 31, 2006, the company had $295.4 million of senior and subordinated debt, as compared with $143 million at Dec. 31, 2005. The company's debt to capitalization ratio at Dec. 31, 2006, was 70.5% on shareholder equity of $123.9 million, as compared with 49.6% on $145.1 million at Dec. 31, 2005. The company delivered 940 homes during the year at an average per unit revenue of about $259,000. "This was a difficult year," said Christopher Clemente, chairman and chief executive officer. "We look forward to talking with our investors on March 19th about our 2006 results, our progress on bank facility modifications, status of sales and deliveries at the Eclipse and our strategy for 2007 and beyond." A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1e18 Fourth Quarter Results The company posted a net loss of $28.2 million for the quarter ended Dec. 31, 2006, as compared with a net income of $9.2 million for the quarter ended Dec. 31, 2005. Total revenue was $123.3 million for the quarter with $123 million of revenue from homebuilding, of which $40 million was generated from the sale of Carter Lake and $46.1 million from the Eclipse at Potomac Yard, as compared with $77.2 million with $75.8 million of revenue derived from homebuilding for the three months ended Dec. 31, 2005. This represents a 59.7% increase in total revenue and a 62.3% increase in revenue from homebuilding of $77.2 million over the three months ended Dec. 31, 2005. The revenue generated in the quarter related to the sale of the 30 units at Countryside was not included in revenue from homebuilding based on the ongoing involvement and profit participation of the company in the sellout of units. The revenue will be recognized as the units are delivered through the marketing and service agreement. For the three months ended Dec. 31, 2006, the company delivered 553 homes in the quarter at an average per unit revenue of about $228,000, which included 259 units at the company's Carter Lake project and the remaining 30 units at the company's Countryside Condominiums, which were both sold to single buyers. The company did not issue quarterly or annual guidance for 2007. About Comstock Homebuilding Based in Reston, Virginia, Comstock Homebuilding Companies Inc. (Nasdaq: CHCI) -- http://www.comstockhomebuilding.com/-- is a diversified real estate development firm with a focus on moderately priced for-sale residential products. Established in 1985, Comstock builds and markets single-family homes, townhouses, mid-rise condominiums, high-rise condominiums, mixed-use urban communities and active adult communities. The company currently markets its products under the Comstock Homes brand in the Washington, D.C., Raleigh, North Carolina, Atlanta, Georgia and parts of the Carolinas. Comstock develops mixed-use, urban communities and active-adult communities under the Comstock Communities brand. * * * Comstock Homebuilding Companies Inc. carries Standard & Poor's Ratings Services' 'B+' corporate credit rating. D&E COMMUNICATIONS: Earns $6.7 Million in Year Ended December 31 ---------------------------------------------------------------- D&E Communications Inc. reported total operating revenue for the full year 2006 was $162.1 million, as compared with $164.6 million for the previous year. Net income for the year was $6.7 million, as compared with a net income of $13.7 million for 2005. Operating income for 2006 was $22.5 million, as compared with operating income of $22.8 million in 2005. Results for 2006 included a gain on investment of $1 million as a result of a $1 million cash payment received in December related to advances to our international operations that had been written off in a previous year, a loss on early extinguishment of debt of $1.1 million, a non-cash customer relationships intangible asset impairment loss of $1.9 million and a loss on the sale of the Voice Systems Business of $1 million, net of tax. Results for 2005 include income of $6.4 million from the sale of the company's direct and indirect investment in Pilicka, a gain on investment of $2 million from the sale of our interest in PenTeleData and a reduction of income tax expense of $400,000 due to adjusting federal and state tax provisions for 2004 to the actual tax returns filed in 2005. Net income before these items was $8.7 million for the year ended Dec. 31, 2006, as compared with $6 million for the year ended Dec. 31, 2005. Fourth Quarter Results For the fourth quarter of 2006, the company reported total operating revenue of $39.8 million, as compared to $41.9 million in the fourth quarter of 2005. Net income for the fourth quarter was $3.5 million, as compared with a net income of $7.1 million for the same period last year. Operating income for the fourth quarter of 2006 was $7.2 million compared to operating income of $7.1 million in the fourth quarter of 2005. "D&E made solid progress in 2006," stated James Morozzi, D&E's president and chief executive officer. "We placed corporate emphasis on broadband growth and have increased DSL/ High-speed Internet subscribers by 41% over last year. We have also realized success in our CLEC's "On-Net" initiative with an increase to 30% of our customers being served entirely on our own network at year- end as compared to 26% On-Net at year-end 2005. This focus on converting existing customers to our own facilities, as well as emphasizing customer acquisition on our network, is a key to the profitability of our CLEC. To that end, we expanded our network in January 2007 with the purchase of a 26-mile fiber optic network in the Harrisburg area and contracts with two central Pennsylvania school districts. In 2006, our CLEC crossed a milestone by generating operating income for the first time." Mr. Morozzi also noted, "We certainly realize that 2007 is a critical year for our Systems Integration segment. We feel that we positioned ourselves for success in October with the sale of the assets of our commercial voice equipment and service operation to eCommunications Systems Corporation. This move away from a non-strategic business will allow us to put more focus on data, professional and managed services which provide recurring revenue for D&E." As of Dec. 31, 2006, the company had total assets valued at $510.6 million and total liabilities of $325 million, resulting in a total stockholders' equity of $185.6 million. The company held cash and cash equivalents of $3.1 million as of Dec. 31, 2006, down from $10.3 million as of Dec. 31, 2005. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1e1b About D&E Communications Based in Lancaster County, Pennsylvania, D&E Communications Inc. (NASDAQ: DECC) -- http://www.decommunications.com/-- is an integrated communications provider offering high-speed data, Internet access, local and long distance telephone, voice and data networking, network management and security, and video services. * * * D&E Communications Inc. carries Moody's Investors Service Ba2 bank loan debt rating. DAIMLERCHRYSLER AG: UAW Doesn't Favor Magna as Chrysler's Buyer --------------------------------------------------------------- United Auto Workers President Ron Gettelfinger has denied reports that the union endorsed Magna International Inc. as its preferred buyer for DaimlerChrysler AG's Chrysler Group, adding that the UAW maintains its stand against the unit's sale, John D. Stoll writes for Dow Jones Newswires. According to the report, Mr. Gettelfinger explained that the Detroit News misquoted Canadian Auto Workers representative Jerry Dias as saying the UAW was on board with such a plan. Mr. Gettelfinger further said the union isn't playing favorites and hasn't expressed support for Magna or any of Chrysler's potential buyers. The UAW and CAW are not affiliated although they both represent Chrysler workers in North America. The TCR-Europe reported on April 24 that DaimlerChrysler's top leaders, including Chief Executive Dieter Zetsche, plans to meet with labor groups, who plan to ask about the company's strategic review of Chrysler and the status of talks with three other groups, WSJ reveals. Mr. Zetsche faces pressure from shareholders who are concerned that Chrysler, with its $18 billion unfunded health-care liabilities and recent operating losses, is pulling down the company's profitable Mercedes-Benz luxury-car business. The UAW, however, is not taking things lying down. "We have established what we refer to as a war room where we have our people taking a look and monitoring every conceivable situation at Daimler," Mr. Gettelfinger said. "We have publicly [and] repeatedly said that we feel like we could make the case why DaimlerChrysler should keep the Chrysler Group." 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. DAVID DEVOUT: Case Summary & 19 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: David DeVout 606 Bandera Drive Allen, TX 75013 Bankruptcy Case No.: 07-40918 Chapter 11 Petition Date: April 30, 2007 Court: Eastern District of Texas (Sherman) Debtor's Counsel: Eric A. Liepins, Esq. Eric A. Liepins, P.C. 12770 Coit Road, Suite 1100 Dallas, TX 75251 Tel: (972) 991-5591 Total Assets: $8,000,945 Total Debts: $7,879,736 Debtor's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Shape Xpress $470,790 c/o Harold Kestenbaum 1320 Reckson Plaza 14th Floor West Tower Uniondale, NY 11556 Doyle Welch Enterprises $16,000 1622 Pheasant Lane Southlake, TX 76092 Williamson County Tax Office 1515 Shady Hillside $5,000 Deborah M. Hunt Pass Round Rock 904 South Main Street Texas 78664 Georgetown, TX 78626-5701 Whitney ISD $4,164 Kenneth Maun $3,556 Siebman Reynolds Burg & Phillips $3,345 Brian L. Sample $2,500 De Cordova Bend States $2,195 AT&T BSC Texas $819 David Childs $679 First Collection Services Collection Agent $663 Hilco Electric Corp. Presbyterian Hospital $500 White Bluff Property $339 Owners Association Precise Land Surveying $330 Allstate Texas Lloyds Company $261 City of Dallas $223 The Carlton Company $123 Town of Fairview $49 Water Service City of Dallas Unknown Department of Code Compliance DAVITA INC: Earns $76.6 Million Net Income in Quarter Ended Mar 31 ------------------------------------------------------------------ DaVita Inc. reported net income of $76.6 million on net operating revenues of $1.27 billion for the quarter ended March 31, 2007, compared with net income of $57.5 million on net operating revenues of $1.16 billion for the same period in fiscal 2006. Financial and operating highlights include: -- For the rolling 12-months ended March 31, 2007, operating cash flow was $631 million and free cash flow was $515 million. For the three months ended March 31, 2007, operating cash flow was $88 million and free cash flow was $61 million. -- Operating income for the three months ended March 31, 2007, was $193 million, compared with operating income of $162 million for the three months ended March 31, 2006. -- Total treatments for the first quarter of 2007 were 3,700,271 or 47,807 treatments per day. Non-acquired treatment growth in the quarter was 4.0% over the prior year's first quarter. -- As of March 31, 2007, the company operated or provided administrative services at 1,308 outpatient dialysis centers serving approximately 104,000 patients, which includes 32 third-party owned centers serving approximately 2,800 patients. During the first quarter of 2007 the company opened 11 new centers, discontinued providing administrative services to two third-party owned centers and closed one center. -- The company currently expects the annual effective tax rate for 2007 to be in the range of 39.0% - 40.0%. -- During the first quarter of 2007, the company issued $400 million of 6-5/8% senior notes due 2013, and used the proceeds to pay down its term loan B. In addition, the company amended and restated its existing senior secured credit facilities to, among other things, reduce the interest rate margin on its term loan B by 0.50%, and change certain financial covenants. The new term loan B bears interest at LIBOR plus 1.50%. In connection with these transactions, the company wrote-off deferred financing costs and other costs totaling approximately $4.4 million, which is included in debt expense, representing an after-tax amount of $2.7 million. At March 31, 2007, the company's balance sheet showed $6.53 billion in total assets, $5.05 billion in total liabilities, $127.5 million in minority interests, and $1.35 billion in total shareholders' equity. About DaVita Inc. Headquartered in El Segundo, Calif., DaVita Inc. (NYSE: DVA) -- http://www.davita.com/-- provides dialysis services for patients suffering from chronic kidney failure. It provides services at kidney dialysis centers and home peritoneal dialysis programs domestically in 41 states, as well as Washington, D.C. As of Dec. 31, 2006, DaVita operated or managed over 1,300 outpatient facilities serving approximately 103,000 patients. * * * As reported in the Troubled Company Reporter on April 16, 2007, Fitch Ratings revised its Rating Outlook for DaVita Inc. to Positive from Stable. In addition, Fitch affirmed DaVita's ratings: - Issuer Default Rating (IDR) 'B+' - Bank credit facility 'BB/RR2' - Senior subordinated notes 'B-/RR6' - Senior unsecured notes 'B/RR5' DELTA AIR: Emerges from Chapter 11 Bankruptcy Protection -------------------------------------------------------- Delta Air Lines disclosed yesterday in a regulatory filing with the Securities and Exchange Commission that it has emerged from Chapter 11 following a successful and efficient 19-month restructuring. Delta says it has fundamentally transformed its business and is positioned to emerge as a top-tier performer financially and operationally. Among its restructuring accomplishments, Delta points out that the company: * completed a comprehensive transformation plan one year ahead of schedule, delivering $3 billion in annual financial improvements; * reported four consecutive quarters of operating profits, with $155 million in operating profit in the first quarter of 2007; * achieved the lowest mainline non-fuel CASM (excluding special items) of the network carriers in 2006; * reduced the revenue gap with the industry - Delta's length of haul adjusted PRASM was 95 percent of the industry average in the first quarter of 2007 - up from 87 percent for the same quarter in 2005; and * is projected to reduce debt by more than 50%, from $16.9 billion at June 30, 2005, to a projected $7.6 billion at the end of 2007. In celebrating the company's recent achievements, Delta Chief Executive Officer Gerald Grinstein said: "This is a great day in Delta's history -- a day that would not have been possible without the hard work and sacrifice of Delta people around the world. Through our restructuring we have successfully repaired our balance sheet, improved the customer experience, expanded our international route system and built a platform for future success. Delta is now a fierce competitor in a tough industry and we are confident that we will reclaim our rightful place as an industry leader." "Emergence from bankruptcy is not the end of a journey; instead, it is the beginning of a new and prosperous era at Delta. Many challenges are ahead - and, thanks to our successful restructuring, we are stronger and better positioned to meet them," Mr. Grinstein continued. The U.S. Bankruptcy Court for the Southern District of New York approved Delta's exit from bankruptcy on April 25 when it entered an order confirming Delta's Plan of Reorganization. To conclude the exit process, Delta will close on a $2.5 billion exit financing facility that will be used to repay the company's $2.1 billion debtor-in-possession credit facilities led by GE Capital and American Express, to make other payments required upon exit from bankruptcy, and to increase its already strong liquidity position. The exit facility was co-led by ten financial institutions - JPMorgan, Goldman Sachs & Co., Merrill Lynch, Lehman Brothers, UBS, Barclays Capital, Royal Bank of Scotland, CIT, Credit Suisse and Calyon - and consists of an industry leading $1 billion first-lien revolving credit facility, a $600 million first-lien synthetic revolving facility, and a $900 million second-lien Term Loan B. The facility is secured by substantially all of the first-priority collateral in the previous debtor-in-possession facilities. Delta's restructuring success builds on more than five years of change at Delta that has delivered more than $8 billion in annual cost and revenue improvements to the company. "Rather than simply cut costs, Delta used the Chapter 11 process to completely transform every aspect of our business and create a platform for long-term success that will enable us to weather future volatility in the airline industry," said Edward Bastian, Delta's chief financial officer. "With a best-in-class cost structure, improving revenue performance and a strong financial foundation, we are exiting Chapter 11 in a position of strength and are ready to build on this momentum." Delta's operational improvements have focused on enhancing the customer experience and creating a stronger, more balanced network as a result of the addition of more than 60 new international routes. "In just over 19 months we have undertaken the largest international expansion in Delta's history," said Jim Whitehurst, Delta's chief operating officer. "[Yester]day, Delta takes customers to more places than any other airline and is the leading carrier between the U.S. and trans-Atlantic destinations. "Even in the midst of our turnaround, our employees continued to focus on the customer and the operation. Delta employees delivered stellar performance in on-time arrivals and customer service last year. In fact, Delta ranked in the top two in the 2006 J.D. Power North America Airline Satisfaction Study," continued Mr. Whitehurst. In accordance with Delta's prior announcements and as required by the Plan of Reorganization approved by the Bankruptcy Court, Delta's pre-plan common stock will be cancelled. Holders of the pre-plan common stock will not receive a distribution of any kind under the Plan of Reorganization. The company will issue new shares of Delta common stock in payment of bankruptcy claims and as part of a post-emergence compensation program for Delta employees. These new shares will be issued in early May 2007. The new shares have been approved for listing on the New York Stock Exchange. Trading on the NYSE commenced April 26, 2007, on a "when issued" basis, and "regular way" trading is anticipated to begin on May 3, 2007 under the symbol DAL. About Delta Air Headquartered in Atlanta, Georgia, Delta Air Lines (OTC:DALRQ) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. DRESDNER RCM: Good Credit Quality Cues Moody's to Upgrade Ratings ----------------------------------------------------------------- Moody's Investors Service has upgraded the ratings of these classes of notes issued by Dresdner RCM Global Investors CBO II, Ltd., a collateralized debt obligation lender: (1) The $12,000,000 Class A-2A Senior Floating Rate Notes Due November 10, 2012 Prior Rating: Aa1 Current Rating: Aaa (2) The $10,000,000 Class A-2B Senior Fixed Rate Notes Due November 10, 2012 Prior Rating: Aa1 Current Rating: Aaa (3) The $10,000,000 Class B-1 Senior Subordinate Floating Rate Notes Due November 10, 2012 Prior Rating: Baa2 (on watch for possible upgrade) Current Rating: Aa2 (4) The $15,000,000 Class B-2 Senior Subordinate Fixed Rate Notes Due November 10, 2012 Prior Rating: Baa2 (on watch for possible upgrade) Current Rating: Aa2 (5) The $12,000,000 Class B-3 Senior Subordinate Notes Due November 10, 2012 Prior Rating: Baa2 (on watch for possible upgrade) Current Rating: Aa2 (6) The $5,500,000 Class C Subordinate Fixed Rate Notes Due November 10, 2012 Prior Rating: Ba2 Current Rating: A3 Moody's noted that the rating action was due to an improvement in the credit quality of the transaction's underlying portfolio. EVERGREEN HOMES: Case Summary & 58 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: Evergreen Homes, L.L.C. 611 West Market Street Akron, OH 44303 fdba Summit Redevelopment Co. Bankruptcy Case No.: 07-51261 Debtor-affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Evergreen Investment Corporation 07-51262 Evergreen Builders, L.L.C. 07-51263 Type of Business: The Debtor is an urban residential developer. See http://www.evergreenhomesllc.com/ Chapter 11 Petition Date: April 29, 2007 Court: Northern District of Ohio (Akron) Judge: Marilyn Shea-Stonum Debtors' Counsel: Howard E. Mentzer, Esq. 1 Cascade Plaza, Suite 1445 Akron, OH 44308 Tel: (330) 376-7500 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million A. Evergreen Homes, LLC's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Dana Humphreys 804 West Market $120,000 4310 Wickliffe Drive Street, Akron, Barberton, OH 44203 Ohio- vacant landlord commercial 522 White Trail, $100,000 Canton, Ohio- vacant lot - property sold April 20, 2006 without satisfying lien Harley & Carol Kastner Summit County $158,000 3771 Edinburg Drive Common Pleas Uniontown, OH 44685 Court, Summit County, Ohio Case No. 2006-09- 5563 Terry & M. Nick Harbarger Summit County $100,000 5180 Greenwich Road Common Pleas Seville, OH 44273 Court, Summit County, Ohio Case No. 2006-09- 5563 F.G. Ayers, Inc. trade debt- home $84,754 building Raycom Media/WUAB TV trade debt- $83,390 advertising John A. Donofrio real estate $63,583 taxes- see attached schedule 10.4 First Merit Bank, N.A. 2873 South Main $51,100 Street, Akron, Ohio (sold on land contract- Taylor); value of security: $56,580; value of senior lien: $50,000 Time Warner Cable Ad Sales trade debt- $49,784 advertising First Merit Bancard Center credit cards $35,366 4194810020010278 4194810020010286 4194810020010294 4194810020010310 4194810020010328 4194810020010336 4194810020011573 Westfield Insurance Company insurance $31,595 Roetzel and Andress legal services $29,673 2722 Fulton, Ltd. rent $26,072 WOIO-TV trade debt- $20,540 advertising Joe & Catherine Cannata rent $17,500 Cuyahoga County Treasurer $17,601 Gary D. Ziegler taxes $13,345 R.E.M. Architects trade debt $11,487 Dominion East Ohio utilities $11,297 B. Evergreen Investment Corp's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Evelyn Valentine investors/ $258,000 10106 McCallum certificate Alliance, OH 44601 holder Charles Berringer, Trustee investors/ $175,000 2510 Brice Road certificate Akron, OH 44313 holder Samuel Schott investors/ $173,000 2225 Lee Drive certificate Akron, OH 44306 holder Sanford & Marjorie Speicher investors/ $165,000 certificate holder Harley & Carol Kastner investors/ $158,000 certificate holder J.A. & Eleanor Shaeffer investors/ $156,400 certificate holder Steve Rufener investors/ $150,000 certificate holder William Materna investors/ $140,000 certificate holder Bernard Wolak investors/ $135,000 certificate holder Jerry & Mary Reed investors/ $130,000 certificate holder Paul Balazek investors/ $125,000 certificate holder Richard or Helen Beichler investors/ $125,000 certificate holder Palmer Wetzel investors/ $125,000 certificate holder Charlotte Welever investors/ $120,000 certificate holder Jacob F. or Della R. Hough investors/ $113,000 certificate holder Terry & Pebble Seller investors/ $111,000 certificate holder Jerry & Meredith Selby investors/ $110,000 certificate holder Terry Kiko investors/ $108,000 certificate holder Randall or Kathy Krabill investors/ $106,000 certificate holder Lawrence Peelman investors/ $102,900 certificate holder C. Evergreen Builders, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ed Schory & Son Co. trade debt $134,456 5177 Louisville Street Northeast Louisville, OH 44624 Carter-Jones trade debt $125,840 P.O. Box 40 Kent, OH 44240-0001 Holmes Siding Contractors trade debt $50,046 E.T. Construction Troyer trade debt $45,234 Construction Roman Plumbing trade debt $34,018 Alfieri Brothers Materials trade debt $23,664 Supply Co. Maddern Electric, Inc. trade debt $21,993 Crown Heating & Cooling, Inc. trade debt $20,187 84 Lumber Company trade debt $19,489 Site Works Construction trade debt $19,198 Groundsource Excavating trade debt $17,580 Hartville Redi-Mix, Inc. Stark County, $16,042 Common Pleas Court, Case No. 2006 CV03040 Summit County, Common Pleas Court, Case No. J2007-2760 Westfield Insurance Co. liability $14,492 insurance Stahl Excavating, L.L.C. trade debt $14,413 John M. Miller $ Sons trade debt $13,504 Construction Medina Supply Company trade debt $12,974 M.D. Concrete, Inc. trade debt $10,964 Robertson trade debt $10,991 H&E Construction trade debt $10,400 Jerry's Trucking & Excavating consent judgment $10,245 in Canton Municipal Court Case No. 2006 CVF 6932 FIRST FRANKLIN: Moody's Cuts Ratings on Seven Certificates ---------------------------------------------------------- Moody's Investors Service downgraded seven certificates from four transactions issued in 2004 by First Franklin Mortgage Loan Trust. The transactions are backed by first lien, adjustable and fixed rate subprime mortgage loans. The actions are based on the analysis of the credit enhancement provided by subordination, overcollateralization and excess spread relative to expected losses. Complete rating actions are: Downgrade: Issuer: First Franklin Mortgage Loan Trust, 2004-FFH1 * Class M-7, downgraded to Ba1 from Baa1; * Class M-8, downgraded to B2 from Baa2; * Class M-9, downgraded to Caa1 from Baa3. Issuer: First Franklin Mortgage Loan Trust, 2004-FFH2 * Class B-1, downgraded to B2 from Ba1; * Class B-2, downgraded to Caa1 from Ba2. Issuer: First Franklin Mortgage Loan Trust, 2004-FFH3 * Class B-2, downgraded to B3 from Ba1. Issuer: First Franklin Mortgage Loan Trust, 2004-FFH4 * Class B-2, downgraded to B1 from Ba3. FORSTER DRILLING: Posts $838,243 Net Loss in Quarter Ended Feb. 28 ------------------------------------------------------------------ Forster Drilling Corporation reported a net loss of $838,243 for the first quarter ended Feb. 28, 2007, compared with a net loss of $225,809 for the same period ended Feb. 28, 2006. Revenues increased from $266,000 to $1,430,880 for the three months ended February 28, 2007, as a result of contract drilling operations. Total operating expenses increased from $359,252 to $1.8 million for the three months ended Feb. 28, 2007, reflecting increased business operations in the field and in the corporate office. Rig refurbishment and related expenses decreased from $129,685 to $51,883. Consulting and professional fees increased from $0 to $434,757. Other general and administrative expenses increased from $226,777 to $603,996, as a result of contract drilling operations. At Nov. 30, 2006, the company's balance sheet showed $10 million in total assets, $6.4 million in total liabilities and $3.6 million in total stockholders' equity. The company's balance sheet at Nov. 30, 2006, also showed strained liquidity with $237,459 in total current assets available to pay $4,813,112 in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Nov. 30, 2006, are available for free at http://researcharchives.com/t/s?1e15 Going Concern Doubt John M. James CPA, in Houston, expressed substantial doubt about Forster Drilling Corporation's ability to continue as a going concern after auditing the company's consolidted financial statements for the year ended Nov. 30, 2006. Mr. James pointed to the company's recurring losses from operations. About Forster Drilling Headquartered in Houston, Forster Drilling Corporation (OTC BB: FODL.OB) -- http://www.forsterdrilling.com/--is engaged in providing contract drilling services to independent oil and gas exploration and production companies, acquiring and rebuilding rotary drilling rigs and manufacturing major rig components, and exploring for, development, production, and sale of oil and natural gas. Forster Drilling recently entered into a multi-well daywork contract with Ridgeway Petroleum Corporation of Houston to drill wells in the St. John Field. The St. John Field located in Eastern Arizona and Western New Mexico is the largest known undeveloped CO2 resource in North America. FOUR SEASONS: Court Approves Plan of Arrangement for Privatization ------------------------------------------------------------------ Four Seasons Hotels Inc. disclosed that the Ontario Superior Court of Justice has issued a final order approving the plan of arrangement pursuant to Four Seasons be taken private by affiliates of Cascade Investment L.L.C., Kingdom Hotels International, and Isadore Sharp. Under the terms of the transaction, which remains subject to the satisfaction or waiver of conditions specified in the acquisition agreement, including Ministerial approval under the Investment Canada Act, holders of Limited Voting Shares will receive $82 cash per share. As reported in the Troubled Company Reporter on Nov. 21, 2006, the company received an offer to take Four Seasons private at $82 per share, or an enterprise value of $3.7 billion. The proposed capital structure included $750 million in debt financing and the contribution of new equity into the company, net of the company's existing cash balances. The offer to purchase Four Seasons was received from CEO Isador Sharp and Triples Holdings Limited, the controlling shareholder in Four Seasons, together with Kingdom Hotels International, which is owned by Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud, and Cascade Invesment LLC, which is owned by Bill Gates. Four Seasons' board has established a committee of directors to consider the proposed transaction. The company anticipated that the transaction would be completed early in the second quarter of 2007. About Four Seasons Hotel Inc. Headquartered in Ontario, Canada, Four Seasons Hotel Inc. (TSX Symbol "FSH"; NYSE Symbol "FS") -- http://www.fourseasons.com/-- has followed a targeted course of expansion, opening hotels in major city centers and desirable resort destinations around the world. Founded in 1960, the company currently has 74 hotels in Thailand, the United Kingdom, and Costa Rica and 28 other countries, and more than 25 properties under development, Four Seasons will continue the hospitality industry with innovative enhancements, making business travel easier and leisure travel more rewarding. FTS GROUP: Recurring Losses Cue Bassie & Co.'s Going Concern Doubt ------------------------------------------------------------------ Bassie & Co., in Houston, Texas, raised substantial doubt the ability of FTS Group Inc. to continue as a going concern citing the company's recurring losses after auditing the company's financial statements for the years ended Dec. 31, 2006, and 2005. The company had net income of $1,231,367 for the fiscal year ended Dec. 31, 2006, as compared with net loss of $3,627,067 for the fiscal year ended Dec. 31, 2005. The increase in net income was primarily due to increased sales at FTS Wireless and improved overall operating conditions at FTS Wireless during the year ended Dec. 31, 2006. The addition of the operations of See World Satellites Inc. not included in the prior years' operating results and an income benefit from the valuation of outstanding derivatives of $1,400,902 also contributed to the increase in net income. Consolidated sales revenues for the year ended Dec.31, 2006, increased $5,367,345 to $6,678,076, as compared with $1,310,731 for the year ended Dec. 31, 2005. The increase in sales revenues was primarily related to the acquisition and development of new stores and opening of new retail outlets. As of Dec. 31, 2006, the company had total assets of $6,719,323 and total liabilities of $5,065,106, resulting in a total stockholders' equity of $1,654,217. It had an accumulated deficit of $10,704,226 as of Dec. 31, 2006. The company reported strained liquidity as of Dec. 31, 2006. Its total current assets decreased to $866,501 as of Dec. 31, 2006, versus $1,323,143 as of Dec. 31, 2005, while its total current liabilities increased to $3,612,067 as of Dec. 31, 2006, from $1,331,996 as of Dec. 31, 2005. Current assets consisted of $115,056 of cash, $130,025 of accounts receivable, $373,734 of inventories and $247,686 of prepaid expenses and current assets. Total assets increased to $6,719,323 versus $1,974,495 as of Dec. 31, 2005. Current liabilities consisted of $1,820,215 current portion of notes payable to related parties, net of discount, $1,238,321 of convertible debentures-current portion, $548,707 of accounts payable and accrued expenses and $4,824 of current installment of long term debt-equipment loans. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1e25 About FTS Group FTS Group Inc. (OTCBB: FLIP) -- http://www.ftsgroup.com/-- develops and acquires businesses primarily in the wireless industry. Through FTS Wireless Inc., a wholly owned subsidiary, the company acquires and develops a chain of retail wireless locations in the Gulf Coast market of Florida. FURNITURE DIRECT: Files for Bankruptcy; Customers Won't Get Orders ------------------------------------------------------------------ Furniture Direct and Home Fashion Market have filed for bankruptcy, The Record reports citing the companies' bankruptcy trustee BDO Dunwoody LLP. The report quotes Susan Taves, of BDO Dunwoody, as saying that that it is unlikely that they would be able to fill orders by customers who have already made deposits. Around 3,000 people will probably never get furniture that they have paid for or put deposits down, Ms. Taves adds. According to the report, customers whose furniture orders are not in the store yet will become creditors and will be mailed a creditor's notice. Further information on the companies' bankruptcy is available at: http://www.bdo.ca/furniture/ GERALD MATTICKS: Declares Bankruptcy Due to Unpaid Taxes -------------------------------------------------------- Gerald Matticks has declared bankruptcy, The Gazette reports citing the Journal de Montreal. Mr. Matticks is a member of the West End Gang and is currently serving a 12-year prison sentence. According to the report, Mr. Matticks owes the Quebec government $8 million in unpaid income tax and GST while he owes the federal governement $2.3 million. The amounts were calculated from profits Mr. Matticks is alleged to have earned from illegal activities, the report adds citing Solange de Billy-Tremblay, the agent in the case. The government plans to get the money back by seizing five buildings Mr. Mattick owns, the report relates. GLASSMASTER CO: Case Summary & 14 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Glassmaster Company 126 Glassmaster Road Lexington, SC 29072 Bankruptcy Case No.: 07-02242 Type of Business: The Debtor is active in polymer filaments, flexible control cables, switch panels, electronic test equipment, and mudular composite framework. See http://www.glassmaster.com/ Chapter 11 Petition Date: April 27, 2007 Court: District of South Carolina (Columbia) Judge: Helen E. Burris Debtor's Counsel: Robert Frank Anderson, Esq. Anderson & Associates, P.A. P.O. Box 76 Columbia, SC 29202-0076 Tel: (803) 252-8600 Fax: (803) 256-0950 Total Assets: $10,066,068 Total Debts: $8,997,367 Debtor's 14 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Melvin Chavis $300,000 1113 Lindler Drive West Columbia, SC 29169 Dupont Co. $237,494 P.O. Box 905552 Charloote, NC 28290-5552 E.M.S.-Grivory $236,959 P.O. Box 751609 Charlotte, NC 28275 Kathryn B. Trewhella $200,000 George Husong $200,000 Stephen Trewhella, Sr. $150,000 Sonoco Crellin $109,567 Custom Resins $105,030 County of Lexington $105,003 John & Virginia Husong $100,000 Prime Polymer Services $94,077 Equivalent Performance Polymers $84,778 American Express $84,164 Rhodia Polyamide Corporation $69,815 GSMPS MORTGAGE: Moody's Cuts Rating on Class B4 & B5 Certificates ----------------------------------------------------------------- Moody's Investors Service has downgraded two certificates and confirmed the rating of one certificate from a GSMPS Mortgage deal, issued in 2003. The transaction consists of a securitization of FHA insured and VA guaranteed re-performing loans virtually all of which were repurchased from GNMA pools. The insurance covers a large percentage of any losses incurred as a result of borrower defaults. The two most subordinate certificates from the GSMPS 2003-1 transaction have been downgraded because existing credit enhancement levels are low given the current projected losses on the underlying pools. Currently there is only a small amount of credit enhancement for the transaction in the form a subordinate bond. The one mezzanine certificate rating is being confirmed because credit enhancement levels are sufficient compared to the current projected loss numbers for the current rating level. Complete rating actions are: Issuer: GSMPS Mortgage Loan Trust Downgrades: * Series 2003-1; Class B4, downgraded to Ba3 from Ba2; * Series 2003-1; Class B5, downgraded to Ca from B2. Confirmed: * Series 2003-1; Class B3, current rating Baa2 rating confirmed. GSRPM MORTGAGE: Moody's Rates Class B-4 Certificates at Ba1 ----------------------------------------------------------- Moody's Investors Service has assigned a Aaa rating to the senior certificates issued by GSRPM Mortgage Loan Trust 2007-1 and ratings ranging from Aa2 to Ba1 to the subordinate certificates in the transaction. The securitization is backed by performing and re-performing mortgages purchased from Bank of America, National Association, Mortgage Lenders Network USA, Inc., Ameriquest Mortgage Company, Freemont Investment & Loan and others. The ratings are based primarily on the credit quality of the loans and on protection against credit losses by subordination, excess interest, and overcollateralization. The ratings also benefit from an interest- rate swap agreement and an interest-rate cap agreement both provided by Goldman Sachs Mitsui Marine Derivative Products, L.P. Moody's expects collateral losses to range from 14.95% to 15.45%. Ocwen Loan Servicing, LLC (SQ2-), Washington Mutual Bank (SQ2) subprime, Well Fargo Bank, N.A. (SQ1) subprime, Bank of America, National Association, and Avelo Mortgage, L.L.C. will service the loans. JPMorgan Chase Bank, N.A. will act as the master servicer. The complete rating actions are: Issuer: GSRPM Mortgage Loan Trust 2007-1 * Cl. A, Assigned Aaa * Cl. M-1, Assigned Aa2 * Cl. M-2, Assigned A2 * Cl. B-1, Assigned Baa1 * Cl. B-2, Assigned Baa2 * Cl. B-3, Assigned Baa3 * Cl. B-4, Assigned Ba1 HALCYON LOAN: Moody's Rates $15.5 Million Class D Notes at Ba2 -------------------------------------------------------------- Moody's Investors Service has assigned these ratings to notes issued by Halcyon Loan Investors CLO II, Ltd., a collateral loan obligation: (1) Aaa to the $270,500,000 Class A-1-S Senior Secured Floating Rate Notes due 2021 (2) Aa1 to the $30,250,000 Class A-1-J Senior Secured Floating Rate Notes due 2021 (3) Aa2 to the $23,000,000 Class A-2 Senior Secured Floating Rate Notes due 2021 (4) A2 to the $18,500,000 Class B Senior Secured Deferrable Floating Rate Notes due 2021 (5) Baa2 to the U.S. $21,750,000 Class C Senior Secured Deferrable Floating Rate Notes due 2021 (6) Ba2 to the U.S. $15,500,000 Class D Secured Deferrable Floating Rate Notes due 2021 Moody's ratings of the notes address the ultimate cash receipt of all required interest and principal payments, as provided by the notes' governing documents, and are based on the expected loss posed to noteholders, relative to the promise of receiving the present value of such payments. Halcyon Loan Investors, L.P. will manage the selection, acquisition and disposition of collateral on behalf of the Issuer. HAMILTON BEACH: S&P Rates Proposed $125 Million Sr. Term Loan at B ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Glen Allen, Virginia-based small appliance manufacturer Hamilton Beach Inc. The outlook is stable. At the same time, Standard & Poor's assigned its 'B' bank loan and '4' recovery ratings to the company's proposed $125 million senior secured term loan B, indicating that lenders can expect marginal (25%-50%) recovery of principal in the event of a payment default. Hamilton Beach/Proctor-Silex Inc., the company's wholly owned subsidiary, is the borrower of the term loan facility. For analytical purposes, Standard & Poor's views Hamilton Beach Inc. and Hamilton Beach/Proctor-Silex Inc. as one economic entity. All ratings are based on preliminary offering statements and are subject to review upon final documentation. "The ratings on Hamilton Beach reflect the company's narrow business focus, participation in the highly competitive small appliance industry, customer concentration, and aggressively leveraged financial profile," said Standard & Poor's credit analyst Bea Chiem. Hamilton Beach is a leading designer, marketer, and distributor of small electric kitchen and household appliances. Its products are branded primarily under the Hamilton Beach and Proctor-Silex brands, and are marketed primarily to retail merchants and wholesale distributors. HAMILTON BEACH: Moody's Puts Corporate Family Rating at B1 ---------------------------------------------------------- Moody's Investors Service assigned Hamilton Beach, Inc. a B1 corporate family rating and Hamilton Beach/Proctor-Silex, Inc. a B1 senior secured term loan B rating. Proceeds from the new $125 million term loan B will be used to pay a one-time dividend to NACCO Industries, Inc. in an amount not to exceed $110.0 million, refinance a portion of the company's asset based revolver and pay associated fees and expenses. The outlook is stable. The ratings assigned are subject to review of final documentation, with no material change to the terms and conditions of the facility and transaction as presented to Moody's. HBPS is currently a wholly owned subsidiary of NACCO. NACCO intends to spin-off 100% of its HBPS business to existing NACCO stockholders by the end of June 2007, with HBPS paying a $110 million cash dividend to NACCO prior to the spin-off. Following the spin off, HBPS will be a wholly-owned subsidiary of Hamilton Beach, Inc. (parent of HBPS). Hamilton Beach, Inc. will apply to list its Class A common stock on the New York Stock Exchange. Moody's B1 rating reflects the company's limited scale in the highly competitive small appliance industry, moderate brand strength with the Hamilton Beach name and high customer concentration. The ratings also reflect initial leverage, measured as debt/EBITDA, of approximately 4.0x based on 2006 results pro forma for the new debt (excluding one time items) and EBITDA/interest of approximately 4.9x. HBPS has had a successful track record in recent years in terms of improving its operating margins through new product innovation and focus on improving its cost position. The rating outlook is stable as HBPS is expected to maintain operating margin stability and to utilize free cash flow to reduce debt. HBPS currently maintains a $115 million asset based revolver (ABL) (not rated by Moody's) which has 1st lien on accounts receivable and inventory and a second on T/L B 1st lien collateral. The term loan's B1 rating its LGD-3 (31%) loss given default assessment as this facility is secured by a 1st lien on all assets other than accounts receivable and inventory and a 2nd lien on ABL 1st lien collateral and the B2 probability of default rating. These ratings were assigned: Hamilton Beach, Inc.: * Corporate Family Rating at B1 * Probability of Default Rating at B2 Hamilton Beach/Proctor-Silex, Inc.: * Secured Term Loan B at B1 * Secured Term Loan B LGD Assessment -- LGD 3 (31%) Hamilton Beach/Proctor-Silex, headquartered in Glen Allen, Virginia, is a designer, marketer and distributor of small electric kitchen and household appliances, as well as commercial products for restaurants, bars and hotels, primarily under the "Hamilton Beach" and "Proctor Silex" brand names. Revenue for Hamilton Beach/Proctor-Silex in fiscal 2006 was approximately $547 million. HANGER ORTHOPEDIC: Good Performance Cues Moody's to Up All Ratings ------------------------------------------------------------------ Moody's Investors Service upgraded all the ratings of Hanger Orthopedic Group, Inc. and kept the outlook at stable. Moody's upgraded these ratings: - $75 million senior secured revolver due 2011 to Ba3 (LGD2, 26%) from B1 (LGD2, 25%); - $230 million senior secured term loan due 2013 to Ba3 (LGD2, 26%) from B1 (LGD2, 25%); - $175 million unsecured notes due 2014 to Caa1 (LGD5, 81%) from Caa2 (LGD5, 80%); - Corporate Family Rating to B2 from B3; - Probability of Default Rating to B2 from B3; The upgrade in the Corporate Family Rating primarily reflects the improvement in operating performance resulting in improved credit metrics (all figures in accordance with Moody's standard analytical adjustments). Debt/EBITDA has decreased to approximately 5.5 times at the end of 2006 from 6.0 times at the end of 2005 and interest coverage measured as EBIT/Interest expense has improved to 1.5 times from 1.3 times over that same period. The key factors constraining the B2 CFR are Hanger's high leverage, weak free cash flow, modest revenue growth trends and unfavorable though improving reimbursement environment. The stable outlook reflects Moody's expectation that the company will benefit from a better reimbursement environment in 2007 as the freeze in Medicare reimbursement levels for all orthopedic and prosthetic services ended at the end of 2006. Hanger should be able to maintain its improved credit metrics as a result of stabilization in top-line revenue and cash flow generation. Hanger Orthopedic Group, Inc., headquartered in Bethesda, MD, is the leading provider of orthotic and prosthetic patient-care services. The company owns and operates 618 patient care centers in 45 states including the District of Columbia. For the twelve months ended December 31, 2006, the company recognized revenue of approximately $599 million. HARMAN INTERNATIONAL: Inks Merger Agreement with KHI Parent ----------------------------------------------------------- Harman International Industries Incorporated entered into an Agreement and Plan of Merger with KHI Parent Inc. and its wholly owned subsidiary KHI Merger Sub Inc. In the merger agreement, each outstanding share of Harman common stock, other than any shares held by Harman or KHI Parent, will be converted into the right to receive $120 in cash, without interest. Holders of Company common stock will have the right to elect to receive in lieu of cash, common stock of Parent, at a 1:1 ratio, up to a maximum of 8,333,333 shares in the aggregate. If Company stockholders elect to receive more than 8,333,333 shares, in the aggregate, then the 8,333,333 shares of Parent common stock will be allocated to electing stockholders on a pro-rated basis. If proration is necessary, Harman stockholders will receive the Cash Election Price for any of their shares of Harman common stock that are not converted in the Merger into KHI Parent common stock. Holders of Harman stock options issued under Harman's benefit plans will have the ability to participate in the same election for KHI Parent common stock. KHI Parent common stock issued in the Merger to electing stockholders is not required under the Merger Agreement to be listed on any stock exchange. KHI Parent has agreed to file the reports specified in Section 13(a) of the Securities and Exchange Act of 1934 and the rules thereunder for a period of 2 years following the Merger closing. No Harman stockholder will be required to elect to receive Parent common stock for their shares in lieu of cash. At the request of the Sponsors, Dr. Sidney Harman, Harman's Executive Chairman and Chief Executive Officer, has agreed to elect to receive KHI Parent shares in exchange for at least 1,700,000 shares of Harman Common Stock he beneficially owns, subject to the same proration as is applicable to all other electing Harman stockholders and option holders. The Board of Directors of Harman has unanimously determined that the Merger is in the best interests of Harman and its stockholders, and declared advisable, to enter into the Merger Agreement, approved the Merger Agreement and resolved to recommend adoption of the Merger Agreement by Harman stockholders. The closing of the Merger is subject to customary closing conditions, including adoption of the Merger Agreement by Harman's stockholders and antitrust clearance. Closing is not subject to any financing condition but the closing may be delayed in certain circumstances to facilitate financing. The merger is expected to be completed in the third calendar quarter of 2007. The Merger Agreement contains a "go-shop" provision pursuant to which Harman has the right to solicit and engage in discussions and negotiations with respect to competing proposals through June 15, 2007. After that date, Harman may continue discussions with any "Excluded Party", defined as a party that submits a written proposal during the go-shop period that Harman's Board of Directors: a. believes in good faith to be bona fide; and b. determines in good faith, after consultation with its independent financial advisors and outside counsel, is or could reasonably be expected to result in a "Superior Proposal." Before the Merger Agreement is approved by stockholders of Harman, Harman may terminate the Merger Agreement to enter into a Superior Proposal, provided that Harman complies with the requirements under the Merger Agreement, including, among other things, giving three business days' advance notice to KHI Parent and taking into account adjustments, if any, offered by KHi. If Harman so terminates the Merger Agreement in connection with a Superior Proposal submitted by an Excluded Party, Harman must pay a fee of $75 million to Parent. After June 15, 2007, Harman is subject to further restrictions on its ability to solicit third-party proposals, provide information and engage in discussions with third parties other than continuing Excluded Parties. Harman may, in accordance with the requirements of the Merger Agreement, only provide information and participate in discussions with respect to unsolicited third-party proposals submitted after June 15, 2007, that the Board of Directors of Harman: a. believes in good faith to be bona fide; b. determines in good faith, after consultation with its independent financial advisors and outside counsel, is or could reasonably be expected to result in a Superior Proposal; and c. after consultation with outside counsel, determines in good faith that the failure to take such action could violate its fiduciary duties under applicable law. If Harman terminates the Merger Agreement in connection with a Superior Proposal that is not submitted by an Excluded Party, the Company must pay a fee of $225 million to KHI Parent. The $225 million fee payable by Harman to KHI Parent is also payable in other limited circumstances involving a competing proposal and termination of the Merger Agreement. In certain other circumstances where the Merger Agreement is terminated and no competing offer is involved, Harman must reimburse KHI Parent for its expenses not to exceed $20 million. The Merger Agreement provides that KHI Parent will pay to the Company a fee of $225 million upon termination of the Merger Agreement under circumstances in which KHI Parent has breached certain of its representations, warranties, obligations or agreements contained in the Merger Agreement or where the Merger is not completed within the specified time period and other conditions to closing have been satisfied. Upon such termination, Parent must pay the Company a $225 million fee, and payment of this fee is liquidated damages and the Harman's sole recourse against KHI Parent and its affiliates under the Merger Agreement. Affiliated funds of KKR and GSCP have each delivered to Harman's limited guarantees of KHI Parent's obligations to pay certain amounts under the Merger Agreement up to a maximum amount of $225 million in the aggregate, plus interest and other expenses, if applicable. Harman has made customary representations and warranties in the Merger Agreement and agreed to customary covenants, including covenants regarding operation of the business of Harman and its subsidiaries prior to the closing. In connection with entering into the Merger Agreement, Harman's Board of Directors adopted and approved an amendment to the Rights Agreement, dated as of Dec. 13, 1999, by and between Harman and Mellon Investor Services LLC, as rights agent. The Amendment amends the Rights Agreement so that: a. neither the execution, delivery or performance of the Merger Agreement nor the consummation of the transactions contemplated thereby will: i. cause the Rights to become exercisable, ii. cause Parent, Merger Sub or any of their Affiliates or Associates to become an Acquiring Person, or iii. give rise to a Share Acquisition Date, a Distribution Date, a Flip-in Event, a Flip-over Event, or a Triggering Event; and b. the Rights will expire in their entirety immediately prior to the effective time of the Merger without any payment being made in respect thereof. A full-text copy of the Agreement and Plan of Merger, dated as of April 26, 2007 is available for free at: http://ResearchArchives.com/t/s?1e13 Harman International Industries Inc. makes audio systems through auto manufacturers, including DaimlerChrysler, Toyota/Lexus, and General Motors. Also the company makes audio equipment, like studio monitors, amplifiers, microphones, and mixing consoles for recording studios, cinemas, touring performers, and others. HARTCOURT COMPANIES: Posts $1.3 Mil. Net Loss in Qtr Ended Feb. 28 ------------------------------------------------------------------ The Hartcourt Companies Inc. reported a net loss of $1,383,721 for the third quarter ended Feb. 28, 2007, compared with a net loss of $1,500,454 for the same period ended Feb. 28, 2006. The company reported $0 revenues during the quarters ended Feb. 28, 2007, and 2006, following the company's entry into a definitive agreement to sell its IT distribution business. Said business has been classified as discontinued operations for the three months ended Feb. 28, 2007, and 2006. Loss from discontinued operations for the three months ended Feb. 28, 2007, was $1,048,625, compared with loss from discontinued operations of $1,485,831 for the same period ended Feb. 28, 2006. At Feb. 28, 2007, the company's balance sheet showed $1,930,732 in total assets, $983,337 in total liabilities, and $947,395 in total shareholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Feb. 28, 2007, are available for free at http://researcharchives.com/t/s?1e1c Discontinued Operations On Feb. 26, 2007, the company entered into a definitive agreement with Shanghai Shiheng Architecture Consulting Co. Ltd. to sell its 100% equity interest in Shanghai Jiumeng Information Technology Co. Ltd. Going Concern Doubt As reported in the Troubled Company Reporter on Sept. 21, 2006, Kabani & Company Inc. expressed substantial doubt about Hartcourt Companies Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended May 31, 2006. The auditing firm pointed to the company's accumulated deficit of $67,709,374 as of May 31, 2006, and negative cash flow from operations amounting $1,630,966 for the year ended May 31, 2006. About Hartcourt Companies Hartcourt Companies Inc. (OTC BB: HRCT.OB) -- http://www.hartcourt.com/ -- used to be a distributor of internationally well known brand named IT hardware products and related services in the People's Republic of China. HERITAGE PROPERTY: Moody's Cuts Ratings and Retains Review ---------------------------------------------------------- Moody's Investors Service downgraded the ratings of Heritage Property Investment Trust, Inc. (senior unsecured debt to Ba2, from Baa3) and left the bonds under review for possible downgrade. Moody's said that the review will focus on the timeliness of Heritage's security filings, and on long-term evolution of the firm's management structure and leverage appetite. Heritage was purchased by affiliates of Centro Properties Group [ASX: CNP] in October 2006. Heritage had approximately $350 million of unsecured bonds outstanding as of March 31, 2006. In its rating action, Moody's cited delayed securities filings, constrained transparency and increasing secured debt as causes for the downgrade. The REIT's third quarter 2006 10-Q filing was only released on March 20, 2007, and it is unknown when its 2006 10-K filing will be made available. These ratings were downgraded, and remain under review: Heritage Property Investment Trust, Inc. * Senior unsecured to Ba2 from Baa3; * senior unsecured shelf to (P)Ba2 from (P)Baa3; * subordinated shelf to (P)Ba3 from (P)Ba1; * preferred stock shelf to (P)Ba3 from (P)Ba1 Centro Properties Group is a retail investment organization specializing in the ownership, management and development of retail shopping centers. Centro manages both listed and unlisted property, and has an extensive portfolio of shopping centers across Australia, New Zealand and the USA. HERTZ GLOBAL: Revenue Increases by 7.9% in Year Ended December 31 ----------------------------------------------------------------- Hertz Global Holdings Inc. reported total revenues of $8 billion for the year ended Dec. 31, 2006, increased by 7.9% from $7.4 billion for the year ended Dec. 31, 2005. Revenues from the company's car rental operations of $6.2 billion for the year ended Dec. 31, 2006, increased by $323.7 million, or 5.4%, from $5.9 billion for the year ended Dec. 31, 2005. The company had net income of $115.9 million for the year ended Dec. 31, 2006, representing a decrease of $234.1 million, or 66.9%, from $350 million for the year ended Dec. 31, 2005. The decrease in net income was primarily due to the 80.1% increase in interest expense over the year ended Dec. 31, 2005. Total expenses of $7.8 billion for the year ended Dec. 31, 2006 increased by 13.4% from $6.9 billion for the year ended Dec. 31, 2005, and total expenses as a percentage of revenues increased to 97.5% for the year ended Dec. 31, 2006, as compared with 92.7% for the year ended Dec. 31, 2005. As of Dec. 31, 2006, Hertz had an aggregate principal amount outstanding of $2 billion pursuant to its senior term loan facility and no borrowings outstanding under its senior asset- based loan facility. The company posted total assets of $18.6 billion and total liabilities of $16.1 billion, resulting in a total stockholders' equity of $2.5 billion as of Dec. 31, 2006. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1e14 Fourth Quarter Results The company reported record 2006 fourth quarter worldwide revenues of $2 billion, an increase of 8% over the same period in 2005. Net income for the fourth quarter of 2006 was $39.8 million, as compared with a loss of $27.6 million for the fourth quarter of 2005. The company generated strong cash flows during the year with net corporate debt decreasing from $4.8 billion at Dec. 31, 2005, to $4.5 billion at Dec. 31, 2006. Levered after-tax cash flows after fleet growth were $284.2 million for the year, an improvement of $733.9 million over 2005. Mark P. Frissora, the company's chairman and chief executive officer, said "Hertz achieved record fourth quarter operating results for several reasons including strong cost management, as we reduced operating expenses by over two full percentage points of revenues compared with the fourth quarter of 2005, even while increasing our investment in advertising by $6.6 million versus the prior year quarter. Most of the reduction in operating expenses occurred in our U.S. car rental and equipment rental operations. We also achieved solid revenue growth in both the car and equipment rental businesses, due to pricing improvements and increasingly diversified revenue sources. Hertz's strong brand, global platform and diversified business mix are competitive advantages that helped us generate record results this quarter, and we expect that they will be the basis for future revenue and profit growth." Outlook for 2007 For the full year 2007, the company forecasts revenues of $8.5 billion to $8.6 billion, an increase of 5% to 7% for both car rental and equipment rental. The company expects improved revenues, profitability and margin growth in 2007, driven by previously announced restructuring plans and expense management initiatives to be continued throughout the year and incremental organic growth from a number of diverse sources. Results of Hertz Corporation The company's operating subsidiary, The Hertz Corporation, posted interest expense attributable to the company of $16.2 million and $40 million, for the fourth quarter and full year 2006, respectively. Hertz Corp. posted the same revenues as the company's. Cost Reduction Initiatives On Jan. 5, 2007, the company disclosed an initiative to further improve competitiveness and industry leadership through job reductions affecting about 200 employees primarily at its corporate headquarters and its service center in Oklahoma City. These reductions are expected to result in annualized savings of up to $15.8 million. The company expects to incur an estimated $3.3 million to $3.8 million restructuring charge in the first quarter of 2007. On Feb. 28, 2007, the company disclosed the second initiative through targeted job reductions affecting about 1,350 employees primarily in its U.S. car rental operations, with much smaller reductions occurring in U.S. equipment rental operations, the corporate headquarters, and the service center in Oklahoma City, as well as in Canada, Puerto Rico, Brazil, Australia and New Zealand. These reductions are expected to result in annualized savings of up to $125 million. The company expects to incur an estimated $9 million to $11 million restructuring charge in the first quarter of 2007. Further cost reduction initiatives are in process. About Hertz Global Hertz Global Holdings Inc. in Park Ridge, New Jersey, (NYSE: HTZ) -- https://www.hertz.com/ -- through its subsidiaries, rents and leases cars and trucks primarily in the U.S. and Europe. It operates in two segments, Car Rental and Equipment Rental. The Car Rental segment engages in the ownership and lease of cars. The Equipment Rental segment rents earthmoving equipment, material handling equipment, aerial and electrical equipment, air compressors, generators, pumps, small tools, compaction equipment, and construction-related trucks in North America and Europe. The company's products and services include Hertz #1 Club Gold; NeverLost customized, onboard navigation systems; SIRIUS Satellite Radio; and unique cars and SUVs offered through Hertz's Prestige, Fun and Green collections. Hertz also operates an equipment rental companies with corporate locations in France and Spain. It is the corporate parent of Hertz Corporation. * * * Hertz Global Holdings Inc. carries Moody's Investors Service's Ba3 corporate family rating with a stable ratings outlook. INFOUSA INC: $75 Mil. Increase in Senior Loan Cues S&P's BB Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its loan and recovery ratings to infoUSA Inc.'s senior secured term loan B due 2012, following an increase in the existing loan to $175 million from $100 million. The loan rating is 'BB' and the recovery rating is '3', reflecting the expectation for a meaningful (50%-80%) recovery of principal in the event of a payment default. infoUSA's revolving credit facility due 2011 remains at $175 million, although the option of infoUSA to increase the availability under its revolving credit facility by an amount of $75 million was deleted. The rating on the revolver was affirmed at 'BB' with a recovery rating of '3'. Proceeds from the increased term loan were used to repay amounts outstanding under the company's revolving credit facility, which was utilized to fund the acquisition of Opinion Research Corp. in December 2006. The facility's collateral package includes a first-priority perfected security interest in all the tangible and intangible assets of the borrower. The borrower's domestic subsidiaries provide guarantees. The corporate credit rating on Omaha, Nebraska-based infoUSA is 'BB' and the rating outlook is stable. The corporate credit rating reflects the company's moderate-size operating cash flow base, acquisitive growth strategy, narrow product set, and competitive market conditions--including competition from other data services providers with greater financial resources. infoUSA's proprietary database of consumer and business information, diverse base of business customers, and significant portion of sales derived from existing customers temper these factors. Ratings List infoUSA Inc. Corporate Credit Rating BB/Stable/-- Secured Debt BB (Recovery Rating: 3) INSIGHT HEALTH: Extends Senior Sub. Notes Exchange Offer to May 3 ----------------------------------------------------------------- InSight Health Services Holdings Corp. has extended the offer to exchange shares of common stock for up to $194.5 million aggregate principal amount of 9-7/8% Senior Subordinated Notes due 2011 (CUSIP No. 45766QAE1) of InSight Health Services Corp., its wholly owned subsidiary, to 5:00 p.m., New York City time, on May 3, 2007, unless further extended. All terms of the exchange offer remain the same. On March 21, 2007, InSight Health has launched the offer to exchange shares of its common stock. Holders of approximately 52% in aggregate principal amount of the Notes have already indicated an interest to tender in the exchange. For each $1,000 of aggregate principal amount of Notes tendered, Note holders will receive 40 shares of the company's common stock after giving effect to a 4.70 for 1 reverse stock split. Completion of the exchange offer is conditioned upon, among other things, tenders from not less than 95% in aggregate principal amount of the Notes. The company may waive this condition. Tendering holders will also consent to the adoption of certain amendments to the indenture for the Notes to terminate substantially all of the restrictive covenants. Concurrent with the exchange offer, the company is also soliciting votes to accept or reject a prepackaged plan of reorganization, which will attempt to accomplish the restructuring on substantially the same terms as the out-of-court exchange offer. The company only expects to file this prepackaged plan if the minimum tender conditions of the exchange offer are not satisfied or waived. No exchange or consent fee will be payable in connection with the exchange offer and consent solicitation. The exchange offer and consent solicitation will expire at 11:59 p.m. New York City time on April 19, 2007, unless extended. Notification of any extension will be made public. The terms and conditions of the exchange offer and consent solicitation and other important information are contained in a Prospectus and Solicitation Statement dated March 21, 2007, filed with the Securities and Exchange Commission. The dealer manager for the exchange offer is Lazard Capital Markets LLC. Note holders may request copies of the Prospectus and Solicitation Statement, the related Letter of Transmittal and Ballots by contacting the solicitation and information agent: CapitalBridge 111 River Street, 10th Floor Hoboken, NJ 07030 Telephone (877) 746-3583 As of April 27, 2007, approximately $109.1 million of Notes had been tendered to the exchange agent. About InSight Based in Lake Forest, California, InSight Health Services Holdings Corp. -- http://www.insighthealth.com/-- is a nationwide provider of diagnostic imaging services. It serves managed care entities, hospitals and other contractual customers in over 30 states, including the following targeted regional markets: California, Arizona, New England, the Carolinas, Florida and the Mid-Atlantic states. InSight's network consisted of 109 fixed-site centers and 108 mobile facilities as of Dec. 31, 2006. InSight Health's balance sheet at Dec. 31, 2006, showed $354,548,000 in total assets and $503,827,000 in total liabilities, resulting in a $198,038,000 stockholders' deficit. * * * As reported in the Troubled Company Reporter on Feb. 23, 2007, Standard & Poor's Ratings Services placed its 'CCC' corporate credit rating on InSight Health Services Corp. and its 'CC' rating on InSight's subordinated debt on CreditWatch with negative implications. The 'CCC' rating on InSight's senior secured debt was placed on CreditWatch with developing implications. INTEGRAL NUCLEAR: Taps Cole Schotz as Bankruptcy Counsel -------------------------------------------------------- Integral Nuclear Associates LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of New Jersey for permission to employ Cole, Schotz, Meisel, Forman & Leonard, P.A., as their bankruptcy counsel. Cole Schotz will: a. provide legal advice with respect to the Debtors' powers and duties as debtors-in-possession in the continuing to operate and manage their assets; b. advise the Debtors concerning, and assisting in the negotiation of documentation of, the use of cash collateral and/or debtor-in-possession financing, debt restructuring and related transactions; c. review the nature and validity of agreements relating to the Debtors' businesses and advise the Debtors in connection to those agreements; d. review the nature and validity of liens, if any, asserted against the Debtors and advise as to the enforceability of those liens; e. advise the Debtors concerning the actions they might take to collect and recover property for the benefit of their estates; f. prepare on the Debtors' behalf all necessary and appropriate applications, motions, pleadings, orders, notices, petitions, schedules, and other documents, and review all financial and other reports to be filed in Debtors' Chapter 11 cases; g. advise the Debtors concerning, and preparing responses to, applications, motions, pleadings, notices and other papers, which may be filed in the Debtors' Chapter 11 cases; h. counsel the Debtors in connection with formulation, negotiation and promulgation of a plan of reorganization and related documents; and i. perform all other legal services for and on behalf of the Debtors, which may be necessary or appropriate in the administration of their Chapter 11 cases. Cole Schotz will be paid based on these hourly rates: Designation Hourly Rates ----------- ------------ Members $275 to $575 Associates $175 to $375 Paralegals $120 to $200 The Debtors paid Cole Schotz a total retainer of $157,000 before the bankruptcy filing. The Debtors assured the Court that Cole Schotz does not hold or represent any interest adverse to the Debtors or their creditors, and is a disinterested person. The firm can be reached at: Michael D. Sirota, Esq. Member Cole, Schotz, Meisel, Forman & Leonard, P.A. Court Plaza North, 25 Main St. Hackensack, NJ 07601 Tel: (201) 489-3000 http://www.coleschotz.com/ About Integral Nuclear Based in Paoli, Pennsylvania, Integral Nuclear Associates, LLC -- http://www.integralpet.com/-- operates nuclear imaging centers. The company and 25 of its affiliates filed for Chapter 11 protection on April 15, 2007 (Bankr. D. N.J. Case Nos. 07-15183 through 07-15215). When the Debtors filed for protection from their creditors, they listed estimated assets and debts of $1 million to $100 million. INTEROCEANICA IV: S&P Rates $562 Mil. Senior Secured Notes at BB ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' ratings to Interoceanica IV Finance Ltd.'s $562 million zero-coupon senior secured notes series 2007-1 due 2025 and series 2007-2 due 2018. The ratings reflect the 'BB' rating assigned to the Peruvian government's payment obligations (certificados de reconocimiento de derechos del pago anual por obras; CRPAOs). The CRPAOs are an unconditional and irrevocable payment obligation of the government of Peru, but Standard & Poor's assessed their credit quality at one notch below Peru's sovereign foreign currency rating. This assessment reflects: -- The certificates are subject to budgetary allocation; -- The certificates do not constitute sovereign indebtedness; and -- The Peruvian government has a strong commitment to the IIRSA toll road project. The ratings are also based on the sound legal and financial structure of the transaction, including the true sale of the underlying assets, and consider the strength of Goldman Sachs International as swap counterparty in the cash investment agreement. The transaction is a securitization of the CRPAOs for the construction of the fourth stretch of the IIRSA Sur toll road project. Upon completion of different construction milestones, the GOP will issue U.S. dollar-denominated CRPAOs through its Ministry of Transportation and Communication acknowledging the right to collect U.S. dollar payments over a 15-year period. The issuer will buy the CRPAOs over an expected 42-month construction period. Upon the issuance of the CRPAOs, the GOP's obligation to make payments is absolute and independent of the performance of the project's sponsors or any revenues generated by the toll road. During the construction period, the portion of note proceeds that has not yet been used to purchase CRPAOs will be used by the issuer to enter into a cash investment agreement. This agreement is a total return swap with Goldman Sachs International as the swap counterparty and provides sufficient funds to purchase CRPAOs. The transaction is supported by a make-whole agreement that mitigates the risk of negative carry that may result from an early termination of the transaction due to certain failures of the project concessionaire during the construction period. The transaction also features a credit default swap that will pay investors up to the largest semiannual CRPAO payment amount upon the occurrence of a payment default by the GOP on the CRPAOs. This swap functions similar to a reinstatable liquidity facility. This is the third securitization rated by Standard & Poor's related to the construction of the IIRSA toll road system in Peru. In 2006, Standard Poor's rated two transactions: IIRSA Norte Finance Ltd. and Peru Enhanced Pass-Through Finance Ltd. Ratings Assigned Series Rating Amount ------ ------ ------ 2007-1 BB $321,000,000 2007-2 BB $241,000,000 IPC SYSTEMS: Increased Leverage Cues S&P to Cut Credit Rating to B ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on New York City-based IPC Systems Inc. to 'B' from 'B+', and removed the rating from CreditWatch, where it was placed on March 28, 2007, with negative implications, following the announced acquisition of WestCom Corp. The rating outlook is stable. At the same time, Standard & Poor's assigned its 'B' bank loan rating and '2' recovery rating to IPC's proposed $915 million first-lien senior secured bank facility, reflecting S&P' expectation of substantial (80%-100%) recovery of principal by creditors in the event of a payment default. Standard & Poor's also assigned its 'CCC+' bank loan rating and '5' recovery rating to IPC's proposed $315 million second-lien senior secured term loan, indicating our expectation of negligible (0%-25%) recovery of principal by creditors in the event of a payment default. "The downgrade of the corporate credit rating reflects an increase in leverage to more than 7x from the mid-6x area, which is excessive for the prior rating, given IPC's relatively narrow business profile," said Standard & Poor's credit analyst Ben Bubeck. Despite the fact that the acquisition of WestCom bolsters IPC's services business and adds stability to the overall business, IPC's capacity to make additional debt-financed acquisitions as a 'B+' was extremely limited following the previous acquisition of Positron Public Safety Systems Inc. Proceeds from the proposed first- and second-lien term loans, along with a $25 million equity contribution, will be used to fund the acquisition of WestCom and refinance existing debt. The ratings on IPC reflect a concentrated product base and end market, along with an aggressive financial policy. These are only partly offset by a leading global market position in its addressed niche and our expectations for continued positive demand momentum over the intermediate term. IPCS INC: Stockholders Get Special Cash Dividend of $11 Per Share ----------------------------------------------------------------- iPCS Inc.'s board of directors has declared a special cash dividend of $11 per share payable to all holders of the company's common stock, with a record date of Tuesday, May 8, 2007, and a payment date of Wednesday, May 16, 2007. Based on its estimates, the company expects that, for U.S. federal income tax purposes, the special cash dividend will be treated as a tax-free return of capital to the extent of each stockholder's tax basis in the company's common stock with any excess generally being treated as gain from the sale of stock. The company will not complete the company's final determination of the character of the special cash dividend, for U.S. federal income tax purposes, until early calendar year 2008. The company's stockholders are advised to consult with their tax advisors regarding the U.S. federal, state, local and foreign tax consequences of the special cash dividend. Headquartered in Schaumburg, Illinois, iPCS Inc. (Nasdaq: IPCS) -- http://www.ipcswirelessinc.com/-- is an affiliate of Sprint Nextel Corporation with the exclusive right to sell wireless mobility communications network products and services under the Sprint brand in 80 markets including markets in Illinois, Michigan, Pennsylvania, Indiana, Iowa, Ohio and Tennessee. The territory includes key markets such as Grand Rapids (MI), Fort Wayne (IN), Tri-Cities (TN), Scranton (PA), Saginaw-Bay City (MI) and Quad Cities (IA/IL). As of March 31, 2007, iPCS's licensed territory had a total population of approximately 15 million residents, of which its wireless network covered approximately 11.4 million residents, and iPCS had approximately 590,900 subscribers. * * * As reported in the Troubled Company Reporter on April 11, 2007, Moody's Investors Service affirmed its B3 corporate family rating for iPCS Inc. The company's SGL-3 rating has also been affirmed. Moody's has changed its outlook for iPCS to developing. KIRKLAND KNIGHTSBRIDGE: Court Approves Hartman as Special Counsel ----------------------------------------------------------------- The Honorable Alan Jaroslovsky of the U.S. Bankruptcy Court for the Northern District of California gave Kirkland Knightsbridge LLC permission to employ Hartman & Hartman, as its special counsel. The Debtor tells the Court that it holds disputed claims against 360 Global Wine Company and 360 Viansi LLC in an amount of up to $15 million. The Debtor asserted certain possessory liens on certain wine inventory owned by 360 Global and 360 Viansi. The firm is expected to: a. advise the Debtor's current counsel on procedural and substantive matters pertaining to the Debtor's rights and remedies against Chapter 11 debtors in Nevada bankruptcy court proceedings; b. act as "designated local counsel" within the meaning of Local Rule IA 10-2 of the Rules of Practice of the U.S. Bankruptcy Court for the District of Nevada, and making appearances in the proceedings In re 360 Global Wine Company and In re 360 Viansa LLC U.S. Bank. Ct. D. Nev. Case Nos. 07-50205 and 07-50206 as appropriate; and c. perform other legal services for the estate as may be necessary herein; provide however that the nature and scope of the services are limited by the engagement letter of the firm. The firm has requested a $5,000 retainer from the funds of the Debtor's manager Larry D. Kirkland. Jeffrey Hartman, Esq., a principal at Hartman & Hartman, will bill $325 per hour for this engagement. Mr. Hartman assures the Court the his firm does not hold any interest adverse to the Debtor and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Court. Mr. Hartman can be reached at: Jeffrey Hartman, Esq. Hartman & Hartman 645 First Street East Sonoma, California 95476 Kirkland Knightsbridge LLC dba Kirkland Ranch Winery -- http://www.kirklandranchwinery.com/-- operates vineyards and wineries in the Napa Valley region and breeds cattle for commercial consumption. The company filed a chapter 11 petition on September 21, 2006 (Bankr. N.D. Calif. Case No. 06-10628). The company's affiliate, Kirkland Cattle Company, filed a separate chapter 11 petition in the same court under Case No. 06-10630. John H. MacConaghy, Esq. at MacConaghy and Barnier, PLC represents the Debtors in their restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtors' cases. When the Debtors sought protection from their creditors, they listed assets and debts between $10 million to $100 million. KLIO II: Credit Support Improvement Cues S&P to Hold BB+ Rating --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on the class B and C notes issued by Klio II Funding Ltd., a high-grade cash flow CDO of ABS transaction, and removed them from CreditWatch with positive implications, where they were placed Dec. 22, 2006. Concurrently, the ratings on the CP program, the class A-1 and A-2 notes, and the preference shares were affirmed. The upgrades are primarily the result of an improvement in the credit support of the notes following the decrease in the balance of the class B note due to paydowns. Klio II Funding Ltd. has a feature in its payment structure that permits, during the reinvestment period, up to 25% of the excess funds remaining during each payment period to be paid to the class B notes before making any distributions to the preference shareholders. As a result, the current class B note balance was 81.63% of its original size, which has improved the credit support to the notes. Ratings Raised and Removed from Creditwatch Positive Klio II Funding Ltd. Rating Balance ------ ------- Class To From Original Current ----- -- ---- -------- ------- B A A-/Watch Pos $50,000,000 $40,815,000 C BBB+ BBB/Watch Pos $50,000,000 $50,000,000 Ratings Affirmed Klio II Funding Ltd. Balance ------- Class Rating Original Current ----- ------ -------- ------- CP A-1+ $4,500,000,000 $4,500,000,000 A-1 AAA $292,500,000 $292,500,000 A-2 AA $70,000,000 $70,000,000 Pref shares BB+ $86,250,000 $86,250,000 LIMEROCK CLO: Moody's Rates $20 Million Class D Notes at Ba2 ------------------------------------------------------------ Moody's Investors Service has assigned these ratings to Notes and Combination Securities issued by Limerock CLO I: (1) Aaa to the $80,000,000 Class A-1 Floating Rate Notes Due 2023; (2) Aaa to the $60,000,000 Class A-2 Floating Rate Notes Due 2023; (3) Aaa to the $207,000,000 Class A-3a Floating Rate Notes Due 2023; (4) Aa1 to the $23,000,000 Class A-3b Floating Rate Notes Due 2023; (5) Aa2 to the $29,000,000 Class A-4 Floating Rate Notes Due 2023; (6) A2 to the $22,000,000 Class B Deferrable Floating Rate Notes Due 2023; (7) Baa2 to the $19,000,000 Class C Floating Rate Notes Due 2023; (8) Ba2 to the $20,000,000 Class D Floating Rate Notes Due 2023; (9) Baa2 to the $14,000,000 Class J Blended Securities; and (10) Baa2 to the $5,000,000 Class K Blended Securities. The Moody's ratings of the Notes address the ultimate cash receipt of all required interest and principal payments, as provided by the Notes' governing documents, and are based on the expected loss posed to Noteholders, relative to the promise of receiving the present value of such payments. The Moody's ratings of the Class J and Class K Blended Securities address solely the ultimate receipt of the Class J Blended Securities Rated Amount and the Class K Blended Securities Rated Amount, respectively. The ratings reflect the risks due to the diminishment of cash flow from the underlying portfolio consisting of Leveraged Loans, High Yield Bonds, CLO Notes and Synthetic Securities due to defaults, the transaction's legal structure and the characteristics of the underlying assets. Invesco Senior Secured Management, Inc. will manage the selection, acquisition and disposition of collateral on behalf of the Issuer. MARLBOROUGH STREET: Moody's Rates $9 Million Notes at Ba2 --------------------------------------------------------- Moody's Investors Service announced that it has assigned these ratings to Notes issued by Marlborough Street CLO, Ltd.: (1) Aaa to the $93,000,000 Class A-1 Senior Secured Floating Rate Notes due 2019; (2) Aaa to the $126,000,000 Class A-2A Senior Secured Floating Rate Notes due 2019; (3) Aa1 to the $14,000,000 Class A-2B Senior Secured Floating Rate Notes due 2019; (4) Aa2 to the $13,000,000 Class B Senior Secured Floating Rate Notes due 2019; (5) A2 to the $15,000,000 Class C Secured Deferrable Floating Rate Notes due 2019; (6) Baa2 to the $15,000,000 Class D Secured Deferrable Floating Rate Notes due 2019; and (7) Ba2 to the $9,000,000 Class E Secured Deferrable Floating Rate Notes due 2019. The Moody's ratings of the Notes address the ultimate cash receipt of all required interest and principal payments, as provided by the Notes' governing documents, and are based on the expected loss posed to Noteholders, relative to the promise of receiving the present value of such payments. MFS Investment Management will manage the selection, acquisition and disposition of collateral on behalf of the Issuer. MARYLAND ECONOMIC: Moody's Cuts Rating on Revenue Bonds to Ba2 -------------------------------------------------------------- Moody's Investors Service has downgraded the rating to Ba2 from Ba3 on the Maryland Economic Development Corporation Senior Student Housing Revenue Bonds (Frostburg State University Project), Series 2002 A. Approximately $16.85 million of the original $17.22 million remains outstanding. The downgrade reflects the declining demand for the 406-bed project (74% occupancy for spring 2007) known as Edgewood Commons, and our expectation that the project will continue to perform below underwriting projections in the next few years. The rating outlook remains negative reflecting the possibility of a further downgrade if the project's financial position does not significantly improve in the near term, the likelihood that the project will need to withdraw funds from its debt service reserve fund to pay debt service in the near term, and our concern for the project's performance in a relatively rural location and in a declining enrollment environment as experienced by Frostburg State University over the last several years. Credit Strengths: -- The property manager, Capstone Management Corp., is experienced nationally and in the State of Maryland in privatized student housing, and has taken positive steps to build a relationship with Frostburg State University over the past two fiscal years, increase rental income by average 7% and reduce operating expenses by performing certain services in-house, as reflected in the project's fiscal year 2006 financial performance in 1.18x. Additionally, Capstone's management fee is subordinated to debt service. -- Strong oversight by MEDCO, as both issuer for the bonds and owner of the project. Credit Challenges: -- Occupancy has declined from 93% and 94% for the fall and spring of the 2005-06 academic year to 71% and 74% for fall and spring of the current 2006-07 academic year. Decline in occupancy is attributable to large supply of available and more affordable beds both on- and off-campus in this rural area of the state. Enrollment at Frostburg State University has also been declining over the last several years and is projected to grow very little in the coming years. -- Despite improvement in financial performance based on audited financial statements ending June 30, 2006 over the previous years, based upon operating statements through December 2006 the project will not be able to meet the 2006-07 debt service even with the management fee and issuer fee subordinated to debt service. -- Absence of a long-term financial or legal commitment from the University, the University System of Maryland (rated Aa2), or the State of Maryland (rated Aaa). Recent Developments/Results: The audited financial statements ending June 30, 2006 demonstrated a 55% increase in net operating income from fiscal year 2005, attributable to 21% increase in rental revenues and 38% increase in other income while overall operating expenses declined by 9%. The project experienced 93-94% occupancy throughout the year, which was a marked improvement from 87-77% from the previous year. Occupancy, however, has declined during the current academic year at 71% and 74% in the fall 2006 and spring 2007 respectively. Moody's understands that the availability of affordable units off- campus, while for the most part inferior to what is offered at Edgewood Commons, is a significant source of competition for the project. Frostburg State University has 2,000 available beds on- campus which is also a significant source of competition. Frostburg State University has also experienced a decline in enrollment over the last several years; the current number of full-time-equivalent students (4, 434) declined by 2% from 2005-06 academic year and has declined 4.5% overall since the 2002-03 academic year. Projections for enrollment remain relatively flat into the coming years, with the projected number of full-time- equivalent students to be at 4,350 for 2010-11, which will be 153 less students than the number of full-time-equivalent students enrolled in 2003-04 when the project first opened. Summer income revenue continues to be below original underwriting projections. Given these various factors as well as the recent change in administration new to this campus and the challenges the project has been facing, rental revenue is 19% below budget for this first six months of operation for the current fiscal year. Based on our projections and estimates, debt service coverage could be below 1.0x for the 2006-07 fiscal year (even assuming the management fee and issuer fee are subordinated). MEDCO reports that the new administration has demonstrated a willingness to address the imbalance in market forces by the on-camp housing stock by taking an aging 90-bed facility off-line and by raising the rates for single rooms in the coming academic year. The bond trustee has reported that the debt service reserve fund remains fully funded however the repair and replacement reserve fund reflects a combined deficit of approximately $180,000. Outlook The negative rating outlook reflects the possibility of a further rating downgrade if the project's financial position does not improve in the near term. What could change the rating - UP -- A substantial increase in debt service coverage and stabilized occupancy. -- Replenished reserves. What could change the rating - DOWN -- Withdraw from debt service reserve fund to meet debt service payment. MASSACHUSETTS DEV'T: Poor Liquidity Cues S&P to Cut Rating to BB+ ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Massachusetts Development Finance Agency's bonds, issued for Cambridge Friends School, to 'BB+' from 'BBB-', reflecting a substantial decline in student enrollment, much weaker demand flexibility, weak financial results, and deteriorating liquidity. The outlook is stable. "The stable outlook reflects management's proactive initiative to return to a balance budget through substantial cost reductions, including staff reduction," said Standard & Poor's credit analyst Marc Savaria. "Furthermore, the board decided to reduce the school size and become smaller in the near term, with a budgeted goal to enroll 240 students next fall compared to 270 students just two years ago. Further erosion of financial resources and weaker operating results would lead to another rating downgrade." More specifically, the 'BB+' rating reflects six consecutive years of unrestricted net asset deficits and a financial plan that does not produce a balance budget until fiscal year 2008; as well as deteriorating liquidity levels, with unrestricted resources to operations at 62% and expendable resources to operations at 65%, compared with 116% and 131%, respectively, just five years ago. A lower rating is precluded at this time due to management stability after many years of substantial leadership transition; a manageable debt burden, at roughly 5.2% of budget, with no debt plan; and a still adequate financial cushion, with expendable resources that equal 65% of operating expenses and 102% of debt. Cambridge Friends School is an elementary and middle day school for pre-kindergarten through the eighth grade. MERRILL LYNCH: S&P Rates CDN$1.08 Million Class L Certs. at B- -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Merrill Lynch Financial Assets Inc. commercial mortgage pass-through certificates series 2007-Canada 22. The preliminary ratings are based on information as of April 26, 2007. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings assigned to Merrill Lynch Financial Assets Inc.'s CDN$434.4 million commercial mortgage pass-through certificates series 2007-Canada 22 reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the servicer and backup servicer, the economics of the underlying mortgage loans, and the geographic and property type diversity of the underlying pool of loans. Standard & Poor's determined that, on a weighted-average basis, the loan pool has a debt service coverage ratio of 1.50x, a beginning loan-to-value ratio of 97.7%, and an ending LTV of 84.2%. Preliminary Ratings Assigned Merrill Lynch Financial Assets Inc. Class Rating Amount ----- ------ --------------- A-1 AAA CDN$50,034,000 A-2 AAA CDN$167,659,000 A-3 AAA CDN$163,471,000 XP-1 AAA N/A B AA CDN$8,687,000 C A CDN$10,860,000 D BBB CDN$12,488,000 E BBB- CDN$3,801,000 F BB+ CDN$2,823,000 G BB CDN$2,389,000 H BB- CDN$1,304,000 J B+ CDN$1,085,000 K B CDN$1,521,000 L B- CDN$1,086,000 M NR CDN$7,167,398 XP-2 AAA N/A XC AAA CDN$434,375,398 MICHAEL BRETZEL: Case Summary & 11 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Michael Robert Bretzel 539 North Oleander Avenue Daytona Beach, FL 32118 Bankruptcy Case No.: 07-01710 Chapter 11 Petition Date: April 25, 2007 Court: Middle District of Florida (Jacksonville) Debtor's Counsel: Walter J. Snell, Esq. Snell & Snell, P.A. 436 North Peninsula Drive Daytona Beach, FL 32118 Tel: (386) 255-5334 Fax: (386) 255-5335 Total Assets: $5,978,100 Total Debts: $5,357,369 Debtor's 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Option One Mortgage Corp. 1347 North Central $364,922 Payment Processing Avenue, Flagler Beach Secured: Department 7821 Florida 32136, Gold $350,000 Los Angeles, CA 90084-7821 Coast Subdivision Block Black & White Investment 109 15th Street $163,450 1124 Waverly Drive Flagler Beach, Secured: Daytona Beach, FL 32118 Florida 32136 $150,000 Fuquay Subdivision Block Regions Bank 2004 Coachman $145,000 P.O. Box 2153 Motor Home Secured: Birmingham, AL 35287-0201 $135,000 Citi Cards Credit Card Purchases $18,632 Beneficial Credit Card Purchases $10,282 Bank of America Credit Card Purchases $6,688 Cobb & Cole Legal Fees $3,681 Chase Credit Card Purchases $2,700 Action Card Credit Card Purchases $1,295 Heritage Funding Group, Inc. Personal Guarantees Unknown Securities & Exchange Civil Damages Unknown Commission MOSAIC CO: Planned Loan Reduction Cues S&P's Positive Outlook ------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on The Mosaic Co. to positive from negative. S&P affirmed all the ratings, including the 'BB' corporate credit rating. "The outlook change followed Mosaic's announcement that it plans to apply $250 million of cash generated from strong recent business conditions to voluntarily reduce term loan balances," said Standard & Poor's credit analyst Cynthia Werneth. "It also incorporates our expectation that management will be able to follow through on its commitment to further strengthen the company's financial profile in the near term given the robust conditions in global agricultural markets. Also important is the fact that Mosaic has sharply reduced the brine inflow at its Esterhazy, Saskatchewan, potash mine." Plymouth, Minnesota-based Mosaic is a leading global producer of phosphate and potash fertilizer and feed, with annual sales of more than $5 billion. "We could raise ratings within the next two years if continued strong agricultural market conditions enable the company to generate cash for additional debt reduction and financial policies remain supportive of somewhat higher credit quality," Ms. Werneth said. "Factors that could constrain the ratings include an unexpected deterioration in fertilizer market conditions, significant weather-related or other operating disruptions, developments that forestall the expected reduction of debt, and the failure to resolve internal control weaknesses." MRF CARBON CANYON: Case Summary & 10 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: M.R.F.- Carbon Canyon, L.P. 8951 Research Drive Irvine, CA 92618 Tel: (714) 417-1396 Bankruptcy Case No.: 07-11225 Type of Business: The Debtor is engaged in the real estate business. Chapter 11 Petition Date: April 27, 2007 Court: Central District Of California (Santa Ana) Judge: Theodor Albert Debtor's Counsel: Nanette D. Sanders, Esq. Ringstad & Sanders, L.L.P. 2030 Main Street, Suite 1200 Irvine, CA 92714 Tel: (949) 851-7450 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 10 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Carbon Canyon II, L.P. $4,967,133 8951 Research Drive Irvine, CA 92618 The Shopoff Group, L.P. $205,867 8951 Research Drive Irvine, CA 92618 Gromet & Associates $167,975 114 Pacifica, Suite 250 Irvine, CA 92618 DR3D Planning & Imaging $16,623 Medin Enterprises, Inc. $3,250 Iger & Associates, Inc. $2,000 Jeffer, Mangels, Butler $1,467 & Marmaro, L.L.P. Croudace & Dietrich $583 Stantec Consulting, Inc. trade debt $530 Safeguard Business System $86 NATIONAL RETAIL: S&P Holds BB+ Preferred Stock Rating ----------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BBB-' corporate credit and unsecured debt ratings and its 'BB+' preferred stock rating on National Retail Properties Inc. The affirmations affect roughly $662 million of senior notes. The outlook is stable. "The affirmation of the ratings on National Retail reflects a conservative financial profile that offsets the risks created by historical tenant and industry concentrations within a cyclical retail sector," explained Standard & Poor's credit analyst Tom Taillon. "Additional rating considerations include a well occupied and geographically diverse triple-net-leased real estate portfolio that has historically produced a stable stream of cash flow." The rating affirmations precede the release of the company's first-quarter 2007 results, scheduled for May 2, 2007, and assume that the actual results will be in line with Standard & Poor's expectations. A growing portfolio of relatively stable assets should result in predictable cash flow that comfortably covers the company's debt obligations over the near term, supporting the stable outlook. Standard & Poor's may revise the outlook to positive if future growth is well executed and conservatively financed. Changes in the company's corporate financial policy or larger, more aggressive acquisitions could place downward pressure on the ratings. NESTOR INC: Common Stock's Market Value Falls Below Nasdaq's Limit ------------------------------------------------------------------ Nestor Inc. was notified by The Nasdaq Stock Market on April 23, 2007, that the market value of the company's common stock had fallen below $1 per share for the last 30 consecutive business days, the minimum requirement for continued inclusion under Marketplace Rule 4310(c)(4). In accordance with Marketplace Rule 4310(c)(8)(D) the company has been provided 180 calendar days, or until Oct. 22, 2007, to regain compliance. If the bid price of the company's common stock closes at $1 per share for 10 or more consecutive business days before Oct. 22, 2007, Nasdaq staff will provide written notification that it complies with the Rule. If compliance cannot be demonstrated by Oct. 22, 2007, Nasdaq staff will determine whether the company meets its other Capital Market initial listing criteria as set forth in Marketplace Rule 4310(c). If the Company does not meet these other initial listing criteria, then the Nasdaq staff will provide written notification to the company that its securities will be delisted. In that event, the company may appeal the staff's determination. If the company meets the initial listing criteria except for the bid price requirement then Nasdaq staff will notify the company that it has been granted an additional 180 calendar days to fully comply. A delisting of the company's stock for more than five consecutive days or for more than an aggregate of 10 days in any 365-day period would constitute an event of default under the terms of the company's 7% Senior Secured Convertible Notes dated May 25, 2006. A default under the 7% Notes would in turn be a default under the company's 5% Senior Convertible Notes due Oct. 31, 2007. About Nestor Inc. Headquartered in Providence, Rhode Island, Nestor Inc. (NASDAQ: NEST) -- http://www.nestor.com/-- is a provider of advanced intelligent traffic management solutions. Nestor Traffic Systems provides automated traffic enforcement solutions to state and municipal governments. Nestor Traffic Systems is the exclusive North American distributor for the Vitronic PoliScanSpeed(TM) scanning LiDAR capable of tracking multiple vehicles in multiple lanes simultaneously. CrossingGuard(R) uses patented multiple, time-synchronized videos to capture comprehensive evidence of red light and speed violations. In addition, CrossingGuard(R) offers customers a unique Collision Avoidance(TM) safety feature that can help prevent intersection collisions. CrossingGuard(R) is a registered trademark of Nestor Traffic Systems, Inc. PoliScanSpeed(TM) is a trademark of Vitronic. Going Concern Doubt Carlin, Charron, & Rosen LLP raised substantial doubt about Nestor Inc.'s ability to continue as a going concern, after it audited the company's financial statements for the fiscal year ended Dec. 31, 2006. The auditors point to the company's accumulated deficit at Dec. 31, 2006 and substantial net losses in recent years. NEW CENTURY: Court Okays Richards Layton as Delaware Counsel ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware approved New Century Financial Corporation and its debtor-affiliates' application to employ Richards Layton & Finger, P.A., as their local counsel for Delaware, nunc pro tunc to April 2, 2007. In their request, the Debtors told the Court that they selected Richards Layton as their co-counsel because of the firm's extensive experience and knowledge in the field of debtors' and creditors' rights, business reorganizations and liquidations under Chapter 11 of the Bankruptcy Code, and because of its expertise, experience, and knowledge in practicing before the Delaware bankruptcy court, its proximity to the Court and its ability to respond quickly to emergency hearings and other emergency matters in the Court, Monika L. McCarthy, New Century's senior vice president and assistant general counsel, tells the Honorable Kevin J. Carey. As local counsel, Richards Layton will: (a) advise the Debtors of their rights, powers and duties as debtors and debtors-in-possession; (b) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtors, the negotiation of disputes in which the Debtors are involved, and the preparation of objections to claims filed against the Debtors' estates; (c) prepare on behalf of the Debtors all necessary motions, applications, answers, orders, reports and papers in connection with the administration of the Debtors' estates; and (d) perform all other necessary legal services in connection with the Chapter 11 cases. The Debtors will pay Richards Layton for its services in accordance with the firm's hourly rates, and reimburse the firm for necessary and reasonable expenses. The firm's attorneys and personnel who are expected to be principally responsible for the Debtors' cases and their hourly rates are: Mark D. Collins $520 Michael J. Merchant $390 Paul N. Heath $350 Marcos Ramos $315 Chun I. Jang $225 Christopher M. Samis $210 Aja E. McDowell $165 Ms. McCarthy disclosed that prior to the Debtors' bankruptcy filing, the Debtors paid Richards Layton a $275,000 retainer in connection with and in contemplation of the Debtors' Chapter 11 filing. The Debtors asked the Court to deem the retainer paid to RL&F and not expended for prepetition services and disbursements as an evergreen retainer to be held by the firm as security throughout the Chapter 11 cases until the firm's fees and expenses are awarded by final order and paid. Michael J. Merchant, Esq., a director at Richards Layton, assured the Court that the firm's directors and associates do not have any connection with or any interest adverse to the Debtors, their creditors, or any other party-in-interest. 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. The company and its debtor-affiliates filed for Chapter 11 protection on April 2, 2007 (Bankr. D. Del. Lead Case No. 07-10416). Suzzanne Uhland, Esq., Austin K. Barron, Esq., and Ana Acevedo, Esq., at O'Melveny & Myers LLP, and Mark D. Collins, Esq., Michael J. Merchant, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. When the Debtors filed for bankruptcy, they listed total assets of $36,276,815 and total debts of $102,503,950. The Debtors' exclusive period to file a chapter 11 plan expires on July 31, 2007. (New Century Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). The Debtors' exclusive period to file a plan expires on July 31, 2007. NEW CENTURY: DB Structured Alleges Breach of Repurchase Agreements ------------------------------------------------------------------ DB Structured Products Inc. asserts claims of breach of contract and conversion against Debtors New Century Mortgage Corporation, New Century Credit Corporation, Home123 Corporation, NC Capital Corporation, and New Century Financial Corporation. DBSP relates that it is party to two master repurchase agreements and related agreements, dated Sept. 2, 2005, and April 17, 2006, with the Debtors. Pursuant to the Repurchase Agreements, DBSP purchased mortgage loans from the Debtors, who were obligated to repurchase the loans at a later, agreed upon date. Certain of the Debtors agreed to service the mortgage loans purchased by DBSP. DBSP presently owns hundreds of millions of dollars worth of mortgage loans, which have not been repurchased by the Debtors. Each time DBSP purchased a group of mortgage loans, the Debtors were required to provide to a third-party custodian, agreed to by the parties, loan files relating to each of the mortgage loans, including the original mortgage note, original mortgage or a certified copy thereof, original mortgagee title insurance policy, assignment of mortgage executed by the applicable Debtor, and any security agreements and other agreements related to the mortgage. After loans had been purchased by DBSP and the asset files transferred to the custodian, the custodian would send DBSP a trust receipt indicating that it had the applicable loan files and was holding the documents as the bailee of and custodian of DBSP. All funds collected with respect to any loans owned by DBSP by the Servicers were to be deposited in an account maintained at Union Bank of California, N.A., for DBSP's benefit. On March 5, 2007, DBSP made a margin call to the Debtors of approximately $14,100,000. The Debtors transferred 235 mortgage loans to DBSP on March 6 to satisfy the margin call. At the same time, the Debtors requested that DBSP purchase certain additional mortgage loans from them, including certain "Wet-Ink Loans," asking DBSP to consider the transfer of the Transferred Loans as inducement to purchase these loans. Relying on the fact that the Transferred Loans were transferred to it, on March 6 and 7, DBSP purchased additional loans, including Wet-Ink Loans, from the Debtors for $40,000,000, even though events of default under the Repurchase Agreements were in existence and were continuing, Kenneth J. Enos, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, tells the Court. DBSP served the Debtors with notices of termination and acceleration of their repurchase and other obligations under the Repurchase Agreement on March 14 and 15. The Debtors have not fulfilled any of their repurchase obligations with respect to the Purchased Loans, Mr. Enos says. On March 30, the Debtors asserted that the Transferred Loans were improperly transferred to DBSP prepetition and demanded their return. The Debtors have refused to turn over necessary documentation with respect to the loans, and on information and belief, retained for their own benefit funds collected on the loans that rightfully belong to DBSP, Mr. Enos says. Moreover, the Debtors have listed the Transferred Loans on their Intralinks website alongside other loans that they are selling, which could create confusion in the marketplace and harm DBSP, Mr. Enos relates. The asset files and servicing records for certain of the DB Loans, including the Transferred Loans, remain in the Debtors' possession and control, and certain of the Debtors continue as Servicers for some of the DB Loans. DBSP has repeatedly requested the turnover of the files and records, but the Debtors have yet to turn these over, Mr. Enos says. "The greater the delay in the turnover of these records, the greater the risk that the value of the Purchased Loans will be impaired due to servicing issues, asset management issues, as well as an increasing likelihood of defaults and delinquencies," Mr. Enos points out. Because the Debtors are still servicing certain of the DB Loans, including the Transferred Loans, they continue to receive payments with respect to the loans. There are discrepancies between the amounts that DBSP has received and the amounts that it believes it should be receiving on account of the DB Loans. As it does not have access to the servicing records, DBSP is unable to determine whether there have been payments, including prepayments, on any of the DB Loans that have not been remitted to the collection account or to DBSP. According to Mr. Enos, as of April 25, the Debtors have not complied with DBSP's repeated request to provide it with a reconciliation of all amounts collected with respect to the DB Loans. DBSP asks the U.S. Bankruptcy Court for the District of Delaware to: (a) enter a preliminary injunction with respect to the Purchased Loans: * giving DBSP immediate access to all of the asset files and servicing records; * requiring the Debtors immediately to segregate and turn over to DBSP all income relating to the Purchased Loans; * requiring the Debtors to assist and cooperate with the transfer of servicing; and * requiring the Debtors to perform all other acts necessary to allow DBSP complete possession, control and management of the Purchased Loans. (b) enter a preliminary injunction with respect to the Transferred Loans: * enjoining the Debtors from trying to sell, encumber or otherwise take any action to interfere with DBSP's ownership interest in these loans; and * requiring the Debtors to segregate and hold in escrow any funds collected until a final judgment is entered in the proceeding. (c) enter a preliminary injunction requiring the Debtors to provide DBSP with an accounting of all funds relating to the DB Loans; (d) enter a judgment granting DBSP permanent injunctive relief with respect to the DB Loans and requiring the Debtors to turn over to DBSP all records, asset files, servicing records and income with respect to the DB Loans; (e) enter judgment declaring that DBSP owns the Transferred Loans free and clear of any interest of the Debtors in the loans; (f) enter judgment imposing a constructive trust over all income generated by the DB Loans and retained by the Debtors; (g) award possession to DBSP of all asset files, servicing records and income relating to the DB Loans; and (h) award DBSP its costs, expenses and attorney's fees pursuant to applicable agreements and law. 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. The company and its debtor-affiliates filed for Chapter 11 protection on April 2, 2007 (Bankr. D. Del. Lead Case No. 07-10416). Suzzanne Uhland, Esq., Austin K. Barron, Esq., and Ana Acevedo, Esq., at O'Melveny & Myers LLP, and Mark D. Collins, Esq., Michael J. Merchant, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. When the Debtors filed for bankruptcy, they listed total assets of $36,276,815 and total debts of $102,503,950. The Debtors' exclusive period to file a chapter 11 plan expires on July 31, 2007. (New Century Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). The Debtors' exclusive period to file a plan expires on July 31, 2007. NORANDA ALUMINUM: S&P Rates $750 Million Credit Facilities at BB- ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its bank loan and recovery ratings to Noranda Aluminum Acquisition Corp.'s $750 million credit facilities. The $500 million term loan and $250 million revolving credit facility are rated 'BB-', with a recovery rating of '1', indicating an expectation for 100% recovery of principal in the event of a payment default. At the same time, Standard & Poor's assigned its 'B-' rating to Noranda Aluminum's $510 million floating-rate notes. The corporate credit rating on parent Noranda Aluminum Holding Corp. is 'B+'. The outlook is stable. "The ratings on Noranda Aluminum Acquisition Corp. reflect the company's high debt leverage after the company's acquisition by a private equity company and unstable profitability owing to its exposure to cyclical aluminum prices," said Standard & Poor's credit analyst Donald Marleau. "Countering these weaknesses are the company's integration and forward sales contracts that lock in currently strong aluminum prices for about one-third of production through 2010," Mr. Marleau added. Ratings List Noranda Aluminum Holding Corp. Corporate credit rating B+/Stable/-- Rating Assigned Noranda Aluminum Acquisition Corp. $500 million term loan BB- Recovery rating 1 $250 million revolving credit facility BB- Recovery rating 1 $510 million floating-rate notes B- NORTHWEST AIRLINES: Posts $292 Mil. Net Loss in Qtr Ended March 31 ------------------------------------------------------------------ Northwest Airlines Corporation reported a net loss of $292 million for the first quarter ended March 31, 2007, compared with a net loss of $1.10 billion for the same period in fiscal 2006. Excluding reorganization items, Northwest Airlines Corp. reported a first quarter 2007 pre-tax profit of $100 million, compared with a first quarter 2006 pre-tax loss of $129 million. Operating revenues in the first quarter decreased by 0.6 percent to 2.87 billion, versus operating revenues for the first quarter of 2006 of $2.89 billion. System passenger revenue increased 7.5 percent to $2.2 billion on 4.7 percent more mainline available seat miles (ASMs), resulting in a 2.7 percent improvement in unit revenue. Including regional carrier revenues, Northwest's consolidated unit revenue improved 1.3 percent on 3.1 percent more ASMs. Operating expenses in the quarter decreased 8.0 percent year-over- year to $2.67 billion. Mainline unit costs, excluding fuel, decreased by 7.5 percent on 4.6 percent more ASMs. Included in the first quarter 2007 fuel expense of $704 million is approximately $28 million in mark-to-market fuel derivative gains related to future contracts. Without the favorable impact of mark-to-market fuel derivative gains, fuel averaged $1.85 per gallon, excluding taxes, down 1.3 percent versus the first quarter of last year. Northwest's quarter-ending unrestricted cash and short-term investments balance was approximately $2.4 billion, excluding $543 million of restricted cash and short-term investments. Commenting on the results, Neal Cohen, executive vice president and chief financial officer, said, "Building on our restructuring progress, Northwest realized significant year-over-year earnings improvement and a first quarter pre-tax profit, excluding reorganization items. This represents the first time the company has realized a first quarter profit, excluding unusual items, since 1998." Mr. Cohen added, "Northwest has achieved competitive restructured costs, further improved its premium revenue position and, over the next several years, will realize significant fleet changes that will drive continued improved financial results." Discussing the current environment, Mr. Cohen said, "While we are optimistic as we look forward, we are seeing some softening in domestic revenue and we remain concerned about the impact of fuel price increases." Doug Steenland, Northwest Airlines president and chief executive officer, said, "Our first quarter results met our expectations as compared to the business plan. The year-over-year comparisons clearly indicate that the restructuring actions that have been accomplished over the past 19 months are positioning Northwest Airlines for long-term profitability. We could not have realized these financial results without the excellent work of our employees, especially given the adverse winter weather that impacted our operations this quarter, particularly in the upper Midwest. We thank our employees for their efforts." Discussing the airline's restructuring, Mr. Steenland said, "During the first quarter, we made steady progress in our restructuring efforts. The Bankruptcy Court approved the company's Disclosure Statement and the Plan of Reorganization is now before the creditors for a vote. In mid-April, we announced our new board of directors that will help guide the airline once it emerges from bankruptcy protection. The mix of current and new board members will bring a variety of expertise to Northwest that will be helpful as the airline repositions itself to be a strong, profitable company going forward." Commenting on the airline's employee gainsharing programs, Mr. Steenland added, "A key element of our business plan is the various programs we have instituted to allow employees to share in the success of a profitable Northwest. So far in 2007, the airline distributed to its employees approximately $395 million in profit sharing, performance incentive payments and proceeds from unsecured claims sales that were part of the collective bargaining agreements. Through 2010, we forecast that Northwest employees will receive approximately $1.6 billion in distributions through these programs and claims." He continued, "We expect to complete our restructuring process in June and emerge as a stronger and profitable company with the highest valuation in the company's history." Restructuring In early April, Northwest began soliciting creditor approval of its Plan of Reorganization after receiving Bankruptcy Court approval to do so. U.S. Bankruptcy Court Judge Allan Gropper gave Northwest permission to seek creditors' approval after he ruled that the airline's plan, including its Disclosure Statement, met the legal requirements. Creditors will have until May 7 to vote on the Northwest plan. Earlier this month, in conjunction with the Unsecured Creditors' Committee, Northwest announced the make-up of its post-emergence board of directors. The new board will include continuing and new directors who bring a broad mix of skills, including airline operations, consumer marketing and branding and financial expertise to Northwest Airlines. About Northwest Airlines Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. Plan Update On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. The hearing to consider confirmation of the Debtors' Plan is set for May 16, 2007. PACIFIC LUMBER: Court Rules Against Transfer of Cases to Calif. --------------------------------------------------------------- The Hon. Judge Richard S. Schmidt of the United States Bankruptcy Court for the Southern District of Texas has denied the various motions filed by several California State Agencies, the Official Committee of Unsecured Creditors, the U.S. Trustee, and the City of Rio Dell, Calif., to have Pacific Lumber and debtor-affiliates' cases transferred to the Northern District of California. In February 2007, the California Resources Agency, the California Department of Forestry and Fire Protection, the California Department of Fish and Game, the California Wildlife Conservation Board, the California Regional Water Quality Control Board, North Coast Region, and the State Water Resources Control Board, filed a motion to have the Debtors' cases transferred to the Northern District of California, Oakland Division, citing that Debtors manufactured venue through the formation of Scotia Development LLC as a limited liability company in Corpus Christi, Texas. Subsequently, the City of Rio Dell asked the Court to transfer Debtors' consolidated case to the Northern District of California, citing that "the citizens of Rio Dell, including their elected representatives, have no way of meaningfully participating in Debtors' bankruptcy process if it remains in Texas." In addition, the Official Committee of Unsecured Creditors asked the Court to transfer venue of the Debtors' cases to the Northern District of California, in the interest of justice, for the convenience of the parties-in-interest and for the efficient and economic administration of the Debtors' estate, asserting that the Debtors' cases were filed in an improper district for purposes of Section 1408 of the Judiciary and Judicial Procedures Code. Furthermore, Charles F. McVay, the U.S. Trustee for Region 19, asked the Court to transfer the venue of Debtors' jointly administered bankruptcy cases Debtors' to the Northern District of California, maintaining that all facts available to the U.S. Trustee point to the conclusion that the California Debtors created Scotia Development LLC principally to establish a basis for venue in Texas and thus avoid the requirement that they file their bankruptcy cases in California. "While many of the parties allege that venue is improper, the unrefuted facts presented at the hearing demonstrate that venue is proper in the Southern District of Texas," Judge Schmidt opines. Judge Schmidt acknowledges that Scotia Development LLC is a Texas Limited Liability Company whose principal assets and principal place of business are located in the Southern District of Texas. The company was incorporated approximately eight months before the Debtors' bankruptcy filing as a special purpose corporation with a valid business purpose independent of venue selection, the Court holds. Scotia Development provided real estate expertise to Scotia Pacific Company LLC and The Pacific Lumber Company, the Court notes. At all times after its incorporation, Scotia Development was an affiliate of the Debtors. The Court states that Congress permitted venue for a corporation in the state of its incorporation, in the location of its principal place of business, in the location of its assets, and in any district where an affiliate corporation has filed. The California State Agencies, the Committee, the U.S. Trustee, Humboldt County and Rio Dell have argued that venue is improper because Scotia Development was incorporated 233 days before its Chapter 11 filing, citing a recent oral opinion of Judge Robert D. Drain of the Southern District of New York in In re Winn-Dixie Stores, Inc. Case No. 05-11063 (Bankr. S.D.N.Y. 2005). The Winn-Dixie Court found that venue was proper in New York, Judge Schmidt maintains. However, the Winn-Dixie Court used its discretion to transfer the case "in the interest of justice," not because venue was improper, Judge Schmidt clarifies. The Venue Transfer Parties also argued that the transfer of the Scotia Development stock from Maxxam Group Inc. to PALCO on the day before bankruptcy should infer bad faith and render venue improper. The Court holds that the stock transfers did not affect Scotia Development's status as an affiliate of the other Debtors, hence it had no impact on venue. The Court also finds that the record does not support the allegation that Scotia Development only filed for bankruptcy to guarantee the other Debtors' debt. In any case, the Court states that the guarantee is a contingent liability and is balance sheet neutral. More importantly, Scotia Development's primary assets are obligations from PALCO and Scopac and its principal business opportunities were the sales of affiliated Debtors' assets, the Court notes. "Whether or not Scotia Development guaranteed debt, it appropriately qualifies as a debtor," Judge Schmidt says. The Transfer Venue Parties also asserted that the size of Scotia Development should disqualify it as an affiliate for venue purposes. The fact that Scotia Development had a "phone booth" office is irrelevant, the Court holds. "Venue is district wide. Even without all of the Corpus Christi connections, venue is proper in the Southern District of Texas," Judge Schmidt opines. "At the time Scotia Development filed its bankruptcy petition, the Southern District was its only appropriate venue selection." There also is no evidence of forum shopping, Judge Schmidt holds. Transfer of Venue is Not Necessary A plaintiff's choice of forum should be respected unless it is clearly outweighed by other considerations, the Court states. The Debtors had at least three venue choices -- the District of Delaware, the Southern District of Texas and the Northern District of California. Upon consideration, the Debtors elected to file in the Southern District of Texas. Accordingly, the Court says, the Debtors' choice of forum should be respected. The Debtors' cases require financial restructuring, the Court notes. Neither the bankruptcy nor any proposed plan will restructure the Debtors' operations. Moreover, a plan of reorganization cannot restructure the environmental laws and regulations of California and the United States. Although significant environmental and regulatory issues involving the Debtors exist, it is unlikely that the Court will be involved in those issues. Also, no evidence was presented to refute the Debtors' assertion that they are solvent, the Court points out. Thus, liquidation is unlikely, the Court notes. If the case converts to Chapter 7, transfer may be appropriate, Judge Schmidt opines. As to the Debtors' creditors, Judge Schmidt notes that: * Scopac's largest constituency is the Noteholders, which are located all over the United States. Of the 113 identified Individual Noteholders, only one was domiciled in the Northern District of California. Also, of the 27 members of an Ad Hoc Committee of Timber Noteholders, 17 are located in New York; * PALCO's largest secured creditor, Marathon Structured Finance, is headquartered in New York City, while LaSalle Bank National Association, another secured creditor, is headquartered in Chicago. The Credit Agreements with Marathon and LaSalle contain clauses designating New York courts as having jurisdiction and venue over disputes related to the Agreements. California is not more convenient for the PALCO Secured Creditors than Texas, the Court finds; and * The Debtors' unsecured creditors are scattered all over the United States. The Southern District of Texas is equally convenient or more convenient for those creditors. Normally, a court would normally rely on the Creditors Committee's position. However, the Committee appointed by the U.S. Trustee in the Debtors' cases is dominated by three parties with lawsuits against the Debtors who are not trade creditors and whose motives are more related to legal strategy than convenience of all of the unsecured creditors, Judge Schmidt points out. The Court further acknowledges that the Debtors' Board of Directors are the persons that will make the important management decisions regarding the Debtors' financial restructuring process. Certain of the Debtors' officers are located in the Southern District of Texas, including James Shanks, president of Scotia Development; Bernie Birkel, secretary for all the Debtors; Emily Madison, assistant secretary for the Debtors; Valencia McNeil, assistant secretary for the Debtors; and Norma Romo Robertson, assistant secretary for the Debtors. All three members of Scopac's Board of Managers are located in the Southern District of Texas. Moreover, the meetings of Scopac's managers and the PALCO Board take place at the offices of Maxxam in Houston, Texas. Thus, the Southern District of Texas is much more convenient for the participation of the Debtors' Board than the Northern District of California, the Court opines. On the contrary, the Venue Transfer Parties failed to present sufficient evidence to overcome the presumption in favor of the Debtors' choice of forum, the Court finds. Thus, the Debtors' cases should remain in the Southern District of Texas, Judge Schmidt rules. A full-text copy of 29-page Venue Transfer Order is available for free at http://researcharchives.com/t/s?1df9 PALCO's Statement "The Pacific Lumber Company is pleased with the Court's decision to retain venue for the Company and its subsidiaries' voluntary Chapter 11 bankruptcy cases in the Federal Bankruptcy Court for the Southern District of Texas," George A. O'Brien, president and chief executive officer of The Pacific Lumber Company, said in a news release. "We agree with the Court's statement that 'While many of the parties allege that venue is improper, the unrefuted facts presented at the hearing demonstrate that venue is proper in the Southern District of Texas.'" "We believed from the beginning of this case that venue is appropriate in Corpus Christi, as the Court's ruling confirms," Mr. O'Brien stated. "This ruling is obviously important to the Companies and our employees. Getting this key matter behind us will now allow the Companies to work with their creditors, lenders, and other necessary parties to focus on reorganizing our Companies so that we can emerge quickly from bankruptcy as a strong, ongoing business," Mr. O'Brien added. About Pacific Lumber Headquartered in Oakland, California, The Pacific Lumber Company -- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry, including the growing and harvesting of redwood and Douglas-fir timber, the milling of logs into lumber and the manufacture of lumber into a variety of finished products. Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned subsidiaries of Pacific Lumber. Scotia Pacific, Pacific Lumber's largest operating subsidiary, was established in 1993, in conjunction with a securitization transaction pursuant to which the vast majority of Pacific Lumber's timberlands were transferred to Scotia Pacific, and Scotia Pacific issued Timber Collateralized Notes secured by substantially all of Scotia Pacific's assets, including the timberlands. Pacific Lumber, Scotia Pacific, and four other subsidiaries filed for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case Nos. 07-20027 through 07-20032). Jeffrey L. Schaffer, Esq., William J. Lafferty, Esq., and Gary M. Kaplan, Esq., at Howard Rice Nemerovski Canady Falk & Rabkin, A Professional Corporation is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq., Harlin C. Womble, Jr. , Esq., and Shelby A. Jordan, Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co- counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead counsel. John F. Higgins, Esq., and James Matthew Vaughn, Esq., at Porter & Hedges LLP, is Scotia Pacific's co-counsel. When Pacific Lumber filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. Scotia Pacific listed total assets of $932,000,000 and total debts of $765,978,335. The Debtors' exclusive period to file a chapter 11 plan expires on May 18, 2007. (Scotia/Pacific Lumber Bankruptcy News, Issue No. 14, http://bankrupt.com/newsstand/or 215/945-7000). PALMER ABS: Moody's Rates $22.5 Million Class D Notes at Ba1 ------------------------------------------------------------ Moody's Investors Service has assigned these ratings to Notes issued by Palmer ABS CDO 2007-1, Ltd.: (1) Aaa to the $100,000,000 Class A-1 Floating Rate Senior Secured Notes Due 2047; (2) Aa2 to the $50,000,000 Class A-2 Floating Rate Senior Secured Notes Due 2047; (3) A2 to the $55,000,000 Class B Floating Rate Deferrable Subordinate Secured Notes Due 2047; (4) Baa2 to the $40,000,000 Class C Floating Rate Deferrable Junior Subordinate Secured Notes Due 2047; and (5) Ba1 to the $22,500,000 Class D Floating Rate Deferrable Junior Subordinate Secured Notes Due 2047; The Moody's ratings of the Notes address the ultimate cash receipt of all required interest and principal payments, as provided by the Notes' governing documents, and are based on the expected loss posed to Noteholders, relative to the promise of receiving the present value of such payments. GSCP (NJ), L.P. will manage the selection, acquisition and disposition of collateral on behalf of the Issuer. PARAMOUNT RESOURCES: CDN$2.2 Bil. Offer Cues S&P's Positive Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including its 'CCC+' long-term corporate credit rating, on Paramount Resources Ltd. on CreditWatch with positive implications. The placement follows the announcement that that Statoil ASA has entered into an acquisition agreement with North American Oil Sands Corporation whereby Statoil will make an all-cash offer to acquire all of the outstanding shares of NAOSC for approximately CDN$2.2 billion. The sale will generate approximately CDN$682.4 million for Paramount. "The CreditWatch placement reflects the possibility for significant improvement in the financial profile of Paramount if the sale proceeds are largely used to deleverage," said Standard & Poor's credit analyst Jamie Koutsoukis. "Furthermore, in addition to the ability Paramount will have to improve its capital structure following the sale, its liquidity and financial flexibility will improve dramatically as it will likely clear availability on its bank facilities," Ms. Koutsoukis added. With the expected sale of NAOSC, the term loan B will likely be prepayed following the transaction. The terms of the loan require that the proceeds from the sale of Paramount's interest in NAOSC must be offered to the debtholders to repurchase the existing term loan B. Furthermore, a call provision provides Paramount the option of retiring the debt. The sale of Paramount's shares in NAOSC to Statoil will generate approximately CDN$682.4 million for the company, which provides ample funds for the prepayment. The extent of any positive rating action will depend on an analysis of Paramount's planned uses of the proceeds and amount of debt reduction the company will achieve as a result of the sale. S&P do not expect to resolve the CreditWatch placement until further consultation with Paramount's management the transaction closes. QTC MANAGEMENT: Credit Pact Amendment Cues Moody's to Hold Ratings ------------------------------------------------------------------ Moody's Investors Service affirmed the B2 Corporate Family Rating of QTC Management, Inc, following its recent announcement to amend its existing first lien credit agreement. QTC is proposing to add an additional $30 million to its $110 million senior secured first lien term loan and use the proceeds, along with available cash, to repay its existing $45 million secured, second lien term loan. As a result of the refinancing of the second lien debt with first lien debt, Moody's downgraded the first lien credit agreement to B2 from Ba3 and changed the Probability of Default Rating to B3 from B2 given the significantly diminished support from the previously subordinated second lien debt. The ratings outlook remains stable. Moody's affirmation of QTC's B2 CFR reflects the company's small size, significant revenue concentration with the Department of Veterans Affairs, its heavy reliance on funding from government programs and minimal diversity of its overall client base. Moody's also noted that most of the company's key credit metrics, including adjusted Debt to EBITDA, are indicative of a B2 rated company. The ratings also reflect the company's leading position as an outsourced private provider to several federal government agencies. The ratings also consider the stability of the company's revenues due to the fact that almost all of its revenues come from long-term contracts with government agencies, in which QTC has historically retained a majority of these contracts upon renewal while serving some of these clients for over ten years. These QTC Management, Inc. ratings have been downgraded: * $140 million first lien term loan, to B2, LGD3, 33% from Ba3, LGD2, 29% * $15 million first lien revolver, to B2, LGD3, 33% from Ba3, LGD2, 29% * Probability of Default Rating, to B3 from B2 This QTC Management, Inc. rating is affirmed: * Corporate Family Rating, rated B2 QTC Management, Inc, based in Diamond Bar, California, is the leading provider of disability evaluations and medical evidence development services. The company provides disability exams under contracts with the Department of Veteran Affairs and other governmental agencies through its national network of 12,600 independent physicians and 32 leased facilities in seven states. QTC reported approximately $104 million in total revenues for the twelve months ended December 31, 2006. RADIOSHACK CORP: Earns $42.5 Million in Quarter Ended March 31 -------------------------------------------------------------- RadioShack Corporation reported net income of $42.5 million for the first quarter ended March 31, 2007, versus net income of $8.4 million for the same period ended March 31, 2006. First quarter net income was favorably impacted by a reduction in selling, general and administrative expenses and an increase in interest income when compared to the prior year period. The results for the current quarter include a pre-tax charge of approximately $8.5 million for employee separation costs in connection with a reduction in corporate support staff, while the prior year period's results include a charge for impairment of fixed assets which reduced the company's 2006 first quarter pre- tax income by $8.9 million. RadioShack's cash balance increased by $418 million at the end of first quarter of 2007 to $463 million from $45 million at the end of first quarter of 2006. The increase in cash was driven by improved working capital management and cash generated from net income partially offset by cash used in share repurchases of $45.2 million under the company's share repurchase program. As of March 31, 2007, $163 million remained available for share repurchase under the repurchase program. First quarter 2007 comparable store sales were down 9.2% versus the prior year. Total sales decreased in the first quarter of 2007 to $992 million, down 14.5%, from total sales of $1.16 billion for the previous year. The declines in the postpaid wireless business continue to impact both the comparable store and total sales results. In addition, total sales were impacted by 506 fewer company-operated stores and kiosks when compared to last year. "We took the opportunity earlier this year to warn that same store sales numbers for the first quarter were likely to be challenging, given the highly promotional nature of our business in the first quarter last year. And so it proved. Nonetheless, against this background we were able to produce financial results which reflected steady improvement in our operating economics," stated Julian C. Day, chairman and chief executive officer. First quarter 2007 gross margin rate was 52.0% versus 48.3% for the same period of the previous year, an increase of 370 basis points. The increase was driven primarily by improved inventory management, improved product mix and to a lesser extent the $14 million tax benefit associated with the recapture of federal telecommunications excise tax. SG&A expenses were $412 million in the first quarter of 2007, down $84 million or 16.9% versus the prior year. The decrease was due to cost reductions in payroll, advertising and outside services, partially offset by the costs associated with the employee separations. Free cash flow improved significantly when compared to last year's first quarter. RadioShack generated $37 million in free cash flow in the first quarter of 2007 versus a cash use of $310 million in the first quarter of 2006. The increase in cash generation was a result of improved inventory management and more prudent capital expenditures, combined with higher net income. "We are encouraged by our progress, both in improvement of gross margin and management of SG&A expenses, resulting in a significant increase in both net income and cash balance," stated Jim Gooch, chief financial officer. "While we recognize and are focused on our top-line sales challenges, particularly in the wireless business, we will continue to bring a disciplined approach to the management of our business, with the goals of improving profitability, strengthening our balance sheet and driving cash flow." At March 31, 2007, the company's balance sheet showed $1.88 billion in total assets, $1.18 billion in total liabilities, and $699.5 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended March 31, 2007, are available for free at http://researcharchives.com/t/s?1e2f About RadioShack Corporation RadioShack Corporation (NYSE: RSH) -- http://radioshack.com/-- retails consumer electronics specialty products through more than 6,000 company-operated stores and dealer outlets in the United States, over 100 RadioShack locations in Mexico and nearly 800 wireless phone kiosks. * * * As reported in the Troubled Company Reporter on March 14, 2007, Moody's Investor Services downgraded RadioShack Corp.'s long term rating and the company's short term rating and assigned a corporate family rating of Ba1, as well as a speculative grade liquidity rating of SGL-1. The outlook for the company's long- term ratings is stable. RARE RESTAURANT: Moody's Junks Rating on $100 Million Senior Notes ------------------------------------------------------------------ Moody's Investors Service assigned a Caa1/46%/LGD3 rating to Rare Restaurant Group, LLC's $100 million guaranteed senior secured notes due 2014. In addition, Moody's assigned a corporate family rating of Caa1. The outlook is stable. Rare will use the proceeds from this note offering along with approximately $70 million in contributed equity and a $20 million holding company note to acquire all of the assets of Mastro's restaurants and related assets. The Caa1 corporate family rating reflects the company's modest scale, limited scope, weak debt protection metrics, high geographic concentration risk, and relativey aggressive growth plans. However the ratings also incorporate the company's reasonable operating metrics, good margins, and sizeable average unit volumes. The stable outlook reflects Moody's expectation that Rare will prudently manage its growth strategy in an effort to improve debt protection metrics, minimize any potential brand dilution or deterioration in liquidity. Mastro's owns and operates seven luxury steakhouse and seafood restaurants located in Scottsdale, Arizona and Southern California. Mastro's average check is approximately $100. For the year ended December 31, 2006, Mastro's reported revenues and operating income of $72 million and $13 million respectively. Rare Restaurant Group, LLC, is owned by Kinderhook Capital Fund II L.P. (42.9%), Soros Strategic Partners, LP (45%), and management and other investors (12.1%). REAL ESTATE: Moody's Puts Low-Ratings on Six Securities ------------------------------------------------------- Moody's Investors Service has assigned definitive ratings to securities issued by Real Estate Asset Liquidity Trust 2007-1. The provisional ratings issued on March 30, 2007 have been replaced with these definitive ratings: - Class A-1, $195,580,000, rated Aaa - Class A-2, $261,900,000, rated Aaa - Class XP-1, $479,716,000*, rated Aaa - Class XC-1, $1,000*, rated Aaa - Class B, $12,208,000, rated Aa2 - Class C, $12,208,000, rated A2 - Class D-1, $1,000, rated Baa2 - Class E-1, $1,000, rated Baa3 - Class D-2, $12,849,000, rated Baa2 - Class E-2, $3,854,000, rated Baa3 - Class F, $3,855,000, rated Ba1 - Class G, $1,285,000, rated Ba2 - Class H, $1,285,000, rated Ba3 - Class J, $1,285,000, rated B1 - Class K, $642,000, rated B2 - Class L, $1,928,000, rated B3 - Class M, $5,142,418, rated NR - Class XP-2, $1,000*, rated Aaa - Class XC-2, $514,022,418*, rated Aaa * Approximate notional amount REICHMANN REAL: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Reichmann Real Estate Co., LLC 1048 Texan Trial Grapevine, TX 76051 Bankruptcy Case No.: 07-20236 Type of Business: The Debtor develops real estate property. Reichmann Petroleum Corp., the Debtor's affiliate, filed for Chapter 11 protection on December 8, 2006 (Bankr. S.D. Tex. Case No. 06-20804). Chapter 11 Petition Date: April 30, 2007 Court: Southern District of Texas (Corpus Christi) Debtor's Counsel: Patrick J. Neligan, Jr., Esq. Neligan Foley Tarpley LLP 1700 Pacific Avenue, Suite 2600 Dallas, TX 75201 Tel: (214) 840-5300 Fax: (214) 840-5301 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. ROSEMARY ROMO: Case Summary & Seven Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Rosemary G. Romo fdba Isias Secrets fdba Able's Chemical Free Yardwork 94 Hollywood Avenue San Jose, CA 95112 Bankruptcy Case No.: 07-51177 Chapter 11 Petition Date: April 24, 2007 Court: Northern District of California (San Jose) Judge: Roger L. Efremsky Debtor's Counsel: Charles B. Greene, Esq. 84 West Santa Clara Street, Suite 770 San Jose, CA 95113 Tel: (408) 279-3518 Total Assets: $1,379,335 Total Debts: $1,128,976 Debtor's Seven Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service $85,000 Stop HQ5420 P.O. Box 99 San Jose, CA 95103 Franchise Tax Board $20,000 Special Procedures P.O. Box 2952 Sacramento, CA 95812 Santa Clara Mission Cemetary Charges $8,000 490 Lincoln Street Santa Clara, CA 95050 Irma Gutierrez Personal Loan $3,000 Monarch Grand Vacations $1,792 Cingular Wireless $453 Capital One Services, Inc. $139 RUNNING HORSE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Running Horse, L.L.C. dba Running Horse Golf and Country Club dba Running Horse Development dba Running Horse Realty 2121 West Whitesbridge Fresno, CA 93706 Bankruptcy Case No.: 07-11185 Type of Business: The Debtor owns and operates the Running Horse Golf & Country Club, a multi-entry private, gated community that has 758 upscale homesites, an 18-hole championship golf course, and a 42,000-square foot clubhouse with spa facilities and a fitness center. See http://www.runninghorsegolf.com/ Chapter 11 Petition Date: April 27, 2007 Court: Eastern District of California (Fresno) Judge: W. Richard Lee Debtor's Counsel: Riley C. Walter, Esq. 7110 North Fresno Street, Suite 400 Fresno, CA 93720 Tel: (559) 435-9800 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ben Nakagawa $2,793,150 946 South Hughes Avenue Fresno, CA 93706 Kent & Nancy Northeross $2,739,305 P.O. Box 3381 Tubac, AZ 85646 Emmetts Excavation, Inc. $1,662,673 1477 Menlo Clovis, CA 93611 Ed May party to lawsuit $1,590,059 6054 West Bluff Avenue Fresno, CA 93722 Elon Golf Construction $1,500,000 17333 South Comconex Road Manteca, CA 95336 Melene H. Dovilis Rev. Trust $941,932 P.O. Box 3381 Tubac, AZ 85646 Joyce Scampa $881,529 1298 Adobe Lane Pacific Grove, CA 93950 Triad/Holmes Associates $847,753 P.O. Box 1570 Mammoth Lakes, CA Maude Goorabian $753,956 P.O. Box 1852 Fresno, CA 93706 Eddie & Eujenia Morales $679,221 2404 West Church Avenue Fresno, CA 93706 Edinger Architectural Corp. $628,000 2827 Presidio Drive San Diego, CA 92110 I.M.G. $550,000 101 Clay Street San Francisco, CA 94111 Thomas Joyce $545,975 Bill & Kathleen Sotero $500,000 P.O. Box 804 Aptos, CA 95001-0804 Francisco & Maria Torres $421,647 2426 West Church Avenue Fresno, CA 93706 Tobb Sabin $300,000 Gary T. Vigen $277,750 1122 East Olive Fresno, CA 93728 Bryan Graham $200,000 Christian & Tamera Lauren $200,000 Marilyn Pope $200,000 SOLUTIA INC: Panel Wants Monsanto & Pharmacia to File Final Claims ------------------------------------------------------------------ The Official Committee of Equity Security Holders in Solutia Inc. and its debtor-affiliates' bankruptcy cases asks the U.S. Bankruptcy Court for the Southern District of New York to compel Monsanto Company and Pharmacia Corp. to file final amended proofs of claim and file in final form any additional proofs of claim no later than 21 days after entry of an order directing them to do so, to provide certainty regarding the alleged amount of their claims. Karen B. Dine, Esq., at Pillsbury Winthrop Shaw Pitman LLP, in New York, relates that the claims will be amongst the largest and most significant claims asserted in the Debtors' Chapter 11 cases. She asserts that an opportunity to evaluate the claims as fully asserted is critical for parties: -- attempting to develop a plan of reorganization; and -- evaluating any and all plans that may be proposed. Ms. Dine points out that although the alleged resolution of Monsanto's and Pharmacia's claims has been the major focus of the Debtors' reorganization strategy, the Debtors have not even required Monsanto and Pharmacia to file final proofs of claim so as to enable other parties-in-interest to fairly assess and evaluate both claims, and in turn, the viability of the Debtors' strategy. According to the numerous stipulations between Monsanto, Pharmacia and the Debtors extending the deadline for Monsanto and Pharmacia to submit final amended and any additional proofs of claim in final form, the reason for the extension is because "Monsanto and Pharmacia are currently in the process of reviewing these proofs of claim to determine if their Initial Proofs of Claim should be amended and what additional proofs of claim they believe they are entitled to file." With more than two years having passed from the bar date for the filing of the claims, Monsanto and Pharmacia have had more than enough time to review the filed claims and will not be prejudiced or overly burdened by having to file their final proofs of claim within 21 days of an order, Ms. Dine argues. On June 7, 2005, the Debtors and Monsanto each publicly announced that the Debtors, Official Committee of Unsecured Creditors and Monsanto have reached an agreement on the principal terms of a plan of reorganization that was memorialized in a proposed term sheet. It provided that Monsanto would: -- assume all legacy tort liabilities; -- assume some environmental liabilities for specific sites that were never owned or operated by Solutia after the spin-off from Monsanto; -- provide a backstop for a $250,00,000 rights offering that would fund almost all of its retiree medical liability for pre-spin retirees and a part of environmental liabilities at two of Solutia's sites; and -- share responsibility for environmental remediation at Solutia's Anniston and Sauget sites. The Debtors filed their Joint Plan of Reorganization and related disclosure statement on Feb. 14, 2006. Although the Plan currently is likely no longer viable because of, among other reasons, a material change in the enterprise value of the Debtors, the Debtors desire to preserve the essential terms of the global settlement as a basis for any new or amended plan of reorganization, Ms. Dine says. However, a fundamental problem with the disclosure statement was that it completely failed to quantify Monsanto's claims, making it impossible for the Equity Committee, or any other party, to evaluate the impact and effect of the proposed global settlement, Ms. Dine tells the Court. Ms. Dine asserts that any additional delay would be significantly prejudicial to the Equity Committee because its ability to formulate and propose a meaningful plan, and to evaluate other plan proposals, will largely depend upon having accurate claim information. About Solutia Inc. Headquartered in St. Louis, Missouri, Solutia Inc. (OTCBB:SOLUQ) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Allen E. Grimes, III, Esq., at Dinsmore & Shohl, LLP and Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher, LLP. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 84; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SOLUTIA INC: Gets Okay to Acquire Akzo Nobel's 50% Flexsys Stake ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave Solutia Inc. and its debtor-affiliates authority to acquire Akzo Nobel N.V.'s interest in Flexsys pursuant to the terms of a transaction agreement, and provide Flexsys with a subordinated intercompany loan up to $150,000,000 for the acquisition of Akzo Nobel's interest in Flexsys. The Court overrules all objections to the request that have not been withdrawn, waived or settled, and all reservation of rights included. Solutia-Akzo Nobel Relationship Solutia and Akzo Nobel have been partners in Flexsys, a successful rubber chemicals business with 13 manufacturing facilities worldwide, with approximately 1,000 employees, and annual revenues in fiscal year 2006 of about $600,000,000. Flexsys was formed in 1995 as a 50/50 joint venture between Akzo Nobel and Monsanto Company. Solutia was created in 1997 by Pharmacia Corp., then known as Monsanto, pursuant to a spin-off transaction. In connection with the spin-off, Solutia received Pharmacia's interest in Flexsys. Flexsys is not a debtor in the Debtors' Chapter 11 cases. Flexsys is headquartered in Brussels, Belgium, and is comprised of three primary legal entities: (a) Flexsys Holding B.V., (b) Flexsys America LP, and (c) Flexsys Rubber Chemicals Ltd. By late 2005, Akzo Nobel had decided to exit the rubber chemicals business to focus on its other chemicals and coating businesses, and asked Solutia if it would consent to a sale of Akzo Nobel's 50% interest in Flexsys. Solutia relates that following a year-long process resulting in three binding bids, it concluded that it would not be in the estates' best interest to sell Solutia's stake in Flexsys at the prices and on the terms and conditions set forth in the bids submitted. Solutia management, with input from its operational consultants, CRA International, formerly Charles River Associates, undertook a strategic review options with respect to Flexsys on the summer of 2006. As a result of the review, Solutia's Board of Directors determined that the best course of action would be to seek to purchase Akzo Nobel's 50% in Flexsys on favorable terms. Proposed Transaction On Feb. 27, 2007, after several months of arm's-length negotiations, Solutia and Akzo Nobel reached an agreement on the terms of Solutia's proposed acquisition of the remaining 50% interest in Flexsys. Under the terms of the Transaction Agreement, the Flexsys entities will repurchase Akzo Nobel's interests in Flexsys for $212,500,000, subject to certain deductions and adjustments. Upon the closing of the proposed transaction, the Flexsys Entities will become wholly-owned subsidiaries of Solutia. However, they will remain separate and distinct legal entities from Solutia and its affiliated subsidiary debtors. Akzo Nobel will continue to be responsible for certain legacy environmental liabilities. To provide Flexsys with sufficient funds for its general corporate and other working capital needs, the Flexsys Entities have negotiated a commitment from KBC Bank N.V. and Citigroup Global Markets Limited for $200,000,000. The credit facility will be secured solely with the assets of the Flexsys Entities and will not result in any additional obligations on Solutia or any of its Debtor-subsidiaries. Solutia previously amended its debtor-in-possession financing facility to provide up to $150,000,000 as an intercompany loan to the Flexsys Entities, to finance the proposed transaction. The intercompany loan will be subordinate to the financing obtained directly by the Flexsys Entities; have an initial term of six years; be non-amortizing; and will be provided on customary market rates and terms for debt of this kind. No interest will be paid to Solutia on account of the subordinated intercompany loan until Solutia emerges from Chapter 11 and certain other conditions have been satisfied. The subordinated intercompany loan will be subject to an intercreditor agreement among Solutia, KBC Bank, and Citigroup. Under the Transaction Agreement, Akzo Nobel and its affiliates will agree to a five-year, worldwide non-compete in the Field of Agreement, subject to limited exceptions. The Akzo Nobel entities will not solicit or hire any employees of the Flexsys Entities for three years after closing, subject to customary exceptions. The Akzo Nobel Entities will reimburse Flexsys for 50% of the cost of the "disentanglement transactions," which refers to certain transactions designed to separate the operations of the Flexsys Entities from the Akzo Nobel Entities, incurred after the Closing or incurred but not paid as of immediately before Closing. To the extent the Akzo Nobel Entities will continue providing services to the Flexsys Entities at certain sites after the Closing, the parties will enter into services agreements before Closing that will have substantially similar terms as the operating agreements that govern the services before the Closing. The services will generally be provided on the same economic terms as they are provided under the current operating agreements. The Transaction Agreement also contains customary covenants regarding access to books and records; efforts to obtain financing; cooperation regarding certain material litigation; cooperation regarding intellectual property transfer; tax matters; and termination of certain affiliate arrangements. A summary of proposed transaction terms is available for free at: http://researcharchives.com/t/s?1c5f James M. Sullivan, senior vice president and chief financial officer of Solutia, states that as a condition to the proposed transaction to acquire the rights to manufacture and market certain Flexsys products in Asia, the Flexsys Entities, along with their Japanese affiliate Flexsys KK, will enter into an equity purchase agreement and an asset purchase agreement, pursuant to which the Kashima Buyers will purchase all of Akzo Nobel's Crystex(R) business in Japan from affiliates of Akzo Nobel. Under the Kashima Purchase Agreements, the Kashima Buyers will acquire all of the outstanding shares of Crystex Japan K.K., which are owned by Akzo Nobel K.K.; and all of the assets owned by Akzo Nobel Kashima K.K. that relate to its Crystex business and to assume the liabilities related to the assets. Neither Solutia nor any of its Debtor-affiliates will participate in the Kashima Transactions. Jonathan S. Henes, Esq., at Kirkland & Ellis LLP, in New York, states that the structure of the lending transaction provides tax and financing benefits to Solutia, including allowing the repayment of the intercompany financing without triggering a United States taxable income inclusion. Mr. Henes asserts that Solutia's acquisition of Akzo Nobel's 50% stake in Flexsys and the provision of a subordinated intercompany loan to Flexsys is in the best interest of Solutia's estates, its stakeholders, and all other parties-in-interest because: (a) Solutia has the opportunity to create additional value for its estates as the sole owner of Flexsys. Solutia is acquiring Akzo Nobel's interest in Flexsys at an attractive price when compared to the acquisition prices for comparable specialty chemical companies. Like Solutia, Flexsys is a global specialty chemicals business that specializes in the "know how" of manufacturing market-leading products, Mr. Henes says. Solutia continues to experience improved financial performance during the Chapter 11 cases as a result of implementing new business strategies, disposing of underperforming assets and shutting down unprofitable businesses, Mr. Henes notes. Solutia believes that the implementation of many of the same strategies similarly would improve Flexsys' businesses to the benefit of all of Solutia's stakeholders. (b) The proposed transaction allows Solutia to retain and possibly enhance the value of its existing interest in Flexsys. Solutia believes that the proposed transaction would resolve the divergent business interests of Solutia and Akzo Nobel and present significant opportunities for Flexsys to be more profitable and competitive in the future. Under the status quo, Solutia believes substantial value would remain trapped in a joint venture that lacks one dedicated owner or a viable exit strategy, thereby eroding the value of Solutia's existing investment in Flexsys. (c) The proposed transaction will be accretive to Solutia's earnings and cash flow, and will enhance Solutia's credit metrics by decreasing Solutia's debt-to-EBITDAR ratio. (d) The acquisition will diversify Solutia's cash flows. Solutia should be authorized to enter into the Proposed Transaction, including implementation of certain organizational changes in connection with the acquisition, because Solutia has demonstrated that good business reasons support acquiring Akzo Nobel's interests in Flexsys, Mr. Henes tells the Court. Solutia believes that the Proposed Transaction presents the optimal way for Akzo Nobel to exit the Flexsys joint venture, while at the same time allowing Solutia to maximize value for its interest in Flexsys. Organizational Changes In connection with Solutia's acquisition of Flexsys, James R. Voss, Solutia's senior vice president of Business Operations, has been named president of Flexsys and senior vice president of Solutia. He will assume general management responsibilities for the Flexsys business. Robert T. DeBolt, Solutia's vice president of Strategy, has been named senior vice president of Business Operations for Solutia. He will retain responsibility for the corporate strategy function and will assume responsibility for four additional corporate functions -- environmental, safety & health; human resources; procurement; and information technology. Solutia will enter into new employment agreements with Messrs. Voss and DeBolt. About Solutia Inc. Headquartered in St. Louis, Missouri, Solutia Inc. (OTCBB:SOLUQ) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Allen E. Grimes, III, Esq., at Dinsmore & Shohl, LLP and Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher, LLP. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 84; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SOURCE ENTERTAINMENT: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Lead Debtor: Source Entertainment, Inc. 11 Broadway Suite 360 Manhattan, NY 10003 aka Source Enterprises, Inc. aka Source Magazine, L.L.C. aka Source Merchandising L.L.C. aka Source Entertainment, L.L.C. aka Source Holdings L.L.C. Bankruptcy Case No.: 07-11243 Debtor-affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Source Magazine, L.L.C. 07-11245 Type of Business: The Debtor is the publisher of the "The Source", a US monthly full-color magazine covering hip- hop music, politics and culture. See http://www.thesource.com/ Chapter 11 Petition Date: April 27, 2007 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtors' Counsel: Jerrold Lyle Bregman, Esq. Curtis, Mallet-Prevost, Colt & Mosle, L.L.P. 101 Park Avenue New York, NY 10178 Tel: (212) 696-6185 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million The Debtors did not submit a list of their largest unsecured creditors. SOUTHPARK COMMUNITY: Exclusive Plan Filing Extended Until July 28 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Louisiana extended Southpark Community Hospital LLC's exclusive periods to: a. file a Chapter 11 plan of reorganization until July 28, 2007; and b. solicit acceptances of that plan until Sept. 26, 2007. As reported in the Troubled Company Reporter on April 11, 2007, the Debtor said that an extension is warranted since it is still in the process of analyzing its options with respect to the plan structure, and needs the additional time to solidify its financial position and work with proposed financing sources. Based in Lafayette, Louisiana, Southpark Community Hospital, LLC -- http://www.southparkhospital.com/-- provides personalized, quality, professional, and comprehensive health care services. The Debtor filed for Chapter 11 protection on November 30, 2006 (Bankr. W.D. La. Case No. 06-51053). Brandon A. Brown, Esq. and Louis M. Phillips, Esq., at Gordon, Arata, McCollam, Duplantis, & Eagan, LLP, represent the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in this case. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $1 million to $100 million. SPECTRUM SIGNAL: Courts OK Arrangement Plan with Vecima Networks ---------------------------------------------------------------- Spectrum Signal Processing Inc. disclosed that the Supreme Court of British Columbia has approved the statutory plan of arrangement involving Spectrum, its shareholders and Vecima Networks Inc. Spectrum also reported that the United States Department of State and the Committee on Foreign Investments in the United States approved the transaction on April 26, 2007. On Feb. 16, 2007, Spectrum signed a definitive agreement with Vecima Networks Inc., under which Vecima will acquire all the outstanding common shares of Spectrum. The transaction with Vecima will be carried out by way of a statutory plan of arrangement and must be approved by the British Columbia Supreme Court and by the affirmative vote of the holders of 75% of Spectrum's shares. The transaction is also subject to certain closing conditions, including the approval of the United States Department of State and the Committee on Foreign Investments in the United States well as the receipt of all other required regulatory approvals and customary closing conditions. Spectrum shareholders at a special meeting held on April 20, 2007, where more than 92% of Spectrum shareholders represented at the meeting voted to approve the Arrangement, approved the Arrangement. The transaction is expected to close on May 2, 2007, following which the common shares of Spectrum will be delisted from the Toronto Stock Exchange and Nasdaq. After closing all Spectrum shareholders will be entitled to receive the consideration they have elected, or are deemed to have elected, to receive for their Spectrum common shares. Such consideration will be the equivalent of Cdn$0.8939 per Spectrum share based on a value per Vecima common share of Cdn$10.06 which was the 30-day volume weighted average trading price of Vecima shares to January 23, 2007, the date that Spectrum and Vecima executed a non-binding letter of intent. Spectrum shareholders were entitled to elect to receive the consideration in cash, Vecima shares or some combination of cash and Vecima shares, subject to maximum aggregate cash consideration of Cdn$10,075,000 and a maximum of 820,000 Vecima shares. Registered Spectrum shareholders who did not deliver a letter of transmittal and election form to Computershare Investor Services Inc. by 4:00 p.m. (Pacific time) on April 18, 2007 are deemed to have elected to receive consideration comprised of cash of Cdn$0.4915 and 0.04 of one Vecima share for each of their Spectrum shares. About Vecima Networks Inc Vecima Networks Inc. (TSX: VCM) -- http://www.vecimanetworks.com/ -- designs, manufactures and sells products that enable broadband access to cable, wireless and telephony networks. The company has also developed and continues to focus on developing products to address emerging markets such as Voice over Internet Protocol, fiber to the home and IP video. About Spectrum Signal Based in Columbia, Maryland, Spectrum Signal Processing Inc. (TSX: SSY)(NASDAQ: SSPI) -- http://www.spectrumsignal.com/-- is a supplier of software-defined platforms for defense electronics applications. The company provides applications engineering services and modified commercial-off-the-shelf platforms to the US Government, its allies and its prime contractors. The company's products and services are optimized for military communications, signals intelligence, surveillance, electronic warfare and satellite communications applications. As of Dec. 31, 2006, the company had cash and cash equivalents of $1.7 million and net working capital of $3.5 million. The company has an undrawn line of credit facility of up to Cdn$2.9 million. STANDARD MGT: Files Amended 10Q for Quarter Ended September 30 -------------------------------------------------------------- Standard Management Corp. filed a second amendment to its financial statements for the three and nine-month periods ended Sept. 30, 2006, with the Securities and Exchange Commission, on April 23, 2007. According to the company, the amendment was to correct certain accounting related to the issuance of convertible debt in September 2006 that included complex conversion and other features which required its embedded derivatives and all of the Registrant's outstanding common stock warrants to be reported as liabilities of the Registrant and marked-to-market each balance sheet date. Standard Management Corp. reported a net loss of $11.4 million on net revenues of $4.9 million for the third quarter ended Sept. 30, 2006, compared with a $3.8 million net loss on net revenues of $5.5 million for the same period in fiscal 2005. Results for the current quarter include a net loss from discontinued operations of $5 million compared to net gain from discontinued operations of $200,000 for the third quarter of 2005. Results for the quarter also include a $1 million dollar goodwill impairment charge in the company's base of business existing prior to the 2005 business acquisitions. Interest expense for the third quarter of 2006 increased by $700,000 to $1.7 million compared to $1 million in the third quarter of 2005, primarily due to financing fees related to short- term senior notes issued and settled during the third quarter of 2006. At Sept. 30, 2006, the company's balance sheet showed $24.2 million in total assets and $35.1 million in total liabilities, resulting in a $10.9 million total shareholders' equity. The company's balance sheet at Sept. 30, 2006, also showed strained liquidity with $5.9 million in total current assets available to pay $10 million in total current liabilities. Full-text copies of the company's amended consolidated financial statements for the quarter ended Sept. 30, 2006, are available for free at http://researcharchives.com/t/s?1e17 For comparison purposes, full-text copies of the company's original 10Q filing for the third quarter of 2006, which was filed on Nov. 20, 2006, are available at: http://researcharchives.com/t/s?1e19 Going Concern Doubt As reported in the Troubled Company Reporter on May 19, 2006, BDO Seidman LLP expressed substantial doubt about Standard Management Corporation'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 likely lack of adequate financing to meet all of its near-term operating needs. * * * Headquartered in Indianapolis, Indiana, Standard Management Corporation -- http://www.sman.com/-- is a holding company that, through its operating subsidiaries, provides pharmaceutical products and services to the healthcare industry. The company focuses on providing pharmaceuticals to long-term care and infusion therapy patients. Through its regional pharmacies, the company offers custom packaging for all long-term care facilities in addition to creating solutions for specialized healthcare facilities in a growing number of regions of the United States. STERLING CENTRECORP: Shareholders OK Plan of Arrangement with SCI ----------------------------------------------------------------- Sterling Centrecorp Inc. disclosed in an April 30 press statement that the company's shareholders approved the proposed going private transaction by plan of arrangement with SCI Acquisition Inc. at the annual and special shareholders meeting. In a separate press statement, the company disclosed receiving a proposal from First Capital Realty Inc. whereby FCRI intends to make a all-cash takeover bid, subject to customary conditions, for all the outstanding shares of Sterling at a price of $1.62 per share. An independent committee of Sterling's board, formed to review the unconditional going private transaction with SCI Acquisition Inc. is reviewing this proposal in light of the Arrangement Agreement between Sterling and SCI. The Committee has asked SCI if it would entertain modifying the Arrangement Agreement to allow the Committee to pursue discussions with FCRI, and SCI has refused. FCRI has also asked Sterling to postpone the April 30, 2007, meeting of shareholders to consider the Arrangement. Based on legal advice, the Sterling board has determined that Sterling is obliged, under the terms of the Arrangement Agreement, to proceed with the meeting on that date. Based on an application from FCRI, the Ontario Securities Commission is convening a hearing on May 11, 2007 to consider if Sterling shareholders who have entered into agreements supporting the SCI going private transaction should be excluded as part of the minority for the majority of the minority approval requirement. The Court is set to consider final approval of the Plan of Arrangement on May 14, 2007. About First Capital Realty Headquartered in Ontario, Canada, First Capital Realty (TSX: FCR) -- http://www.firstcapitalrealty.ca/-- is an owner, developer and operator of supermarket-anchored neighborhood and community shopping centers, located in growing metropolitan areas. The company currently owns interests in 161 properties, including 7 under development, with approximately 18.9 million square feet of gross leasable area. In addition, the company owns 13.9 million shares of Equity One (NYSE: EQY), one of the shopping center REITS in the southern U.S. Including its investments in Equity One, the company has interests in 334 properties totaling approximately 36.8 million square feet of gross leasable area. About Sterling Centrecorp Inc. Headquartered in Ontario, Canada, Sterling Centrecorp Inc. (TSX: SCF) -- http://www.sterlingcentrecorp.com/-- is a North American real estate investment and management services company specializing in the retail property sector. Sterling, through its North American platform, uncovers and secures real estate opportunities and then aligns itself with strategic financial partners to maximize returns for all parties. The company has offices located in Toronto, Edmonton, and Montreal, and its U.S. subsidiary has offices located in West Palm Beach, Charlotte, Dallas, San Antonio, and Scottsdale. STRUCTURED ASSET: Moody's Puts Ratings on Two Certs. Under Review ----------------------------------------------------------------- Moody's Investors Service has placed under review for possible downgrade two certificates from one transaction issued by Structured Asset Securities Corporation in 2002. The transaction is backed primarily by first lien adjustable- and fixed-rate subprime mortgage loans. The two most subordinate classes of Structured Asset Securities Corp 2002-BC1 transaction have been placed on review for possible downgrade because existing credit enhancement levels are low given the current projected losses on the underlying pools. The transaction has zero overcollateralization and the Class B tranche has taken approximately $785,000 in write-downs as of the 4/25/07 reporting date. Moody's complete rating actions are: Review for Downgrade: Issuer: Structured Asset Securities Corporation * Series 2002-BC1; Class M3 -- current rating B2 under review for possible downgrade; * Series 2002-BC1; Class B, -- current rating Ca under review for possible downgrade. STRUCTURED ASSET: Moody's Cuts Rating on 27 Loan Classes -------------------------------------------------------- Moody's Investors Service has downgraded twenty-seven ratings from seven transactions issued by Structured Asset Investment Loan Trust in 2005 and 2006. Additionally, Moody's has placed on review for possible downgrade eight tranches from two SAIL transactions from 2006 and confirmed three ratings from one 2006 SAIL deal. These transactions consist of fixed and adjustable rate, first- and second- lien subprime residential mortgage loans. These certificates are being downgraded and reviewed based on the current credit enhancement levels when compared to higher than anticipated rates of delinquency in the underlying collateral. Moreover, recent losses have begun to erode overcollateralization on a number of the downgraded deals, leaving the rated bonds less protected against future losses. Complete rating actions are: Issuer: Structured Asset Investment Loan Trust, Series 2005-5 * Class M-7, confirmed at Baa1; * Class M-8, confirmed at Baa2; * Class M-9, confirmed at Baa3; * Class B, downgraded to B1, previously Ba2. Issuer: Structured Asset Investment Loan Trust, Series 2005-8 * Class M-7, downgraded to Baa3, previously Baa1; * Class M-8, downgraded to Ba1, previously Baa2; * Class M-9, downgraded to B1 previously Baa3; * Class B, downgraded to Caa1, previously Ba2. Issuer: Structured Asset Investment Loan Trust, Series 2005-11 * Class M-6, downgraded to Ba1, previously Baa1; * Class M-7, downgraded to B1, previously Baa2; * Class M-8, downgraded to B3, previously Baa3; * Class B-1, downgraded to Caa3, previously Ba1. Issuer: Structured Asset Investment Loan Trust, Series 2006-1 * Class M-7, downgraded to Baa3, previously Baa1; * Class M-8, downgraded to Ba1, previously Baa2; * Class M-9, downgraded to Ba2, previously Baa3; * Class B-1, downgraded to B1, previously Ba1. Issuer: Structured Asset Investment Loan Trust, Series 2006-2 * Class M-6, downgraded to Baa3, previously Baa1; * Class M-7, downgraded to Ba1, previously Baa2; * Class M-8, downgraded to Ba3, previously Baa3; * Class B-1, downgraded to B1, previously Ba1; * Class B-2, downgraded to B3, previously Ba2. Issuer: Structured Asset Investment Loan Trust, Series 2006-3 * Class M-9, Currently Rated: Baa3; under review for possible downgrade; * Class B-1, Currently Rated: Ba1; under review for possible downgrade; * Class B-2, Currently Rated: Ba2; under review for possible downgrade. Issuer: Structured Asset Investment Loan Trust, Series 2006-4 * Class M-6, Currently Rated: Baa1, under review for possible downgrade; * Class M-7, Currently Rated: Baa2; under review for possible downgrade; * Class M-8, Currently Rated: Baa3; under review for possible downgrade; * Class B-1, Currently Rated: Ba1; under review for possible downgrade; * Class B-2, Currently Rated: Ba2; under review for possible downgrade. Issuer: Structured Asset Investment Loan Trust, Series 2006-BNC1 * Class M-6, downgraded to Baa3, previously Baa1; * Class M-7, downgraded to Ba1, previously Baa2; * Class M-8, downgraded to Ba3, previously Baa3; * Class B-1, downgraded to Caa1, previously Ba1. Issuer: Structured Asset Investment Loan Trust, Series 2006-BNC2 * Class M-6, downgraded to Baa2, previously Baa1; * Class M-7, downgraded to Ba1, previously Baa2; * Class M-8, downgraded to Ba2, previously Baa3; * Class B-1, downgraded to B2, previously Ba1; * Class B-2, downgraded to Caa2, previously Ba2. SUPERIOR ESSEX: Moody's Upgrades Ratings on Improved EBITDA ----------------------------------------------------------- Moody's Investors Service upgraded the Corporate Family Rating of Superior Essex Communications LLC and changed the outlook to positive. Moody's upgraded these ratings: - Corporate Family Rating to B1 from B2; - Probability of Default Rating to B1 from B2; Moody's affirmed this rating: - $257.1MM, 9.0% Senior Unsecured Notes due 2012, B3 (LGD5,78%) from (LGD5, 76%); The upgrade in the Corporate Family Rating follows the recent strong financial performance (all figures in accordance with Moody's standard analytical adjustments) of the company, which has been characterized by moderating leverage, strong interest coverage and materially improved EBITDA. Debt/EBITDA has decreased to approximately 2.6 times at the end of 2006 from 4.3 times at the end of 2005. This decrease has been driven mainly through EBITDA that has increased from $96 million to $163 million from 2005 to 2006. At the end of 2006, interest coverage measured as EBIT/Interest expense was strong at 3.5 times. Factors constraining the B1 Corporate Family Rating are Superior's seasonal and volatile business environment, negative free cash flow because of increases in copper costs and the impact on working capital, and the high commodity price content in its products. The company benefits from its leading market positions, strong capacity utilization due to firm global product demand, good liquidity and material barriers to entry. The positive outlook reflects the expectation of a stable macro economic environment allowing Superior to maintain its moderate leverage and strong interest coverage. It is Moody's belief that absent a significant increase in copper pricing, free cash flow could normalize in 2007 and that FCF/debt could equal or exceed 10%. Superior Essex Communications LLC is a leading manufacturer and supplier of communications wire and cable products to telephone companies, CATV companies, distributors and systems integrators, and magnet wire and fabricated insulation materials to major original equipment manufacturers for use in motors, transformers and electrical controls. The company also converts copper cathode to copper rod for internal consumption and for sale to other wire and cable manufacturers and OEMs. Superior operates manufacturing operations in the U.S., the United Kingdom, France, Germany, Portugal, Mexico and China. The company presently conducts its operations through 95 sites. For the twelve months ended December 31, 2006, the company recognized revenue of approximately $2.9 billion. TARGUS GROUP: High Interest Burden Cues Moody's to Cut All Ratings ------------------------------------------------------------------ Moody's Investors Service downgraded all ratings of Targus Group International, Inc. including the corporate family rating to Caa1 and the rating outlook is negative. The rating downgrade was prompted by Moody's concern regarding the sufficiency of the revolving credit facility given the company's potential working capital needs over the next four quarters, its weak operating profitability, and its high interest burden. The negative outlook recognizes that the ratings could again fall if operating performance does not meaningfully improve or liquidity concerns deepen. Ratings downgraded are: - $230 million first-lien secured bank facilities to B2 (LGD-2, 25%) from Ba3; - $85 million second-lien secured term loan to Caa2 (LGD-4, 69%) from B3; - Corporate family rating to Caa1 from B2; - Probability of Default Rating to Caa1 from B2. The Caa1 corporate family rating of Targus reflects the high fixed charge burden relative to Moody's medium-term expectations for ongoing EBITDA, our belief that compliance will be tight as bank loan covenants start to tighten in December 2007, and Moody's concern about liquidity availability relative to working capital that has proven to be volatile. Important quantitative credit metrics, such as leverage, interest coverage, free cash flow, and scale, are consistent with a low-rated issuer. Potentially offsetting these risks are the revenue diversity from a worldwide geographic footprint, three separate distribution channels (retailers, original equipment manufacturers, and computer distributors), and two product categories (notebook cases and computer accessories) and the favorable growth trends for notebook cases and computer accessories as global notebook computer unit sales continue to rapidly increase. The negative rating outlook recognizes that immediate concerns about financial performance would place downward pressure on the ratings over the next 12 to 18 months, given the challenges in meaningfully improving from current levels operating performance, free cash flow, and credit metrics. Ratings will decline if outflows for cash interest expense, capital expenditures, and working capital cause continued free cash flow deficits and permanent revolving credit facility utilization or if collateral value declines. Given the negative outlook, Moody's currently believes that an upgrade is unlikely. Targus Group International, Inc, with headquarters in Anaheim, California, designs, develops, and distributes notebook computer cases and computer accessories. The company sells its products to original equipment manufacturers, third-party distributors, and retailers worldwide. Targus generated revenue of $450 million for the twelve months ending December 31, 2006. TOWER RECORDS: WEA Corporation Objects to Disclosure Statement -------------------------------------------------------------- Warner/Elektra/Atlantic Corporation has filed an objection to the Disclosure Statement describing MTS Inc. dba Tower Records and its debtor-affiliates' Chapter 11 Plan of Reorganization, contending that the disclosure statement does not contain adequate information. The Debtors' Disclosure Statement, as published in the Troubled Company Reporter on Mar. 28, 2007, stated that unsecured claims of trade suppliers will total $73.5 million, in addition to other unsecured claims expected to range from $95 million to $115 million. The Debtors estimated that assets available for distribution to trade suppliers and other unsecured creditors will range from $3 million to $26 million. WEA asks the U.S. Bankruptcy Court for the District of Delaware to decline approving the Disclosure Statement because it fails to: 1) disclose a reasoned estimate of the Debtors' remaining administrative liabilities or disclose the amount of the proposed administrative claims reserve; 2) disclose the amount of cash on hand that constitutes the remaining proceeds of the Debtors' inventory; 3) substantiate the Debtors' contention that the maximum amount of the claims asserted by the Debtors' secured trade vendors is $5 million to $7 million; 4) disclose the estimated return to creditors if the cases were converted to Chapter 7; 5) the existence, merit and value of potential claims against pre-petition management of mismanagement, negligence and breach of fiduciary duty; 6) the identity and affiliates of the proposed post- confirmation Director; and 7) definitively state whether the Debtors' plan of reorganization provides for substantive consolidation of the Debtors' estates and, if so, the practical implications of consolidation of debts and liabilities and factual predicates for satisfying the applicable legal standards. Furthermore, WEA argues that the plan of reorganization advocated by the disclosure statement is "unconfirmable on its face." WEA points out that: a) the Debtors' bankruptcy estates are likely administratively insolvent; b) the plan proposes improper "double dip" payments that purport to satisfy independent secured and administrative claims; c) the plan improperly classifies different classes of similarly situated unsecured creditors and improperly provides for voting among the Class 5 subclasses on an unconsolidated basis while at the same time providing for distributions on a consolidated basis; d) the plan improperly confers the authority to appoint an estate fiduciary with the power to release the Debtors' management upon present management, rather than creditors; and e) the plan fails to set forth a deadline for objection to claims thereby enabling the indefinite postponement of the claims reconciliation process. WEA Wants Debtors to Disclose Estimated Admin. Debts WEA counsel Frank W. DeBorde, Esq., at Morris Manning & Martin LLP, reminds the Court that the Debtors must disclose a reasonable estimate of their existing and prospective unpaid administrative liabilities. The Debtors are presently holding $32.2 million in cash and expect to collect an additional $5.5 million, leaving a maximum of $37.7 million for distribution. The amount is required to satisfy: -- $26.8 million in secured Trade Vendor claims; -- claims under Section 503(b)(9) of the Bankruptcy Code approximately $9.2 million; -- a pending $3.5 million administrative WARN Act Claims in the Debtors' adversary proceeding against Rick Walker and Robert Hannan; -- $45.8 million in filed administrative claims in the Debtors' claims register; and -- remaining wind-up costs. Mr. DeBorde says that unless the Debtors disclose a reasonable estimate of administrative debts, it is impossible for creditors to evaluate the risk of administrative insolvency. The Debtors' plan of reorganization also proposes a Senior Claim Reserve to pay all their remaining secured, reclamation and administrative claims in these cases. Mr. DeBorde says that neither the plan nor the disclosure statement reveals how much money will be deposited into this reserve. WEA and other senior claimants are depending on the sufficiency of the Senior Claim Reserve to fund payment of claims as they become allowed, including claims under Sections 503(b)(9) and 546(c) of the Bankruptcy Code, Mr. DeBorde explains. The disclosure statement also leads creditors to believe that the maximum at stake in the Debtors' Trade Vendor Adversary Proceeding is $7 million and that the Trade Vendors claim they are owed no more than $16 million. The Debtors provide no analysis for this conclusion. According to Mr. DeBorde, the disclosure statement incorrectly states that the Trade Vendors believe their maximum priority recovery is $16 million, when in reality, Trade Vendors view their maximum recovery at $26.8 million, the balance of the remaining inventory proceeds. Aside from being inadequate in proving administrative solvency, Mr. DeBorde asserts that the plan is unconfirmable because the plan proposes to give the Debtors double credit for payment of secured or reclamation claims. Section 503(b)(9) of the U.S. Bankruptcy Code entitles WEA and similarly situated Trade Vendors to secured and additional administrative claims, which are independent from each other and must be satisfied irrespective of any other obligations, declares Mr. DeBorde. The Court is set to consider the adequacy of the disclosure statement on Thursday, May 3, 2007. About Tower Records Based in West Sacramento, California, MTS Inc., dba Tower Records -- http://www.towerrecords.com/-- is a retailer of music in the U.S., with nearly 100 company-owned music, book, and video stores. The company and its affiliates previously filed for chapter 11 protection on Feb. 9, 2004 (Bankr. D. Del. Lead Case No. 04-10394). The Court confirmed the Debtors' plan on March 15, 2004. The company and seven of its affiliates filed their second voluntary chapter 11 petition on Aug. 20, 2006 (Bankr. D. Del. Case Nos. 06-10886 through 06-10893). Richards, Layton & Finger, P.A. and O'Melveny & Myers LLP represent the Debtors. The Official Committee of Unsecured Creditors is represented by McGuirewoods LLP and Cozen O'Connor. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. TRW AUTOMOTIVE: S&P Affirms BB+ Long-Term Corporate Credit Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its bank loan and recovery ratings to TRW Automotive Inc.'s proposed $2.5 billion senior secured credit facilities. The credit facilities were rated 'BBB-' with a recovery rating of '1', indicating a high expectation for full recovery of principal in the event of a payment default. At the same time, Standard & Poor's affirmed its ratings on the auto supplier, including its 'BB+' long- and 'A-3' short-term corporate credit ratings. The outlook is stable. TRW had $3.2 billion in total balance sheet debt outstanding, pro forma for the proposed credit facility refinancing and recent unsecured debt refinancing, at Dec. 31, 2006. To lower its interest cost and extend maturities, TRW proposes to refinance its existing $2.5 billion credit facilities with new facilities of the same total committed capacity. When the transaction is completed, Standard & Poor's will withdraw the rating on TRW's existing facilities. The new facilities will be comprised of a $500 million multicurrency (USD, Sterling, Euro) revolving facility due in 2012, $900 million U.S. revolving facility due 2012, $600 million term loan A due 2013, and $500 million term loan B due 2013. VANSON LEATHERS: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Vanson Leathers, Inc. 951 Broadway Fall River, MA 02724 Bankruptcy Case No.: 07-12600 Type of Business: The Debtor manufactures leather and textile motorcycle and casual garments in the US. See http://www.vansonleathers.com/ Chapter 11 Petition Date: April 27, 2007 Court: District of Massachusetts (Boston) Judge: William C. Hillman Debtor's Counsel: Nina M. Parker, Esq. Parker & Associates 10 Converse Place Winchester, MA 01890 Tel: (781) 729-0005 Fax: (781) 729-0187 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did submit a list of its largest unsecured creditors. WERNER LADDER: Court Approves $265-Mil. Asset Sale to New Werner ---------------------------------------------------------------- The Honorable Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware approved the sale of substantially all assets of Werner Holding Co. (DE) Inc. and its debtor subsidiaries to New Werner Holdings Co. (DE) LLC for $265,000,000. New Werner is the acquisition vehicle formed by a group of investors, including Black Diamond Capital Management; Brencourt Advisors LLC; Levine Leichtman Capital Partners III L.P.; Milk Street Investors LLC; Schultze Asset Management LLC; and TCW Group, Inc. Judge Carey ruled that the Debtors may sell the Purchased Assets free and clear of all liens, claims, encumbrances, and interests, because, with respect to each creditor asserting an Encumbrance, one or more of the standards under Section 363 of the Bankruptcy Code has been satisfied. In addition, Judge Carey approved the Amended Asset Purchase Agreement, dated April 23, 2007, among the Debtors and New Werner, et al. Judge Carey clarified that the Sale and its related transactions do not amount to a consolidation, merger, or de facto merger of New Werner and the Debtors. He adds that New Werner does not constitute a successor to the Debtors or their estates. Furthermore, Judge Carey finds that the Sale does not constitute a sub rosa Chapter 11 plan for which approval has been sought without the protections that a disclosure statement would afford. The Sale neither impermissibly restructures the rights of the Debtors' creditors nor impermissibly dictates a liquidating plan for the Debtors. To maximize the value of the Debtors' Assets, Judge Carey deemed it essential that the Sale occur within the time constraints set forth in the Purchase Agreement. Judge Carey finds that there is cause to lift the automatic stays contemplated by Rules 6004 and 6006 of the Federal Rules of Bankruptcy Procedure. The Debtors anticipate that the Sale transaction will close next month. The Sale will substantially reduce the company's debt and overall leverage, as more than $300,000,000 of liabilities will be extinguished through that transaction, James J. Loughlin, Jr., Werner's Interim Chief Executive Officer, said in a company statement. He adds that Werner will benefit from an improved capital structure and liquidity that will allow the company to serve its customers and meet all of its future obligations. "We are very pleased the Court has approved the sale order," Mr. Loughlin said in a company statement. "This is a good result for Werner and its employees and positions the Company for future success. We remain committed to serving our customers and teaming with our suppliers and other business partners to remain the leader in each of our product segments." Sale Objections Resolved & Overruled Judge Carey overruled all objections and responses concerning the Sale Motion to the extent any pleading was not otherwise withdrawn, waived, or settled. In their recent response to all Sale objections, the Debtors have insisted that the Purchase Agreement with the Black Diamond Group is the Bid that maximizes value for the Debtors' estates. The Debtors maintained that: (a) a buyer of assets is not required to fund every liability of the estates; (b) treatment of creditors in an asset sale is dictated by fair market value of the assets of the debtor that the purchaser in its business judgment elects to purchase; (c) the disparate treatment of creditors occurs as a consequence of the Sale transaction itself, and is not an attempt by the Debtors to circumvent the distribution scheme of the Bankruptcy Code; and (d) while guaranteed payments to all creditors would be ideal, applicable law does not require it, and no objector have cited support for payments to all creditors. Assumption & Assignment of Contracts/Leases Judge Carey authorized the Debtors to assume, sell, assign and transfer the Seller Agreements and Assumed Leases under the Asset Purchase Agreement to New Werner. Specifically, Judge Carey ruled that the Debtors' agreements with Oracle USA, Inc., will not be deemed assumed and assigned, unless and until (i) the Buyer has provided to Oracle an executed "standard" Oracle assignment agreement and reasonable financial information regarding New Werner, and (ii) Oracle has indicated its consent to that assumption and assignment, which would not be unreasonably withheld. Judge Carey declared that all defaults or obligations of the Debtors under the Seller Agreements and Assumed Lease arising or accruing before the Closing Date will be deemed cured by the payment or other satisfaction of the cure costs in certain amounts. The Debtors and Bradco Supply Corporation will use reasonable efforts to reconcile the Cure Amount owed, if any, to Bradco, which amount will not be greater than $48,908. The Purchased Assets will not include the insurance policies issued by ACE American Insurance Company or the agreements between the Debtors and ACE related to those policies. A schedule of the Cure Amounts is available at no charge at: http://researcharchives.com/t/s?1e1e Validity of Prepetition Liens Judge Carey ruled that the obligations of and claims against the Debtors or their estates under the First Lien Credit Agreement will constitute legal valid and binding obligations of the Debtors. No portion of those obligations will be subject to avoidance, recharacterization, subordination or recovery pursuant to the Bankruptcy Code. The First Lien Credit Agreement Obligations will be deemed satisfied in full, and all liens and related claims under the Final DIP Order will be deemed extinguished. Use of Sale Proceeds On the Closing Date, the Debtors will be authorized to effectuate the DIP Payoff, which is a payment in full, in cash, to the DIP agent, for the benefit of all claimholders against a Debtor, arising pursuant to the DIP Facility. Subsequent to the DIP Payoff, the use of all remaining cash proceeds from the Sale will be subject to further Court orders. All claims arising under the First Lien Credit Facility will be deemed satisfied in full, provided that at the Closing, the Debtors will Cash Collateralize all outstanding letters of credit issued under the First Lien Credit Facility. The Debtors will also pay $1,147 to the Tax Commissioner of DeKalb County, Georgia, to satisfy all claims of DeKalb County. Carve Out & Wind Down Amount For the amounts paid by New Werner to satisfy the Carve Out under a Second Forbearance Agreement, Judge Carey ruled that they will be free and clear of all liens, claims, interests and encumbrances of all parties, other than the claims of the professionals whose fees are included in the Carve Out Amounts. Judge Carey stated the Purchase Price will be reduced by the Wind Down Amount, and New Werner will pay all expenses incurred by the Debtors in connection with the wind-down of the estates, including costs of prosecuting litigation, provided that the amount paid New Werner will not exceed an aggregate of $750,000. Additional Provisions Judge Carey finds that neither his Order nor the approved Asset Sale will limit or effect the claims of Dorel Juvenile Group, Inc., Cosco Home and Office Products Division for infringement of U.S. Patent Nos. 6, 427 and 805, including the claims for infringement which are pending before Judge Jeffrey Cole of the U.S. District Court for the Northern District of Illinois, Eastern Division, under Case No. 06-C-1380. The Sale Order will not prejudice Cosco's rights to: -- pursue its claims of infringement against the Debtors, New Werner, and any other entity involved in the manufacture, use, sale, or import of infringing step stools or ladders; or -- amend or file any proof of claim in the Debtors' cases or any superseding bankruptcy case related to those claims. Pursuant to Sections 105(a), 363(b) and 503(c), the Debtors are further authorized, but not required to: (a) execute and perform their obligations under any Non- Compete Agreement that was authorized pursuant to orders approving an EIP Motion, so long as the Non-Compete Agreement was executed by the applicable parties no later than April 16, 2007; (b) make payments to the applicable executives under the EIP Motion in connection with the Non-Compete Agreements; and (c) take other actions necessary to implement the Non-Compete Agreements, including designing or altering the those contracts in any manner necessary to comply with applicable law. A full-text copy of the Court's Sale Order is available at no charge at http://researcharchives.com/t/s?1e1f About Werner Holding Co. Based in Greenville, Pennsylvania, Werner Holding Co. (DE) Inc. aka Werner Ladder Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). The Debtors are represented by the firm of Willkie Farr & Gallagher LLP as lead counsel and the firm of Young, Conaway, Stargatt & Taylor LLP as co-counsel. Rothschild Inc. is the Debtors' financial advisor. The Official Committee of Unsecured Creditors is represented by the firm of Winston & Strawn LLP as lead counsel and the firm of Greenberg Traurig LLP as co-counsel. Jefferies & Company serves as the Creditor Committee's financial advisor. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. (Werner Ladder Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/or (215/945-7000). WERNER LADDER: Pact Creating Litigation Trust for Asset Sale OK'd ----------------------------------------------------------------- In its objection to Werner Holding Co. (DE) Inc. aka Werner Ladder Company and its debtor-affiliates' proposed asset sale to New Werner Holdings Co. (DE), LLC, the Official Committee of Unsecured Creditors asserted that the Sale disposes substantially all of the Debtors' assets without the protections of a plan of reorganization. The Committee argued, among other things, that the U.S. Bankruptcy Court for the District of Delaware should only approve the Sale if it provided a bridge to a plan of reorganization or liquidation that furnishes value to the general unsecured creditors. To help ensure that any Chapter 11 plan after the sale will create the potential of providing value to the unsecured creditors, the Committee negotiated with various parties-in- interest to resolve its Sale objection. The negotiations have resulted in the Committee, the proposed purchaser of the Debtors' assets, almost all of the Debtors' secured lenders and the Debtors' largest unsecured creditor in agreeing to a stipulation that will resolve certain Sale-related issues. Aside from the Committee and the Debtors, other parties to the Stipulation are: * JPMorgan Chase Bank, as Administrative and Collateral Agent under the First Lien Credit Facility, dated June 11, 2003; * Credit Suisse, Cayman Islands Branch, as Administrative and Collateral Agent under the Second Lien Credit Facility, dated May 10, 2005; * BDCM Opportunity Fund, II, L.P. and BDC Finance, L.L.C.; * Brencourt BD, LLC; * Levine Leichtman Capital Partners III, L.P.; * Milk Street Investors LLC; * TCW Shared Fund IVB, L.P., TCW/Drum Special Situation Partners, LLC, and TCW Shared Opportunity Fund III, L.P.; and * Schultze Master Fund, Ltd., Schultze Offshore Fund, Ltd., Schultze Partners, L.P., Schultze Asset Management, LLC, Arrow Distressed Securities Fund and Distressed Securities and Special Situations Fund. The Stipulation provides that: (1) all litigation claims and causes of action that are property of the Debtors' bankruptcy estates and all other Excluded Assets under the Asset Purchase Agreement will be transferred to a liquidating trust, which will be administered by a trustee mutually selected by Levine Leichtman and the Committee; (2) Levine Leichtman or its designee have the sole authority to: (i) evaluate and determine strategy for the causes of action, and litigate, settle, transfer, release or abandon any Causes of Action; (ii) retain legal counsel for the Trust to pursue the Causes of Action; (iii) pay all out-of-pocket costs and expenses incurred in connection with the Causes of Action out of the Trust Funding; and (iv) make distributions of proceeds of the Causes of Action and draw down on the Trust Funding; (3) the assignment of claims under the Second Lien Credit Agreement by Black Diamond, Brencourt, TCW, and Schultze to Levine Leichtman will be approved; (4) Levine Leichtman will have an allowed unsecured super- priority claim for $95,835,390, plus all accrued interest and all other amounts entitled to Section 507(6) of the Bankruptcy Code; (5) Levine Leichtman will provide funding of $2,000,000 to the Trust; (6) the Litigation Designee will distribute the proceeds from the Causes of Action, by providing, among other things, that: (i) the first $50,000,000 in distributions payable to Levine Leichtman on account of its Allowed 507(b) Claim will be paid 80% to Levine Leichtman, and 20% to the Trustee for distribution to general unsecured creditors; (ii) the next $10,000,000 in distributions payable to Levine Leichtman on account of its Allowed Claim will be paid 90% to Levine Leichtman, and 10% to the Trustee for distribution to the general unsecured creditors; and (iii) any further distributions payable to Levine Leichtman on account of its Allowed Claim in excess of $60,000,000 will be paid 98% to Levine Leichtman, and 2% to the Trustee for distribution to the general unsecured creditors. The Court approved the stipulation pursuant to an April 25, 2007 order approving the asset sale. A full-text copy of the Stipulation is available at no charge at: http://researcharchives.com/t/s?1e20 About Werner Holding Co. Based in Greenville, Pennsylvania, Werner Holding Co. (DE) Inc. aka Werner Ladder Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). The Debtors are represented by the firm of Willkie Farr & Gallagher LLP as lead counsel and the firm of Young, Conaway, Stargatt & Taylor LLP as co-counsel. Rothschild Inc. is the Debtors' financial advisor. The Official Committee of Unsecured Creditors is represented by the firm of Winston & Strawn LLP as lead counsel and the firm of Greenberg Traurig LLP as co-counsel. Jefferies & Company serves as the Creditor Committee's financial advisor. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. (Werner Ladder Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/or (215/945-7000). WESTAR ENERGY: Former CEO David Wittig Undergoing Third Trial ------------------------------------------------------------- David Wittig, former chief executive officer of Westar Energy Inc. and Douglas Lake, former chief strategy officer will go to trial for a third time on allegations that they tried to loot the company, the Associated Press reports citing Assistant U.S. Attorney Richard Hathaway. AP relates the Mr. Wittig will face one count of conspiracy and 14 counts of circumventing internal financial controls, while Mr. Lake will face the same conspiracy charge and 13 identical counts. Messrs. Wittig and Lake was previously charged in 2004 but the trial ended in a hung jury. A federal appeals court had also dismissed dozens of convictions against the two executives in January 5, AP adds. Westar Energy, Inc. (NYSE: WR) -- http://www.westarenergy.com/-- is the largest electric utility in Kansas, providing electric service to about 669,000 customers in the state. Westar Energy has about 6,000 megawatts of electric generation capacity and operates and coordinates approximately 33,000 miles of electric distribution and transmission lines. * * * As reported in the Troubled Company Reporter on April 16, 2007, Standard & Poor's Ratings Services assigned its preliminary 'BBB-/BB+/BB' rating to Westar Energy Inc.'s omnibus Rule 415 shelf registration, covering an indeterminate amount of first mortgage bonds, senior and subordinated debt securities, and preferred and preference stock. The outlook is stable. The ratings on Westar Energy reflect a satisfactory consolidated business risk position of '5' and an intermediate financial profile that is commensurate with investment-grade characteristics. WESTAR ENERGY: William Moore Promoted to President and CEO ---------------------------------------------------------- The Westar Energy, Inc. board of directors disclosed that William Moore, 54, will succeed Chief Executive Officer James Haines. Mr. Moore will also become a member of the board May 1, 2007. He currently is president and chief operating officer. Mr. Haines announced his retirement as CEO effective June 30, 2007. "The board is pleased to appoint Bill Moore as Westar's president and CEO. For several years, the board has been active in succession planning, and we are confident that the company will continue to succeed under Bill's leadership," said Charles Q. Chandler, IV, chairman of the board. "The board also thanks Jim Haines for his great leadership and unwavering commitment to Westar's success." Mr. Moore rejoined Westar Energy in late 2002 from his position as senior managing director and senior adviser for Saber Partners, LLC. His previous years with Westar began in 1978 as a finance assistant. He held numerous financial positions with the company, becoming vice president, finance in 1985, and executive vice president and chief financial officer in 1998 until he left the company in 2000. Upon his return, he served as executive vice president and chief operating officer until 2006 when he became president and chief operating officer. MR. Moore earned his bachelor of business administration degree from Wichita State University in 1974. He currently lives in Wichita but will be relocating to Topeka. He and his wife, Shelly, have two adult sons. Mr. Moore has been very active in the Wichita community where he serves on the executive board of the Wichita Area Chamber of Commerce, is chair of Goodwill Industries, Easter Seals of Kansas, and is on the executive committee of the Wichita University Foundation Board of Directors, among many other civic and charitable activities. He served as the 2004 campaign chair for the United Way of the Plains. Westar Energy, Inc. (NYSE: WR) -- http://www.westarenergy.com/-- is the largest electric utility in Kansas, providing electric service to about 669,000 customers in the state. Westar Energy has about 6,000 megawatts of electric generation capacity and operates and coordinates approximately 33,000 miles of electric distribution and transmission lines. * * * As reported in the Troubled Company Reporter on April 16, 2007, Standard & Poor's Ratings Services assigned its preliminary 'BBB-/BB+/BB' rating to Westar Energy Inc.'s omnibus Rule 415 shelf registration, covering an indeterminate amount of first mortgage bonds, senior and subordinated debt securities, and preferred and preference stock. The outlook is stable. The ratings on Westar Energy reflect a satisfactory consolidated business risk position of '5' and an intermediate financial profile that is commensurate with investment-grade characteristics. WHOLE FOODS: S&P to Cut Rating Upon Completion of Wild Oats Deal ---------------------------------------------------------------- Standard & Poor's Ratings Services said that while the ratings on Whole Foods Market Inc., including the 'BBB-' corporate credit rating, currently remain on CreditWatch with negative implications, where they were placed on Feb. 22, 2007, S&P will lower the corporate credit rating to 'BB+' from 'BBB-' upon closure of its acquisition of Wild Oats Inc. At this time, ratings will also be removed from CreditWatch. The outlook will be stable. This action will reflects the combination of Austin, Texas-based Whole Foods Market's weaker pro forma credit metrics, and S&P's expectation that store development and capital spending activity will increase over the next few years. S&P anticipate that some of the 110 acquired Wild Oats stores may be either closed, sold, or relocated. Additionally, "while we believe Whole Foods will recognize meaningful synergies from the acquisition of Wild Oats over time," explained Standard & Poor's credit analyst Stella Kapur, "we still expect credit metrics pro forma for this acquisition will take time to recover to levels more consistent with current ratings." YELL GROUP: Intense Competition Prompts US Profit Warning --------------------------------------------------------- Yell Group Plc issued a trading update in advance of the May 22 publication of its preliminary financial results for the year ended March 31, 2007. In the U.S., the competition environment has intensified further. This leads Yell now to believe that U.S. organic revenue growth for the current financial year is likely to be just around 3%. The profit expectation is a dramatic decline from the 10% growth expected in 2007, Richard Wray writes for The Guardian. Yell reiterated its confidence in meeting market expectations for the financial year to March 31, 2007, considering the rapid growth of its internet revenues and strong operating cash flow. Expectations for the U.K. and Spanish businesses are maintained. The U.K. business continues actively to plan the development of its marketing and service offer, looking ahead to the favorable change in printed directory regulation in April next year. In Spain, the impact of Yell's actions on revenues and costs is expected progressively to start to have effect during the year. "While the underlying share shift towards independent directories continues in the U.S., the pace of competition has increased as incumbents seek to protect their share and new books are published by both independent and incumbents. In the longer term, we believe this will lead to a shake-out in the market. In the near term, though, it will impact the rate of our U.S. organic revenue growth," John Condron, Yell Group CEO disclosed. As of April 27, Yell shares are trading at 480 pence a share. On April 24, shares of the company began to drop after the company statement. It dived as much as 17% or 107 pence to 505.5 pence and traded at 509 pence from 613 pence on April 23. It cut about GBP800 million from the company's market value. "The big concerns are going to be with the U.S. market," Charles Peacock, an analyst at Seymour Pierce in London was quoted by Bloomberg News as saying. "Investors will want to know how intensive the competition will be, how long it will last and how is this going to impact on earnings," Mr. Peacock added. Headquartered in Reading, England, Yell Group plc -- http://www.yellgroup.com/-- is an international directories business operating in the classified advertising market through printed, online, and phone media in the U.K. and the US. * * * As reported in the TCR-Europe on April 20, Moody's confirmed its Ba3 corporate family rating for Yell Group plc. It also assigned a B1 Probability-of-Default rating to the company. Standard & Poor's rates Yell's long-term foreign issuer credit and long-term local issuer credit at BB- with a stable outlook. ********* 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, Melanie C. Pador, Ludivino Q. Climaco, Jr., Loyda I. Nartatez, Tara Marie A. Martin, John Paul C. Canonigo, 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 ***