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/raid1/www/Hosts/bankrupt/TCR_Public/070504.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, May 4, 2007, Vol. 11, No. 105 Headlines AEARO TECHNOLOGIES: S&P Junks Rating on $200 Million Sr. Term Loan ALL AMERICAN: Bankruptcy Court Approves First Day Motions AMERICAN FAMILY: Voluntary Chapter 11 Case Summary ANDREW KORN: Voluntary Chapter 11 Case Summary APOSTOLIC CHURCH: Case Summary & Largest Unsecured Creditor ARR-MAZ CUSTOM: Cash Distribution Cues S&P to Lower Rating to B- ASARCO LLC: Taps Consulting Experts to Handle MRI & AMC Litigation ASARCO LLC: Can Hire Fennemore Craig as Special Counsel ASC INC: Case Summary & 20 Largest Unsecured Creditors ASSET ACCEPTANCE: Moody's Puts Corporate Family Rating at B1 ASSET SECURITIZATION: Fitch Holds Low-B Ratings on 2 Certificates ASSOCIATED ESTATES: Declares Preferred Shares' Quarterly Dividend ASSOCIATES MANUFACTURED: S&P Cuts Rating on Junk S. 1996-2 Certs. BEAR STEARNS: Moody's Holds Low-B Ratings on Six Certificates BOSTON SCIENTIFIC: COO Says Company Mulls Sale of Noncore Assets BOSTON SCIENTIFIC: Names Sam Leno as Chief Financial Officer BRIGHTPOINT INC: Earns $35.6 Million in Year Ended December 31 CABLEVISION SYSTEMS: Dolan Merger Cues Fitch's Negative Watch CABLEVISION SYSTEMS: Moody's Places All Ratings Under Review CABLEVISION SYSTEMS: Dolan Offer Prompts S&P's Negative Watch CABLEVISION SYSTEMS: Privatization Cues DBRS to Review Ratings CABLEVISION SYSTEMS: Posts $26.3 Mil. Net Loss in Qtr Ended Mar 31 CELESTICA INC: Moody's Downgrades Corporate Family Rating to B1 CERADYNE INC: Earns $38.1 Million in Quarter Ended March 31 CHIQUITA BRANDS: Weak Operating Results Cue S&P's B Corp. Credit CIGNA CORP: Earns $289 Million in First Quarter Ended March 31 CINRAM INT'L: Inks $50 Million Acquisition Deal with Ditan CITY OF NEW ORLEANS: Moody's Upgrades Rating on Tax Debt COMMERCIAL REALTY: Files Joint Chapter 11 Plan of Reorganization CORPORATE BACKED: S&P Lifts Ratings on $27 Mil. Certificates to B CONSTELLATION BRANDS: Earns $331.9 Million in Year Ended Feb. 28 CREDIT SUISSE: Moody's Holds Low-B Ratings on Six Certificates CYBERONICS INC: Hires Daniel Moore as Pres. & CEO Effective May 1 DALLAS ROOF: Voluntary Chapter 11 Case Summary DUANE CAUSWELL: Voluntary Chapter 11 Case Summary DURA AUTOMOTIVE: Evaluates Strategic Alternatives for Atwood Group DUTCH HILL: Fitch Rates $11.8 Million Class D-3 Notes at BB+ EDISON MISSION: Fitch Expects to Rate $2.7 Bil. Sr. Notes at BB- ENTERGY NEW ORLEANS: Court Approves Settlement Deal with Hartford ENTERGY NEW ORLEANS: Wants $180 Mil. Investment in Federated OK'd ENTERGY NEW ORLEANS: Judge Brown Confirms Chapter 11 Plan FORD MOTOR: Navistar Files $2 Billion Counter-Claim FORD MOTOR: April U.S. Sales Decreased 13%, to 228,623 GENERAL MOTORS: April Sales Down 2.2%; Daily Rental Sales Down 36% GENERAL MOTORS: Earns $62 Million in Quarter Ended March 31 GENTA INC: NASDAQ to Delist Stocks Due to Bid Price Non-Compliance GEOKINETICS INC: Commences Offering of 4.5 Million Common Stock GMAC COMMERCIAL: Moody's Holds Low-B Ratings on 6 2002-C3 Certs. GMAC LLC: Massive Losses Prompt S&P to Affirm BB+/B-1 Rating GOLDMAN SACHS: S&P Puts BB+ Rated Class B Notes on Positive Watch GREAT LAKES: Refinancing Prompts Moody's to Affirm Debt Ratings GREENWICH CAPITAL: Moody's Holds Low-B Ratings on Six Certificates HAYES LEMMERZ: Moody's Upgrades Unit's Corporate Rating to B3 HAYES LEMMERZ: Planned Debt Reduction Cues S&P to Upgrade Ratings HIGHVIEW RESOURCES: Completes Reorganization Initiatives INDYMAC MANUFACTURED: Poor Performance Cues S&P to Lower Rating INGRESS I: Fitch Holds Junk Rating on $28 Million Class C Notes IPC SYSTEMS: Moody's Junks Rating on New $315 Million Loan JAMES KOONCE: Case Summary & 17 Largest Unsecured Creditors JOE THOMAS: Case Summary & 3 Largest Unsecured Creditors JOHN MIKUS: Voluntary Chapter 11 Case Summary JOSEPH PINTOLA: Voluntary Chapter 11 Case Summary LB-UBS COMMERCIAL: Moody's Lowers Ratings on Six Certificates LINDA BORGOGNONE: Case Summary & 18 Largest Unsecured Creditors LLOVET ENTERPRISE: Case Summary & 17 Largest Unsecured Creditors MAXXCAPP CORP: Fails to Meet TSX-Venture Filing Regulations MERCHANTS INSURANCE: Fitch Affirms and Withdraws BB+ Rating MGM MIRAGE: Withdraws Proposal to Develop a Lottery Facility NAVISTAR INTERNATIONAL: Files $2 Bil. Counter-Claim Against Ford NEW COREY: Case Summary & Nine Largest Unsecured Creditors NRG ENERGY: S&P Lifts Rating on $4.7 Bil. Unsecured Bonds to 'B' NUTRO PRODUCTS: Mars Offer Cues S&P's Positive CreditWatch ON SEMICONDUCTOR: Steady Gains Cue S&P to Up Credit Rating to BB- PAC-WEST TELECOMM: Organizational Meeting Scheduled for May 9 PACIFIC LUMBER: Court OKs Morrison & Foerster as Special Counsel PALACE DEVELOPERS: Case Summary & XX Largest Unsecured Creditors PORTRAIT CORP: Inks Pact Selling Assets to CPI for $100MM Cash QWEST CORP: Moody's Rates Planned $400MM Sr. Notes Offering at Ba1 QWEST CORP: Fitch Rates Proposed $400 Million Senior Notes at BBB- QWEST CORP: S&P Rates Proposed $400 Million Notes at BB+ RANDY SCHNEIDT: Case Summary & 4 Largest Unsecured Creditors RESTORATION FUNDING: S&P Withdraws BB- Rating on Class E Notes RICARDO FORNESA: Case Summary & 49 Largest Unsecured Creditors SAN FRANCISCO RAWHIDE: Case Summary & 3 Largest Unsec. Creditors SINCLAIR BROADCAST: Plans to Offer $300MM of Convertible Sr. Notes SKILLED HEALTHCARE: S&P Places Ratings on Positive CreditWatch SOLUTIA INC: Exclusive Plan Filing Period Extended Until July 30 SOLUTIA INC: Gets Open Ended Extension of Lease Decision Deadline SPENCER PARTNERS: Chapter 15 Petition Summary STONY HILL: S&P Puts BB- Rated Class A Notes on Positive Watch STRATHMORE MINERALS: Exploration Drill Program in Wyoming Okayed SYNTHEMED INC: Posts $1.1 Million Net Loss in Qtr Ended March 31 UNIVERSAL CITY: Moody's Affirms B1 Corporate Family Rating USI HOLDINGS: Fitch Cuts Issuer Default Rating to B- from BB- VALEANT PHARMA: Incurs $22 Mil. Net Loss in Quarter Ended Dec. 31 VISTEON CORP: Posts $153 Million Net Loss in Qtr Ended March 31 VONAGE HOLDINGS: Circuit Court Denies Bid for Patent Case Retrial YUKOS OIL: Two More Lots Set for Auction in June YUKOS OIL: Rosneft Oil Wins Auction to Buy East Siberian Assets * Baker Botts Welcomes Victor Vital to Dallas' Litigation Dep't. * Clear Thinking Accepts Adam Cook as Turnaround Management Leader * BOOK REVIEW: American Economic History ********* AEARO TECHNOLOGIES: S&P Junks Rating on $200 Million Sr. Term Loan ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its loan and recovery ratings to Aearo Technologies Inc.'s proposed $735 million senior secured credit facilities. The $60 million first-lien senior secured revolving credit facility was rated 'B+' with a '1' recovery rating, indicating a high expectation of full recovery of principal in the event of default. The $475 million first-lien senior secured term loan was rated 'B' with a '3' recovery rating, indicating a meaningful expectation of full recovery. And the $200 million second-lien senior secured term loan was rated 'CCC+' with a '5' recovery rating, indicating a negligible expectation of full recovery. At the same time, Standard & Poor's revised its outlook on Aearo to negative from stable based on the company's recently proposed recapitalization that will result in higher financial leverage. The 'B' corporate credit rating has been affirmed. Standard & Poor's will withdraw existing ratings on Aearo's currently outstanding senior secured facilities upon completion of the proposed transaction. ALL AMERICAN: Bankruptcy Court Approves First Day Motions --------------------------------------------------------- All American Semiconductor, Inc. disclosed the approval of its first day motions by the U.S. Bankruptcy Court for the Southern District of Florida, Miami Division. The company received approval of first day motions seeking relief to enable the company to continue operations during the Chapter 11 process, including debtor-in-possession financing from its existing bank group, and the payment of prepetition, employee-related and certain customer obligations. In addition, All American received Bankruptcy Court approval of bidding procedures for an auction sale of its businesses as a going concern to be completed no later than June 8, 2007. The Court approved interim DIP financing of up to $13 million, which is expected to provide the company with sufficient liquidity to continue operations during the Chapter 11 case and is based on a budget agreed upon with the bank group. The final hearing on DIP financing is scheduled to be held on May 17, 2007. "We are pleased with this outcome," Bruce Goldberg, President and CEO of All American, said. "The Court's approval of our motions allows All American to continue as a going concern as we work towards an auction sale of the business." The approved sale process provides for interested purchasers to complete due diligence and submit binding bids by May 28, 2007, with the auction scheduled for May 31 at the Miami offices of the company's counsel, Squire, Sanders & Dempsey, L.L.P. The hearing to approve a sale to the highest bidder at the auction is scheduled for June 5, 2007, with the sale closing no later than June 8. Prior to the company's bankruptcy filing on April 25, 2007, it signed a nonbinding letter of intent with a potential purchaser of substantially all of the company's and its subsidiaries' assets. The company advised the Bankruptcy Court that it is actively negotiating a binding purchase agreement with this party to become the stalking horse for the sale. In the event such an agreement is reached, specific stalking horse protections, including a breakup fee, will be subject to the approval of the DIP lenders and the Bankruptcy Court. In addition, a sale to the highest bidder at the auction will also require the approval of the Bankruptcy Court. The Chapter 11 filing included the company's 33 subsidiaries in the United States, Canada, Mexico, Europe and Asia. All American determined to file for relief under Chapter 11 after extensively exploring and carefully evaluating all of its options. All American believes that the Chapter 11 process provides the best alternative for maximizing the value of the company for the benefit of its stakeholders including suppliers, customers and employees. About All American Semiconductor Headquartered in Miami, Florida, All American Semiconductor Inc. (Pink Sheets: SEMI.PK) -- http://www.allamerican.com/-- is a distributor of electronic components manufactured by others. The company distributes a full range of semiconductors including transistors, diodes, memory devices, microprocessors, microcontrollers, other integrated circuits, active matrix displays and various board-level products. All American also distributes passive components such as capacitors, resistors and inductors; and electromechanical products such as power supplies, cable, switches, connectors, filters and sockets. The company also offers complete solutions for flat panel display products. In total, the company offers approximately 40,000 products produced by approximately 60 manufacturers. The company has 36 strategic locations throughout North America and Mexico, as well as operations in both Asia and Europe. The company and its debtor-affiliates filed for Chapter 11 protection on April 25, 2007 (Bankr. S.D. Fla. Lead Case No. 07-12963). Tina M. Talarchyk, Esq., at Squire Sanders & Dempsey LLP, in West Palm Beach, Florida, represents the Debtors. As of Feb. 28, 2007, total assets was $117,634,000 and total debts was $106,024,000. AMERICAN FAMILY: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: American Family Estates, Inc. 9637 Anderson Lakes Parkway, Suite 153 Eden Prairie, MN 55344 Bankruptcy Case No.: 07-41485 Chapter 11 Petition Date: May 2, 2007 Court: District of Minnesota (Minneapolis) Judge: Dennis D O'Brien Debtor's Counsel: William A. Vincent, Esq. 17736 Excelsior Boulevard Minnetonka, MN 55345 Tel: (952) 401-8880 Fax: (952) 401-8889 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor does not have any creditors that are not insiders. ANDREW KORN: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtors: Andrew R. Korn Jo Elizabeth Schifani Korn 4221 Avondale Avenue Dallas, TX 75219 Bankruptcy Case No.: 07-32186 Chapter 11 Petition Date: May 2, 2007 Court: Northern District of Texas (Dallas) Judge: Stacey G. Jernigan Debtor's Counsel: Joyce W. Lindauer, Esq. 8140 Walnut Hill Lane, Suite 301 Dallas, TX 75231 Tel: (972) 503-4033 Fax: (972) 503-4034 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. APOSTOLIC CHURCH: Case Summary & Largest Unsecured Creditor ----------------------------------------------------------- Debtor: The Apostolic Church of Jesus, Inc. 1130 Merritt Street Altamonte Springs, FL 32701 Bankruptcy Case No.: 07-01745 Type of Business: See http://www.acoj.com/ Chapter 11 Petition Date: May 1, 2007 Court: Middle District of Florida Judge: Arthur B. Briskman Debtor's Counsel: David R. McFarlin, Esq. Wolff, Hill, McFarlin & Herron, P.A. 1851 West Colonial Drive Orlando, FL 32804 Tel: (407) 648-0058 Fax: (407) 648-0681 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Cecil Allen Construction, Inc. $100,000 18 North College Street Eatonville, FL 32751 ARR-MAZ CUSTOM: Cash Distribution Cues S&P to Lower Rating to B- ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Arr-Maz Custom Chemicals Inc. to 'B-' from 'B'. The outlook is stable. "The downgrade was prompted by Arr-Maz's plan to make an approximately $44 million cash distribution to shareholders," said Standard & Poor's credit analyst Cynthia Werneth. "This transaction will result in a very highly leveraged financial profile, with total debt of $220 million and total debt to EBITDA near 7x." At the same time, based on preliminary terms and conditions, S&P assigned senior secured bank loan ratings to Arr-Maz's proposed $15 million six-year revolving credit facility and $154 million first-lien term loan. The loans are rated 'B-' with a recovery rating of '2', indicating S&P's expectation that lenders under these facilities would experience substantial (80% to 100%) recovery of principal in a payment default. S&P also assigned ratings, based on preliminary terms and conditions, to Arr-Maz's proposed $66 million 6.5-year second-lien term loan. The loan is rated 'CCC' with a recovery rating of '5' to reflect S&P's belief that second-lien lenders would experience negligible (0% to 25%) recovery of principal in a payment default. Proceeds from the proposed term loans will be used to make the cash distribution to all shareholders and to refinance existing debt. S&P will withdraw the ratings on Arr-Maz's existing bank loans upon completion of the refinancing. The ratings on Mulberry, Florida-based Arr-Maz reflect the limited size and scope of the company's operations as a producer of niche specialty chemicals and its very highly leveraged financial profile. Arr-Maz is a narrowly focused producer of process chemicals and functional additives, including reagents and coatings, to the phosphate fertilizer and mining industries, which account for more than half of total sales. ASARCO LLC: Taps Consulting Experts to Handle MRI & AMC Litigation ------------------------------------------------------------------ ASARCO LLC and its debtor-affiliates ask authority from the U.S. Bankruptcy Court for the Southern District of Texas to employ consulting experts to handle certain avoidance and recovery issues, nunc pro tunc to March 14, 2007. ASARCO LLC had filed a complaint to avoid and recover, from Americas Mining Corporation and Grupo Mexico, S.A. de C.V., 54.2% of its ownership interest in Southern Copper Corporation. ASARCO also filed a complaint to avoid and recover, from Montana Resources, Inc., its ownership interest in the Montana Resources general partnership. Jack L. Kinzie, Esq., at Baker Botts L.L.P., in Dallas, Texas, contends that the AMC and MRI Litigations represent substantial assets of the Debtor's estate. ASARCO anticipates utilizing experts on issues related to the AMC and MRI Litigations. The Consulting Experts will: -- assist ASARCO in the ongoing development and analysis of the issues involved in the Litigations; and -- testify at trial to facilitate the orderly, unified presentation and expert analysis of the various aspects of evidence supporting ASARCO's position in the Litigations. ASARCO will pay the Consulting Experts according to their customary hourly rates: Professional Hourly Rate ------------ ----------- Managing Director $450 - $725 Director $350 - $475 Associate Director $250 - $300 Managing Consultant $200 - $275 Senior Consultant $175 - $225 Consultant $150 - $200 Analyst $95 - $150 Mr. Kinzie tells the Court that the Consulting Experts do not represent any interest adverse to ASARCO and its estates. The Consulting Experts are also "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Consistent with Rule 26 of the Federal Rules of Civil Procedure, ASARCO is not required to disclose the names of the Consulting Experts until the time it determines whether or not it will designate the Consulting Experts as testifying experts and present their opinions at trial, Mr. Kinzie notes. To the extent the Court desires to review the name, qualifications, retention agreement and scope of employment of the Consulting Experts, ASARCO seeks the Court's permission to file that information under seal. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/ -- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). The Debtors' exclusive period to file a plan expires on Aug. 9, 2007. (ASARCO Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ASARCO LLC: Can Hire Fennemore Craig as Special Counsel ------------------------------------------------------- ASARCO LLC and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the Southern District of Texas to employ Fennemore Craig, P.C. as its special counsel, nunc pro tunc to Jan. 1, 2007. As reported in the Troubled Company Reporter on Apr. 13, 2007, Fennemore Craig will continue to provide legal services to ASARCO on matters concerning real estate, employment, regulatory, legislative, general corporate, water and environmental law and other related areas of the law. ASARCO will pay the Firm for its services based on the firm's customary hourly rates: Professional Hourly Rate ------------ ----------- Shareholder $310 - $550 Counsel $275 - $500 Associates $210 - $300 Paralegals $125 - $175 ASARCO anticipates that Fennemore's monthly fees in the future will exceed the $20,000 monthly rolling average for ordinary course professionals. Cathy L. Reece, Esq., a shareholder and director at Fennemore, assures the Court that her firm does not represent any interest adverse to ASARCO and its estate and is a "disinterested person" as the term is defined under Section 101(14) of the Bankruptcy Code. Ms. Reece discloses that as of the Petition Date, Fennemore holds a $104,232 prepetition retainer. Pursuant to the OCP Order, Fennemore applied the prepetition retainer to their outstanding prepetition fees and expenses, aggregating $40,597. Fennemore continues to hold the remaining $63,634 of the retainer. Ms. Reece says Fennemore will apply the remaining retainer to the firm's approved fees and expenses for January and February 2007. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). The Debtors' exclusive period to file a plan expires on Aug. 9, 2007. (ASARCO Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ASC INC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------ Debtor: ASC, Incorporated c/o Gary H. Cunningham, Esq. Giarmarco, Mullins & Horton, P.C. 101 West Big Beaver Road, 10th Floor Troy, MI 48084 Bankruptcy Case No.: 07-48680 Chapter 11 Petition Date: May 2, 2007 Court: Eastern District of Michigan (Detroit) Judge: Thomas J. Tucker Debtor's Counsel: Gary H. Cunningham, Esq. Giarmarco, Mullins & Horton, P.C. Tenth Floor Columbia Center 101 West Big Beaver Road, 10th Floor Troy, MI 48084-5280 Tel: (248) 457-7056 Fax: (248) 457-7001 -- and -- Sean M. Walsh, Esq. Giarmarco, Mullins & Horton, P.C. Tenth Floor Columbia Center 101 West Big Beaver Road, 10th Floor Troy, MI 48084-5280 Tel: (248) 457-7091 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Whitehall Industries $703,325 P.O. Box 97520 Chicago, IL 60678-7520 Bridgewater Interior $547,383 4617 West Fort Street Detroit, MI 48209 Power Packer $540,475 23156 Network PL Chicago, IL 60673 Cambridge Tool & Manufacturing $520,987 P.O. Box 198747 Atlanta, GA 30384-8747 General Pattern Co., Inc. $489,223 3075 84th Lane Northeast Blaine, MN 55449 Top-Line Automotive, L.L.C. $393,674 519 8th Avenue New York, NY 10018 Quality Metalcraft, Inc. $385,475 33355 Glendale Livonia, MI 48150 American Axle & Manufacturing, Inc. $356,236 Drawer, Suite 5893 Detroit, MI 48279-5893 Haartz Corp. $323,654 P.O. Box 3905 Boston, MA 02241-3905 Deezee, Inc. $318,129 P.O. Box 3090 Des Moines, IA 50316 Great Lakes Die Cast $281,236 4473 Paysphere Circle Chicago, IL 60674 Bossard/M.M.G. $279,397 P.O. Box 78043 Milwaukee, WI 53278-8043 Global Technology Associates $230,438 City of Oak Park Treasurer $210,863 Guardian Industries Corp. $197,758 Motor City Stamping, Inc. $189,434 Jerz Machine Tool Corp. $184,624 Findlay Industries, Inc. $168,007 Norplas Industries, Inc. $149,640 Interchez Logistics Systems $147,418 ASSET ACCEPTANCE: Moody's Puts Corporate Family Rating at B1 ------------------------------------------------------------ Moody's Investors Service has assigned these ratings to Asset Acceptance Capital Corp.: * Corporate Family Rating: B1 * Senior Secured $100 million Revolving Credit Facility: B1 * Senior Secured $150 million Term Loan B Facility: B1 The rating outlook is stable. The ratings are assigned in conjunction with AACC's planned recapitalization program, through which it will use the proceeds of a $150 million term loan to engage in a stock repurchase program (up to $75 million) and pay a special dividend to shareholders for the balance of the $150 million. The credit facilities carry the same ratings as the Corporate Family Rating, as these facilities represent AACC's only debt. AACC maintains a strong market position in its core charged off consumer debt management business -- a market that remains quite fragmented. The company also benefits from a capable senior management team led by CEO Brad Bradley, who has 28 years of experience with AACC. AACC possesses a sophisticated portfolio evaluation/acquisition/collections platform that has produced a strong collections track record, with a collections/purchase price multiple averaging 4.5x over past 10 years (past 3 years approximately 3.5x). The company has exhibited discipline in asset purchases, generally eschewing aggressive asset purchases when industry pricing is "irrational." AACC also possesses satisfactory capitalization: although AACC has experience in operating with leverage, over the past several years the company has operated with essentially zero leverage; even with the proposed recapitalization, leverage will remain at reasonable levels. The company benefits from generally favorable industry characteristics, including a growing pool of consumer debt outstanding, an increasing number of credit card charge-offs, and increasing volumes of charged-off debt sales. That said, the purchased accounts receivable business has become increasingly competitive, with several new companies entering the market. While the number of portfolio sales has increased, demand has outweighed supply, which has caused pricing to increase over the past 3-4 years reducing AACC's potential earnings. This trend may be exacerbated by credit card industry consolidation which may give remaining players increased market power in the price and terms of sales of charged-off credit card accounts. Credit challenges facing AACC include its monoline nature (AACC is wholly reliant on a business line that is controversial and litigious in nature) and its management of rapid growth. AACC has grown rapidly over the past 5 years, with purchased receivables growing at a CAGR (2001-2006) of approximately 26%. Although to date the company has managed growth effectively, rapid growth can lead to stress on controls and management and systems capacity, which could adversely affect the company's business and operating results. Additionally, this growth rate in the face of heightened competition further indicates margin erosion in the future. It may also indicate the challenge of operating this business as a public company where the pressure to grow earnings is consistent while on the other hand the ability to selectively acquire assets at a reasonable cost is more sporadic. Moody's also points out the speculative nature of AACC's assets. Although Moody's acknowledges AACC's solid track record in collecting on charged-off consumer debt portfolios, nevertheless market confidence, perception and sensitivity regarding expected volatility of this asset class may cause reduced liquidity, particularly if AACC experiences financial stress. Adding to this risk, in Moody's view AACC possesses limited liquidity sources and faces refinancing risk: the term loan effectively has a bullet maturity. AACC's business is also subject to model risk, i.e. regarding cash flow forecasting and portfolio valuation, in the absence of readily obtainable market values. For example, lower than forecast collections cash flows would cause impairment charges, which would reduce earnings and cause earnings volatility. In Moody's view AACC is also subject to an element of key man risk in the person of longtime CEO Brad Bradley. Finally, although well managed to date, the company faces event risk regarding litigation and/or legislative action. The firm's substantial commitment to maintain operations in house can lead to better controls regarding this risk. Headquartered in Warren, Michigan, AACC purchases charged-off consumer debt from credit issuers, and then uses proprietary methods to collect on these receivables. As of March 31, 2007 AACC reported total assets of $352 million. ASSET SECURITIZATION: Fitch Holds Low-B Ratings on 2 Certificates ----------------------------------------------------------------- Fitch Ratings upgrades Asset Securitization Corp.'s commercial mortgage pass-through certificates, series 1997-D5 as: -- $39.5 million class A-5 to 'AA' from 'A+'. In addition, Fitch affirms the ratings on these classes: -- $549.0 million class A-1C at 'AAA'; -- $229.8 million class A-1D at 'AAA'; -- $52.6 million class A-1E at 'AAA'; -- Interest-only class PS-1 at 'AAA'; -- $87.7 million class A-2 at 'AAA'; -- $52.6 million class A-3 at 'AAA'; -- $26.3 million class A-4 at 'AAA'; -- $43.9 million class A-6 at 'BBB+'; -- $21.9 million class A-7 at 'BB+'; -- $39.5 million class B-1 at 'B'. Class B-2 remains at 'CC/DR4'. Classes A-1A, A-CS1, and A-1B have paid in full. Classes B-3 through B-7H have been reduced to zero due to realized losses. The rating upgrade is the result of increased credit enhancement due to 11.6% paydown as well as stable overall pool performance since Fitch's last rating action. The transaction has paid down 32.7%, to $1.2 billion from $1.8 billion at issuance. In addition, 31 loans, 27.9% of the pool, have defeased, including the Fath Multifamily Pool, 6.3%, a credit assessed loan and the second largest in the pool. There is currently one loan (0.5%) in special servicing that is current. The loan is collateralized by an industrial property in Pottstown, Pennsylvania. The property has suffered from low occupancy. In addition, the borrower is currently involved in litigation with the borrower of an adjacent property. However, Fitch does not project losses at this time. Fitch is also concerned with two separate litigation cases. The first case involves the bankruptcy proceedings of the operating entity of the Dr.'s Hospital loan, which has been resolved from the trust The special servicer escrowed approximately $2.7 million from the settlement proceeds of the Dr.'s Hospital breach of representations and warranty claim, and $1 million remains. Future legal fees associated with this case will not cause interest shortfalls as long as these funds remain. In addition, there is ongoing litigation filed on behalf of the trust by the special servicer against the loan seller for breach of representations and warranties for seven loans that have been liquidated from the trust, causing $27.7 million in losses. Fitch is concerned that future legal fees associated with this litigation as well as amounts above the $2.7 million escrowed in the bankruptcy proceeds may cause future shortfalls to certain junior classes. Four loans (22.4%), the Saul Centers pool, 3 Penn Plaza, the Swiss Bank Tower and Comsat maintain investment grade credit assessments. One loan, the Westin Casuarina Resort, maintains a below investment grade credit assessment. ASSOCIATED ESTATES: Declares Preferred Shares' Quarterly Dividend ----------------------------------------------------------------- Associated Estates Realty Corporation declared a quarterly dividend of $0.54 per one-tenth depositary share on the company's 8.70% Class B Series II Cumulative Redeemable Preferred Shares (NYSE: AECPRB), payable on June 15, 2007 to shareholders of record on June 1, 2007. Each depositary share represents one-tenth of a share of the company's 8.70% Class B Series II Cumulative Redeemable Preferred Shares. For more information, please contact: Michael Lawson Vice President of Investor Relations Tel: (216) 797-8798 Kimberly Kanary Manager of Corporate Communications Tel: (216) 797-8752 Headquartered in Cleveland, Ohio, Associated Estates Realty Corporation (NYSE: AEC) -- http://www.aecrealty.com/-- is a real estate investment trust. The REIT directly or indirectly owns, manages or is a joint venture partner in 99 multifamily communities containing a total of 20,650 units located in nine states. * * * As reported in the Troubled Company Reporter on Nov. 30, 2006, Moody's Investors Service raised the senior unsecured debt shelf rating of Associated Estates Realty Corporation to B1 from B2. The B3 preferred stock shelf rating was affirmed. The rating outlook is stable. ASSOCIATES MANUFACTURED: S&P Cuts Rating on Junk S. 1996-2 Certs. ----------------------------------------------------------------- Standard & Poor's raised its ratings on the class B-1 and B-2 certificates from Associates Manufactured Housing Contract Pass Through Certificates' series 1996-1, 1997-1, and 1997-2. In addition, the rating on the class B-2 certificates from Associates' series 1996-2 was lowered. Furthermore, the ratings on six classes from the four transactions were affirmed. The raised ratings reflect a weak-link to Standard & Poor's long- term credit rating on Citigroup Inc., which was raised to 'AA' on Feb. 14, 2007. Citigroup Inc. provides limited guarantees on the class B-1 and B-2 certificates in series 1996-1, 1997-1, and 1997- 2 and, which links the ratings on these classes to the rating on Citigroup Inc. The limited guarantees cover all principal and interest payments due for those classes. Class B-2 from Associates' series 1996-2 does not benefit from a limited guarantee, and poor performance of the underlying collateral has negatively affected existing credit enhancement. As of the April 2007 distribution date, principal write-downs had reduced the certificate balance of the class B-2 certificates to $11,220,910 from the initial balance of $14,176,244. Ratings Raised Associates Manufactured Housing Contract Pass Through Certificates Series 1996-1 Rating ------ Class To From ----- -- ---- B-1 AA AA- B-2 AA AA- Associates Manufactured Housing Contract Pass Through Certificates Series 1997-1 Rating ------ Class To From ----- -- ---- B-1 AA AA- B-2 AA AA- Associates Manufactured Housing Contract Pass Through Certificates Series 1997-2 Rating ------ Class To From ----- -- ---- B-1 AA AA- B-2 AA AA- Rating Lowered Associates Manufactured Housing Contract Pass Through Certificates Series 1996-2 Rating ------ Class To From ----- -- ---- B-2 CCC- CCC Ratings Affirmed Associates Manufactured Housing Contract Pass Through Certificates Series 1996-1 Class Rating ----- ------ M AA- Associates Manufactured Housing Contract Pass Through Certificates Series 1996-2 Class Rating ----- ------ M AA B-1 BB+ Associates Manufactured Housing Contract Pass Through Certificates Series 1997-1 Class Rating ----- ------ M AA Associates Manufactured Housing Contract Pass Through Certificates Series 1997-2 Class Rating ----- ------ A-6 AAA M AA BEAR STEARNS: Moody's Holds Low-B Ratings on Six Certificates ------------------------------------------------------------- Moody's Investors Service affirmed the ratings of 21 classes of Bear Stearns Commercial Mortgage Securities Inc., Commercial Mortgage Pass-Through Certificates, Series 2005-TOP18 as: - Class A-1, $50,043,775, affirmed at Aaa - Class A-2, $121,900,000, affirmed at Aaa - Class A-AB, $105,700,000, affirmed at Aaa - Class A-3, $41,600,000, affirmed at Aaa - Class A-4, $517,238,000, affirmed at Aaa - Class A-4FL, $75,000,000, affirmed at Aaa - Class A-J, $74,307,000, affirmed at Aaa - Class X-1, Notional, affirmed at Aaa - Class B, $29,443,000, affirmed at Aa2 - Class C, $8,412,000, affirmed at Aa3 - Class D, $12,618,000, affirmed at A2 - Class E, $11,216,000, affirmed at A3 - Class F, $9,814,000, affirmed at Baa1 - Class G, $9,814,000, affirmed at Baa2 - Class H, $8,412,000, affirmed at Baa3 - Class J, $4,206,000, affirmed at Ba1 - Class K, $4,206,000, affirmed at Ba2 - Class L, $4,206,000, affirmed at Ba3 - Class M, $1,402,000, affirmed at B1 - Class N, $1,403,000, affirmed at B2 - Class O, $2,804,000, affirmed at B3 As of the April 13, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 1.7% to $1.10 billion from $1.12 billion at securitization. The Certificates are collateralized by 159 mortgage loans. The loans range in size from less than 1.0% to 7.7% of the pool, with the top 10 loans representing 41.7% of the pool. The pool includes nine shadow rated loans, representing 23.9% of the outstanding loan balance. The pool has not experienced any losses since securitization and currently there are no loans in special servicing. Nine loans, representing 5.5% of the pool, are on the master servicer's watchlist. Moody's was provided with full-year 2005 and partial-year 2006 operating results for 96.7% and 68.3%, respectively, of the pool. Moody's average weighted loan to value ratio for the conduit component is 85.5%, compared to 86.1% at securitization. The largest shadow rated loan is the 111-115 Fifth Avenue Loan ($75.0 million - 6.8%), which is secured by two contiguous multi- story buildings totaling 582,602 square feet located in the Flat Iron District of New York City. The loan is interest-only for its entire term. Moody's current shadow rating is A1, the same as at securitization. The second largest shadow rated loan is the Boulevard at The Capital Centre Loan ($71.5 million - 6.5%), which is secured by a 484,664 square foot lifestyle retail center located in Landover, Maryland. The loan is interest only for its entire term. Moody's current shadow rating is Baa3, the same as at securitization. The third largest shadow rated loan is the Chateau On The Lake Loan ($29.8 million -- 2.7%), which is secured by a 301-room, 10- story full service hotel located in Branson, Missouri. Moody's current shadow rating is Baa3, the same as at securitization. The fourth largest shadow rated loan is the Capital Arms Apartments Loan ($29.0 million -- 2.6%), which is secured by a 278-unit, 18-story multifamily complex located in the Midtown West submarket of New York City. Moody's current shadow rating is Aa2, the same as at securitization. The fifth largest shadow rated loan is the Watertown Mall Loan ($20.0 million -- 1.8%), which is secured by a 231,201 square foot enclosed community mall located approximately five miles west of downtown Boston in Watertown, Massachusetts. As of January 2007 the property was 89.9% occupied, compared to 97.4% at securitization. The loan is interest only for its entire term. Moody's current shadow rating is Ba1, compared to Baa3 at securitization. The sixth largest shadow rated loan is the 340 East 93rd Street Loan ($15.0 million -- 1.4%), which is secured by a 358-unit multifamily property in New York City. The loan is interest only for its entire term. Moody's current shadow rating is Aaa, the same as at securitization. The seventh largest shadow rated loan is the Dal-Rich Village Loan ($7.7 million -- 0.7%), which is secured by a 162,562 square foot retail property located approximately 15 miles north of Dallas in Richardson, Texas. Moody's current shadow rating is Baa2, the same as at securitization. The eighth largest shadow rated loan is the Holiday Inn Express Midtown Loan ($7.7 million -- 0.7%), which is secured by a 168- room limited service hotel located in Philadelphia, Pennsylvania. Moody's current shadow rating is Baa2, the same as at securitization. The ninth largest shadow rated loan is the 3200 Liberty Avenue Loan ($7.3 million -- 0.7%), which is secured by a 212,621 square foot warehouse building located in North Bergen, New Jersey. The loan is on the master servicer's watchlist due to a decline in occupancy. Moody's current shadow rating is Baa3, the same as at securitization. The three largest conduit exposures represent 16.8% of the pool. The largest conduit loan is the 95-97 Horatio Street Loan ($85.0 million - 7.7%), which is secured by a 325-unit multifamily property located in the West Village section of New York City. The loan is interest only for its entire term. Moody's LTV is 99.3%, compared to 99.6% at securitization. The second largest conduit loan is the Waikele Center Loan ($63.3 million - 5.7%), which is secured by a 521,332 square foot community shopping center located in Waipahu, Hawaii, 14 miles west of Honolulu. The loan represents a 45.0% pari-passu interest in a $140.7 million loan. The loan is interest only for its entire term. Moody's LTV is 86.6%, compared to 86.4% at securitization. The third largest conduit loan is the Janus World Headquarters Loan ($36.8 million -- 3.3%), which is secured by a 160,364 square foot seven-story, Class A office building located in the Cherry Creek submarket of Denver, Colorado. Moody's LTV is 82.0%, compared to 82.3% at securitization. BOSTON SCIENTIFIC: COO Says Company Mulls Sale of Noncore Assets ---------------------------------------------------------------- Boston Scientific Corp. is reviewing its portfolio and will consider selling parts that are not considered strategic, long- term contributors, Jon Kamp of The Wall Street Journal reports, citing the company's chief operating officer Paul LaViolette as saying. According to WSJ, Mr. LaViolette further stated that the company is also undertaking a corporate-wide efficiency improvement program, with estimated savings to be in the "hundreds of millions of dollars" range. "Anything we do would be to improve operating effectiveness," the Journal quoted Mr. LaViolette as saying during a health-care conference. Headquartered in Natick, Massachusetts, Boston Scientific Corporation (NYSE: BSX) -- http://www.bostonscientific.com/-- is a worldwide developer, manufacturer and marketer of medical devices whose products are used in a broad range of interventional medical specialties. * * * As reported in the Troubled Company Reporter on Feb. 6, 2007, Moody's Investors Service affirmed Boston Scientific Corporation's Ba1 subordinated shelf rating and Ba2 preferred stock rating with a negative outlook. BOSTON SCIENTIFIC: Names Sam Leno as Chief Financial Officer ------------------------------------------------------------ Boston Scientific Corporation disclosed that Sam Leno will join the company as Chief Financial Officer and Executive Vice President of Finance and Information Systems. Mr. Leno is currently CFO and Executive Vice President of Finance and Corporate Services for Zimmer Holdings, Inc. He has also served as CFO and Senior Vice President of Arrow Electronics, Inc., and CFO and Executive Vice President of Corporate Express. From 1971 to 1994 he served in a number of finance, accounting and leadership positions for Baxter International, Inc./American Hospital Supply Corp. During his tenure at Baxter he worked closely with Boston Scientific President and Chief Executive Officer Jim Tobin, who then served as the Chief Operating Officer of Baxter. "I have known Sam for more than 20 years, and he brings a substantial body of knowledge, expertise and experience to his new role," said Mr. Tobin. "He has worked in large, diversified companies, including two of the world's leading health care technology companies. He is exceptionally well qualified to serve as our new CFO, and I am looking forward to working with him again." "I would like to welcome Sam, who is a seasoned business executive with a wealth of experience in the health care industry, including experience with acquisition integration, financing and capital markets," said Pete Nicholas, Chairman and Co-founder of Boston Scientific. "He has a broad range of talents and abilities that will allow him to begin contributing immediately. We are very fortunate to have Sam joining us." "I am very excited to be joining Boston Scientific," said Leno. "Like Zimmer, it is an amazing company with a terrific management team. With the relatively recent acquisition of Guidant, I am honored to have the opportunity to participate in executing Pete's and Jim's strategic vision for the company. I also had the opportunity to work directly for Jim Tobin during part of my career at Baxter, and I am very pleased to be able to work for him again. My years of experience in health care -- and more importantly medical devices -- should also assist in creating an efficient and smooth transition into the company." Mr. Leno will replace Larry Best, Boston Scientific's long-time CFO, who plans to retire from the Company to pursue an interest in private investing within the life sciences field. Mr. Leno will join the Company June 5; Mr. Best will retire effective July 6. "I am extremely proud to have been a part of the strategic build of Boston Scientific over the past 15 years," said Best. "Through the enormous efforts of a truly outstanding team, a global leader in medical devices has been built. I thank everyone who has contributed to this success." "Larry has been an integral part of Boston Scientific," said Tobin. "His many accomplishments have shaped our company and have helped make it the organization it is today. He has been instrumental to our growth strategy, particularly the historic and transforming acquisition of Guidant, which I believe has been our most important and beneficial transaction. I want to thank him for his numerous contributions, and for his dedication and commitment to our employees, customers and shareholders. I wish Larry continued success and much happiness." "From the beginning, Larry shared my vision of a global enterprise devoted to delivering the most innovative medical technologies to physicians and their patients," said Mr. Nicholas. "He was an essential partner in the creation of today's Boston Scientific, one of the world's largest medical device companies. For more than a decade, he was a key architect of a bold and creative acquisition strategy. With the Guidant transaction - our most recent and largest acquisition - we are well positioned for future growth. Nobody has worked harder - or cared more about Boston Scientific - than Larry. He has been a valued colleague and a good friend, and I want to thank him personally for everything he has done for Boston Scientific, and I want to wish him all the best." About Boston Scientific Headquartered in Natick, Massachusetts, Boston Scientific Corporation (NYSE: BSX) -- http://www.bostonscientific.com/-- is a worldwide developer, manufacturer and marketer of medical devices whose products are used in a broad range of interventional medical specialties. * * * As reported in the Troubled Company Reporter on Feb. 6, 2007, Moody's Investors Service affirmed Boston Scientific Corporation's Ba1 subordinated shelf rating and Ba2 preferred stock rating with a negative outlook. BRIGHTPOINT INC: Earns $35.6 Million in Year Ended December 31 -------------------------------------------------------------- Brightpoint Inc. reported net income of $35.6 million for the year ended Dec. 31, 2006, compared with net income of $10.4 million for the year ended Dec. 31, 2005. Results of operations for 2005 included a loss from discontinued operations of $21.5 million relating primarily to Brightpoint France which was sold on Dec. 16, 2005. Total revenue was $2.4 billion for the year ended Dec. 31, 2006, which represents growth of 13% compared to total revenue of $2.1 billion for the year ended Dec. 31, 2005. Operating income from continuing operations increased to $48.4 million in 2006 from $44.4 million in 2005. The increase in operating income was due to an $18.9 million increase in gross profit, partly offset by a $15.8 million increase in selling, general and administrative expenses. Operating income also improved due to the $900,000 facility consolidation charge during 2005 that did not recur during 2006. Cash and cash equivalents were $54.1 million at Dec. 31, 2006, a decrease of $49.5 million from Sept. 30, 2006. Liquidity (unrestricted cash and unused borrowing availability) was approximately $129.8 million as of Dec. 31, 2006, compared to $202 million as of Sept. 30, 2006. At Dec. 31, 2006, the company's balance sheet showed $778.3 million in total assets, $583.5 million in total liabilities, and $194.8 million in total shareholders' equity. Full-text copies of the company's consolidated financial statements for the year ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?1e5d About Brightpoint Brightpoint Inc. (NASDAQ: CELL) -- http://www.brightpoint.com/-- distributes wireless devices and provides customized logistic services to the wireless industry. Brightpoint's innovative services include distribution, channel development, fulfillment, product customization, eBusiness solutions, and other outsourced services that integrate seamlessly with its customers. * * * As reported in the Troubled Company Reporter on Feb. 23, 2007, Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Plainfield, Indiana-based Brightpoint Inc. and revised the outlook to negative from stable. The actions followed the company's recent report that it has agreed to acquire Dangaard Telecom A/S for approximately $308 million in stock. CABLEVISION SYSTEMS: Dolan Merger Cues Fitch's Negative Watch ------------------------------------------------------------- Fitch Ratings has placed the ratings of Cablevision Systems Corporation and its wholly owned subsidiary CSC Holdings, Inc. on Rating Watch Negative as: CVC -- Issuer Default Rating 'B+'; -- Senior unsecured debt 'CCC+/RR6'. CSC -- Issuer Default Rating 'B+'; -- Secured bank facility rating 'BB/RR1'. -- Senior unsecured debt 'BB-/RR3'. Approximately $12.5 billion of debt as of Dec. 31, 2006 is affected by Fitch's action. Fitch's rating action follows the company's announcement that it has entered into a definitive merger agreement with an entity created by the Dolan family to purchase the publicly held shares of CVC for $36.26 a share. To affect the transaction CVC has committed financing totaling $15.5 billion which will finance the conversion of CVC common stock into cash and refinance bank debt at CSC and Rainbow National Services. Additionally the Dolan family will contribute its existing equity stake in CVC valued at approximately $2.1 billion to the transaction. The company's existing senior notes and subordinated debentures totaling approximately $6.5 billion as of year end 2006 are expected to remain outstanding. From Fitch's perspective the proposed transaction materially increases CSC's financial risk and significantly erodes the company's credit profile. As of year end 2006 CVC's leverage metric (including the collateralized indebtedness) was 6.9 times (x). Depending on CVC's ultimate capital structure, Fitch believes that leverage could exceed 10x when the transaction is finalized constraining the company's ability to generate free cash flow. In resolving the Rating Watch, Fitch will consider the final capital structure, credit profile and recovery prospects of the entities created by the transactions as well as the business and operational risks of the entities going forward. Due to the leveraging nature of the transaction as currently envisioned Fitch expects a multi - notch downgrade of the ratings upon closing of the transaction. CABLEVISION SYSTEMS: Moody's Places All Ratings Under Review ------------------------------------------------------------ Moody's Investors Service placed all ratings for Cablevision Systems Corporation, CSC Holdings, Inc., a wholly owned subsidiary of CVC, and Rainbow National Services LLC on review for possible downgrade following the Board 's acceptance of the Dolan family's latest proposal to acquire Cablevision. As in the past, in Moody's view, under the proposed transaction, Cablevision's credit metrics would deteriorate meaningfully. Moody's also notes that the company has to balance pro forma transaction higher interest burden with a continuing need to invest in the cable operations given increasingly competitive environment. In Moody's view, Rainbow's event risk would increase as a result of the transaction, given increased financial burden on the parent company. The conclusion to the negative review will follow Moody's assessment of the new capital structure. These Ratings are on Review for Possible Downgrade: Cablevision Systems Corporation * Corporate Family Rating, Placed on Review for Possible Downgrade, currently B1 * Probability of Default Rating, Placed on Review for Possible Downgrade, currently B1 * Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently B3, 93 - LGD6 CSC Holdings, Inc. * Senior Secured Bank Credit Facility, Placed on Review for Possible Downgrade, currently Ba2, 23 - LGD2 * Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently B2, 73 - LGD5 Rainbow National Services LLC * Corporate Family Rating, Placed on Review for Possible Downgrade, currently B1 * Probability of Default Rating, Placed on Review for Possible Downgrade, currently B1 * Senior Secured Bank Credit Facility, Placed on Review for Possible Downgrade, currently Ba1, 19 - LGD2 * Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently B2, 59 - LGD4 * Senior Subordinated Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently B3, 86 - LGD5 Outlook Actions: CSC Holdings, Inc. * Outlook, Changed To Rating Under Review From Stable Cablevision Systems Corporation * Outlook, Changed To Rating Under Review From Stable Rainbow National Services LLC * Outlook, Changed To Rating Under Review From Stable Headquartered in Bethpage, New York, Cablevision Systems Corporation, is a domestic cable multiple system operator serving more than 3 million subscribers in and around the metropolitan New York area. Rainbow National Services LLC, headquartered in Jericho, New York, supplies television programming to cable television and direct broadcast service providers throughout the United States. CABLEVISION SYSTEMS: Dolan Offer Prompts S&P's Negative Watch ------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Bethpage, New York-based cable TV operator Cablevision Systems Corp. on CreditWatch with negative implications, including the 'BB' corporate credit rating. S&P also placed the ratings on Cablevision's Rainbow Media Enterprises Inc. unit on CreditWatch with negative implications, including the 'BB' corporate credit rating. However, S&P's '1' recovery rating on the bank loan at unit Rainbow National Services LLC and '2' recovery rating on the bank loan at unit CSC Holdings Inc. are not on CreditWatch. These actions follow the announcement that Cablevision's Board of Directors has approved a buyout offer from the Dolan Family Group to purchase the public shares of the company for $36.26 per share, or about $8 billion. As of Dec. 31, 2006, the company had about $11.6 billion of debt outstanding, excluding collateralized debt obligations. "The CreditWatch listing reflects the potential for a significant degradation of credit measures if the transaction were to be significantly debt-financed, with no sale of assets and accompanying debt paydown," said Standard & Poor's credit analyst Catherine Cosentino. S&P note that if the Dolan Family Group offer were to be 100% debt-financed, Cablevision's debt to EBITDA ratio would exceed 10x, compared with about 6.7x reported for 2006. Such credit deterioration could prompt S&P to lower the corporate credit rating to the 'B' category. However, the company did recently announce an agreement to sell its interest in two regional sports networks, Fox Sports Net New England and Fox Sports Net Bay Area, for $570 million, which could portend for other asset sales at the company's Rainbow Media Holdings LLC unit. S&P will examine the manner in which the transaction is financed on a permanent basis to assess the impact on credit quality. CABLEVISION SYSTEMS: Privatization Cues DBRS to Review Ratings -------------------------------------------------------------- Dominion Bond Rating Service has placed the ratings of Cablevision Systems Corporation and its wholly owned subsidiary, CSC Holdings, Inc., rated B (low) and BB (low)/B (high), respectively, as Under Review with Negative Implications following Dolan family, which controls 74% of the company's voting shares, issued an offer to privatize the company with a cash proposal to acquire the entire public float for approximately $8 billion. DBRS notes that the Dolans' $36.26 per share cash offer has been accepted by the company's special transaction committee and only requires the approval of a majority of the public shareholders. Should this transaction be approved, it would add significant leverage of roughly $8 billion to the company's balance sheet and take gross debt-to-EBITDA for the group from just under 7x to over 11x. At this level, leverage would be excessive for any cable operator. It is noteworthy that this transaction contemplates refinancing the company's bank debt, however, Cablevision's existing notes and debentures will remain in place following the privatization. As part of its review, DBRS will focus on the following three factors: 1. the structuring of the Dolans' equity commitment and the debt financing that would be used to undertake this proposal; 2. the impact that this proposal will have on the company's cable business, as despite the additional operating flexibility gained from being a private company, this transaction will put the company in a negative free cash flow position; and 3. whether the Company is or would consider selling any non- core assets to help to reduce debt levels. CABLEVISION SYSTEMS: Posts $26.3 Mil. Net Loss in Qtr Ended Mar 31 ------------------------------------------------------------------ Cablevision Systems Corporation reported a net loss of $26.3 million for the first quarter ended March 31, 2007, compared with a net loss of $58 million for the same period last year. First quarter consolidated net revenue grew 12.5% to just under $1.6 billion compared to consolidated net revenue of $1.4 billion in the prior year period, reflecting solid revenue growth in Telecommunications Services, Rainbow and Madison Square Garden. Consolidated adjusted operating cash flow increased 21.4% to $481.6 million and consolidated operating income grew 69.7% to $176 million. Adjusted operating cash flow, a non-GAAP financial measure, is defined as operating income before depreciation and amortization (including impairments), excluding share-based compensation expense or benefit and restructuring charges or credits. Cablevision president and chief executive officer James L. Dolan commented: "Cablevision had a solid start to 2007, driven primarily by continuing growth in the company's cable operations as well as adjusted operating cash flow growth at Madison Square Garden and Rainbow Media. Our success in cable continues to be driven by the strength of our video, voice and data services, which maintained their industry-leading penetration rates. The company delivered its 12th consecutive quarter of basic subscriber growth while our digital video service reached a penetration rate of 80 percent," concluded Mr. Dolan. Telecommunications Services Telecommunications Services net revenues for the first quarter 2007 rose 14.9% to $1.1 billion, adjusted operating cash flow grew 12.3% to $428.6 million and operating income increased 22.6% to $185.5 million, all compared to the prior year period. Rainbow Rainbow consists of the company's National Programming services. Rainbow net revenues for the first quarter of 2007 increased 11.4% to $230.1 million and adjusted operating cash flow rose 76.5% to $49 million, both compared to the prior year period. Operating income improved to $15.8 million as compared to a first quarter 2006 operating loss of $4 million. Madison Square Garden Madison Square Garden's primary businesses include: MSG network, FSN New York, the New York Knicks, the New York Rangers, the New York Liberty, MSG Entertainment, the MSG Arena complex, Radio City Music Hall, and the Beacon Theatre. Madison Square Garden's first quarter 2007 net revenue increased 5.2% to $235.6 million, adjusted operating cash flow increased $10.7 million to $17.6 million and operating loss declined 91.5% to $1.1 million, all compared to the prior year period. Other Matters On April 30, 2007, Cablevision announced an agreement to sell its 60% interest in FSN Bay Area and its 50% interest in FSN New England to Comcast Corporation for $570 million in cash. This transaction is subject to certain closing conditions. On May 2, 2007, Cablevision announced that it had entered into a definitive merger agreement with an entity created by members of the Dolan Family Group, pursuant to which all outstanding shares of Cablevision that the Dolan Family Group does not own will be converted into $36.26 per share in cash. Based on the recommendation of the Special Transaction Committee, Cablevision's Board of Directors, including independent directors, voted to approve the transaction. The transaction requires approval by holders of a majority of Cablevision's outstanding Class A shares not held by the Dolan Family Group or Cablevision's directors and executive officers. The transaction is also subject to certain regulatory approvals, the receipt of funds pursuant to already committed financing and other customary closing conditions. About Cablevision Systems 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. Its cable television operations serve more than 3 million households in the New York metropolitan area. The company's advanced telecommunications offerings include its iO: Interactive Optimum digital television, Optimum Online highspeed Internet, Optimum Voice digital voice-over-cable, and its Optimum Lightpath integrated business communications services. * * * As reported in the Troubled Company Reporter on Jan. 23, 2007, Standard & Poor's Ratings Services affirmed the ratings on Cablevision Systems Corp. and its related entities, including the 'BB' corporate credit rating. The outlook is negative. In the same month, Moody's Investors Service confirmed Cablevision's B1 Corporate Family Rating and Probability of Default Rating and B3 Senior Unsecured Regular Bond/Debenture Rating. Additionally, Fitch affirmed the 'B+' Issuer Default Rating it assigned to Cablevision and its wholly owned subsidiary CSC Holdings Inc. The Rating Outlook on Cablevision and CSC is Negative. CELESTICA INC: Moody's Downgrades Corporate Family Rating to B1 --------------------------------------------------------------- Moody's Investors Service downgraded Celestica Inc.'s corporate family rating to B1 from Ba3 and the senior subordinated note ratings to B3 from B2. Simultaneously, Moody's lowered the company's speculative grade liquidity rating to SGL-2 from SGL-1. This rating action concludes Moody's February 1, 2007 review for possible downgrade, which was triggered by the company's weak fourth quarter financial performance, operational setbacks at its Mexican facility and softness in European top-line revenue growth. The ratings outlook is negative. The downgrade to B1 reflects: (i) the continued excess capacity in the EMS sector; (ii) Celestica's sub-par asset utilization and ongoing business restructurings, which have totaled roughly $345 million since January 2005; (iii) expectations of continued pressure in the telecom space as OEM consolidation combined with heightened competition from Asian outsourcers have negatively impacted volumes; (iv) the potential for prolonged restructurings, which inevitably would serve as a major distraction for management in an industry where management focus and execution are key competitive differentiations; (v) an increase in leverage from 3.1x EBITDA in 2005 to 5.0x (Moody's adjusted) as a result of weak EBIT levels over the last two quarters; and (vi) negative free cash flow generation in recent quarters due in part to increasing working capital, which has reduced Celestica's cash balance to a level which does not provide as much financial flexibility. Although good, liquidity has been deteriorating given that cash declined each year since 2003 when it was over $1 billion to $704 million as of the recent first quarter, while funded debt rose from $211 million to $750 million during the same period. Additionally, Celestica's recent refinancing of its credit facility has resulted in full access to a new $300 million revolver that is half the size of the old credit facility and now secured to most of the company's assets. Finally, free cash flow remains negative for the twelve months ended March 31, 2007 as Celestica has generated negative free cash flow in five of the last nine quarters. The B1 rating also considers Celestica's response to the weak operating environment through operational streamlining, warehouse consolidation, the gradual transfer of programs from Mexico to Asia and headcount reductions over the next several quarters. The restructuring involves the implementation of best practices at the Mexico facility and modest revenue growth at the European operations via new program wins, but this will take a full year to launch. The rating also reflects Celestica's position as a Tier 1 EMS provider, efforts to diversify its concentrated client base, improving inventory and accounts receivable turnover and the sequential improvement in gross margin. Although Celestica is moderately levered and has good liquidity, the negative outlook reflects Moody's concerns about the continued softness in the EMS space with significant supply overhang and excess capacity, margin pressures, and execution and customer attrition issues. While the company continues to implement its restructuring plans to reduce capacity and inventory levels, as well as refocusing to a more customer-centric strategy, we believe the EMS operating environment will remain challenged over the near-to-intermediate term. Given this difficult industry backdrop, the negative outlook also reflects our concerns regarding the company's ability to remedy its operational issues and losses in its overseas (non-Asian) operations in a timely manner and to minimize customer attrition in order to alleviate the negative impact on Celestica's revenue, profitability and cash flow generation. Moody's will most likely stabilize the ratings outlook if Celestica is able to demonstrate: improved customer retention and meaningful program wins as evidenced by revenue growth, enhanced product/services mix, and diversification partly due to growth in non-traditional end-markets, or tightening in supply/demand imbalances; improved operating performance in the second half of 2007 such that operating margins recover above 2.0% (Moody's adjusted) and operating income return on assets (net cash) is sustainable between 4.0% -- 4.5% (Moody's adjusted); an ability for management to improve core execution; financial leverage below 4.5x (Moody's adjusted) as EBITDA levels advance; fewer material restructuring charges plus realization of planned cost savings; and an ability to generate and sustain meaningful positive free cash flow levels. Moody's subscribers can find additional information in the Celestica Credit Opinion published on Moodys.com. These ratings were downgraded: * Corporate Family Rating to B1 from Ba3 * Probability of Default Rating to B1 from Ba3 * $500 million 7.875% Senior Subordinated Notes due 2011 to B3 (LGD-5, 85%) from B2 (LGD-5, 87%) * $250 million 7.500% Senior Subordinated Notes due 2013 to B3 (LGD-5, 85%) from B2 (LGD-5, 87%) Speculative Grade Liquidity Rating to SGL-2 from SGL-1 Headquartered in Toronto, Canada, Celestica Inc. is a global provider of electronic manufacturing services to original equipment manufacturers in the information technology and communications industry. For the last twelve months ended March 31, 2007, the company generated EBITDA (Moody's adjusted to exclude restructuring charges) totaling $241 million from $8.7 billion in revenues. CERADYNE INC: Earns $38.1 Million in Quarter Ended March 31 ----------------------------------------------------------- Ceradyne Inc. reported net income of $38.1 million for the first quarter ended March 31, 2007, compared with net income of $24.6 million for the same period last year. Sales for the first quarter increased 38.2% to a record $188.4 million from $136.3 million in the first quarter of 2006. Gross profit margin increased to 40.9% of net sales in the first quarter of 2007 from 39.6% of net sales in the first quarter of 2006. The provision for income taxes was 36.1% in the first quarter of 2007, compared to 36.5% in the first quarter of 2006. First-quarter 2007 new orders were $176.5 million compared to $154.7 million in the first quarter of 2006. Total order backlog on March 31, 2007, was $332.3 million compared to the prior year backlog of $294.8 million. Joel P. Moskowitz, Ceradyne chief executive officer, commented: "We are pleased with the strong results in the first quarter of 2007 which are due in part to the continued improvement in production throughput and yields. During the first quarter, the company continued to pursue its strategy of product and market global diversification in both defense and non-defense areas. We authorized and began implementation of a $15 million expansion of our ESK [Ceramics] subsidiary in Kempten, Germany. This expansion is designed to increase capacity for our recently introduced Boroneige(R) boron nitride powder for both cosmetic and industrial applications. We also are expanding capacity to produce a wide range of industrial silicon carbide ceramic seals for various fluid handling uses. "The opening ceremony for our new factory in Tianjin, China, is scheduled for June. This 98,000 sq. ft. plant will be dedicated to the production of high purity fused silica ceramic crucibles used in the manufacture of polycrystalline silicon in the production of photovoltaic solar cells." Moskowitz added, "In anticipation of future growth in the nuclear waste containment market and Ceradyne's technical ceramics for semiconductor applications, we formed a separate business unit headed by Ceradyne vice president, Michael Kraft, reporting to Ceradyne's president of North American Operations, David Reed. We anticipate this organizational change will allow us to focus and better track performance in these markets." The company's cash, cash equivalents and short-term investments totaled $254.5 million at March 31, 2007, compared to $204.1 million at Dec. 31, 2006. For the three months ended March 31, 2007, net cash provided by operating activities amounted to $56.1 million compared to net cash provided by operating activities of $32.4 million during the three months ended March 31, 2006. At March 31, 2007, the company's balance sheet showed $672 million in total assets, $223.4 million in total liabilities, and $448.6 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?1e5e About Ceradyne Inc. Based in Costa Mesa, California, Ceradyne Inc. (Nasdaq: CRDN) -- http://www.ceradyne.com/-- develops, manufactures and markets advanced technical ceramic products and components for defense, industrial, automotive and consumer applications. * * * Ceradyne's $50 million revolving credit facility due 2009 carries Standard & Poor's BB- rating. The company's credit rating is also rated BB- by Standard & Poor's. CHIQUITA BRANDS: Weak Operating Results Cue S&P's B Corp. Credit ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' corporate credit and other ratings on Cincinnati, Ohio-based Chiquita Brands International Inc. on CreditWatch with negative implications, meaning that the ratings could be lowered or affirmed following the completion of their review. Total debt outstanding at the company was about $1.3 billion as of March 31, 2007. "The CreditWatch placement follows the company's announcement of weak first-quarter operating results due to high purchased fruit and other industry costs and lower local banana prices in Europe," said Standard & Poor's credit analyst Alison Sullivan. Adjusted EBITDA fell about 35% in the quarter, which resulted in over 9x leverage for the 12 months ending March 31, 2007. Costs are likely to remain under pressure due to raw products, fuel, ship charter, paper, and resin prices. "We are concerned that operating trends and credit measures continue to deteriorate," said Ms. Sullivan. "Weak industry trends, including continuing adjustment to European markets following the tariff regime change, and uncertain timing surrounding restoration of consumer confidence to return to packaged salads, are likely to persist." Standard & Poor's will review Chiquita's operating and financial plans with management before resolving the CreditWatch listing. S&P will also review the impact of debt repayment on existing recovery ratings as part of this review. CIGNA CORP: Earns $289 Million in First Quarter Ended March 31 -------------------------------------------------------------- CIGNA Corporation reported net income of $289 million for the first quarter ended March 31, 2007, compared with net income of $352 million for the same period last year. Net income for the first quarter of 2006 included after-tax realized investment gains of $94 million. Consolidated revenues were $4.4 billion for the first quarter of 2007 and $4.1 billion for the first quarter of 2006. Excluding income from discontinued operations and realized investment gains, net of taxes, CIGNA's adjusted income from operations was $264 million for the first quarter of 2007 versus adjusted income from operations of $258 million for the same period last year. This quarter's earnings reflect strong results in CIGNA's health care, disability and life, and international businesses. "We generated strong earnings in each of our businesses in the first quarter of 2007," said H. Edward Hanway, chairman and chief executive officer of CIGNA Corporation. "We grew health care membership, and our group disability and life as well as our international results reflect the strength of their respective competitive positions. Looking ahead, we are confident that we will continue to succeed in the marketplace by using our strengths and differentiated capabilities to enhance and improve the health, well-being, and security of our members." Health care medical claims payable were approximately $755 million at March 31, 2007, and $710 million at Dec. 31, 2006. The company repurchased on the open market approximately 4.2 million shares of its stock for $575 million during the first quarter of 2007 and approximately 4.9 million shares for $680 million year to date. As of May 2, 2007, the company has approximately $300 million of stock repurchase authority available. Cash and short term investments at the parent company were approximately $770 million at March 31, 2007, and $425 million at December 31, 2006. At March 31, 2007, the company's balance sheet showed $42.38 billion in total assets, $38.23 billion in total liabilities, and $4.15 billion in total stockholders' equity. Full-text copies of the company's consolidated financial statements of the quarter ended March 31, 2007, are available for free at http://researcharchives.com/t/s?1e69 About CIGNA Corporation Headquartered in Philadelphia, CIGNA Corporation (NYSE: CI) -- http://www.cigna.com/-- provides health care and related benefits offered through the workplace. Key product lines include health care products and services (medical, pharmacy, behavioral health, clinical information management, dental and vision benefits, and case and disease management); and group disability, life and accident insurance. In addition, CIGNA also provides life, accident, health and expatriate employee benefits insurance coverage in selected international markets, primarily in Asia and Europe. * * * As reported in the Troubled Company Reporter on Aug. 22, 2006 Standard & Poor's Ratings Services assigned its preliminary 'BB+' preferred stock rating to Cigna Corp.'s universal shelf. The outlook remains positive. CINRAM INT'L: Inks $50 Million Acquisition Deal with Ditan ---------------------------------------------------------- Cinram International Inc., a wholly owned subsidiary of Cinram International Income Fund, has entered into an agreement to purchase Ditan Corporation, the leading third-party interactive software and games distribution company in the United States. "Ditan's strong relationship with the interactive software industry and well established footprint will provide Cinram with a point of entry into a new industry that is directly adjacent and complimentary to ours," said Cinram chief executive officer Dave Rubenstein. "They have a large stable of renowned video games customers and retailers with medium to long-term contracts that will be accretive to Cinram." Under the terms of the agreement, Cinram will acquire Ditan Corporation for $50 million in initial cash consideration, plus additional cash consideration to be earned upon the achievement of certain future performance metrics. The transaction is expected to close in the second quarter of 2007, subject to customary closing conditions, including regulatory approval. "There are significant information technology, engineering, automation, operational and purchasing synergies to be harvested from the combination of our two businesses that will further enhance the world-class services that Ditan currently provides to its blue-chip clients," said Ron Novotny, president and chief executive officer of Ditan Corporation. "Exceeding our customers' expectations has always been our commitment and has contributed significantly in developing those long-standing relationships." Ditan is a privately held company that specializes in direct-to- store and third-party logistics. Their customers include leading video game publishers, major retailers and home video studios. Ditan maintains a long-standing market leading position in providing innovative distribution solutions for all facets of the video game industry. In addition, Ditan is an authorized value-added service provider for the major video game platforms. The company has strategically located facilities in Atlanta, Indianapolis, Louisville and Seattle, and 180 employees. Cinram International Inc. (TSX: CRW.UN) - http://www.cinram.com/ -- an indirect wholly owned subsidiary Cinram International Income Fund, provides pre-recorded multimedia products and related logistics services. With facilities in North America and Europe, Cinram International Inc. manufactures and distributes pre-recorded DVDs, VHS video cassettes, audio CDs, audio cassettes and CD-ROMs for motion picture studios, music labels, publishers and computer software companies around the world. The company has sales offices in Mexico. * * * As reported in the Troubled Company Reporter on Nov. 16, 2006, Standard & Poor's Ratings Services said it revised its outlook on Cinram International Inc., a wholly owned indirect subsidiary of Cinram International Income Fund, to negative from stable. At the same time, Standard & Poor's affirmed its 'BB-' long-term corporate credit rating and its 'BB-' bank loan rating, with a recovery rating of '4', on prerecorded multimedia manufacturer Cinram. CITY OF NEW ORLEANS: Moody's Upgrades Rating on Tax Debt -------------------------------------------------------- Moody's Investors Service has upgraded the rating on the City of New Orleans' general obligation unlimited tax debt to Baa3 from Ba1. In addition, we have also upgraded the rating on the City's Downtown Development District Bonds, Series 2001 and Drainage System Limited Tax bonds have been also been upgraded to Baa3 from Ba1, and the Limited Tax Bonds, Series 2005 to Ba1 from Ba2. Finally, we have affirmed the Ba1 rating on the Audubon Commission Limited Tax Bonds, Series 1997 and the Ba3 rating on the City's Pension Obligation Bonds, Series 2000. The City's ratings carry a stable outlook. Hurricane Katrina struck New Orleans on August 29, 2005 resulting in substantial uncertainties about the impact City's financial and economic circumstances and how long recovery would take. These uncertainties led to rating adjustments in November of 2005. The current rating upgrades reflect the recovery and rebuilding taking place, particularly in key commercial sectors such as tourism. Major revenues are tracking favorably and already approximate 80% of pre-Katrina levels and State and Federal funding sources are closing budget gaps for the near term only. Additionally, City officials have enacted significant staffing and other cuts to bring expenditures in line with available revenues and appear committed to making additional cuts if needed. The city has also established a reserved emergency fund that will have the effect of reducing the uncertainty of meeting debt service obligations which Moody's believes is a prudent fiscal practice. Management has developed a forecast to become self supporting on City revenues, without any additional State or Federal assistance, by 2011. Moody's also notes and reflected in the ratings management's ability and willingness to provide critical information and financial projections that are prudent and reasonable. The ratings on the GOULT and GOLT debt also take into consideration the Board of Liquidation which administers the debt and for the GOULT debt, it has full authority to raise the tax rate to a level necessary to repay debt. The Board's prudent actions in the wake of Hurricane Katrina to assure that sufficient revenues were available to cover debt service and to replenish its own reserves, despite uncertainty about the impact of the hurricane on the tax base and collections, are an additional factor incorporated into the upgrades. The City still faces numerous challenges and these challenges are incorporated into the current ratings. These challenges include a lack of affordable housing, labor shortages, a decreased population, and image problems related to high crime. The Baa3 ratings on certain limited tax debt take into consideration strong debt service coverage despite a decrease in the assessed valuation. The Ba1 ratings on the remaining limited tax debt reflect adequate yet narrower debt service coverage for these series. Finally, maintenance of the Ba3 rating on the pension obligation bonds reflects the weaker security of excess revenues of general fund operations. The ratings in the Ba category, while below investment grade, still anticipate that full and timely payment of debt service is highly likely, although elements of risk exist that add a greater degree of uncertainty about future debt service payments than at the investment grade level. COMMERCIAL REALTY: Files Joint Chapter 11 Plan of Reorganization ---------------------------------------------------------------- Commercial Realty and Development Company and its debtor- affiliates filed with the United States Bankruptcy Court for the Western District of Pennsylvania a Joint Chapter 11 Plan of Reorganization. The Debtors tell the Court that Mr. and Mrs. Floyd Howell will sell their properties and the proceeds of that sale will be distributed to the Debtors' creditors. Additionally, the Debtors will continue to lease some properties and the gross amounts of rents will be used to pay: a. operating expenses of the leasing business, including maintenance and repairs, real estate taxes, and management fees; and b. expenses from the operation of the hotel, restaurant and lounge. The Plan provides the full payment of Administrative and Priority Claims of CSB Bank. Treatment of Claims Under the Plan, Administrative Claims will be paid in full, in cash, at closing from the confirmation deposit fund. Allowed Secured Claim of CSB Bank will be paid in full. CSB Bank's claim will be amortized over a period of 20 years with a balloon payment due in 10 years, and with a fixed annual interest rate of 6%. CSB Bank has a secured claim of $1,500,000 as of the effective date of the Plan. Deficiency, if any, on the claim of CSB Bank will be paid from the proceeds of sale of the properties. Real Estate Taxes Claims will receive quarterly payment over 72 months following the Plan's effective date. Priority Taxes, and Priority Wages and Commission Claims will be paid in full in the ordinary course of business and in quarterly payments over 72 months following the Plan's effective date, plus future interest at federal treasury rate. Executory Contracts and Leases Claims will be paid in full at closing, or as otherwise agreed by the holder. Holders of General Claims will paid after current expenses are paid. The Debtors estimated distribution at 5% in quarterly payments over 5 years beginning on the first anniversary of the effective date. Each holder of Equity Security Interests will retain their percentage ownership of the Debtors after the Plan is confirmed. About Commercial Realty Headquartered in St. Marys, Pa., Commercial Realty and Development Company operates a 59-room hotel and inn, complete with Executive and VIP Suites. Its Towne House Inn Dining Room is open to the public and offers a full country breakfast, luncheon menu and dinner menu. The company and two affiliates -- Towne House Inn Inc. and Towne House Enterprises Inc. -- sought chapter 11 protection on November 8, 2006 (Bankr. W.D. Pa. Lead Case No. 06- 11436). Guy C. Fustine, Esq., at Knox McLaughlin Gornall & Sennett, P.C. represents the Debtors in their restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtors' case. When Commercial Realty sought protection from its creditors, it listed assets and debts between $1 million and $100 million. CORPORATE BACKED: S&P Lifts Ratings on $27 Mil. Certificates to B ----------------------------------------------------------------- Standard & Poor's Ratings Services inadvertently raised its ratings on the class A-1 and A-2 certificates from the $27 million Corporate Backed Trust Certificates Series 2001-19 Trust to 'B' from 'D' on May 1, 2007. The ratings on the pass-through transaction were based solely on the rating assigned to the underlying collateral, Delta Air Lines Inc.'s $27,109,000 8.3% senior unsecured notes due Dec. 15, 2029. However, the rating on this debt issued by Delta was lowered to 'D' and was later withdrawn after the company filed for bankruptcy in September 2005. The ratings on the synthetic issue are now being lowered to 'D' and will be withdrawn to reflect the fact that the referenced Delta debt is no longer outstanding. CONSTELLATION BRANDS: Earns $331.9 Million in Year Ended Feb. 28 ---------------------------------------------------------------- Constellation Brands Inc. reported net income of $331.9 million on net sales of $5.2 billion for the fiscal year ended Feb. 28, 2007, compared with net income of $325.3 million on net sales of $4.6 billion for the fiscal year ended Feb. 28, 2006. Net sales were up 13 percent over the prior year, primarily due to the June 5, 2006 acquisition of Vincor International Inc. and from growth in the base business. "While we had a solid year of organic net sales growth, our earnings performance was somewhat challenged by competitive conditions in the U.K. market. However, the Constellation Brands business remains fundamentally sound and we were able to achieve several long-term strategic goals throughout the year, including the acquisition and integration of Vincor, formation of the Crown Imports beer joint venture, initiation of the SVEDKA Vodka acquisition and refining the organizational and operational structure of our wine business," said Richard Sands, Constellation Brands chairman and chief executive officer. Consolidated operating income increased to $699 million for fiscal 2007 from $666.1 million for fiscal 2006, an increase of $32.9 million, or 5%, primarily due to the increase in sales partially offset by increased acquisition-related integration costs, restructuring and related charges and unusual costs, the recognition of stock-based compensation expense of $16.5 million and the competitive market conditions in the U.K. For the year ended Feb. 28, 2007, the company recorded $23.6 million of acquisition-related integration costs associated primarily with the restructuring and integration of the operations of Vincor. For the year ended Feb. 28, 2006, the company recorded $16.8 million of acquisition-related integration costs associated with the restructuring and integration of the operations of The Robert Mondavi Corporation. The company recorded $32.5 million of restructuring and related charges for fiscal 2007 associated primarily with the company's plan to invest in new distribution and bottling facilities in the U.K. and to streamline certain Australian wine operations and the company's worldwide wine reorganizations and the company's program to consolidate certain west coast production processes in the U.S. Net income increased 2% over the comparable prior year period primarily due to the increase in operating income, a gain of $55.1 million on change in fair value of derivative instrument entered into in connection with the acquisition of Vincor, an increase in equity in earnings of equity method investees of $49.1 million, partly offset by increased interest expense combined with an increased provision for income taxes. The increase in equity investment earnings is primarily due to the start-up of Crown Imports in January 2007. Interest expense increased 42 percent to $268.7 million for fiscal 2007, primarily due to the financing of the Vincor acquisition and higher average interest rates. At Feb. 28, 2007, the company's balance sheet showed $9.4 billion in total assets, $6 billion in total liabilities, and $3.4 billion in total stockholders' 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?1e6c Acquisition of Vincor Interntional On June 5, 2006, the company acquired all of the issued and outstanding common shares of Vincor International Inc., Canada's premier wine company. Through this transaction, the company acquired various additional winery and vineyard interests used in the production of premium, super-premium and fine wines from Canada, California, Washington State, Western Australia and New Zealand. Total consideration paid in cash to the Vincor shareholders was approximately $1.1 billion. At closing, the company also assumed outstanding indebtedness of Vincor, net of cash acquired, of $320.2 million. Investment in Crown Imports On July 17, 2006, Barton Beers Ltd., an indirect wholly-owned subsidiary of the company, entered into a Joint Venture Agreement with Diblo S.A. de C.V., an entity owned 76.75% by Grupo Modelo S.A. de C.V. and 23.25% by Anheuser-Busch Inc., pursuant to which Modelo's Mexican beer portfolio will be exclusively imported, marketed and sold in the 50 states of the U.S., the District of Columbia and Guam. Pursuant to the Joint Venture Agreement, Barton established Crown Imports LLC, a wholly-owned subsidiary formed as a Delaware limited liability company. As of February 28, 2007, the company's investment in Crown Imports was $163.4 million. About Constellation Brands Constellation Brands, Inc. (NYSE: STZ, ASX: CBR) -- http://www.cbrands.com/-- is an international producer and marketer of beverage alcohol brands with a broad portfolio across the wine, spirits and imported beer categories. The company has operations in Australia, Japan and New Zealand. * * * As reported in the Troubled Company Reporter on March 6, 2007, Fitch Ratings downgraded its ratings on Constellation Brands Inc. including the company's Issuer Default Rating to 'BB-' from 'BB'; Bank credit facility to 'BB-' from 'BB'; Senior unsecured notes to 'BB-' from 'BB'; and Senior subordinated notes to 'B+' from 'BB-'. The Rating Outlook was revised to Negative. CREDIT SUISSE: Moody's Holds Low-B Ratings on Six Certificates -------------------------------------------------------------- Moody's Investors Service affirmed the ratings of 21 classes of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2005-C1 as: - Class A-1, $86,303,345, affirmed at Aaa - Class A-2, $125,500,000, affirmed at Aaa - Class A-AB, $113,100,000, affirmed at Aaa - Class A-3, $181,606,000, affirmed at Aaa - Class A-4, $674,347,000, affirmed at Aaa - Class A-J, $92,510,000, affirmed at Aaa - Class A-X, Notional, affirmed at Aaa - Class A-SP, Notional, affirmed at Aaa - Class B, $43,423,000, affirmed at Aa2 - Class C, $13,216,000, affirmed at Aa3 - Class D, $24,543,000, affirmed at A2 - Class E, $18,880,000, affirmed at A3 - Class F, $20,767,000, affirmed at Baa1 - Class G, $15,104,000, affirmed at Baa2 - Class H, $18,880,000, affirmed at Baa3 - Class J, $5,663,000, affirmed at Ba1 - Class K, $5,664,000, affirmed at Ba2 - Class L, $5,664,000, affirmed at Ba3 - Class M, $5,664,000, affirmed at B1 - Class N, $5,664,000, affirmed at B2 - Class O, $3,776,000, affirmed at B3 As of the April 17, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 1.8% to $1.48 billion from $1.51 billion at securitization. The Certificates are collateralized by 166 mortgage loans. The loans range in size from less than 1.0% to 7.8% of the pool, with the top 10 loans representing 36.3% of the pool. The pool has not experienced any losses since securitization. Currently there are three loans, representing 0.8% of the pool, in special servicing. Moody's estimates approximately $800,000 of losses for all the specially serviced loans. Thirty-two loans, representing 10.3% of the pool, are on the master servicer's watchlist. Moody's was provided with full-year 2005 and partial-year 2006 operating results for 91.6% and 79.5%, respectively, of the performing loans. Moody's weighted average loan to value ratio is 94.2%, compared to 97.5% at securitization. The three largest exposures represent 15.1% of the pool. The largest conduit exposure is the GGP Retail Portfolio Loan ($116.0 million - 7.8%), which is secured by four regional malls containing 2.2 million square feet of GLA, of which 1.8 million is collateral for the loan. The properties are located in Wyoming, Idaho, Utah and Washington. Moody's LTV is 90.9%, compared to 103.8% at securitization. The second largest loan is the Phelps Dodge Tower Loan ($54.5 million - 3.7%), which is secured by a 20-story, 409,900 square foot class A office building located in Phoenix, Arizona. The property is subject to a 50-year ground lease with the City of Phoenix. As of December 2006 occupancy was 95.4%, compared to 84.0% at securitization. The loan is interest only for its entire term. Moody's LTV is 82.3%, compared to 86.7% at securitization. The third largest conduit loan is the Bexley Multifamily Portfolio Loan ($53.3 million - 3.6%), which is secured by two Class A multifamily properties containing 820 units located in Charlotte, North Carolina. The loan is interest only for its entire term. Moody's LTV is in excess of 100.0%, the same as at securitization. CYBERONICS INC: Hires Daniel Moore as Pres. & CEO Effective May 1 ----------------------------------------------------------------- Cyberonics Inc. has appointed Daniel J. Moore as president and chief executive officer, effective May 1, 2007. Mr. Moore joins Cyberonics from Boston Scientific where, since 1989, he has held positions in sales, marketing and senior management in the United States and in Europe. Reese S. Terry, Jr., co-founder of Cyberonics and interim chief executive officer since November 2006, will remain on the board of directors. Mr. Moore has also been appointed to Cyberonics' board of directors. Mr. Moore has a long and successful track record of growing revenues and profitability, building effective global teams and introducing new products for market leadership. He recently assumed the position of president, international distributor management at Boston Scientific. Prior to that role, he held the position of president, Inter-Continental, the fourth largest business unit of Boston Scientific with more than 1,000 global employees and revenues exceeding $700 million. Mr. Moore previously held senior management positions at several Boston Scientific U.S. and International divisions. He led Inter- Continental marketing during the initial launch of the Taxus(TM) Drug Eluting Stent. Prior to joining Boston Scientific, Mr. Moore spent four years with Procter and Gamble. He received his Bachelor of Arts from Harvard University and a Masters of Business Administration with High Honors from Boston University. "Dan is a proven leader with the right combination of sales, marketing and operations experience to lead Cyberonics," Hugh Morrison, chairman of the board stated. "Dan understands the challenges the company face and is qualified to lead the company to achieve the objectives set out by the board, specifically near- term positive cash flow and profitability, refocusing on epilepsy, realigning our spending in the depression market based on the current reimbursement environment and enhancing the company's reputation with all of the company's stakeholders. The company is pleased to have someone of Dan's caliber join Cyberonics at this important time." "I am thrilled to be joining Cyberonics," Mr. Moore said. "I am confident that my previous professional experience has prepared me well to assume the leadership of this company. It is exciting to join an organization so focused on its mission to improve the lives of people touched by epilepsy, depression and other chronic disorders. While we face many challenges with regard to access for patients, I am confident that the company will succeed in achieving its goals of creating value for Cyberonics shareholders, helping improve the lives of people suffering from the disorders treatable with VNS Therapy and building a company that Cyberonics employees and management will be proud to be part of." About Cyberonics Headquartered in Houston, Texas, Cyberonics Inc. (NASDAQ: CYBX) -- http://cyberonics.com/-- markets the VNS Therapy system in selected markets worldwide. The VNS Therapy System uses a surgically implanted medical device that delivers electrical pulsed signals to the vagus nerve in the left side of the neck. This therapy has proven effective in significantly reducing the number and/or intensity of seizures in many people suffering from epilepsy and has the potential for use in the treatment of other inadequately treated, chronic disorders. Going Concern Doubt As reported in the Troubled Company Reporter on Jan. 10, 2007, KPMG LLP in Houston, Texas, raised substantial doubt about Cyberonics Inc.'s ability to continue as a going concern after auditing the company's financial statements for the fiscal years ended April 28, 2006, and April 29, 2005. The auditing firm pointed to the company's recurring losses from operations, the receipt of a notice of default and demand letter and notice of acceleration for a $125 million senior subordinated convertible notes, and incurrence of a potential default of a $40 million line of credit. DALLAS ROOF: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Dallas Roof Gardens, Inc. 7600 Bradford Pear Irving, TX 75202 Bankruptcy Case No.: 07-32159 Type of Business: The Debtor is a roofing contractor in Texas. Chapter 11 Petition Date: May 1, 2007 Court: Northern District of Texas Judge: Barbara J. Houser Debtor's Counsel: C. Bryan Dunklin, Esq. 100 Highland Park Village, Suite 200 Dallas, TX 75205 Tel: (214)520-8666 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not submit a list of its largest unsecured creditors. DUANE CAUSWELL: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Duane Allen Causwell 8885 Old South Wickpass Alpharetta, GA 30022 Bankruptcy Case No.: 07-66965 Chapter 11 Petition Date: April 30, 2007 Court: Northern District of Georgia (Atlanta) Debtor's Counsel: Ralph Goldberg, Esq. Goldberg & Cuvillier, P.C. Suite 600 755 Commerce Drive Decatur, GA 30030 Tel: (404) 378-7700 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not submit a list of his largest unsecured creditors. DURA AUTOMOTIVE: Evaluates Strategic Alternatives for Atwood Group ------------------------------------------------------------------ DURA Automotive Systems, Inc., is exploring strategic alternatives for its Atwood Mobile Products division, headquartered in Elkhart, Indiana. DURA has engaged Miller Buckfire as its exclusive financial advisor in connection with the strategic evaluation, including solicitation of interest from prospective acquirers of Atwood Mobile Products, Inc. In consultation with its financial advisor, DURA will consider whether a sale or a growth strategy would maximize Atwood's financial contribution to the company. With 2006 sales of approximately $330 million, Atwood offers a broad range of products to the recreation vehicle, specialty vehicle and manufactured housing markets. The division's products encompass windows and doors, specialty glass, hardware appliances and electronics. Founded in 1909, Atwood was acquired by automotive supplier Excel Industries, which was then acquired by DURA in 1999. "Atwood enjoys leading market positions in each of its product categories based on a reputation for product innovation, quality manufacturing and superior customer service," Larry Denton, DURA's chairman and chief executive officer, said. "While the group is profitable and growing, we believe it is in the best interests of our shareholders, customers and employees to conduct a full review of strategic alternatives with respect to Atwood, including evaluation of further growth alternatives and divestiture options." Atwood provides the most extensive product line of any supplier to the recreation vehicle industry, with more than 90% of the recreation vehicles on the road using Atwood products. The RV industry has experienced consistent historical growth, with RV ownership currently at record levels. Industry trends point toward significant future growth due to favorable population demographics and increasing purchase interest. About DURA Automotive Systems Inc. Rochester Hills, Mich.-based DURA Automotive Systems Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The Debtors filed for chapter 11 petition on Oct. 30, 2006 (Bankr. D. Delaware Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. The Debtors' exclusive plan-filing period expires on May 23, 2007. DUTCH HILL: Fitch Rates $11.8 Million Class D-3 Notes at BB+ ------------------------------------------------------------ Fitch assigns these ratings to Dutch Hill Funding II Ltd. and Dutch Hill Funding II, Corp.: -- $206,400,000 Class A-1 First Priority Senior Secured Floating Rate Notes due 2046 'AAA'; -- $21,200,000 Class A-2 Second Priority Senior Secured Floating Rate Notes due 2046 'AAA'; -- $64,400,000 Class B Third Priority Senior Secured Floating Rate Notes due 2052 'AA'; -- $24,000,000 Class C Mezzanine Secured Floating Rate Deferrable Notes due 2052 'A'; -- $8,000,000 Class C Loan due 2052'A'; -- $15,200,000 Class D-1 Mezzanine Secured Floating Rate Deferrable Notes due 2052 'BBB+'; -- $11,800,000 Class D-2 Mezzanine Secured Floating Rate Deferrable Notes due 2052 'BBB'; -- $11,800,000 Class D-3 Mezzanine Secured Floating Rate Deferrable Notes due 2052 'BB+'. EDISON MISSION: Fitch Expects to Rate $2.7 Bil. Sr. Notes at BB- ---------------------------------------------------------------- Fitch Ratings expects to assign a 'BB-' rating to Edison Mission Energy's planned $2.7 billion senior unsecured note issuance. Fitch also expects to assign a 'BBB-' rating to Midwest Generation LLC's $500 million amended secured credit facility. At the same time, Fitch has affirmed these ratings: EME -- Issuer Default Rating 'BB-'; -- Senior unsecured debt 'BB-'. Midwest Generation LLC -- Issuer Default Rating 'BB'. The Rating Outlook for all is Stable. The proposed new issuance by EME and MWG is conditional upon the successful conclusion of tender and consent solicitations for debt of EME, MWG, and Mission Energy Holdings Company announced by their ultimate parent, Edison International on April 17. Upon successful completion of these transactions, MEHC will no longer have any outstanding debt and will cease to exist as a separate corporate entity; at such time, Fitch would withdraw the IDR of MEHC as well as those of all EME, MEHC and MWG retired issues. In the planned transactions, EME will raise $2.7 billion to be used along with cash on hand to retire and pay tender premia on $2.4 billion face value of debt, as: MWG's $1 billion of 8.75% second lien notes; MEHC's $800 million of 13.5% notes; and EME's $600 million of 7.73% notes. As of April 30, 2007, EME had received tenders and consents representing approximately 99% of the targeted $2.4 billion of debt at MEHC, EME and MWG. As a consequence of the transactions, EME will modestly reduce cash on hand but on a forward-looking basis will have lower interest expenses and materially lower debt maturities through 2016. MEHC had approximately $1.8 billion of cash, cash equivalents and short-term investments at year-end 2006. Thus, MWG and EME will have improved liquidity and flexibility to fund capital expenditures, including major investments that result from MWG's commitment under its consent decree with the Illinois Environmental Protection Agency, which was announced in December 2006. The settlement is expected to result in capital investment totaling $2.7 billion-$3.4 billion through 2018 (in 2006 dollars). Investment to remediate mercury in Phase 1 of the agreement is expected to result in investment of approximately $60 million by the end of 2009, while remediation of nitrogen oxide emissions in Phase 2 is expected to require investment of $450 million by the end of 2011. Air quality equipment to reduce sulfur dioxide emissions in Phase 3 is expected to result in capital spending of $2 billion-$3 billion by 2018. Fitch believes the improvement in the group's maturity profile and increased liquidity and flexibility would be consistent with Fitch's ratings upgrades of EME, MEHC and MWG on Sept. 27, 2006. While individual debt leverage will be materially reduced at MWG and increased at EME as a result of the transaction, the companies' treasury and financial practices will continue to draw all residual cash flows up to EME, and Fitch views the credit of MWG and EME as being closely related. EME has other subsidiaries, including EME Homer City Generation LLC and various project- financed independent generation entities. MEHC and EME are intermediate holding company subsidiaries of Edison International. MEHC was formed in June 2001 to hold the common equity of EME. MWG is an indirect operating subsidiary of EME. MEHC's direct parent, Edison Mission Group, is also the parent of finance company, Edison Capital, which is in the process of winding down its holdings. EIX is also the parent of Southern California Edison, one of the largest investor-owned utilities in the U.S. Fitch has initiated these ratings: Edison Mission Energy Co. -- Senior unsecured notes 'BB-'. Midwest Generation Co. -- Secured revolving credit agreement 'BBB-'. These ratings are affirmed: Edison Mission Energy Co. -- Issuer Default Rating 'BB-'; -- Senior Unsecured 'BB-'. Midwest Generation Co. -- Issuer Default Rating 'BB'. These ratings are affirmed and are expected to be withdrawn upon completion of the tender and consent solicitation: Mission Energy Holding Co. -- Issuer Default Rating 'BB-'; -- Senior Secured 'BB-'. Midwest Generation Co. -- Secured term loan (first priority lien) 'BBB-'; -- Secured notes (second priority lien) 'BB+'. ENTERGY NEW ORLEANS: Court Approves Settlement Deal with Hartford ----------------------------------------------------------------- The U. S. Bankruptcy Court for the Eastern District of Louisiana approved Entergy New Orleans Inc.'s settlement agreement with Hartford Steam Boiler Inspection and Insurance Company, subject to Hartford's payment of $69,500,000 to Entergy Corporation on May 25, 2007. Applying the Court-approved Insurance Protocol to the Hartford Settlement Proceeds for the Entergy Insurance Claim, an estimated $53,766,056 will be allocated to ENOI, subject to adjustment as costs are actually incurred by the Entergy Operating Companies. However, the ENOI Allocation will be no less than $50,000,000. The Court also ordered that upon its receipt of the Hartford Settlement Proceeds, Entergy Corp. will offset the ENOI Allocation against the balance, if any, of the DIP Credit Agreement between Entergy Corp. and ENOI. The Court directed Entergy Corporation to promptly pay ENOI any remaining portion of the ENOI Allocation, subject to any rights of the Bank of New York, as Indenture Trustee. Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. Carey L. Menasco, Esq., Philip Kirkpatrick Jones, Jr., Esq., and Joseph P. Hebert, Esq., at Liskow & Lewis, APLC, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 44 Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ENTERGY NEW ORLEANS: Wants $180 Mil. Investment in Federated OK'd ----------------------------------------------------------------- Entergy New Orleans Inc. seeks the U. S. Bankruptcy Court for the Eastern District of Louisiana's authority to invest up to $180,000,000 at Federated Investors Inc. because of the Debtor's anticipated receipt of (i) approximately $171,000,000 in Community Development Block Grant Funds, and (ii) more than $50,000,000 in insurance proceeds before June 30, 2007. The Court previously amended the February 2006 Cash Management Order to allow ENOI to invest up to $50,000,000 at Federated at any time. Nan Roberts Eitel, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., in New Orleans, Louisiana, relates that Entergy Services, Inc., provides, among other things, accounting and cash management services to ENOI and other Entergy Corporation affiliates pursuant to a Services Agreement. Since the Debtors' bankruptcy filing, Ms. Eitel continues, ESI has continued to provide those services to ENOI in accordance, in part, by the Region 5 U.S. Trustee's Operating Guidelines and the Cash Management Orders. Ms. Eitel states that all ENOI accounts, except one, are maintained at depository institutions approved by the Region 5 U.S. Trustee's office. She says the only ENOI account that is not at an approved depository institution is maintained at Federated pursuant to the Amended Cash Management Order. According to Ms. Eitel, ENOI uses its investment account at Federated to provide the Debtor with the flexibility to invest short term or on a daily basis in a money market fund that is managed to provide safety of principal and daily liquidity. She adds that the range of expected return at Federated substantially exceeds the earnings credit rate for the ENOI general fund account, which is used principally to offset ENOI's bank fees. ENOI's current investment balance at Federated is approximately $20,000,000, Ms. Eitel states. Given the upcoming hearing on confirmation of ENOI's Fourth Amended Plan of Reorganization set for May 3 to 4, 2007, and the targeted June 30 Plan Effective Date, ENOI anticipates the receipt of substantial funds in the near-term that, if invested, would exceed the $50,000,000 investment cap set forth in the Amended Cash Management Order. Given that there will likely be possibly up to 60 days between receipt and disbursement of CDBG funds and insurance proceeds, ENOI requires the flexibility to maximize its returns on a short- term basis by investing its excess cash at Federated. Accordingly, ENOI insists that the Court should increase its investment limit with Federated from $50,000,000 to $180,000,000. Ms. Eitel says the request would expire on the earlier of the ENOI Plan Effective Date, or July 1, 2007, if the Plan has not been confirmed and become effective by then. Ms. Eitel further states that the Cash Management Orders would remain in effect and unchanged. The United States Trustee and the Official Committee of Unsecured Creditors in ENOI's case support the Debtor's request. Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. Carey L. Menasco, Esq., Philip Kirkpatrick Jones, Jr., Esq., and Joseph P. Hebert, Esq., at Liskow & Lewis, APLC, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 44 Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ENTERGY NEW ORLEANS: Judge Brown Confirms Chapter 11 Plan --------------------------------------------------------- Entergy New Orleans and its customers reached a long-awaited milestone Thursday when a federal judge's ruling cleared the final hurdle for the company to emerge from Chapter 11 bankruptcy. "ENO emerging from bankruptcy is great news for our customers and employees who deserved a positive signal that we were on the road to recovery," said Rod West, president and chief executive officer of Entergy New Orleans. "We could not have closed this unfortunate chapter in our company's history without the Herculean efforts and sacrifice of our employees who together worked tirelessly to rebuild our company, the city's infrastructure and their own lives. "This significant step toward returning to financial viability could not have been achieved without the support of the New Orleans City Council, Gov. Kathleen Blanco and the Louisiana Recovery Authority," added Mr. West. Twenty months after Hurricane Katrina hit the Gulf Coast causing severe damage to the ENO electric and gas infrastructure, bankruptcy Judge Jerry Brown of the U.S. Bankruptcy for the Eastern District of Louisiana approved the company's plan of reorganization. Under the plan, all creditors will be fully compensated and there will be no change to its work force of approximately 400 employees. After Thursday's ruling, the judge is expected to sign the order within the week. Once signed, the actual "effective date" for the company's exit is the next business day. Then the company can operate out from under the bankruptcy court's jurisdiction essentially signaling that Entergy New Orleans has exited from Chapter 11. "While [Thurs]day's news is good, we must recognize that our work is not done. We have a devastated gas system and we must rebuild it," said Mr. West. "That work is only beginning and it too will require hard work and sacrifice, but our goal is to accomplish it with as little disruption as possible to commerce and our customers." To date, ENO has incurred more than $213 million in Hurricane Katrina storm restoration costs. ENO estimates that it will incur future storm restoration costs to rebuild its natural gas system of approximately $465 million. Customer Costs Successfully Reduced ENO also confirmed that it received $171.7 million in CDBG funds last Friday and that payment is the first installment of a grant that positions the company to return to business as usual without burdening its customers with up to $200 million of Hurricane Katrina storm costs. The CDBG funding is earmarked for reducing costs that would otherwise be borne by ENO customers associated with rebuilding the catastrophic damage caused by Hurricane Katrina to the ENO electric and gas systems. In addition to CDBG assistance, Entergy Corp. recently settled with Hartford Steam Boiler Inspection and Insurance, a subsidiary of the AIG, Inc. insurance company, for $69.5 million. ENO will receive approximately $53.7 million of the settlement amount for damage to its facilities. About Entergy New Orleans Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. Carey L. Menasco, Esq., Philip Kirkpatrick Jones, Jr., Esq., and Joseph P. Hebert, Esq., at Liskow & Lewis, APLC, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. FORD MOTOR: Navistar Files $2 Billion Counter-Claim --------------------------------------------------- Navistar International Corp. has filed an amended complaint against Ford Motor Co. seeking more than $2 billion in damages, Reuters reports. According to the source, the Navistar's amended complaint stemmed from hints that Ford was planning to develop its own diesel engine for release prior to 2012. Navistar, through its International Truck and Engine Corp. operating company, has been the exclusive diesel engine supplier for Ford's Super Duty pickup trucks since 1979 and had launched a new 6.4L Power Stroke(R) for Ford's new Super Duty. Diesel Engine Litigation In a filing with the U.S. Securities and Exchange Commission, Ford disclosed that on January 2007, it filed a suit against the company seeking, among other things, reimbursement for warranty and related costs involving prior model-year diesel engines supplied by International Truck. On Feb. 26, 2006, the Navistar suspended production claiming that Ford stopped honoring the terms under which the engines were built. Ford sought a temporary restraining order from Judge John J. McDonald of the Circuit Court of Oakland County, Michigan. Judge McDonald issued an order on Feb. 28 that required International Truck to resume production and Ford to pay with no withholding until a hearing was held. Navistar entered into a consent injunction with Ford which Navistar's operating company will continue shipping 6.4L Power Stroke(R) diesel engines and Ford will pay, without deductions, for each engine. About Navistar International Corp. Based in Warrenville, Illinois, Navistar International Corp. (NYSE:NAV) -- http://www.nav-international.com/-- is the parent company of Navistar Financial Corp. and International Truck and Engine Corp. The company produces International brand commercial trucks, mid-range diesel engines and IC brand school buses, Workhorse brand chassis for motor homes and step vans, and is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV market. The company also provides truck and diesel engine parts and service sold under the International brand. A wholly owned subsidiary offers financing services. About Ford Motor Co. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. * * * As reported in the Troubled Company Reporter on Dec. 12, 2006, Standard & Poor's Ratings Services affirmed its 'B' bank loan and '2' recovery ratings on Ford Motor Co. As reported in the Troubled Company Reporter on Dec. 7, 2006, Fitch Ratings downgraded Ford Motor Company's senior unsecured ratings to 'B-/RR5' from 'B/RR4'. As reported in the Troubled Company Reporter on Dec. 6, 2006, Moody's Investors Service assigned a Caa1, LGD4, 62% rating to Ford Motor Company's $3 billion of senior convertible notes due 2036. FORD MOTOR: April U.S. Sales Decreased 13%, to 228,623 ------------------------------------------------------ Ford Motor Co. disclosed in a regulatory filing with the Securities and Exchange Commission that the company's April U.S. sales totaled 228,623, down 13% compared with a year ago. "With April behind us, we remain focused on getting the word out about the strength of our new products, and our marketing offensive is moving into high gear," said Mark Fields, Ford's President of The Americas. "Customers are responding very positively to our new 'Ford Challenge' ads that pit Ford vehicles against the best of the competition, so we're accelerating our plans." Currently, Ford said it began airing two new F-Series truck ads starring Mike Rowe, creator and star of the Discovery Channel's hit show "Dirty Jobs." The ads demonstrate the clear advantages of Ford Tough trucks in safety, strength and capability. Ford's internal data show that the Ford Challenge campaign has generated a strong response in product favorability, purchase consideration and sales. Following the start of the successful "Fusion Challenge" ads in January, the Ford Fusion posted double- digit sales increases throughout the first quarter. Strong Crossover Growth Continues Although April sales for most products were lower than a year ago, new crossover utilities helped Ford increase its share of the industry's fastest growing category. Ford Edge sales were 9,134, and Lincoln MKX sales were 2,901. In addition, Land Rover introduced its first crossover utility, the LR2, and first month sales were 1,302. Total Ford Motor Company crossover sales were 28 percent higher than a year ago during April. "The success of our newest products - Ford Fusion, Edge, Lincoln MKX, Ford Super Duty and Ford Expedition - gives us encouragement that we're creating the products our customers really want, and we're beginning to stabilize our retail market share," Fields said. "Three years ago, 70 percent of new Ford Motor Company vehicles sold in the U.S. were trucks and traditional SUVs. Today, the balance is nearly 50 percent cars and crossovers, and 50 percent trucks and SUVs," Fields explained. "We will continue to introduce new crossovers and even more small cars in the U.S., as they represent the consumer growth segments going forward." About Ford Motor Co. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. * * * As reported in the Troubled Company Reporter on Dec. 12, 2006, Standard & Poor's Ratings Services affirmed its 'B' bank loan and '2' recovery ratings on Ford Motor Co. As reported in the Troubled Company Reporter on Dec. 7, 2006, Fitch Ratings downgraded Ford Motor Company's senior unsecured ratings to 'B-/RR5' from 'B/RR4'. As reported in the Troubled Company Reporter on Dec. 6, 2006, Moody's Investors Service assigned a Caa1, LGD4, 62% rating to Ford Motor Company's $3 billion of senior convertible notes due 2036. GENERAL MOTORS: April Sales Down 2.2%; Daily Rental Sales Down 36% ------------------------------------------------------------------ General Motors Corporation reported that GM dealers in the United States delivered 311,687 vehicles in April, a reduction of 2.2% on a sales-day-adjusted basis. GM's April retail sales of 228,465 were up 3.6%, on a sales-day-adjusted basis. There were two fewer selling days in April this year. Fifteen different models showed a retail sales increase, reflecting the continuing strength of GM's new product portfolio. So far this year, daily rental sales of 13% of total sales accounted for the lowest percentage of total sales in five years. Daily rental sales were down 23,178 vehicles in April, or 36% on a sales-day-adjusted basis, compared with a year ago as mix and quality of share continued to improve significantly. Consistent with its turnaround strategy, GM has reduced daily rental sales by more than 83,000 vehicles in the first four months of 2007. "April sales were consistent with the pattern of the last few quarters - retail sales up, daily rental down, and continued strength of our launch vehicles," said Mark LaNeve, vice president, GM North American Sales, Service and Marketing. "We are particularly pleased with the Silverado and Sierra pickups, and from January to March this year we've seen more than a four point full-size pickup market share increase at the expense of Toyota, Ford and DCX. Pickup truck customers are telling us in today's environment they are shopping for value, fuel economy and warranty. GM wins on all three." Chevrolet Aveo, Impala, Silverado, Suburban, and Avalanche; Pontiac G6; Saturn Sky and VUE; GMC Sierra, Yukon XL and Canyon; Cadillac CTS, SRX, Escalade ESV and Escalade EXT all had April retail sales increases compared with a year ago on a sales-day- adjusted basis. Pontiac G5, Saturn Aura and Outlook and the GMC Acadia are newly-offered products and continue to contribute retail sales momentum. The GMC Acadia and Saturn Outlook had retail sales of more than 9,100 vehicles, pushing a significant retail increase in GM's mid-crossover segment. GM's total sales of more than 11,000 vehicles in this segment pushed monthly performance up 184%, on a sales-day-adjusted basis, compared with the same month last year. Total sales of Saturn vehicles were up 29 percent, GMC was up 17 percent and Cadillac was up 2% in April on a sales-day-adjusted basis. "As we continue to execute our North American marketing plans, we've seen positive results, including increased residual values for our products. For customers, this means better resale values for their GM car or truck," LaNeve added. "With new products such as the Buick Enclave, Cadillac CTS and Chevrolet Malibu still to come this year, we expect to build on this customer enthusiasm." Certified Used Vehicles April 2007 sales for all certified GM brands, including GM Certified Used Vehicles, Cadillac Certified Pre-Owned Vehicles, Saturn Certified Pre-Owned Vehicles, Saab Certified Pre-Owned Vehicles, and HUMMER Certified Pre-Owned Vehicles, were 41,622 units, down 11 percent from last April. Total year-to-date certified GM sales are 181,473 units, up 3% from the same period last year. GM Certified Used Vehicles, the industry's top-selling manufacturer-certified used brand, posted 36,625 sales, down nearly 10% from last April. Year-to-date sales for GM Certified Used Vehicles are 159,409 units, up 4% from the same period in 2006. Cadillac Certified Pre-Owned Vehicles posted April sales of 2,800 units, down 22% from last April. Saturn Certified Pre-Owned Vehicles sold 1,478 units in April, down 17%. Saab Certified Pre- Owned Vehicles sold 639 units, down 10% from last April, and HUMMER Certified Pre-Owned Vehicles sold 80 units, down 30%. "GM Certified Used Vehicles, the industry's top-selling certified brand, continues to set the pace for the category, with sales through April up more than 4 percent," said LaNeve. "April sales were impacted by having two less sales days than last year. Certified GM sales year-to-date are up over 3 percent from the same period last year." GM North America Reports April Production, 2007 Second-Quarter Production Forecast is Revised at 1.145 Million Vehicles In April, GM North America produced 335,000 vehicles (120,000 cars and 215,000 trucks). This is down 17,000 units or 5% compared to April 2006 when the region produced 352,000 vehicles (130,000 cars and 222,000 trucks). (Production totals include joint venture production of 15,000 vehicles in April 2007 and 24,000 vehicles in April 2006.) Additionally, the region's 2007 second-quarter production forecast is revised at 1.145 million vehicles (403,000 cars and 742,000 trucks), down 15,000 units or 1.3% from last month's guidance. GM also announced final 2007 first-quarter and unchanged 2007 second-quarter production forecast for its international regions. GM Europe - GM Europe produced 511,000 vehicles in the first- quarter of 2007. In the first-quarter of 2006 the region built 494,000 vehicles. The region's 2007 second-quarter production forecast remains unchanged at 473,000 vehicles. In the second- quarter of 2006 the region built 495,000 vehicles. GM Asia Pacific - The region built 544,000 vehicles in the first- quarter of 2007. In the first-quarter of 2006 the region produced 472,000 vehicles. GM Asia Pacific's 2007 second-quarter production forecast remains unchanged at 568,000 vehicles. In the second-quarter of 2006 the region built 482,000 vehicles. GM Latin America, Africa and the Middle East - The region built 222,000 vehicles in the first quarter of 2007. In the first quarter of 2006 the region produced 194,000 vehicles. The region's 2007 second-quarter production forecast is unchanged at 233,000 vehicles. In the second quarter of 2006 the region built 206,000 vehicles. About General Motors Corp. General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- is the world's largest automaker and has been the global industry sales leader for 76 years. GM currently employs about 280,000 people around the world. GM manufactures its cars and trucks in 33 countries. In 2006, nearly 9.1 million GM cars and trucks were sold globally under these brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. * * * As reported in the Troubled Company Reporter on Dec. 15, 2006, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating and other ratings on General Motors Corp. and removed them from CreditWatch with negative implications, where they were placed March 29, 2006. S&P said the outlook is negative. As reported in the Troubled Company Reporter on Nov. 14, 2006, Moody's Investors Service assigned a Ba3, LGD1, 9% rating to the $1.5 billion secured term loan of General Motors Corp. As reported in the Troubled Company Reporter on Nov. 14, 2006, Moody's Investors Service assigned a Ba3, LGD1, 9% rating to the $1.5 billion secured term loan of General Motors Corp. GENERAL MOTORS: Earns $62 Million in Quarter Ended March 31 ----------------------------------------------------------- General Motors Corp. reported net income of $62 million, including special items, in the first quarter ended March 31, 2007, compared with net income of $602 million, in the year-ago quarter. Results are preliminary and may be revised prior to actual filing of GM's first quarter report on Form 10-Q. The decline in reported GM earnings is more than accounted for by losses in the residential mortgage business of GMAC Financial Services, driven by continued weakness in the U.S. nonprime mortgage sector. In addition, last year's results included a one- time after tax gain of $395 million due to the sale of a portion of GM's equity ownership position in Suzuki Motors. The reported results for the first quarter of 2007 include unfavorable special items totaling $32 million after tax related largely to restructuring actions in Europe and Asia Pacific, offset in part by a favorable item related to workforce attrition costs for previously divested components plants. "The first quarter of 2007 marked another quarter of continued progress in GM's global automotive operations. We were able to expand vehicle sales and improve automotive profitability based on the progress in our turnaround initiatives in North America and Europe and our expansion strategy for key growth markets like China, Russia and South America," said GM chairman and chief executive officer, Rick Wagoner. "We continue to see progress on the automotive bottom line as we implement the strategies laid out two years ago." Excluding special items, GM posted adjusted net income of $94 million, compared to adjusted net income of $350 million in the first quarter of 2006. Total revenue for the first quarter of 2007 was $43.9 billion, down from $52.4 billion, almost entirely due to GMAC revenue no longer being included in GM's consolidated results. Following the 51 percent equity sale of GMAC in late 2006, GM is reporting its 49 percent ownership interest using the equity accounting method. Automotive revenue for the first quarter of 2007 was $42.9 billion, down slightly from $43.6 billion in the first quarter of 2006. GM Automotive Operations Net income from GM's global automotive operations totaled $304 million on an adjusted basis, in the first quarter of 2007, compared to $40 million in the year-ago quarter. GM sold an all-time first quarter record 2.26 million cars and trucks in the first quarter of 2007, up 3 percent, or 67,000 units, over the first quarter of 2006. Sales in the GM Asia Pacific region grew more than 20 percent; GM Latin America, Africa and Middle East grew 17 percent, and GM Europe grew 6 percent. GM's all-time sales record was achieved despite challenging market conditions in the U.S. largely due to volatile fuel prices and contraction in the housing market. GMAC GMAC posted a net loss of $305 million in the first quarter of 2007, compared to net income of $495 million in the year-ago period. For the first quarter, GM recognized a net loss of $115 million associated with its 49 percent ownership of GMAC, including the accrual of dividends on GMAC preferred membership interests and certain tax benefits realized. GMAC results were significantly impacted by a net loss of $910 million at Residential Capital LLC due to continued pressures in the U.S. mortgage market. GMAC's first quarter net income generated by auto finance, insurance and other operations was $605 million, more than double the earnings generated by these same operations in the first quarter of 2006. Cash and Liquidity GM generated adjusted automotive operating cash flow of $300 million for the first quarter of 2007, an improvement of $1.5 billion year-on-year, with all four regions reporting improvement. Cash, marketable securities, and readily-available assets of the Voluntary Employees' Beneficiary Association trust totaled $24.7 billion at March 31, 2007, up from $21.6 billion on March 31, 2006, but down from the year-end 2006 total of $26.4 billion. At March 31, 2007, the company's balance sheet showed $185.2 billion in total assets, $188.4 billion in total liabilities, $1.1 billion in minority interests, resulting in a $4.3 billion total stockholders' deficit. About General Motors General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- is the world's largest automaker and has been the global industry sales leader for 76 years. GM currently employs about 280,000 people around the world. GM manufactures its cars and trucks in 33 countries. In 2006, nearly 9.1 million GM cars and trucks were sold globally under these brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. * * * As reported in the Troubled Company Reporter on Dec. 15, 2006, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating and other ratings on General Motors Corp. and removed them from CreditWatch with negative implications, where they were placed March 29, 2006. S&P said the outlook is negative. As reported in the Troubled Company Reporter on Nov. 14, 2006, Moody's Investors Service assigned a Ba3, LGD1, 9% rating to the $1.5 billion secured term loan of General Motors Corp. As reported in the Troubled Company Reporter on Nov. 14, 2006, Moody's Investors Service assigned a Ba3, LGD1, 9% rating to the $1.5 billion secured term loan of General Motors Corp. GENTA INC: NASDAQ to Delist Stocks Due to Bid Price Non-Compliance ------------------------------------------------------------------ Genta Incorporated has received a Staff Determination letter from the NASDAQ Stock Market stating that the company's common stock is subject to delisting from The NASDAQ Global Market because the closing bid price of the company's common stock is not in compliance with the $1 minimum closing bid price requirement, as set forth in Marketplace Rule 4450(a)(5). Such letters are standard procedure when a company does not meet the minimum closing bid price requirement. Genta intends to exercise its right to appeal this Staff Determination to a NASDAQ Listings Qualification Panel. The appeal request will automatically stay the delisting until the Panel reaches a decision. NASDAQ will typically hold a hearing to consider an appeal within 45 days after the appeal is made, and it may take up to 30 days after the hearing to make a decision. At the hearing, Genta intends to present a plan to regain full compliance for all requirements to maintain its listing on The NASDAQ Global Market. "While the company will continue to execute its overall strategy and pursue the NASDAQ appeal, among other proposals in the company's proxy statement, the company plans to ask its stockholders to approve a reverse split of the company's common stock over a range of possible ratios, ranging from 1:2 to 1:6, which would be implemented at the discretion of the company's board of directors", Dr. Raymond Warrell, Jr., Genta's Chairman and chief executive officer, said. "The company believes its stockholder's immediate interest is to maintain the Global Market listing, and that granting the board flexibility to effect a reverse split represents one important option to meeting the NASDAQ requirements. This matter will be discussed during the company's upcoming quarterly earnings conference call on May 8, 2007, and the proposal will be formally considered at the company's upcoming annual stockholders meeting scheduled on July 11, 2007. About Genta Incorporated Based in Berkeley Heights, New Jersey, Genta Incorporated (Nasdaq: GNTA) -- http://www.genta.com/-- is a biopharmaceutical company, which focuses on the treatment of patients with cancer. Going Concern Doubt As reported in the Troubled Company Reporter on Aug. 15, 2006, Deloitte & Touche LLP expressed substantial doubt about Genta Incorporated's ability to continue as a going concern after auditing the company's financial statements for the years ended Dec. 31, 2005 and 2004. The auditing firm pointed to the company's recurring losses and negative cash flows. GEOKINETICS INC: Commences Offering of 4.5 Million Common Stock --------------------------------------------------------------- Geokinetics Inc. initiated its public offering of 4.5 million shares of common stock, par value $.01 per share with: -- RBC Capital Markets and UBS Investment Bank acting as joint book-running managers; and -- Raymond James & Associates Inc. and Howard Weil Incorporated as co-managers. Geokinetics intends to use the net proceeds from this offering to redeem its $110 million aggregate principal amount of Second Priority Senior Secured Floating Rate Notes due 2012 issued in December 2006 and, to the extent net proceeds remain, to repay outstanding amounts under the revolving credit facility and for general corporate purposes. Geokinetics and one existing stockholder have granted the underwriters a 30-day option to purchase up to an additional 675,000 shares of common stock to cover over-allotments, if any. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. Copies of the prospectus may be obtained from: a) RBC Capital Markets 17th Floor No. 60 South 6th Street Minneapolis, MN 55402 Tel: (612) 371-2818 Fax: (612) 371-2837, or b) UBS Investment Bank Attn: Clint Lauriston No. 299 Park Avenue New York, NY 10171 Tel:(888) 827-7275 About Geokinetics Inc. Based in Houston, Texas, Geokinetics Inc., (OTC Bulletin Board: GKNT) -- http://www.geokineticsinc.com/-- is a global provider of seismic acquisition and high-end seismic data processing services to the oil and gas industry. Geokinetics has an operating presence in North America and is focused on key markets internationally. Geokinetics operates in some of the most challenging locations in the world from the Arctic to mountainous jungles to the transition zone environments. * * * As reported in the Troubled Company Reporter on Dec. 22, 2006, Standard & Poor's Ratings Services affirmed its 'CCC+' issue rating and '3' recovery rating on Geokinetics Inc.'s second priority floating rate notes due in 2012, after the disclosure that the offering will be increased to $110 million from $100 million. GMAC COMMERCIAL: Moody's Holds Low-B Ratings on 6 2002-C3 Certs. ---------------------------------------------------------------- Moody's Investors Service upgraded the ratings of three classes and affirmed the ratings of 15 classes of GMAC Commercial Mortgage Securities, Inc., Series 2002-C3 Mortgage Pass-Through Certificates as: - Class A-1, $160,130,097, affirmed at Aaa - Class A-2, $406,440,000, affirmed at Aaa - Class X-1, Notional, affirmed at Aaa - Class X-2, Notional, affirmed at Aaa - Class B, $29,153,000, affirmed at Aaa - Class C, $11,661,000, affirmed at Aaa - Class D, $18,463,000, upgraded to Aaa from Aa2 - Class E, $11,661,000, upgraded to Aa2 from Aa3 - Class F, $9,717,000, upgraded to A1 from A2 - Class G, $9,718,000, affirmed at A3 - Class H, $9,718,000, affirmed at Baa1 - Class J, $18,464,000, affirmed at Baa3 - Class K, $8,746,000, affirmed at Ba1 - Class L, $5,831,000, affirmed at Ba3 - Class M, $4,859,000, affirmed at B1 - Class N, $3,887,000, affirmed at B2 - Class O-1, $2,722,000, affirmed at B3 - Class O-2, $1,165,000, affirmed at B3 As of the April 10, 2007 distribution date, the transaction's aggregate certificatel balance has decreased by approximately 6.1% to $729.7 million from $777.4 million at securitization. The Certificates are collateralized by 106 loans, ranging in size from less than 1.0% to 4.5% of the pool, with the top 10 loans representing 30.8% of the pool. Fifteen loans, representing 19.2% of the pool, have defeased and are collateralized by U.S. Government securities. One loan has been liquidated from the pool, resulting in a realized loss of approximately $160,000. Currently there is one loan, representing 2.1% of the pool, in special servicing. Moody's has estimated a loss of approximately $1.5 million for this loan. Twenty-two loans, representing 13.9% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2005 and partial-year 2006 operating results for 98.7% and 91.6%, respectively, of the performing loans. Moody's weighted average loan to value ratio is 81.3%, compared to 86.2% at Moody's last full review in February 2006 and compared to 89.3% at securitization. Moody's is upgrading Classes D, E and F due to defeasance, increased credit support and improved overall pool performance. The top three loans represent 11.5% of the pool. The largest loan is the Clifton Commons Loan ($33.1 million - 4.5%), which is secured by a 173,000 square foot retail center located in Clifton, New Jersey. The center is 100.0% occupied, the same as at last review and at securitization. Moody's LTV is 87.5%, compared to 90.7% at last review. The second largest loan is the Shops at River Park Loan ($26.6 million - 3.6%), which is secured by a 134,000 square foot retail center located in Fresno, California. As of September 2006 the property was 99.5% occupied, compared to 97.0% at last review. Moody's LTV is 77.4%, compared to 80.0% at last review. The third largest loan is the Bailey's Crossroads Loan ($24.2 million - 3.3%), which is secured by a 169,000 square foot retail center located in Fairfax, Virginia. As of December 2006 the property was 100.0% occupied, the same as at last review and at securitization. Moody's LTV is 73.8%, compared to 78.0% at last review. GMAC LLC: Massive Losses Prompt S&P to Affirm BB+/B-1 Rating ------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'BB+/B-1' counterparty credit rating on GMAC LLC. The outlook was revised to negative from developing. At the same time, S&P lowered its counterparty credit rating on GMAC's 100%-owned subsidiary, Residential Cap LLC, to 'BBB-/A-3' from 'BBB/A-3'. The outlook on ResCap is stable. "The revision of GMAC's outlook and the downgrade of ResCap reflect massive additional losses at ResCap's subprime mortgage business, totaling $910 million after-tax in first-quarter 2007," said Standard & Poor's credit analyst Scott Sprinzen. These losses caused GMAC overall to be unprofitable (net loss of $305 million), notwithstanding strong performance by GMAC's automotive finance, insurance, and other businesses. ResCap's loss was significantly worse than S&P had anticipated. S&P now believe that poor financial performance at ResCap could persist for at least the next year, and that this will depress GMAC's consolidated results, significantly dampening the potential for an upgrade of GMAC within the time period addressed by the outlook. The ratings on GMAC continue to reflect the benefits afforded by the diversity of its mortgage and insurance businesses, its generally high asset quality, and its significant long-range profit potential. The ratings also reflect the risks facing GMAC because of its close business ties to General Motors Corp. (GM; B/Negative/B-3), notwithstanding the completion of a transaction on Nov. 30, 2006, whereby GM sold a 51% stake in GMAC to a consortium headed by Cerberus Capital Management L.P. As a result of the transaction with Cerberus, GMAC was able to achieve a significant degree of ratings separation from GM. Despite the beneficial aspects of the transaction, GMAC will continue to face some GM-related risks. In particular, the value of GMAC's core automotive finance franchise will still be influenced by GM's fortunes. If GM's competitiveness deteriorates further, especially if GM were ultimately to declare bankruptcy, this could have a severe effect on the credit and residual loss levels associated with GMAC's retail, wholesale loan, and lease portfolios. There are limits on GMAC's ability to contain its GM- related credit exposure: GMAC is required to continue allocating capital to provide financing to GM customers and wholesale dealers, in accordance with historical practice. Although GMAC retains the right to make individual credit decisions, GMAC has committed to funding a broad credit spectrum of customers and dealers, largely consistent with historical practice. In addition, S&P believe there is potential for future divisiveness among GMAC's owners from diverging business or economic interests. Moreover, potential further ownership changes in the long term are unknown because the consortium is required to retain its investment in GMAC for only five years. ResCap was the seventh-largest U.S. mortgage originator and servicer in 2006. U.S. nonprime loan production accounted for only 19% of its total loan production in 2006. The company is very well-diversified geographically and in terms of mortgage products. The differential between S&P's ratings on ResCap and GMAC reflects ResCap's ability to operate its mortgage businesses separately from GMAC's auto finance business, from which ResCap is partially insulated by financial covenants and governance provisions. However, S&P expect to continue to link the ratings on ResCap with those on GMAC in view of the latter's full ownership of ResCap. The ratings on GMAC could be jeopardized given further deterioration at GM and/or ResCap that threatens to impinge on GMAC's financial performance and funding flexibility. While S&P believe GMAC could survive a bankruptcy filing by GM, the ratings on GMAC would likely be lowered--possibly by several notches if this were to occur--given the uncertainties such a development would entail for GMAC. Improvement in GM's prospects and/or a rapid rebound in ResCap's earnings would enhance GMAC's upgrade potential. However, S&P would still need to consider uncertainty regarding GMAC's ownership structure beyond the next five years. GOLDMAN SACHS: S&P Puts BB+ Rated Class B Notes on Positive Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB+' rating on the class B notes issued by Goldman Sachs Asset Management CBO Ltd., a high-yield arbitrage CBO transaction, on CreditWatch with positive implications. The CreditWatch placement reflects factors that have positively affected the credit enhancement available to support the class B notes since they were upgraded on Dec. 26, 2006. The primary factor was an increase in the level of overcollateralization available to support the class A notes. Since the December 2006 rating action, the transaction has paid down $23.308 million to the class A notes. Standard & Poor's will be reviewing the results of current cash flow runs generated for Goldman Sachs Asset Management CBO Ltd. to determine whether the rating currently assigned to the class B notes remains consistent with the credit enhancement available. Rating Placed on Creditwatch Positive Goldman Sachs Asset Management CBO Ltd. Rating ------ Class To From ----- -- ----- B BB+/Watch Pos BB+ Other Rating Outstanding Goldman Sachs Asset Management CBO Ltd. Class Rating ----- ------ A AAA GREAT LAKES: Refinancing Prompts Moody's to Affirm Debt Ratings --------------------------------------------------------------- Moody's Investors Service affirmed the debt ratings of Great Lakes Dredge & Dock Corporation (Caa1 senior subordinated, B3 corporate family) and changed the Loss Given Default assessment of the senior subordinated notes to 72-LGD5 from 78-LGD5 upon consideration of the planned refinancing of Great Lakes senior secured debt facilities. Moody's also withdrew its Ba3 (17-LGD2) rating on the senior secured term loan that has been repaid and will withdraw its Ba3 (17-LGD2) rating on the existing $60 million senior secured revolving credit facility upon the conclusion of the refinancing. The ratings outlook is stable. The affirmation of the B3 corporate family rating reflects Moody's belief that Great Lakes' markets remain exposed to a meaningful level of demand risk. Fluctuations in the size of annual bid markets and in the company's bid market share could easily absorb the relatively small cushions in the current supportive credit metrics. Great Lakes recently announced plans to acquire a large hydraulic dredge and a large hopper dredge in two separate transactions, collectively valued at approximately $63 million. These significant investments will be funded partially from drawings on the planned new senior secured revolving credit facility (not rated); and by a new operating lease. As a result, Debt to EBITDA is expected to increase from 4.7 times at December 31, 2006. Moody's estimates EBIT to Interest to remain below 1.4 times over this period. According to the company, demand from the U.S. Army Corp of Engineers, the domestic sector's largest customer, remains constrained due to funding constraints related to the U.S government's annual budget, to the centralization of Corp contract funding authorizations, and to restrictions on letting of contracts that are not fully-funded. These factors have limited the number of larger, longer term capital projects being let for bid by the Corp, which has contributed to excess capacity in the domestic market. "Great Lakes credit metrics and its leading position in the U.S. dredge market imply a higher corporate family rating. However, cash flow and earnings volatility, and the company's record of weak earnings and cash flow generation in recent years presently constrain the ratings," said Jonathan Root, Moody's High-Yield Transportation Analyst. The company relied mainly on the Corp for business in those periods; the historical results reflect that concentration as well as the more competitive bidding dynamics in the market in those periods. Moody's believes Great Lakes' current strategy of diversifying revenues and earnings with projects from state or municipal authorities, the private sector and from overseas is appropriate given the expectations of ongoing weak demand from the Corp. However, the current weakness in and poor visibility of the domestic bid market is a restraint on ratings. The stable outlook reflects Moody's belief that the execution of projects in the backlog plus potential new contract awards in 2007 and 2008 should allow Great Lakes to offset the pressure on the credit profile that results from the recently announced capital investments. Moody's expects negative free cash flow in 2007 of about $60 million with an almost equal increase in debt. Nevertheless, the company's leading position with the largest fleet in the U.S. provides it a strong base to capture its share of large capital projects upon their eventual return to the bidding roster. Such projects should contribute to earnings expansion. Moody's also believes that Great Lakes will retain its traditional rational bidding strategy across its markets, by favoring higher contract margins over higher equipment utilization. Ratings could be raised or the outlook changed to positive if EBIT to Interest is sustained above 1.4 times and Debt to EBITDA is below 5.0 times. Upwards pressure on the ratings could also result if Great Lakes was to secure additional contracts in foreign markets that locked in a significant amount of revenues and earnings over the intermediate term to provide a significant hedge to potential weakness in the domestic market. The ratings could be downgraded if revenues and earnings become pressured by a prolonged meaningful decline in the domestic bid market. EBIT to Interest below 1.0 time or Debt to EBITDA above 6.5 times could pressure the ratings down as would additional debt-financed investments that further weaken interest coverage or leverage measures. Issuer: Great Lakes Dredge & Dock Corporation Upgrades: * Senior Subordinated Regular Bond/Debentures, Upgraded to 72-LGD5 from 78-LGD5 Rating Withdrawn: * Senior Secured Bank Term Loan B, Withdrawn, previously Ba3 Rating to be Withdrawn: * Senior Secured Bank Revolving Credit Facility, currently Ba3 Great Lakes Dredge & Dock Corporation, founded in 1890 and headquartered in Oak Brook, IL is the largest provider of dredging services in the United States. GREENWICH CAPITAL: Moody's Holds Low-B Ratings on Six Certificates ------------------------------------------------------------------ Moody's Investors Service affirmed the ratings of 22 classes of Greenwich Capital Commercial Funding Corp., Commercial Mortgage Pass-Through Certificates, Series 2005-GG3 as: - Class A-1, $67,808,477, affirmed at Aaa - Class A-1-A, $138,494,150, affirmed at Aaa - Class A-2, $1,112,085,000, affirmed at Aaa - Class A-3, $562,418,000, affirmed at Aaa - Class A-4, $783,022,000, affirmed at Aaa - Class A-AB, $159,047,000, affirmed at Aaa - Class A-J, $228,986,000, affirmed at Aaa - Class XP, Notional, affirmed at Aaa - Class XC, Notional, affirmed at Aaa - Class B, $112,247,000, affirmed at Aa2 - Class C, $40,410,000, affirmed at Aa3 - Class D, $58,368,000, affirmed at A2 - Class E, $35,920,000, affirmed at A3 - Class F, $44,899,000, affirmed at Baa1 - Class G, $35,919,000, affirmed at Baa2 - Class H, $40,409,000, affirmed at Baa3 - Class J, $8,980,000, affirmed at Ba1 - Class K, $13,470,000, affirmed at Ba2 - Class L, $17,960,000, affirmed at Ba3 - Class M, $13,469,000, affirmed at B1 - Class N, $8,980,000, affirmed at B2 - Class O, $13,470,000, affirmed at B3 As of the April 12, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 1.4% to $3.54 billion from $3.59 billion at securitization. The Certificates are collateralized by 142 loans, the same as at securitization. The loans range in size from less than 1.0% to 6.8% of the pool, with the top 10 loans representing 47.6% of the pool. The pool includes four investment grade shadow rated loans, representing 19.1% of the pool. Four conduit loans, representing 2.0% of the pool, have defeased and are collateralized by U.S. Government securities. The pool has not realized any losses since securitization. Currently there is one loan, representing less than 1.0% of the pool, in special servicing. Moody's is not estimating a loss from this specially serviced loan. Twenty-three loans, representing 9.9% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2005 and partial-year 2006 operating results for 91.5% and 67.3%, respectively, of the pool. Moody's weighted average loan to value ratio for the conduit component is 95.0%, compared to 95.5% at securitization, resulting in an affirmation of all classes. The largest shadow rated loan is the Northstar Regional Mall Loan ($241.8 million - 6.8%), which is secured by the borrower's interest in a 1.3 million square foot regional mall located in San Antonio, Texas. The property is the dominant mall in the region and is anchored by Foley's, Dillard's, Macy's, Saks 5th Avenue and Mervyn's. Moody's current shadow rating is Baa2, the same as at securitization. The second largest shadow rated loan is the Grand Canal Shops at the Venetian Loan ($182.0 million - 6.4%), which represents a 44.5% participation interest in a first mortgage secured by a 537,000 square foot mall located within the Venetian Casino Resort in Las Vegas, Nevada. Moody's current shadow rating is A3, the same as at securitization. The third largest shadow rated loan is the Westin Kierland Loan ($135.0 million - 3.8%), which is secured by a 732-room full service resort and spa hotel located in Phoenix, Arizona. The property's financial performance has improved since securitization due to increased occupancy. RevPAR for calendar year 2005 was $145, compared to $129 at securitization. Moody's current shadow rating is Baa2, compared to Baa3 at securitization. The fourth largest shadow rated loan is the Doral Arrowwood Hotel Loan ($72.3 million - 2.0%), which is secured by a 374-room full service conference resort hotel and 110,000 square foot conference center located in Rye Brook, New York. Pfizer Inc. uses the conference center as its global training facility for its field sales and marketing team. Pfizer is under contract through 2015 to lease the Resort's learning center plus a minimum of 33,000 rooms annually, which Pfizer historically exceeded by a large margin. In the past two years, however, the number of paid rooms by Pfizer creased by approximately 35.0%, resulting in a drop in occupancy to 64.0% for calendar year 2006, compared to 75.7% at securitization. The decline in occupancy as well as other ancillary revenue has caused a significant decline in the hotel's performance. Net operating income for 2006 was approximately 40.0% lower than at securitization. Moody's current shadow rating is Baa3, compared to A2 at securitization. The top three conduit loans represent 17.5% of the pool. The largest conduit loan is the 1440 Broadway Loan ($225.0 million -- 6.4%), which is secured by a 742,000 square foot office building located in New York City. The property is 93.5% occupied, compared to 96.6% at securitization. Moody's LTV is 98.4%, compared to 99.8% at securitization. The second largest conduit loan is The Crescent Loan ($214.8 million -- 6.1%), which is secured by a 1.3 million square foot mixed use office and retail complex located in Dallas, Texas. The property was 92.1% occupied as of August 2006, the same as at securitization. Moody's LTV is 83.0%, the same as at securitization. The third largest conduit loan is the 498 Seventh Avenue Loan ($181.5 million -- 5.1%), which is secured by a 877,000 square foot office building located in New York City. Moody's LTV is 94.2%, the same as at securitization. HAYES LEMMERZ: Moody's Upgrades Unit's Corporate Rating to B3 ------------------------------------------------------------- Moody's Investors Service raised to B3 from Caa1 the corporate family and probability of default ratings of HLI Operating Company, Inc., a wholly-owned subsidiary of Hayes Lemmerz International, and changed the rating outlook to stable from negative. Moody's also assigned a B2 (LGD3, 33%) to new senior secured bank facilities to be issued by HLI Operating Company, a B2 (LGD3, 33%) to a secured term loan and synthetic letter of credit facility to be issued by HLI Luxembourg S.a.r.l. and a Caa2 (LDG5, 87%) to new senior unsecured notes also to be issued by HLI Luxembourg. In a related action, Moody's placed the Caa2 rating of the $157 million of 10.5% senior unsecured notes under review for downgrade. The $157 million of 10.5% senior unsecured notes are not callable until July 2007 and, thus are expected to be repurchased. The review will consider the degree to which covenants and rights are stripped from any notes not purchased. The rating will be withdrawn if substantially all of these notes are purchased. These rating actions are based upon the company successfully completing a series of transactions which include the closing of the announced $180 million common stock rights offering, the issuance of the new senior secured bank debt, and the issuance of the new senior unsecured note. The common stock rights offering will be used to repay the company's existing 10.5% senior unsecured notes. As part of the transaction, the new senior secured term loan, senior secured letter of credit facility, and senior unsecured notes will be issued by a European holding company. The transaction will reduce leverage and better align Hayes's debt service requirements with its geographic cash generating capacity. The ratings also reflect the company's improved credit metrics resulting from the transaction and the continuing challenges of the automotive supplier industry. "The stable outlook reflects the company's progress in gaining operating flexibility through several recent actions, as well as the refinancing plan", noted Timothy Harrod of Moody's Investors Service. These include the restructuring actions taken last year which have reduced wages and moved operations to low cost countries and asset sales in the automotive components segment. These actions combined with the lower leverage, improved interest coverage, and improved liquidity contemplated by the proposed transaction should support the company's ability to negotiate the current industry challenges of the automotive supplier sector at the currently assigned Corporate Family Rating. These challenges include market share losses of the North American Big-3 OEMs, and increasing raw material and energy cost. For the last twelve months (LTM) ended January 31, 2007, Hayes Lemmerz's total debt/EBITDA (using Moody's standard adjustments) approximated 5.5x. EBIT/interest expense was approximately 0.5x. Free cash flow was approximately negative $3 million with cash on hand of $38 million. Availability under the existing revolving credit was approximately $80 million at January 31, 2007. Pro forma for the transaction Debt/EBITDA is expected to reduce to approximately 4.7x and EBIT/Interest expense will moderately improve to approximately 0.63x. Liquidity is expected to improve as part of the refinancing, as the new revolving credit will increase in size to $125 million (and be largely unused over the near term) and the transaction will increase the amount of cash on hand. Ratings raised: * Corporate Family Rating, to B3 from Caa1 * Probability of Default Rating to B3 from Caa1 Ratings assigned: * B2 (LGD3, 33%) to the senior secured revolving credit facility; * B2 (LGD3, 33%) to the senior secured term loan facility; * B2 (LGD3, 33%) to the senior secured synthetic letter of credit facility; * Caa2 (LGD5, 87%) to the senior unsecured notes; These ratings will be withdrawn upon their repayment: * B1 (LDG2, 20%) for the 1st lien senior secured revolving credit * B1 (LDG2, 20%) for the 1st lien senior secured term loan * Caa1 (LDG3, 47%) for the 2nd lien term loan C This rating is under review for downgrade: * Caa2 (LGD5, 72%) for the existing 10.5% senior unsecured notes Outlook change: * To Stable from Negative The ratings of the new issues reflect their priority of payout in Moody's Loss Given Default Methodology. As a result the proposed transaction's shift of the preponderance of debt to Hayes's European operations, the Europe, Middle East, and Africa Loss Given Default Methodology is applied. The significant impact of the EMEA LGD Methodology compared to the US methodology is the senior secured treatment of trade payables. The EMEA LGD generally assumes that a consensual "out of court" restructuring will be pursued as opposed to court administered liquidations. In a consensual restructuring scenario management and financial creditors seek to ensure that the trade creditors remain current to avoid any local insolvency petition being invoked. The assumed outcome of a financial restructuring is that the trade creditors would be preserved and ultimately transferred to a new or restructured entity, without incurring losses. As a result, all trade payables are raised to level of the highest secured obligations. Hayes Lemmerz International, headquartered in Northville, Michigan, is a global supplier of steel and aluminum automotive and commercial vehicle highway wheels, as well as aluminum components for brakes, powertrain, suspension, and other lightweight structural products. Worldwide revenues approximate $2.1 billion. HAYES LEMMERZ: Planned Debt Reduction Cues S&P to Upgrade Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on automotive supplier Hayes Lemmerz International Inc. to 'B' from 'B-,' reflecting planned debt reduction from a proposed refinancing and equity rights offering, as well as improved operating results, particularly in the company's wheels business outside the U.S. At the same time, the ratings were removed from CreditWatch with positive implications, where they were placed on March 16, 2007. The outlook is stable. Standard & Poor's also assigned its bank loan and recovery ratings to Hayes' proposed $495 million senior secured credit facilities, which consist of a $125 million revolving credit facility due 2013 and a $370 million European term loan due 2014. The combined facilities were rated 'B' with recovery ratings of '2', indicating S&P's expectation for substantial (80%-100%) recovery of principal in the event of default or bankruptcy. In addition, Standard & Poor's assigned its 'CCC+' rating to Hayes' proposed $150 million or euro-equivalent senior unsecured notes, to be issued by a European subsidiary. Proceeds from the proposed new debt, as well as a $180 million equity rights offerings, would be used to replace Hayes' existing senior secured credit facilities and repurchase the company's outstanding senior unsecured notes. S&P affirmed its ratings on Hayes' existing senior secured credit facilities and expect to withdraw those ratings upon closing of the proposed transactions. The rights offering is subject to approval of Hayes' shareholders at a special meeting May 4, 2007. HIGHVIEW RESOURCES: Completes Reorganization Initiatives -------------------------------------------------------- Highview Resources Ltd. has completed a number of its initiatives relating to the proposed sale of assets and its restructuring activity. A special shareholders meeting has been called for May 28, 2007, at which time shareholders will be requested to approve: i) the sale of substantially all of the assets of Highview to Wild River Resources Ltd. for $5 million; ii) the consolidation of the common shares of Highview on a 1 for 10 basis; and iii) change of corporate name to Paris Energy Inc. In conjunction with these initiatives, the Highview Board of Directors has appointed Robert L. McPherson as Chief Executive Officer, M. Elizabeth Burke-Gaffney as President, and Clifford A. Jeffrey as Vice-President of Exploration. The new management team will be nominated to sit on the Board at the shareholders' meeting, together with Patrick T. McCarthy, Q.C. The new management team founded and managed Nycan Energy Corp. from 1996 to 2003 when it was sold to a royalty trust for $44.8 million. They then founded and managed a private company, KVR Resources Ltd., which was sold in 2006 for $15.7 million. Most recently, they organized Paris Energy Ltd. which commenced acquiring prospective acreage in southern Alberta. Highview has also agreed to purchase all of the shares of Paris Energy Ltd. for $307,000. Paris is a private company founded by the new management team in association with two other shareholders. Since its incorporation in 2006 Paris has begun to generate oil and gas prospects and the acquisition of prospective acreage in southern Alberta. Two prospects of note are in the Killam and Orion areas of Alberta. At Killam, Paris owns a 71.428% working interest in 600 acres and receives a non-convertible overriding royalty on the currently producing well on the section. Paris owns an interest in a proprietary 3D seismic program covering the entire section that indicates further drilling opportunities for Ellerslie oil occur in the section. In addition, there is potential for Ostracod and Glauconitic gas draped over the Ellerslie sand in the balance of the section. At Orion, Paris owns 100% working interest in 2 sections of freehold land. One of the sections of land is located between two Lower Cretaceous Sunburst Pools with the potential to extend one or both of these pools onto the intervening land. About Highview Resources Based in Calgary, Alberta, Highview Resources, Ltd. (TSX VENTURE:HVW) -- http://www.highviewresources.com/-- is focused on the exploration and development of crude oil and natural gas in Western Canada. Going Concern Doubt In the going concern paragraph of Highview Resources' financial statements for the three months ended Feb. 28, 2007, the company disclosed that it had a loss before income tax expense of $156,565 and had a working capital deficiency of $1,216,357 as at Feb. 28, 2007. The company said that the circumstances lend doubt as to its ability to meet its obligations as they come due and, accordingly, the appropriateness of the use of accounting principles applicable as a going concern. The company further said that its ability to continue as a going concern is dependent upon the closing of the sale of its oil and natural gas assets. INDYMAC MANUFACTURED: Poor Performance Cues S&P to Lower Rating --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class M-1 of IndyMac Manufactured Housing Contract Pass-Thru Trust 1998-2 to 'CCC-' from 'CCC'. At the same time, the ratings on the class A-2, A-3, and A-4 notes were affirmed at 'BB'. The downgrade reflects the poor performance of the underlying pool of manufactured housing contracts, high projected cumulative net losses, and deteriorating credit support. High losses have reduced the transaction's overcollateralization ratio to zero and have resulted in the complete write-down of the class B-2 and B-1 certificates. In addition, class M-2 had been written down from an initial principal balance of $9.18 million to $774,966 as of the April 2007 distribution date, leaving severely reduced credit enhancement levels available to cover losses on class M-1. If class M-1 were to experience write-downs, nonpayment of full and timely interest would be likely given the weak collateral performance and the location of class M-1 write- down interest below senior principal in the transaction's payment allocation waterfall. INGRESS I: Fitch Holds Junk Rating on $28 Million Class C Notes --------------------------------------------------------------- Fitch affirms four classes of the notes issued by Ingress I, Ltd. as: -- $55,092,083 class A-1 notes at 'AAA'; -- $72,537,653 class A-2 notes at 'AAA'; -- $54,000,000 class B notes at 'A'; -- $28,048,546 class C notes remain at 'CC/DR4'. Ingress is a collateralized debt obligation (CDO) supported by a static pool of asset-backed securities (10.1%), commercial mortgage-backed securities (34.8%), residential mortgage-backed securities (4.6%), and senior unsecured real estate investment trust securities (50.4%). Structured Credit Partners, LLC, a subsidiary of Wachovia Corporation, selected the initial collateral and serves as the collateral administrator. Since the last review in August 2006, the collateral has continued to perform, with 16.6% upgraded by a weighted average of 1.53 notches. The class A notes have deleveraged by 18.3% over the same time period, resulting in improved credit enhancement for classes A-1, A-2, and B. The class B overcollateralization (OC) ratio continues to fail its required level of 112%, with a current value of 108.02% according to the trustee report dated April 2, 2007. It is also failing the interest coverage (IC) ratio with a value of 106.99% compared to the trigger of 112%. These failures have caused the class C notes to capitalize missed interest payments of over $6.8 million to date. As a result, all principal and interest (in excess of the classes A and B current interest due) will be directed to pay down the class A notes until the class B OC test is cured or the class A notes are paid in full. The classes A and B notes, however, are receiving full interest due to their position in the waterfall above the classes A and B OC tests. There are six defaulted or distressed assets in the portfolio that are all exposures to manufactured housing. These assets, of which the notional balance represents 6.96% of the entire current portfolio, are expected to have little or no recovery value. The ratings of the classes A-1 and A-2 notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the classes B and C notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. Fitch will continue to monitor and review this transaction for future rating adjustments. IPC SYSTEMS: Moody's Junks Rating on New $315 Million Loan ---------------------------------------------------------- Moody's Investors Service has affirmed IPC System Inc.'s B2 corporate family rating and assigned a B1 rating to the company's new $915 million first lien term loan and a Caa1 rating to the company's new $315 million second lien term loan. Proceeds from the current offering will go towards repaying existing debt and financing the recently announced $515 million acquisition of Westcom Holding Corp. Concurrently, Moody's has revised IPC's rating outlook from stable to negative. IPC's corporate family rating is weakly positioned at B2 due to the company's high financial leverage, pro forma for the Westcom acquisition, which is similar to that of business services peers rated B3. The company's size (pre tax income) and profitability (net returns on assets), which are negatively impacted by the company's high financial leverage, are also similar to B3 rated business services peers. However, the company's business profile, as measured by its geographic, product, and client diversity, are similar to business services peers rated B2. The market position of the company following the Westcom acquisition, combined with our expectation that IPC's financial leverage will improve in the near term, are key factors that support the B2 rating. The negative rating outlook reflects IPC's challenges to reduce its sizeable debt and to realize anticipated cost reductions and synergies from the WestCom acquisition. The rating outlook could be stabilized were IPC to successfully integrate WestCom and benefit from favorable industry dynamics such that its ratio of debt to EBITDA subsides to below 6.5x on a sustainable basis subsequent to September 2008. The ratings could come under downward pressure were the company not to reduce financial leverage to below 6.5x on a sustainable basis subsequent to September 2008. Because of the negative outlook, a ratings upgrade is unlikely at the present time. In line with Moody's loss given default methodology, the ratings also reflect both the overall probability of default of the company, to which Moody's assigns a PDR of B2, and a loss given default of LGD3 and LGD5 for the first and second lien bank facilities, based on their respective priorities in the same collateral/security package. Subsequent to the transaction's closing as planned, Moody's will withdraw the existing credit facility ratings for IPC. Ratings assigned: * $75 million secured revolving credit facility due 2013 -- B1 (LGD 3, 36%) * $840 million first lien secured credit facility due 2014 -- B1 (LGD 3, 36%) * $315 million second lien secured credit facility due 2015 --Caa1 (LGD 5, 89%) Ratings affirmed: * Corporate family rating B2; * Probability-of-default rating B2; * Rating outlook revised to negative IPC Systems, Inc., headquartered in New York, provides telecommunications systems and private line telecommunication network services. JAMES KOONCE: Case Summary & 17 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: James A. Koonce, Jr. Lisa Koonce fka Lisa Rutledge 1137 Smithville Road Mount Holly, NJ 08060 Bankruptcy Case No.: 07-15797 Chapter 11 Petition Date: April 27, 2007 Court: District of New Jersey (Trenton) Judge: Kathryn C. Ferguson Debtor's Counsel: Donald Quigley Deegan and Quigley, L.L.C. 116 Youngs Road Hamilton, NJ 08691 Tel: (609) 584-0600 Fax: (609) 584-6212 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Diamond Federal Cr. Un. automobile $24,588 1600 Medical Drive Pottstown, PA 19464 2004 Volkswagon $22,481 Toureg Keybank Na 1996 Bayliner (to $21,751 P.O. Box 94825 be surrendered) Cleveland, OH 44101 Citibank credit card $19,658 P.O. Box 6241 Sioux Falls, SD 57117 G.M.A.C. 2005 G.M.C. $17,795 Yukon (leased vehicle to be surrendered) Chase credit card $16,850 Discover Fin credit card $15,451 Monogram Bank North America credit card $14,799 Wffinancial installment loan $9,115 Hb Fsb 2003 Honda VTX $7,639 motorcycle (to be surrendered) Regional Sewer Service Invoice 2016-2024 $4,279 Woodlyn Avenue, Woodlyn, New Jersey 08109; value of security: $525,000; value of senior lien: $525,709 Curtin Marina services $1,947 Holston, MacDonald, Uzdavinis, services $1,463 Eastlack Ziegler & Lodge Borough of Collingswood 2016-2024 $1,283 Woodlyn Avenue, Woodlyn, New Jersey 08109; value of security: $525,000; value of senior lien: $525,426 Cumberland Insurance Company services $953 Verizon Wireless other $903 PSE&G services $894 U.S.A.A. services $811 JOE THOMAS: Case Summary & 3 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Joe L. Thomas 3 Bayberry Drive Saddle River, NJ 07458 Bankruptcy Case No.: 07-15888 Chapter 11 Petition Date: April 30, 2007 Court: District of New Jersey (Newark) Debtor's Counsel: Melinda D. Middlebrooks, Esq. Middlebrooks Shapiro & Nachbar, P.C. 140 Eagle Rock Avenue Roseland, NJ 07068-0609 Tel: (973) 228-1616 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Mortgage Electronic location: 3 unknown Registration Sys nominee for Bayberry Drive, First Financial Equities Saddle River, c/o Corporation Trust Company, NJ; value of R.A. security: 820 Bear Tavern Road $2,200,000 Trenton, NJ 08628 R.L.I. Insurance Company unknown 9025 North Lindbergh Drive Peoria, IL 61615 State of New Jersey unknown c/o Attorney General of New Jersey CN-080 Hughes Justice Complex Trenton, NJ 08625 JOHN MIKUS: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: John C. Mikus dba Sukim Industrial Services 648 Garfield Avenue Carnegie, PA 15106 Bankruptcy Case No.: 07-22783 Chapter 11 Petition Date: May 2, 2007 Court: Western District of Pennsylvania (Pittsburgh) Debtor's Counsel: Robert O. Lampl, Esq. 960 Penn Avenue, Suite 1200 Pittsburgh, PA 15222 Tel: (412) 392-0330 Fax: (412) 392-0335 Estimated Assets: $1 Million to $100 Million Estimated Debts: $100,000 to $1 Million The Debtor did not file a list of its 20 largest unsecured creditors. JOSEPH PINTOLA: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Joseph Pintola, Jr. 156 Lemoyne Avenue Washington, PA 15301 Bankruptcy Case No.: 07-22835 Type of Business: The Debtor filed for Chapter 11 protection on January 5, 2007 (Bankr. W.D. Pa. Case No. 07-20075). Chapter 11 Petition Date: May 3, 2007 Court: Western District of Pennsylvania (Pittsburgh) Debtor's Counsel: Robert O. Lampl, Esq. 960 Penn Avenue, Suite 1200 Pittsburgh, PA 15222 Tel: (412) 392-0330 Fax: (412) 392-0335 Estimated Assets: $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. LB-UBS COMMERCIAL: Moody's Lowers Ratings on Six Certificates ------------------------------------------------------------- Moody's Investors Service upgraded the ratings of two classes, downgraded the ratings of six classes and affirmed the ratings of 14 classes of LB-UBS Commercial Mortgage Trust 2002-C2, Commercial Mortgage Pass-Through Certificates, Series 2002-C2 as: - Class A-2, $154,299,330, affirmed at Aaa - Class A-3, $144,100,000, affirmed at Aaa - Class A-4, $533,879,000, affirmed at Aaa - Class X-CL, Notional, affirmed at Aaa - Class X-CP, Notional, affirmed at Aaa - Class X-D, Notional, affirmed at Aaa - Class B, $16,644,000, affirmed at Aaa - Class C, $27,235,000, affirmed at Aaa - Class D, $18,157,000, upgraded to Aaa from Aa1 - Class E, $18,157,000, upgraded to Aa1 from Aa2 - Class F, $24,209,000, affirmed at A1 - Class G, $12,104,000, affirmed at A2 - Class H, $15,131,000, affirmed at A3 - Class J, $18,157,000, affirmed at Baa2 - Class K, $15,131,000, affirmed at Baa3 - Class L, $15,130,000, affirmed at Ba1 - Class M, $12,105,000, downgraded to Ba3 from Ba2 - Class N, $6,052,000, downgraded to B2 from Ba3 - Class P, $4,539,000, downgraded to B3 from B1 - Class Q, $7,566,000, downgraded to Caa1 from B2 - Class S, $3,026,000, downgraded to Caa2 from B3 - Class T, $3,026,000, downgraded to Caa3 from Caa2 As of the April 17, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 12.4% to $1.06 billion from $1.21 billion at securitization. The Certificates are collateralized by 100 loans, ranging in size from less than 1.0% to 15.5% of the pool, with the top 10 loans representing 53.6% of the pool. The pool includes five investment grade shadow rated loans, representing 36.3% of the pool. Twenty conduit loans, representing 12.3% of the pool, have defeased and are collateralized by U.S. Government securities. One loan has been liquidated from the pool resulting in a realized loss of approximately $205,000. Six loans, representing 4.9% of the pool, are in special servicing. The largest specially serviced exposure is the Wisconsin Multifamily Pool ($44.4 million - 4.2%), which is discussed below. Moody's is projecting significant losses for the specially serviced loans. Twenty loans, representing 16.2% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2005 and partial-year 2006 operating results for 93.8% and 58.8%, respectively, of the pool. Moody's weighted average loan to value ratio for the conduit component is 86.7%, excluding the specially serviced loans, compared to 90.3% at Moody's last full review in March 2006 and compared to 90.0% at securitization. Moody's is upgrading Classes D and E due to defeasance, increased credit support and improved overall pool performance. Moody's is downgrading Classes M, N, P, Q, S and T due to anticipated losses from the specially serviced loans. The largest shadow rated loan is the Dadeland Mall Loan ($164.0 million - 15.5%), which is secured by the borrower's interest in a 1.4 million square foot super regional mall located in Miami, Florida. The property is the dominant mall in the region and is anchored by Macy's, Macy's Home Gallery & Kids, J.C. Penney, Nordstrom and Saks Fifth Avenue. The in-line space was 91.7% occupied as of February 2007, compared to 96.0% at last review. The loan's performance has improved since securitization due to increased revenues, stable expenses and loan amortization. The loan has amortized by approximately 6.3% since securitization. Moody's current shadow rating is Aa1, compared to Aa3 at last review. The second largest shadow rated loan is the Square One Mall Loan ($89.6 million - 8.4%), which is secured by the borrower's interest in a 865,400 square foot regional mall located approximately 8 miles northeast of Boston in Saugus, Massachusetts. The property is anchored by Sears, Filene's, T.J. Maxx and Filene's Basement. Although the property's occupancy has been stable since securitization, at approximately 95.0%, performance has declined since last review due to increased expenses. Moody's current shadow rating is Baa1, compared to A3 at last review. The third largest shadow rated loan is the 250 Park Avenue Loan ($72.3 million - 6.8%), which is secured by a 448,000 square foot Class A office building located in New York City. The property was 95.5% occupied as of December 2006, compared to 93.0% at last review. The loan's performance has improved since securitization due to increased rental income, stable expenses and amortization. The loan has amortized by approximately 8.5% since securitization. Moody's current shadow rating is Aa1, compared to A3 at last review. The fourth largest shadow rated loan is the 21 Chelsea Loan ($33.1 million - 3.1%), which is secured by a 209-unit multifamily complex located in New York City. The property is 100.0% leased, the same as at last review and at securitization. Property performance has been stable since securitization. Moody's current shadow rating is A1, the same as at last review. The fifth largest shadow rated loan is The Loop Loan ($25.7 million - 2.4%), which is secured by a 339,000 square foot retail center located approximately 30 miles north of Boston in Methuen, Massachusetts. The property is 100.0% leased, the same as at last review and at securitization. Moody's current shadow rating is A1, compared to A2 at last review. The top three conduit loans represent 11.8% of the pool. The largest conduit loan is the 1750 Pennsylvania Avenue Loan ($47.6 million - 4.5%), which is secured by a fee interest in a 259,000 square foot Class A office building located in Washington, D.C. The property was 98.3% occupied as of December 2006, essentially the same as at last review. Moody's LTV is 80.9%, compared to 83.1% at last review. The second largest conduit loan is the Wisconsin Multifamily Pool Loan ($44.4 million - 4.2%), which is secured by four cross- collateralized loans secured by four multifamily properties totaling 1,157 units and located in Milwaukee (2) and Madison (2), Wisconsin. The properties are 30- to 40-year old Class B quality and have suffered from low occupancy for several years. The portfolio's most recently reported debt service coverage is less than 1.0x. The loans were transferred to special servicing in March 2007 due to a balloon maturity default. Moody's LTV is significantly in excess of 100.0%. The third largest conduit loan is the Center Building Loan ($32.8 million - 3.1%), which is secured by a 437,000 square foot office building located in Long Island City, New York. The property was 72.1% leased as of February 2007, compared to 85.7% at last review. The decline in occupancy is due to the lease rollover of a major tenant. Moody's LTV is in excess of 100.0%, compared to 84.5% at last review. LINDA BORGOGNONE: Case Summary & 18 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Linda Lee Borgognone 33449 Citrus Grove Wildomar, CA 92595 Sergio Gabriel Borgognone 11032 North 28th Drive, Suite 102 Phoenix, AZ 85029 Bankruptcy Case No.: 07-01928 Chapter 11 Petition Date: April 27, 2007 Court: District of Arizona (Phoenix) Judge: Redfield T. Baum PCT Sr. Debtor's Counsel: Pernell W. McGuire Aspey Watkins & Diesel, P.L.L.C. 123 North San Francisco, 3rd Floor Flagstaff, AZ 86001-5231 Tel: (928) 774-1478 Fax: (928) 774-8404 Total Assets: $1,974,994 Total Debts: $2,530,464 Debtor's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ The Christian Fellowship pending lawsuit $150,000 Church c/o David Palmer P.O. Box 1551 Prescott, AZ 86302-1551 American Express goods and $111,017 P.O. Box 297812 services Fort Lauderdale, FL 33329 Luke and Vicki MaGee pending lawsuit $104,000 1757 South Hayworth Avenue Los Angeles, CA 90035 Internal Revenue Service farwest 2005 $31,460 payroll taxes 2004 taxes $14,286 farwest 2006 $52,182 payroll taxes Chicago Title goods and $83,621 services Total Building Systems, Inc. goods and $81,139 services George Farnell, doing business goods and $79,000 as Rainbow Construction services Diversified Towing, Inc. goods and $76,850 services Standing Rock, L.L.C. goods and $52,571 services American Express goods and $50,000 services Residential Warranty Services, goods and $41,333 L.L.C. services Yavapai Plumbing and Electric, goods and $39,084 Inc. services Sovereign Bank 2003 Chevy $26,131 Silverado 1500 (used and paid for by son); value of security: $12,300 House Floors goods and $22,000 services W&W Contracting of Arizona goods and $21,085 services Shadow Valley Corporation goods and $22,000 services City of Prescott sales taxes $14,813 Waddell Concrete Construction, goods and $13,496 L.L.C. services LLOVET ENTERPRISE: Case Summary & 17 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Llovet Enterprise, Inc. fka Llovet Interprise, Inc. dba RLD Distributors 2172-74 Northwest 12th Court Miami, FL 33142 Bankruptcy Case No.: 07-13255 Chapter 11 Petition Date: May 1, 2007 Court: Southern District of Florida (Miami) Judge: A. Jay Cristol Debtor's Counsel: Michael A Frank, Esq. Law Office of Brook Frank & De La Guardia 10 Northwest LeJeune Road, Suite 620 Miami, FL 33126 Tel: (305) 443-4217 Fax: (305) 443-3219 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million Debtor's 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Rene L. Diaz 2172-74 $500,000 c/o Frank Alvarez, Esq. Northwest 24 10661 Southwest 88 Street, Court, Miami, Suite 216 FL 33142; value Miami, FL 33173 of security: $1,000,000; value of senior lien: $928,000 North Dakota Mills business debt $131,000 Puratos business debt $52,941 1200 Northwest 25 Street, Suite 123 Miami, FL 33172 F.P.&L. business debt $24,414 Bay State Milling Company business debt $18,000 Bank of America credit card & $13,941 purchases Bag-It business debt $8,438 Latin Flavors business debt $5,000 Carton Sales business debt $4,075 TimBar Packaging & Display business debt $3,500 Citgo business debt $3,216 G.F.S.- Gordon Food Service business debt $2,031 Department Lesaffre Yeast Corporation business debt $2,000 Bellsouth business debt $1,021 Miami Bearing Service, Inc. business debt $1,000 Grainger business debt $587 Republic Services of Florida business debt $505 MAXXCAPP CORP: Fails to Meet TSX-Venture Filing Regulations ----------------------------------------------------------- Maxxcapp Corporation is unable to meet, as of April 25, 2007, the minimum Toronto Stock Exchange-Venture regulations for representation on its board of directors and has missed TSX- Venture regulations for filing its 2006 Audit. Many of the company's previous investments in its past subsidiaries HouseSmart Ventures Inc., Accurate Infosystems Inc. and Quantex Capital Corporation did not work out as anticipated, and as such, led to the company accumulating debts that it could not sustain without new capital financing. With accumulated debts of over $1 million dollars held by creditors such as KPMG LLP, Bank of Montreal and numerous individual debt note holders, securing new capital and management personnel became increasingly prohibitive. Additionally, there are three writs filed against the company for debt notes which have received favorable ruling for the plaintiffs in British Columbia Supreme Court in the amount of $83,180 plus accrued interest and legal costs. On April 30, 2007, the company accepted a settlement offer of $76,080 for debt it held with Quantex Capital for 760,467 common shares of Quantex, a listed company trading on the Nasdaq OTC:BB (Pink Sheets). Maxxcapp continues to have no active business as management's priority for the past 4 to 5 months was to reorganize the company and arrange financing pursuant to TSX-Venture rules. Additionally, Eunho Lee has resigned as the company's President and CEO and, together with Craig Thomas, has resigned from the company's board of directors on April 30, 2007, leaving the company without a board of directors. As they have done since December 2006, Eunho Lee and Craig Thomas will work on behalf of the shareholders and creditors in efforts to reorganize the company and assist in the transitional process, however will do so from an arm's length perspective. About Maxxcapp Corp. Based in Victoria, British Columbia, Maxxcapp Corporation (TSX VENTURE:MXP)(NEX Board: MXP.H) is engaged in computer systems design and related information technology services. Going Concern Doubt In the going concern paragraphs of Maxxcapp's financial statements for the period ended Sept. 30, 2006, the company disclosed that it plans to pursue additional private placements of its common stock and encourage warrant holders to exercise their warrants so that it may repay debt and provide cash for operations. The operating subsidiaries of the company are being analyzed and restructured to improve the financial position of each unit, which should lessen the need for additional cash. The company said that its ability to continue as a going concern is dependent upon these plans which its management believes will mitigate the adverse conditions. MERCHANTS INSURANCE: Fitch Affirms and Withdraws BB+ Rating ----------------------------------------------------------- Fitch Ratings has affirmed and simultaneously withdrawn the 'BB+' Insurer Financial Strength rating with a Stable Outlook of Merchants Insurance Company of New Hampshire. Fitch is withdrawing the rating on MNH due to a lack of market interest. Fitch affirmed and withdrew this rating: Merchants Insurance Company of New Hampshire, Inc. -- Insurer Financial Strength 'BB+'. MGM MIRAGE: Withdraws Proposal to Develop a Lottery Facility ------------------------------------------------------------ MGM MIRAGE has formally withdrawn its proposal to develop and manage a video lottery terminal facility at the Aqueduct Racetrack and has terminated its negotiations with the New York Racing Association and the State of New York. "We have worked closely with NYRA and the State of New York for almost four years on this project," MGM MIRAGE's Chairman and Chief Executive Officer, Terry Lanni, said. It has been fraught with obstacles, ranging from NYRA's legal difficulties, its Chapter 11 filing, uncertainties concerning the grant of the racing franchise upon the expiration of NYRA's current franchise at the end of 2007, disputes between NYRA and the State, as well as escalating costs for the project." "While we came close to reaching an agreement with the State and NYRA, certain unresolved issues have caused us to withdraw from this opportunity. We expended a lot of resources, time and effort on the project, and regret that it did not come to fruition." About MGM Mirage Headquartered in Las Vegas, Nevada, MGM Mirage (NYSE: MGM) -- http://www.mgmmirage.com/-- owns and operates 23 wholly owned casino resorts in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. MGM Mirage has also announced plans to develop Project CityCenter, a multi-billion dollar mixed-use urban development project in the heart of Las Vegas, and has a 50% interest in MGM Grand Macau, a hotel-casino resort currently under construction in Macau S.A.R. * * * As reported in the Troubled Company Reporter on April 30, 2007, Moody's Investors Service affirmed MGM MIRAGE'S existing ratings, including its Ba2 corporate family rating and speculative grade liquidity rating of SGL-3, and changed the ratings outlook to negative. NAVISTAR INTERNATIONAL: Files $2 Bil. Counter-Claim Against Ford ---------------------------------------------------------------- Navistar International Corp. has filed an amended complaint against Ford Motor Co. seeking more than $2 billion in damages, Reuters reports. According to the report, the company's amended complaint stemmed from hints that the automaker was planning to develop its own diesel engine for release prior to 2012. The company, through its International Truck and Engine Corp. operating company, has been the exclusive diesel engine supplier for Ford's Super Duty pickup trucks since 1979 and had launched a new 6.4L Power Stroke(R) for Ford's new Super Duty. Diesel Engine Litigation In a filing with the U.S. Securities and Exchange Commission, Ford disclosed that on January 2007, it filed a suit against the company seeking, among other things, reimbursement for warranty and related costs involving prior model-year diesel engines supplied by International Truck. On Feb. 26, 2006, the company suspended production claiming that Ford stopped honoring the terms under which the engines were built. Ford sought a temporary restraining order from Judge John J. McDonald of the Circuit Court of Oakland County, Michigan. Judge McDonald issued an order on Feb. 28 that required International Truck to resume production and Ford to pay with no withholding until a hearing was held. The company entered into a consent injunction with Ford which Navistar's operating company will continue shipping 6.4L Power Stroke(R) diesel engines and Ford will pay, without deductions, for each engine. About Ford Motor Co. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. About Navistar International Corp. Based in Warrenville, Illinois, Navistar International Corp. (NYSE:NAV) -- http://www.nav-international.com/-- is the parent company of Navistar Financial Corp. and International Truck and Engine Corp. The company produces International brand commercial trucks, mid-range diesel engines and IC brand school buses, Workhorse brand chassis for motor homes and step vans, and is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV market. The company also provides truck and diesel engine parts and service sold under the International brand. A wholly owned subsidiary offers financing services. * * * As reported in the Troubled Company Reporter on Jan. 12, 2006, Fitch assigned a 'BB-' rating to Navistar International Corp.'s proposed $1.3 billion senior unsecured credit facility. Fitch also withdrew the 'BB-' rating on the company's senior unsecured notes, the 'B' rating on company's senior subordinated debt, and the senior unsecured debt rating at Navistar Financial Corp., all of which have been substantially retired. Fitch expected to withdraw the 'BB-' rating on company's existing credit facility upon the closing of the new $1.3 billion facility. NEW COREY: Case Summary & Nine Largest Unsecured Creditors ---------------------------------------------------------- Debtor: The New Corey Creek Apartments, Inc. 555 Virginia Drive Fort Washington, PA 19034 Bankruptcy Case No.: 07-12640 Type of Business: The Debtor owns and operates apartments. Chapter 11 Petition Date: May 3, 2007 Court: Eastern District of Pennsylvania (Philadelphia) Debtor's Counsel: Lee M. Herman, Esq. Lee M. Herman, Esq., P.C. 200 East State Street, Suite 306 Media, PA 19063 Tel: (610) 891-6500 Fax: (610) 891-9080 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's Nine Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Tioga County Treasurer 2006 Real Estate $49,848 118 Main Street Taxes - 150 North Wellsboro, PA 16901 Main Street 2007 Real Estate $20,859 Taxes - 150 North Main Street 2006 Real Estate $2,037 Taxes - Academy Street 2007 Real Estate $844 Tax - Academy Street Educational Property Group, Inc. $3,958 47 Marchfield Road Exton, PA 19341 Blue Ridge Communications $1,999 P.O. Box 316 Palmerton, PA 18071 Mansfield Municipal Authority $1,895 Epix Internet Service $1,784 Northern Tier Solid Waste Authority $300 London Computer Systems, Inc. $190 Verizon Wireless $115 Property Management Shop $30 NRG ENERGY: S&P Lifts Rating on $4.7 Bil. Unsecured Bonds to 'B' ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on NRG Energy, Inc.'s $4.7 billion unsecured bonds to 'B' from 'B-' and assigned its 'B-' rating to the proposed $1 billion delayed-draw term loan B at NRG Holdings Inc., a newly created holding company that would own 100% of NRG's equity. In addition, Standard & Poor's affirmed the 'B+' corporate credit rating on NRG and affirmed the 'BB-' rating on NRG's $3.148 billion term loan B; the 'CCC+' rating on the company's preferred stock, and the 'B-2' short-term rating. The outlook on all ratings is stable. NHI will be created, and the term loan B issued, only if NRG fails to obtain consent from its unsecured bondholders to institute a common dividend starting in first quarter 2008 of about $100 million-$150 million per year. The proceeds of the term loan B can only be used to pay down the existing term loan B debt at NRG, creating room for the planned dividends under the restricted payments basket of the unsecured bond indenture. "The raised rating on NRG's senior unsecured bonds is a result of our asset coverage test," said Standard & Poor's credit analyst Swami Venkataraman. "The term loan B at NHI is rated 'B-', reflecting its subordination to more than $8.6 billion of debt at NRG." These rating actions follow NRG's announcement that it will create a new holding company to facilitate the payment of a common dividend of $100 million-$150 million per year starting in the first quarter of 2008. NHI will borrow up to $1 billion from the term B market and pay the net proceeds to NRG as an equity contribution. NRG will use the net proceeds to prepay portion of its existing term B loan, resulting in no change to the company's consolidated debt levels. On completion, the restricted payments capacity under NRG's unsecured bond indentures will increase by an amount equal to the equity contribution from the holding company to NRG. The recovery rating of '5' on NHI's debt reflects its negligible recovery prospects since lenders are secured only by the equity interest in NRG and are effectively subordinated to all debt at NRG, including the $4.7 billion unsecured bonds. If the funding occurs, Standard & Poor's expect to raise the rating on the remaining $2.148 billion NRG term loan B to 'BB' from 'BB- ', reflecting the greater overcollateralization of the term loan by NRG's assets and related stronger recovery in the event of a default. NRG is primarily engaged in the ownership, development, construction and operation of power generation facilities, the trading of energy, fuel, capacity and related products in the United States and internationally. As of Dec. 31, 2006, NRG owned 24,175 MW of generating capacity and had about $8.7 billion in debt. NUTRO PRODUCTS: Mars Offer Cues S&P's Positive CreditWatch ---------------------------------------------------------- Standard & Poor's Ratings Services revised its CreditWatch listing for Nutro Products Inc., a premium pet food manufacturer and marketer, to CreditWatch with positive implications, from CreditWatch with negative implications. Ratings were initially placed on CreditWatch on March 30, 2007, reflecting concerns about the potential negative impact on sales related to the Menu Foods pet food recall. This included the 'B-' corporate credit rating and other ratings on the company. CreditWatch with positive implications means that the ratings could be affirmed or raised following the completion of Standard & Poor's review. Total debt outstanding at Dec. 31, 2006, was about $781 million. "The revision of the CreditWatch listing to positive follows the company's announcement that it has entered into an agreement to be acquired by privately held Mars Inc.," said Standard & Poor's credit analyst Bea Chiem. Terms were not disclosed. "We anticipate that Nutro's outstanding debt will be repaid," said Ms. Chiem. Standard & Poor's will withdraw the ratings on Nutro upon repayment of all debt following completion of the transaction, which is expected within 30 to 60 days and is subject to regulatory approval. ON SEMICONDUCTOR: Steady Gains Cue S&P to Up Credit Rating to BB- ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Phoenix, Arizona-based ON Semiconductor Corp. to 'BB-' from 'B+'. The outlook is stable. At the same time, Standard & Poor's assigned its 'BB' rating to the company's amended and restated credit agreement, with a recovery rating of '1', indicating the expectation of full (100%) recovery of principal in the event of a payment default. "The rating action reflects steady gains in profitability and improved debt protection measures, expected to continue over the longer term," said Standard & Poor's credit analyst Bruce Hyman. The ratings for ON Semiconductor reflect its substantial debt burden and its limited market share in a highly competitive commodity industry, as well as the company's low-cost position, good free cash flows and adequate operating liquidity, and good debt protection measures. ON Semiconductor is a major supplier of standard logic and analog integrated circuits and discrete semiconductors, holding mid- single-digit percentage shares of several commodity markets; industry conditions track the global economy, with little exposure to any one customer or market. The company has reduced its operating costs by relocating its manufacturing to low-cost regions, contributing to overall competitiveness, while bolstering margins. PAC-WEST TELECOMM: Organizational Meeting Scheduled for May 9 ------------------------------------------------------------- Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, will hold an organizational meeting to appoint an official committee of unsecured creditors in Pac-West Telecomm, Inc. and its debtor- affiliates' chapter 11 cases at 10:00 a.m., on May 9, 2007, at the J. Caleb Boggs Federal Building, Room 2112, 844 North King Street, in Wilmington, Delaware. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. The meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. However, a representative of the Debtor will attend and provide background information regarding the cases. Creditors interested in serving on a Committee should complete and return to the U.S. Trustee a statement indicating their willingness to serve on an official committee. Official creditors' committees, constituted under Section 1102 of the Bankruptcy Code, ordinarily consist of the seven largest creditors who are willing to serve on a committee. In some Chapter 11 cases, the U.S. Trustee is persuaded to appoint multiple creditors' committees. Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes that the reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About Pac-West Telecomm Inc. Based in Stockton, California, founded in 1980 and first incorporated in 1981, Pac-West Telecomm Inc. (OTC: PACW.PK) -- http://www.pacwest.com/-- is one of the competitive local exchange carriers. Pac-West's network averages over 120 million minutes of voice and data traffic per day, and carries an estimated 20% of the dial-up Internet traffic in California. In addition to California, Pac-West has operations in Nevada, Washington, Arizona, and Oregon. The company and its Debtor-affiliates filed for Chapter 11 protection on April 30, 2007 (Bankr. Case No.: 07-10562 through 0710567 D. Del.). Jeremy W. Ryan, Esq. and Norman L. Pernick, Esq. of Saul, Ewing, Remick & Saul LLP represents the Debtors in their restructuring efforts. No Official Creditors Committee was appointed in this case. When the Debtors filed for protection from their creditors, they listed total assets of $53,883,888 and total debts of $66,358,711. PACIFIC LUMBER: Court OKs Morrison & Foerster as Special Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas has authorized Pacific Lumber Company, Scotia Pacific Company LLC and Salmon Creek LLC to employ Morrison & Foerster LLP as their special litigation counsel, nunc pro tunc to Jan. 18, 2007. Morrison & Foerster will represent Debtors in their lawsuit against California as well as a number of actions involving environmental and regulatory issues, and in connection with any new litigation on environmental and regulatory issues commenced by or against any of the Debtors. As reported in the Troubled Company Reporter on April 11, 2007, Nathaniel Peter Holzer, Esq., at Jordan, Hyden, Womble, Culbreth & Holzer, P.C., in Corpus Christi, Texas, related that in 1996, the Debtors entered into the historic Headwaters Agreement with the Federal government and the state of California, which involved: (i) the sale of substantial old growth redwood timberlands to the Federal and State governments; and (ii) the implementation of comprehensive ongoing permits and approvals regarding harvesting activities on the Debtors' over 200,000 acres of Timberlands. The historic accord resulted in the most stringent environmental restrictions ever placed on timber harvesting, Mr. Holzer said. In December 2006, The Pacific Lumber Company and Scotia Pacific Company LLC commenced a lawsuit -- the Partial Contingency Litigation -- against California in the California Superior Court of Fresno County (Case No. 06 CE CG 042221) to recover damages for breach of the Headwaters Agreement. Under the Lawsuit, the Debtors alleged that California's actions restricted Scopac's ability to harvest timber as allowed under the Headwaters Agreement, which prevented them from remaining economically viable. Mr. Holzer related that prior to Jan. 18, 2007, Debtors hired Morrison & Foerster as their special litigation counsel in numerous proceedings, including these matters -- Hourly Rate Matters: 1. Environmental Protection Information Center & Sierra Club v. California Department Of Forestry & Fire Protection & California Department of Fish & Game, Case No. S1405471, an action filed in the California Supreme Court. California Court of Appeal Case Nos. A108410 and A108478. 2. The People of the State of California v. Pacific Lumber Company, Scotia Pacific Company LLC & Salmon Creek LLC, currently pending in the California Court of Appeal, Case No. A112028. 3. Environmental Protection Information Center v. Pacific Lumber Company, Scotia Pacific Company LLC, Environmental Protection Agency & Christine Todd Whitman, filed in the U.S. District Court for the Northern District of California, Case No. C01-2821 MHP. 4. Northern California River Watch v. Pacific Lumber Company filed in the U.S. District Court for the Northern District of California, Case No. C 06-03556 MMC. 5. Pacific Lumber Company & Scotia Pacific Company LLC v. State Water Resources Control Board commenced in the California Superior Court of Humboldt County, Case No. CV050516. 6. Davies v. Schectman commenced in the California Superior Court of Humboldt County, Case No. DR010441. Morrison & Foerster will carefully coordinate its efforts with the Debtors' other counsel so as to prevent any duplication of effort to the fullest extent practical. Subject to periodic adjustments, Morrison & Foerster will charge the Debtors based on its hourly rates range of $475 to $675 for attorneys, and $210 for paralegals. Mr. Washburn assured the Court that Morrison & Foerster neither holds nor represents an interest adverse to the Debtors and their estates, and is a "disinterested person" as that term is defined under Section 101(14) of the Bankruptcy Code. The Court also authorized the Debtors to file under seal the supplemental declaration of Edgar B. Washburn in support of the Morrison Application, the Court rules. The Washburn Declaration contains the specifics of the contingency arrangement between the Debtors and Morrison & Foerster with respect to the Partial Contingency Litigation, which could be analyzed and potentially used by adverse parties to their tactical advantage, and to the Debtors' detriment, Mr. Holzer said. 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). PALACE DEVELOPERS: Case Summary & XX Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Palace Developers Joint Venture One, L.L.C. 2409 North 89th Avenue Phoenix, AZ 85037 Bankruptcy Case No.: 07-01999 Chapter 11 Petition Date: May 2, 2007 Court: District of Arizona (Phoenix) Judge: George B. Nielsen Jr. Debtor's Counsel: Allan D. Newdelman, Esq. 80 East Columbus Avenue Phoenix, AZ 85012 Tel: (602) 264-4550 Fax: (602) 277-0144 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not submit a list of its largest unsecured creditors. PORTRAIT CORP: Inks Pact Selling Assets to CPI for $100MM Cash -------------------------------------------------------------- CPI Corp. entered into a definitive agreement to acquire substantially all of the operating assets of Portrait Corporation of America, Inc. and its foreign and domestic affiliates for $100 million in cash, subject to certain closing adjustments, and the assumption of certain liabilities. PCA will file a motion seeking approval of the asset purchase agreement. The parties expect the U.S. Bankruptcy Court for the Southern District of New York to conduct a hearing on the motion in May 2007. The transaction is expected to close by the end of June 2007. Commenting on the acquisition, Renato Cataldo, President and Chief Executive Officer, stated, "We are excited about the opportunity to leverage our strong digital capabilities and infrastructure and proven project management skills to upgrade PCA's studios with digital technology, improve convenience and flexibility and enhance the overall customer experience. We are also pleased to be embarking on a relationship with Wal-Mart which we look forward to strengthening and expanding both domestically and internationally including in a new branded format. Finally, we are pleased about the opportunities this deal brings to employees of both organizations. We have consciously become a more field- focused organization in recent years to better address the needs of our Sears Portrait Studio associates. We aim to bring the same focus on the PCA field organization and will eagerly solicit their views and concerns. We believe the combination will benefit customers, employees and shareholders alike." About CPI Corp. CPI Corp. (NYSE: CPY) is a portrait photography company offering photography services in the United States, Puerto Rico and Canada through Sears Portrait Studios. The Company also operates http://searsphotos.com/-- the vehicle for the Company's customers to archive, share portraits via email and order additional portraits and products. About Portrait Corporation Portrait Corporation of America Inc. -- http://pcaintl.com/-- provides professional portrait photography products and services in North America. The Company operates portrait studios within Wal-Mart stores and Supercenters in the United States, Canada, Mexico, Germany and the United Kingdom. The Company also operates a modular traveling business providing portrait photography services in additional retail locations and to church congregations and other institutions. Portrait Corporation and its debtor-affiliates filed for Chapter 11 protection on Aug. 31, 2006 (Bankr S.D.N.Y. Case No. 06-22541). John H. Bae, Esq., at Cadwalader Wickersham & Taft LLP, represents the Debtors in their restructuring efforts. Berenson & Company LLC serves as the Debtors' financial advisor and investment banker. Kristopher M. Hansen, Esq., at Stroock & Stroock & Lavan LLP represents the Official Committee of Unsecured Creditors. Peter J. Solomon Company serves as financial advisor for the Committee. At June 30, 2006, the Debtor had total assets of $153,205,000 and liabilities of $372,124,000. QWEST CORP: Moody's Rates Planned $400MM Sr. Notes Offering at Ba1 ------------------------------------------------------------------ Moody's Investors Service has assigned a Ba1 rating to Qwest Corporation's planned offering of $400 million senior notes due 2017. The notes rank equally with all other unsecured and unsubordinated indebtedness of QC. The newly issued notes will be used to refinance QC's existing $250 million 8.875% senior notes due in June 2031 and pay the maturity of its $70 million 6.0% senior notes due in August 2007. The rating reflects Moody's belief that the proposed transaction will not appreciably weaken the financial profile of QC. Pro forma for the transaction, QC's incremental debt will be approximately $80 million higher. Because of the early debt retirement of the company's $250 million 8.875% notes due in 2031, QC will also be obliged with a call premium of approximately 4%. This call premium is offset, however, by the approximately $5.0 million per annum interest expense savings that the company is expected to benefit from as a result of the lower cost of debt. Consequently, Moody's expects that the proposed transaction will bolster QC's free cash flow. In November 2006, Moody's upgraded the CFR of Qwest Communications Intl to Ba2 from B1 because of stronger than expected earnings and operating cash flows and faster than expected debt reduction. Please refer to Moody's LGD Assessment Report for further details on individual debt ratings. Moody's has taken this rating actions: At QC: * $400 million Senior Unsecured Notes due 2017 -- Ba1 Assigned, LGD2-27% Qwest is a RBOC and nationwide inter-exchange carrier (IXC) headquartered in Denver, CO. QWEST CORP: Fitch Rates Proposed $400 Million Senior Notes at BBB- ------------------------------------------------------------------ Fitch Ratings has assigned a 'BBB-' rating to Qwest Corporation's proposed $400 million offering of senior unsecured notes due 2017. These notes will rank equally with the other outstanding QC debt. Fitch expects that proceeds from the offering will be used to refinance QC's 8.875% senior notes due 2031 and its 6% senior notes due 2007 as well as for general corporate purposes. QC is an indirect wholly owned subsidiary of Qwest Communications International, Inc. Fitch currently has a 'BB' Issuer Default Rating for both Qwest and QC. The Rating Outlook for Qwest and its subsidiaries is Stable. At the end of the first quarter-2007 (1Q'07), Qwest had approximately $14.9 billion of debt outstanding, including $7.8 billion issued by QC. The debt at QC is the most senior within Qwest's consolidated debt structure and Fitch's 'BBB-' senior unsecured rating reflects the debt's proximity to QC's valuable access lines. Overall the ratings assigned to Qwest and its subsidiaries incorporate the scope, scale and relatively stable cash flow generated by QC's local exchange business, the reduced cash requirements of Qwest's out of region businesses, and Fitch's expectation of continued credit metric improvement and generation of material free cash flow. Fitch's ratings also reflect the competitive pressure from ongoing product and technology substitution. The effects of competition manifest themselves through access line losses. While the company is experiencing some stabilization in the absolute number of access line losses Qwest continues to lose a meaningful amount of access lines to competition. Fitch expects that during 2007 and 2008 competition from cable telephone providers will continue to pressure access line losses. Fitch expects absolute access line losses during 2007 to approximate the losses experienced during 2006. Qwest's focus on bundled service offerings to mitigate the competitive pressures within consumer markets continues to gain traction. Penetration of bundled products increased to 59% as of the end of 1Q'07 reflecting a 600 basis point-increase when compared with the year earlier period. Qwest's Mass Market customer connections, a measurement of mass market access lines, high speed internet subscribers, video subscribers through the company's alliance with DIRECTV and wireless subscribers, increased 2.4% on a year over year basis during 1Q'07. Qwest's credit protection metrics continue to improve driven by ongoing operational improvements and debt reduction. On a consolidated basis, Qwest's leverage improved slightly from year- end (YE) 2006 to 3.3 times (x) as of March 31, 2007 and QC's leverage metric is 1.6x, consistent with the YE 2006 metric. Fitch believes that Qwest's credit profile will continue to improve during the ratings horizon with leverage declining modestly to under 3.3x by YE 2007 and approaching 3.1x by the end of 2008. Qwest continues to generate meaningful amount of free cash flow. During the first quarter Qwest generated approximately $150 million of free cash flow (after adjusting for one time payments) representing a $300 million positive swing compared with free cash flow generation from the same period last year. Fitch expects the company to generate free cash flow of approximately $1.6 billion during 2007 and 2008. From Fitch's perspective free cash flow growth will be limited to Qwest's ability to drive further margin improvements as the prospects of revenue growth is muted by competitive pressures. The Stable Rating Outlook reflects Fitch's expectation for continued stabilization of the company's revenue base driven by further strengthening of Qwest's service bundling strategy and investment in growth products such as high speed internet and advanced data products. The stable revenue base coupled with anticipated improvement in operating margins should in Fitch's opinion yield relatively stable generation of free cash flow and continue improvement of the company's key credit protection measures. QWEST CORP: S&P Rates Proposed $400 Million Notes at BB+ -------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' rating to Denver-based Qwest Corp.'s proposed $400 million notes due 2017, to be issued under Rule 144A with registration rights. Proceeds from the note issue will be used for general corporate purposes, including repayment of indebtedness, and funding and refinancing investments in telecommunications assets. S&P also affirmed the existing ratings on Qwest Corp., an incumbent local exchange carrier, and parent Qwest Communications International Inc., including the 'BB' corporate credit ratings. At Dec. 31, 2006, parent Qwest had about $15 billion of total debt outstanding. "The Qwest Corp. debt is rated one notch above the 'BB' corporate credit rating since our recovery analysis indicates that debtholders would have strong prospects for full recovery of principal in the event of a payment default or bankruptcy, given the degree of overcollateralization provided by the company's access-line base even under a stressed case," said Standard & Poor's credit analyst Catherine Cosentino. The ratings are tied to parent Qwest, and reflect the company's weak overall business position and aggressive financial profile. Qwest is the dominant local telephone exchange carrier in its 14- state market, representing some 14 million access lines. S&P view the local exchange business as having a low-investment-grade business risk profile; however, Qwest's long-haul communications business significantly dilutes its overall business position. S&P view the long-haul business, which accounts for about one- third of consolidated revenues, as having a vulnerable business risk profile because of significant pricing pressures over the past few years caused by very aggressive competition and larger business customers' migration to new Internet Protocol technologies from traditional circuit-switched services. The core local business also faces an increasingly competitive environment, and Qwest, unlike the other two regional Bell operating companies, lacks a facilities-based wireless service to mitigate this risk. Several risks are common to Qwest and other large telephone companies: increasing competition from cable TV companies offering cable modem services and, increasingly, cable telephony, and the continuing loss of access lines through wireless substitution. RANDY SCHNEIDT: Case Summary & 4 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Randy L. Schneidt Debra E. Schneidt aka Debra Moreno Schneidt 3512 West Granada Street Tampa, FL 33629 Bankruptcy Case No.: 07-03409 Chapter 11 Petition Date: April 27, 2007 Court: Middle District of Florida (Tampa) Judge: Paul M. Glenn Debtor's Counsel: David W. Steen, Esq. 602 South Boulevard Tampa, FL 33606-2630 Tel: (813) 251-3000 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Franklin Credit Management 601 North Walnut unknown Corp. Colorado Springs, CO; value of security: $180,000; value of senior lien: $122,654 American Express credit card $97,416 P.O. Box 360001 purchases: Ft. Lauderdale, FL 33336-0001 account numbers XXXX-XXXX-XXX -1007 and XXXX-XXXX-XXX -2004 Pier 1 Imports credit card $44,935 P.O. Box 745011 purchases: Cincinnati, OH 45274 account numbers XXXXXX7270 (Debra) and XXXXXX3790 (Randy) Discover credit card $11,200 purchases RESTORATION FUNDING: S&P Withdraws BB- Rating on Class E Notes -------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings on the class A, B, C-1, C-2, D, and E notes issued by Restoration Funding CLO Ltd., a cash flow arbitrage high-yield CLO transaction. The rating withdrawals follow the full redemption of the notes on May 1, 2007, on the direction of the holders of at least 66 2/3% of the preference shares to redeem the notes, in whole, pursuant to section 9.1(a) of the indenture. Ratings Withdrawn Restoration Funding CLO Ltd. Rating Balance ------ ------- Class To From Current Original ----- -- ---- ------- -------- A NR AAA $0.000 $332,000,000 B NR AA- $0.000 $95,000,000 C-1 NR BBB $0.000 $11,000,000 C-2 NR BBB $0.000 $4,000,000 D NR BBB- $0.000 $10,000,000 E NR BB- $0.000 $21,708,000 *NR - Not rated. RICARDO FORNESA: Case Summary & 49 Largest Unsecured Creditors -------------------------------------------------------------- Debtors: Ricardo L. Fornesa, Jr. Cynthia S. Fornesa dba Big For-Mart dba For-Mart Distributing 11222 Ashford Point Drive Sugar Land, TX 77478-6150 Bankruptcy Case No.: 07-33100 Chapter 11 Petition Date: May 3, 2007 Court: Southern District of Texas (Houston) Judge: Letitia Z. Clark Debtors' Counsel: Margaret Maxwell McClure, Esq. 909 Fannin, Suite 3810 Houston, TX 77010 Tel: (713) 659-1333 Fax: (713) 658-0334 Total Assets: $517,867 Total Debts: $1,155,012 Debtors' 49 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Mr. Wilson T. Siy/Intercontinental $196,208 Eagle Trading Corp. 531 Asuncion Street, Unit #703 Binondo, Manila Philippines Quail Valley Retail, Inc. $110,000 1215 Gessner Drive Houston, TX 77055 Four Corners LLC $94,331 1215 Gessner Drive Houston, TX 77055 K.W.S., Inc. $75,014 Cy Fair Plaza, Inc. $69,476 Mayde Creek Partners, Inc. $55,554 American Express $29,092 Internal Revenue Service $23,245 Sampaca Foods, Inc. $20,000 Beneficial Finance/HSBC $17,338 United Mortgage & Loan $15,019 United Mortgage & Loan Investment, LLC $13,424 Clement Chang $13,000 Chase Manhattan Bank, N.A. $9,963 Century Industries Co., Ltd. $9,798 CitiBusiness Card $6,591 Citibank (South Dakota), N.A. $6,591 Capital One Bank $6,131 Bank of America/Resurgent $6,001 Capital Services, L.P. Aspire $4,998 U.S. Bank $4,690 Wells Fargo Card Services $4,542 Bank of America $4,520 Discover Financial Services $4,299 First Equity Card Corp. $3,434 Chase Manhattan Bank USA, N.A. $3,012 Brazoria County $2,105 Spring ISD $1,573 Sam's Club Discover $1,415 Harris County/City of Houston $1,385 Brazoria County MUD #17 $1,255 Katy ISD $1,180 Chase $1,006 Capital One Bank $863 ADT Security Services, Inc. $656 Fry Road MUD $617 GCN Holdings, LLC $607 ADT Security Services, Inc. $601 Lease Finance Group, LLC $596 City of Pearland $548 Houston ISD $400 Lease Finance Group, LLC $392 SCAN-Electrocheck/Integrity of Texas $375 Wells Fargo Financial $320 Lease Finance Group, LLC $320 Independent Funding Company $315 Lease Finance Group, LLC $244 Westador MUD $202 Clear Creek ISD $178 SAN FRANCISCO RAWHIDE: Case Summary & 3 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: San Francisco Rawhide, Inc. 280 Seventh Street San Francisco, CA 94103 Bankruptcy Case No.: 07-30516 Chapter 11 Petition Date: May 2, 2007 Court: Northern District of California (San Francisco) Debtor's Counsel: Sheila Gropper Nelson, Esq. 456 Montgomery Street, Suite 1700 San Francisco, CA 94104 Tel: (415) 362-2221 Estimated Assets: $2,250,000 Estimated Debts: $1,392,500 Debtor's Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Charles W. Roth accounting $3,000 385 Hayes Street services San Francisco, CA 94102 Goldstein Gellman attorney's fees $46,000 1388 Sutter Street, Suite 1000 San Francisco, CA 94109 Walter Schivo, Jr. disputed personal unknown c/o James D. Rohde injury claim 165 North Redwood Drive, Suite 110 San Rafael, CA 94903 SINCLAIR BROADCAST: Plans to Offer $300MM of Convertible Sr. Notes ------------------------------------------------------------------ Sinclair Broadcast Group Inc. intends to offer, subject to market conditions and other factors, approximately $300 million aggregate principal amount of convertible senior notes due 2027. As part of the offering, Sinclair will grant the underwriters of the notes an option, solely to cover over-allotments, to purchase up to an additional aggregate $45 million principal amount of the notes. The underwriters will have 13 days to exercise the over- allotment option. The notes will mature in 2027 and will be convertible into shares of Class A common stock of Sinclair Broadcast at the option of the holder upon certain circumstances and at a fixed conversion rate. The offering is being made pursuant to an effective shelf registration statement previously filed with the Securities and Exchange Commission. Sinclair intends to use the net proceeds from the offering, together with available cash on hand and/or bank debt, to finance the partial redemption of Sinclair Television Group, Inc.'s, its wholly-owned subsidiary, existing 8% Senior Subordinated Notes due 2012. About Sinclair Broadcast Group Headquartered in Baltimore, Maryland, Sinclair Broadcast Group Inc. (Nasdaq: SBGI)-- http://www.sbgi.net/-- is one of the diversified television broadcasting companies, that owns and operates, programs or provides sales services to 61 television stations in 38 markets. Sinclair's television group includes FOX, WB, ABC, CBS, NBC, and UPN affiliates and reaches approximately 23.0% of all U.S. television households. * * * As reported in the Troubled Company Reporter on Dec. 18, 2006, Moody's Investors Service affirmed Sinclair Broadcast Group's Ba3 corporate family rating and assigned a Baa3 rating to its subsidiary, Sinclair Television Group Inc.'s new $225 million Term Loan A-1 Facility. SKILLED HEALTHCARE: S&P Places Ratings on Positive CreditWatch -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Foothill Ranch, California-based nursing home owner and operator Skilled Healthcare Group Inc. on CreditWatch with positive implications. Skilled has registered common stock with a proposed maximum aggregate offering price of $287.5 million. The purpose of this IPO is to reduce debt, and for the largest stockholder, Onex Corp., to sell a portion of its shares. The company expects to receive net proceeds of about $113 million from the offering. Skilled will use these proceeds to redeem $70 million of its subordinated notes and reduce the outstanding balance on its revolving credit facility. If the IPO is completed as expected, S&P will raise the corporate credit rating to 'B+' from 'B', and the outlook will be stable. "The debt repayment should lower lease-adjusted debt to EBITDA to about 4.6x as of March 31, 2007 from about 5.9x," said Standard & Poor's credit analyst David Peknay. "With recent acquisitions and expected gains in operating performance, we believe leverage will decline to 4.1x-4.3x by the end of 2007." In S&P's opinion, the company's operating performance, growth initiatives, and financial policy will be consistent with the revised rating. S&P will resolve the CreditWatch listing when the IPO is completed, now expected to be within the month. SOLUTIA INC: Exclusive Plan Filing Period Extended Until July 30 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York further extended Solutia Inc. and its debtor-affiliates' exclusive periods to: a) file a chapter 11 plan until July 30, 2007; and b) solicit acceptances of that plan until Sept. 28, 2007. As reported in the Troubled Company Reporter on Apr. 26, 2007, the Debtors told the Court that since the March 12, 2007 hearing on their prior request for an extension, they have continued to make significant progress with plan of reorganization negotiations by bringing all of its stakeholders together for settlement discussions. On April 10, Solutia met with and provided its stakeholders with a proposal to modify the plan of reorganization as a starting point for negotiations between and among Solutia and all of its stakeholders. Solutia believes that the plan proposal sets forth a rational and reasonable settlement of all of the unresolved issues in the Chapter 11 cases and intended for the proposal to act as a platform for discussion and good faith negotiations. At the end of the April 10 meeting, Monsanto Company and the Ad Hoc Committee of Solutia Noteholders informed Solutia that they had reached a settlement between themselves and wanted Solutia to join the settlement. On April 16, after extensive deliberations regarding the settlement with its Board of Directors, Solutia responded by letter to the settlement by proposing to modify the Plan proposal. Other major stakeholders were also invited to participate in a follow up negotiation session scheduled for April 23. Jonathan S. Henes, Esq., at Kirkland & Ellis LLP, in New York, stated that the negotiations demonstrate the divergent interests of Solutia's stakeholders on familiar Plan confirmation issues. However, they also highlight what the creditors have in common. Solutia believes that the creditors understand the importance of the settlement reached between Solutia and Monsanto regarding the reallocation of legacy liabilities. As a result, Solutia believes the creditors want to structure a modification to the Plan that preserves the legacy liability reallocation settlement. Mr. Henes pointed out that since the last exclusivity hearing, Solutia has completed three key value-maximizing efforts: -- Proposed auction of its Dequest water-treatment phosphonates business. The auction is scheduled for May 16, and the sale hearing on May 18. Even if no higher or better offers are received, Solutia will receive at least $60,000,000. -- Acquisition of Akzo Nobel N.V.'s stake in Flexsys, the 50%/50% rubber chemicals joint venture between Akzo and Solutia. Owning Flexsys will improve Solutia's earnings and cash flow and enhance Solutia's credit metrics by decreasing Solutia's debt-to-EBITDAR ratio. -- Proposed settlement of Solutia's claims against FMC Corporation relating to the Astaris joint venture. Under the settlement, Solutia will receive $22,500,000 from FMC. The settlement proposal will be heard on May 1. Solutia assured the Court that it is not seeking an extension of exclusivity to pressure creditors. Given the significant progress made since the March 12 hearing, Solutia should be afforded additional time to continue the ongoing negotiations with its stakeholders and to file a plan in the very near future, Mr. Henes says. There is no dispute that the Debtors' Chapter 11 cases are complex and involve a number of competing and ever-evolving stakeholders, Mr. Henes said. Moreover, no party will be prejudiced by an extension of the Exclusive Periods because Solutia is paying its debts as they become due -- a factor that strongly favors extending exclusivity, he added. Unresolved contingent liabilities, including the JPMorgan Adversary Proceeding and the Equity Committee Adversary Proceeding also warrant an extension of exclusivity. The contingent liabilities shape the overall structure of any confirmable plan, Mr. Henes explained. Only the Debtors are in a position to balance the competing interests among the stakeholders and to propose a plan at this point that addresses the contingent liabilities and satisfies the Bankruptcy Code's distribution scheme, he said. 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. 85; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SOLUTIA INC: Gets Open Ended Extension of Lease Decision Deadline ----------------------------------------------------------------- The Honorable Prudence Carter Beatty of the U.S. Bankruptcy Court for the Southern District of New York gave Solutia Inc. and its debtor-affiliates authority to assume or reject unexpired leases until the 10th day prior to the confirmation hearing of any modified plan. The Troubled Company Reporter on Apr. 26, 2007, relates that as of April 18, 2007, the Debtors are parties to approximately 30 unexpired non-residential real property leases, which the Debtors use in connection with their operations throughout the world. Jonathan S. Henes, Esq., at Kirkland & Ellis LLP, in New York, informed the Court that many of the Debtors' offices, from which they conduct key aspects of their operations, are located on premises subject to certain of the unexpired leases. The unexpired leases are integral to the continued operation of the Debtors' businesses and constitute valuable assets of the estates, Mr. Henes said. According to Mr. Henes, the Debtors are currently actively working with their stakeholders towards finalizing a modified Plan of Reorganization, which they believe will contemplate the same assumption and rejection procedures outlined in the Plan for the unexpired leases. He explained that until the modified Plan is finalized, the Debtors will not be in a position to make a final determination to assume or reject the unexpired leases. Mr. Henes assured the Court that the Debtors are current under the Unexpired Leases and have the financial wherewithal to continue to make all payments under the unexpired leases. 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. 85; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SPENCER PARTNERS: Chapter 15 Petition Summary --------------------------------------------- Petitioner: Laurence Keenan Provisional Liquidator Debtor: Spencer Partners, Limited Victoria Chambers, 47 Victoria Street Douglas, Isle of Man IM1 2LD British Isles Case No.: 07-02356 Type of Business: The Debtor was incorporated in the Isle of Man and its registered office was formerly at IOMA House, Hope Street, Douglas, Isle of Man. The Debtor had a capital of GBP2,000 divided into 2,000 shares at GBP1 each. On June 5, 2006, a summons in a civil action was issued in the U.S. District Court for the District of South Carolina and served on the Debtor as co-defendant. The complaint sets forth ten causes of action and the damages sought was in excess of the Debtor's total assets. The Debtor also didn't have any funds available to use in defending the action. On Oct. 5, 2006, the Debtor contacted Methodikos Investments Limited, its sole member, seeking financial support. The Debtor also gave notice of a proposed extraordinary meeting to consider creditor's voluntary liquidation as an alternative. By Dec. 15, 2006, the Debtor still did not receive any indication of support from Methodikos. The Debtor was then forced to call for the meeting but had to reconvene twice since Methodikos was not present nor represented by a proxy. The Debtor's board of directors resolved that the Debtor petition the court for a winding up. The Main Proceeding was commenced on Jan. 25, 2007, in the high Court of Justice of the Isle of Man. The Winding Up Order was entered on March 12, 2007 and April 20, 2007. Laurence Keenan was appointed as Provisional Liquidator and Deemed Official Receiver of the Debtor. Chapter 15 Petition Date: May 2, 2007 Court: District of South Carolina (Columbia) Petitioner's Counsel: Michael M. Beal, Esq. McNair Law Firm, P.A. 1301 Gervais Street Columbia, SC 29201 Tel: (803) 799-9800 Fax: (803) 933-1447 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million STONY HILL: S&P Puts BB- Rated Class A Notes on Positive Watch -------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB-' rating on the class A notes issued by Stony Hill III CDO Ltd., an arbitrage CBO transaction collateralized primarily by investment-grade bonds, on CreditWatch with positive implications. At the same time, the 'AAA' ratings on the insured class A Ins 02, A Ins 03, A Ins 04-1, and A Ins 04-2 notes were affirmed. The CreditWatch placement of the class A notes reflects factors that have positively affected the credit enhancement available to support these notes since the class was downgraded in November 2003, primarily paydowns. The class A, A Ins 02, A Ins 03, A Ins 04-1, and A Ins 04-2 notes have seen a total paydown of more than $127 million since the November 2003 rating action. Standard & Poor's noted that according to the April 2007 trustee report, the overcollateralization ratio for the class A notes was 113.29%, compared with a ratio of 106.09% in November 2003. S&P expect the class A overcollateralization ratio to increase to approximately 119.12% after the April 15, 2007, payment date. Rating Placed on Creditwatch With Positive Implications Stony Hill CDO III Ltd. Rating ------ Class To From Balance ----- -- ---- ------- A BB-/Watch Pos BB- $49,755,000 Ratings Affirmed Stony Hill CDO III Ltd. Class Rating Balance ----- ------ ------- A Ins 02 AAA $16,682,000 A Ins 03 AAA $10,436,000 A Ins 04-1 AAA $12,512,000 A Ins 04-2 AAA $2,085,000 STRATHMORE MINERALS: Exploration Drill Program in Wyoming Okayed ---------------------------------------------------------------- Strathmore Minerals Corp. has obtained approvals from the Wyoming Department of Environmental Quality Land Division and the U.S. Bureau of Land Management to conduct an exploration drill program at its Jeep Project located in Freemont County, Wyoming. A drilling contract has been awarded to a Wyoming drilling company and all required bonding is in place. Strathmore will commence drilling activities in July 2007. Yellowcake Mining Inc. will provide funding for the program. Strathmore recently granted Yellowcake the exclusive right to earn a 60% interest in the Jeep property in consideration of US$10 million in expenditures. Strathmore plans to drill up to 40 exploratory holes to extend a known roll front into untested ground. John DeJoia, Strathmore's Vice President of Technical Affairs, stated that "this exploratory drilling will allow us to determine the viability of this project as a new development site to add to our future mining portfolio in Wyoming." Mr. Juan R. Velasquez, Strathmore's Vice President of Environmental and Regulatory Affairs added that the company has already completed the archaeological and cultural resources as well as the Flora and Fauna surveys needed to support the project. "We have been working closely with the Wyoming Department of Environmental Quality and the United States Bureau of Land Management over the past several months to ensure that we comply with their recommendations. Jeep is one of several projects that hold promise for our future operations in Wyoming," added David Miller, Strathmore's President. "Strathmore was very early in establishing a presence in Wyoming and we are confident that Jeep will emerge as one of several development projects in that State." About Strathmore Minerals Based in Kelowna, British Columbia, Strathmore Minerals Corporation (TSX Venture: STM) -- http://www.strathmoreminerals.com/-- is a resource company specializing in the strategic acquisition, exploration and development of uranium properties. The company acquires previously discovered but not yet mined uranium resources and positions itself in areas wellknown for uranium production. Plan of Arrangement Strathmore Minerals Corp. underwent a reorganization of its mineral property assets with a view to maximizing shareholder value. Pursuant to a Plan of Arrangement, the company transferred all of its Canadian mineral properties and a portion of its cash into a new exploration company. SYNTHEMED INC: Posts $1.1 Million Net Loss in Qtr Ended March 31 ---------------------------------------------------------------- Synthemed Inc. reported a net loss of $1.1 million on revenue of $45,000 for the first quarter ended March 31, 2007, compared with a net loss of $961,000 on $0 revenues for the first quarter ended March 31, 2006. At March 31, 2007, the company's balance sheet showed $3.3 million in total assets, $790,000 in total liabilities, and $2.5 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?1e60 Going Concern Doubt As reported in the Troubled Company Reporter on April 2, 2007, Eisner LLP, in New York, expressed substantial doubt about SyntheMed Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's recurring net losses, limited revenues and cash outflows from operating activities. About SyntheMed Inc. Headquartered in Little Silver, New Jersey, SyntheMed Inc. (OTC BB: SYMD.OB) -- http://www.synthemed.com/-- is a biomaterials company engaged in the development and commercialization of anti-adhesion and drug delivery products. Products under development, all of which are based on the company's licensed proprietary, bioresorbable polymer technology, are primarily medical devices designed to prevent or reduce the formation of adhesions (scar tissue) following a broad range of surgical procedures. Product development efforts are currently focused on the company's lead product, REPEL-CV(R), a bioresorbable adhesion barrier intended for use in cardiac surgery. UNIVERSAL CITY: Moody's Affirms B1 Corporate Family Rating ---------------------------------------------------------- Moody's Investors Service affirmed the B1 corporate family rating of Universal City Florida Holding Co. II and changed the outlook on UCFH's senior notes to stable from negative. Moody's concerns over aggressive distributions to equity partners have moderated somewhat, and the B1 corporate family rating adequately incorporates these concerns at a stable outlook. Moody's also upgraded the senior unsecured notes of Universal City Development Partners, Ltd. (UCDP, a wholly owned operating subsidiary of UCFH) to B1 from B2. The prepayment of $30 million of UCDP bank debt ($509 million secured bank debt currently outstanding) reduced the amount of debt senior to the UCDP bonds ($500 million outstanding) thus improving recovery prospects for these bondholders who continue to benefit from the debt cushion provided by the UCFH bonds (approximately $450 million outstanding). The B1 corporate family rating reflects high financial risk, including risks related to the ownership structure, as well as concerns over weak attendance trends. With leverage of 5.8 times debt-to-EBITDA (as per Moody's standard adjustments), the B1 corporate family rating remains weakly positioned. Furthermore, UCDP operates a single site in a mature, seasonal business sensitive to economic conditions and weather; competes for consumer leisure time from ever increasing entertainment options as well as multiple parks within Orlando; and faces some execution risk related to expected investment in new attractions. The increased investment will also depress free cash flow over the next two years, in Moody's view. However, strong margins, good liquidity, and high asset value support the rating. Also, Moody's views the increased investment favorably and considers it necessary to drive attendance, although the potential attendance benefits are unlikely to occur over the near term. Universal City Florida Holding Co. II - Affirmed B1 Corporate Family Rating - Outlook changed to Stable from Negative - Affirmed B3 rating on Sr Unsecured Bonds, LGD5, 88% Universal City Development Partners, Ltd. - Upgraded Sr Unsecured Bonds to B1 from B2, LGD4, 57% - Affirmed Ba1 Sr Secured Bank Rating, LGD2, 15% - Outlook Stable Universal City Development Partners, Ltd., headquartered in Orlando Florida, operates the Universal Studios Florida and Universal Islands of Adventure theme parks, and CityWalk, a dining, retail and entertainment complex. Universal City Florida Holding Co. I and Universal City Florida Holding Co. II are holding companies that own UCDP. USI HOLDINGS: Fitch Cuts Issuer Default Rating to B- from BB- ------------------------------------------------------------- Fitch Ratings has downgraded and removed USI Holdings Corporation from Rating Watch Evolving as: -- Issuer Default Rating to 'B-' from 'BB-'; -- $210 million five-year secured term loan due March 24, 2011 to 'B/RR3' from 'BB-'. In addition, Fitch has assigned these ratings to USIH: * $100 million senior secured revolving credit facility 'B/RR3', * $550 million senior secured term loan 'B/RR3'; * $225 million senior unsecured notes 'B-/RR4'; * $175 million senior subordinated notes 'CCC+/RR5'. USIH's Rating Outlook is Stable. Fitch originally placed USIH on Rating Watch Evolving on Jan. 16, 2007 following the announcement that the company had entered into a definitive merger agreement to be acquired by GS Capital Partners, a private equity affiliate of Goldman Sachs Group. At the time, Fitch cited various factors that could lead to a possible rating downgrade, including a material increase in USIH's financial leverage. The downgrade of USIH's existing ratings and the assignment of the new ratings reflect the company's significant increase in debt outstanding related to its pending private equity acquisition by GS Capital Partners. The downgrade reflects USIH's proforma significant financial leverage and weak interest coverage following the acquisition. Proforma financial leverage is approximately 67% debt to total capital, compared to 46% at year- end Dec. 31, 2006. Adjusted Debt to EBITDA will increase to roughly 6.5 times (x) from 3.7x, and EBITDA to interest expense will decrease to roughly 1.65x from 5.0x at year-end 2006. VALEANT PHARMA: Incurs $22 Mil. Net Loss in Quarter Ended Dec. 31 ----------------------------------------------------------------- For the fourth quarter of 2006, Valeant Pharmaceuticals International reported a $22.1 million net loss from continuing operations compared to $44.8 million in fourth quarter of 2005. Net loss from continuing operations was $64.1 million in the full year 2006 compared to $185.8 million for the same period in 2005. The company's gross margin on product sales was 69% in 2006, compared to 70% in 2005. The decline was primarily due to the write off of inventory and a change in the mix of products that occurred during the year. In addition, the company recorded a $5.2 million loss to cost of goods sold in the 2006 fourth quarter for the transfer of manufacturing technology for Infergen. Research and development expense was 13% of sales in 2006, compared to 16% in 2005. The decrease primarily reflects cost control measures and a reduction in clinical trial activity compared to last year. Included in research and development expense in the fourth quarter was a $7 million milestone payment related to the development of retigabine. At Dec. 31, 2006, the company's balance sheet showed total assets of $1.51 billion, total liabilities of $1.07 billion and total stockholders' equity of $435.3 million. Headquartered in Aliso Viejo, California, Valeant Pharmaceuticals International (NYSE: VRX) -- http://www.valeant.com/-- is a global specialty pharmaceutical company. * * * As reported in the Troubled Company Reporter on Jan. 26, 2007, Moody's Investors Service confirmed the ratings of Valeant Pharmaceuticals International, including the B2 Corporate Family Rating, and concluded the rating review for possible downgrade first initiated on Oct. 23, 2006. Valeant's rating outlook is now stable. VISTEON CORP: Posts $153 Million Net Loss in Qtr Ended March 31 --------------------------------------------------------------- Visteon Corporation reported a net loss of $153 million on total sales of $2.93 billion for the first quarter ended March 31, 2007, compared with net income of $3 million on total sales of $2.96 billion for the same period ended March 31, 2006. Results for the first quarter of 20076 included $41 million of expenses reimbursable from the 400 million escrow account funded by Ford and non-cash asset impairments of $50 million. Results for the first quarter of 2006 included $9 million of restructuring expenses which qualified for reimbursement from the escrow account. "We continue to make progress implementing our restructuring, improvement and growth plan, despite North American production declines," said Michael F. Johnston, chairman and chief executive officer. "We anticipated this environment, and we have taken the necessary steps to ensure we have the financing and flexibility we need to continue our momentum." Total sales for first quarter 2007 totaled $2.93 billion. First quarter 2007 product sales were $2.8 billion, down slightly from first quarter 2006 as favorable currency and increased sales in Europe and Asia were offset by lower production volumes, principally in North America. Services revenues of $130 million decreased $15 million from the same period in 2006. Cash used by operating activities for the first quarter of 2007 was $131 million compared with cash provided by operating activities of $32 million in the same period a year ago. First quarter 2007 cash flow was impacted by normal seasonal factors, customer and geographic sales mix, the change in payment terms from Ford in North America and operating performance. Capital expenditures for the first quarter of 2007 of $64 million were $21 million lower than the same period a year ago. Free cash flow for the first quarter of 2007 was negative $195 million, compared with negative $117 million in the same period of 2006. As of March 31, 2007, cash balances totaled $872 million as compared to $1.057 billion at Dec. 31, 2006. Total debt of $2.2 billion as of March 31, 2007 was essentially unchanged from year-end 2006. Visteon reached agreement to sell certain chassis operations in Germany, Poland and Brazil to Special Situations Venture Partner II LP (SSVP) in March 2007. On April 30, 2007, the European facilities were transferred to SSVP. Driveline assets located in Visteon's Sao Paulo, Brazil facility will be transferred in the second half of 2007. "With the completion of these chassis divestitures, half of the actions we committed to take in our multi-year plan are complete," said Don Stebbins, president and chief operating officer. "By addressing non-core and underperforming assets we continue to enhance our already strong global footprint, as we focus on our core product areas and position Visteon for profitable growth." At March 31, 2007, the company's balance sheet showed $6.84 billion in total assets, $6.68 billion in total liabilities and $263 million in minority interest, resulting in a $106 million total stockholders' deficit. About Visteon Corp. Headquartered in Van Buren Township, Mich., Visteon Corp. (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic, and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has more than 170 facilities in 24 countries and employs around 50,000 people. * * * As reported in the Troubled Company Reporter on April 10, 2007, Fitch Ratings has taken these actions regarding the ratings of Visteon Corp.: Issuer Default Rating affirmed 'CCC'; Senior Secured Bank Facility affirmed 'B/RR1'; and Senior unsecured downgraded to 'CC/RR6' from 'CCC-/RR5'. VONAGE HOLDINGS: Circuit Court Denies Bid for Patent Case Retrial ----------------------------------------------------------------- The U.S. Court of Appeals for the Federal Circuit has denied Vonage Holdings Corp.'s motion for a retrial in its patent dispute with Verizon Communications Inc., Corey Boles of The Wall Street Journal reports. According to the report, Vonage had sought to have the original jury verdict that it had violated three of Verizon's five patents overturned and a new trial ordered. The court did rule that Vonage could include the issue in its appeal brief, which is due May 9, WSJ says. WSJ cited Vonage as saying that while it was disappointed in the court's ruling, it had no impact on its overall appeal in the case. An oral hearing in an appeal in the case is scheduled for June 25, WSJ relates. Amol Sharma of WSJ said in an earlier report that Vonage asked the Federal Circuit Court to remand the patent case to a lower court, citing a recent Supreme Court ruling that could put pressure on companies in protecting patents deemed too obvious. The ruling, which favored a company accused of patent infringement, gave Vonage more hope that it could win the case against Verizon. The company previously said in a regulatory filing that its ongoing patent litigation with Verizon, if determined against the company, could, among others, lead to the bankruptcy or liquidation of the company. Verizon Litigation On June 12, 2006, Verizon filed a suit against Vonage and its subsidiary Vonage America Inc., with the U.S. District Court for the Eastern District of Virginia. Verizon alleged that the company infringed seven patents in connection with providing VoIP services and sought injunctive relief, compensatory and treble damages and attorneys' fees. Verizon dismissed its claims with respect to two of its patents prior to trial, which commenced on Feb. 21, 2007. After trial on the merits, a jury returned a verdict finding that the company infringed three of the patents-in-suit. The jury rejected Verizon's claim for willful infringement, treble damages, and attorneys' fees, and awarded compensatory damages in the amount of $58 million. The trial court subsequently indicated that it would award Verizon $1.6 million in prejudgment interest on the $58 million jury award. The trial court issued a permanent injunction with respect to the three patents the jury found to be infringed effective April 12, 2007. The trial court then permitted the company to continue to service existing customers pending appeal, subject to deposit into escrow of a 5.5% royalty on a quarterly basis. The trial court also ordered that the company may not use its technology that was found to be infringing to provide services to new customers. In addition, Vonage posted a $66 million bond to stay execution of the monetary judgment pending appeal. On April 6, 2007, the company brought the trial court's ruling to the Federal Circuit Court, which Court allowed Vonage to continue to sign up new customers while Vonage appeals the jury's decision and set June 25, 2007, as the commencement of the oral arguments on the matter. About Vonage Vonage Holdings Corp. (NYSE:VG) -- http://www.vonage.com/-- is a provider of broadband telephone services with over 1.4 million subscriber lines as of February 8, 2006. Utilizing its voice over Internet protocol technology platform, the company offers feature- rich, low-cost communications services with a call quality comparable to traditional telephone services. While customers in the United States represent over 95% of its subscriber lines, Vonage continues to expand internationally, having launched its service in Canada in November 2004, and in the United Kingdom in May 2005. YUKOS OIL: Two More Lots Set for Auction in June ------------------------------------------------ OAO Yukos Oil Co. will see more of its transport and bank assets in the hands of possible buyers as its creditors' committee approve two more lots to be sold via auction, RIA Novosti reports. According to Nikolai Lashkevich, spokesman for Yukos bankruptcy receiver Eduard Rebgun, these assets will be auctioned off in early June: * Lot 15 -- includes shares in Solidarnost commercial bank, for an initial price of RUR162.3 million ($6.3 million); and * Lot 16 -- includes Yukos' transport companies and the assets under the sixth lot cancelled on April 20 due to a lack of bids, for a total starting price of RUR8.9 billion ($347.4 million). The eight non-core assets under the sixth lot are comprised of: -- 86.61% stake in the ES financial and industrial group -- 100% stake in Yukos-Invest investment company -- 100% stake in Ordaliya 2000 -- 90.7% stake in Rus -- 100% stake in the Granit private security company -- 100% stake in Corporate Security Service -- 100% stake in Audit and Balance Sheets company -- 100% in FTT Service Seven out of 14 lots have been auctioned to date. These include: Lot Winning Bid No. Assets Auction Winner (in RUR) *** ****** ************** ************ 1 9.44% in Rosneft Rosneft through 197.8 billion 12 Yuganskneftegaz RN-Razvitiye promissory notes 2 20% in Gazprom Neft EniNeftegaz for 151.5 billion 100% in OAO Arcticgaz Gazprom 100% in ZAO Urengoil 19 other assets 4 100% in ZAO Energy Monte-Valle 3.5 billion Service Co. 100% in ESKOM- EnergoTrade 25.73% in Belgorodenergo 25.15% in Tambovenergo 25.15% in Tambov Energy Sales Company 25.15% in Tambov Trunk Grid Company 25% in Belgorod Trunk Grid Company 25% in Belgorod Sales Company 25% in Corporate Service Systems 3.18% in Territorial Generation Company No. 4 5 energy assets in the Rosneft through 1.03 billion Tambov and Belgorod Neft-Aktiv regions 6 7.69% stake in VTB Vneshtorgbank 234.1 million Bank (Deutschland) AG 7 1.998% stake in Khanty J.B.P. Invest 333.3 million Mansiysk Bank 8 Tomskneft and Angar Rosneft through 177 billion Petrochemical Co. Neft-Aktiv The auction for Lot No. 3, which comprised of Yukos' research and development assets, was called off due to a lack of bids. Interfax relates the assets will be grouped together with the assets under Lot No. 14, which will be sold this month. Rosneft Oil and Gazprom are seen as the most likely bidders for the bulk of the nearly 200 Yukos assets up for liquidation, which bankruptcy receiver Eduard Rebgun aims to sell by August 2007. Aside from being a potential buyer, Rosneft also holds a RUR264.6 billion ($10 billion) claim against Yukos, which entitled Rosneft a seat in the firm's creditors' committee. Mr. Rebgun has estimated the firm's assets between $25.6 billion and $26.8 billion, minus a possible liquidation discount of not more than 30%. As of Jan. 31, claims against Yukos filed by 68 creditors reached RUR709 billion ($26.8 billion). About Yukos Oil Headquartered in Moscow, Yukos Oil -- http://yukos.com/-- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for Chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742), but the case was dismissed on Feb. 24, 2005, by the Hon. Letitia Z. Clark. A few days later, the Russian Government sold its main production unit Yugansk to a little-known firm Baikalfinansgroup for $9.35 billion, as payment for $27.5 billion in tax arrears for 2000-2003. Yugansk eventually was bought by state-owned Rosneft, which is now claiming more than $12 billion from Yukos. On March 10, 2006, a 14-bank consortium led by Societe Generale filed a bankruptcy suit in the Moscow Arbitration Court in an attempt to recover the remainder of a $1 billion debt under outstanding loan agreements. The banks, however, sold the claim to Rosneft, prompting the Court to replace them with the state- owned oil company as plaintiff. On April 13, 2006, court-appointed external manager Eduard Rebgun filed a chapter 15 petition in the U.S. Bankruptcy Court for the Southern District of New York (Bankr. S.D.N.Y. Case No. 06-0775), in an attempt to halt the sale of Yukos' 53.7% ownership interest in Lithuanian AB Mazeikiu Nafta. On May 26, 2006, Yukos signed a $1.49 billion Share Sale and Purchase Agreement with PKN Orlen S.A., Poland's largest oil refiner, for its Mazeikiu ownership stake. The move was made a day after the Manhattan Court lifted an order barring Yukos from selling its controlling stake in the Lithuanian oil refinery. On Aug. 1, 2006, the Hon. Pavel Markov of the Moscow Arbitration Court upheld creditors' vote to liquidate OAO Yukos Oil Co. and declared what was once Russia's biggest oil firm bankrupt. YUKOS OIL: Rosneft Oil Wins Auction to Buy East Siberian Assets --------------------------------------------------------------- OAO Rosneft Oil Co., through its OOO Neft-Aktiv unit, won yesterday's auction to acquire OAO Yukos Oil Co.'s East Siberian assets for RUR177.7 billion, Kommersant reports. Rosneft outbid OOO Unitex, an unknown firm reportedly linked to Gazprombank, after 36 bids on top of RUR166.34 billion starting price, Kommersant relates. Gazprombank, however, denied Unitex was acting on its behalf. The lot is consists of: -- 100% of Tomskneft -- 70.78% of Vostsibneftegaz -- 5.89% of Yeniseineftegaz -- 100% of Angarsk Petrochemical Company -- 100% of Achinsk Oil Refinery, and -- 100% Angarsk Polymer Plant. Rosneft, through the same unit, also won Yukos' fifth lot, consists of energy assets in the Tambov and Belgorod regions, for RUR1.03 billion on April 18. The lot carried a RUR992.3 billion starting price and a RUR9.9 million bid increment. Vladimir Voyeboda, spokesman for Rosneft, told Interfax News the acquisition of the assets represents a new step in the development of company, allowing it to attain "a higher level of vertical integration." Kommesant suggests that following the auction, Rosneft has overtaken Lukoil in terms of oil production capacity. Lukoil produced 90 million tons of oil in 2006, while Rosneft, with Tomskneft, could produce up to 92 million tons. About Rosneft Headquartered in Moscow, Russia, OAO Rosneft Oil Co. -- http://ns.roilcom.ru/english/-- produces and markets petroleum products. The Company explores for, extracts, refines and markets oil and natural gas. Rosneft produces oil in Western Siberia, Sakhalin, the North Caucasus, and the Arctic regions of Russia. About Yukos Oil Headquartered in Moscow, Yukos Oil -- http://yukos.com/-- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The company filed for Chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742), but the case was dismissed on Feb. 24, 2005, by the Hon. Letitia Z. Clark. A few days later, the Russian Government sold its main production unit Yugansk to a little-known firm Baikalfinansgroup for $9.35 billion, as payment for $27.5 billion in tax arrears for 2000-2003. Yugansk eventually was bought by state-owned Rosneft, which is now claiming more than $12 billion from Yukos. On March 10, 2006, a 14-bank consortium led by Societe Generale filed a bankruptcy suit in the Moscow Arbitration Court in an attempt to recover the remainder of a $1 billion debt under outstanding loan agreements. The banks, however, sold the claim to Rosneft, prompting the Court to replace them with the state- owned oil company as plaintiff. On April 13, 2006, court-appointed external manager Eduard Rebgun filed a chapter 15 petition in the U.S. Bankruptcy Court for the Southern District of New York (Bankr. S.D.N.Y. Case No. 06-0775), in an attempt to halt the sale of Yukos' 53.7% ownership interest in Lithuanian AB Mazeikiu Nafta. On May 26, 2006, Yukos signed a $1.49 billion Share Sale and Purchase Agreement with PKN Orlen S.A., Poland's largest oil refiner, for its Mazeikiu ownership stake. The move was made a day after the Manhattan Court lifted an order barring Yukos from selling its controlling stake in the Lithuanian oil refinery. On Aug. 1, 2006, the Hon. Pavel Markov of the Moscow Arbitration Court upheld creditors' vote to liquidate OAO Yukos Oil Co. and declared what was once Russia's biggest oil firm bankrupt. * Baker Botts Welcomes Victor Vital to Dallas' Litigation Dep't. ---------------------------------------------------------------- Baker Botts L.L.P. disclosed that Victor Vital, Esq., who has built a significant trial practice by representing clients in complex commercial matters and business disputes, has joined as a partner in the Firm's Litigation Department. Mr. Vital will be based in Baker Botts' Dallas office. A former Harris County prosecutor, Mr. Vital handles business cases that involve a variety of claims such as breach of contract, fraud, breach of fiduciary duty, tortious interference, misappropriation of trade secrets, defamation and other business torts. He has also defended businesses against complex product liability claims. He has tried more than 100 cases in a variety of forums, including arbitration, state court, federal court and bankruptcy court. "Mr. Victor's experience in business litigation, representing clients in a broad number of forums, further strengthens the firm's litigation team," Walt Smith, Baker Botts managing partner, said. "Mr. Victor's legal skills will offer creative, timely and strategic advice to help the firm's clients solve complex legal issues." Prior to joining Baker Botts, Mr. Vital was a partner in the Dallas office of Haynes and Boone LLP. He has been published in a variety of legal and business journals concerning commercial litigation and general trial practice. He is currently editor of a quarterly newsletter entitled Commercial Litigation for the Texas Association of Defense Counsel. "Mr. Victor's record in representing clients in complex business litigation speaks volumes about the skills he brings to Baker Botts," Robb Voyles, chair of Baker Botts' Litigation Department, said. "In representing energy companies, financial firms and Fortune 100 companies, Mr. Victor has the depth of knowledge in business litigation to help the firm continue to provide its clients the service they have become accustomed to from Baker Botts." Mr. Vital earned his law degree with honors from the Thurgood Marshall School of Law in 1995. He was executive editor of the Thurgood Marshall Law review. He is a member of the National Bar Association, Commercial Law Section, Executive Board and Editorial Board; Texas Association of Defense Counsel, Board of Directors; Dallas Bar Association; Dallas Association of Young Lawyers; DAYL Foundation, Fellow; J.L. Turner Legal Association, Board of Directors; and the American Bar Association, Section of Litigation. About Baker Botts LLP Based in Houston, Texas and founded in 1840, Baker Botts L.L.P. -- http://www.bakerbotts.com/-- is an international law firm with offices in Austin, Beijing, Dallas, Dubai, Hong Kong, Houston, London, Moscow, New York, Riyadh and Washington. With approximately 750 lawyers, Baker Botts provides a full range of legal services to regional, national and international clients. * Clear Thinking Accepts Adam Cook as Turnaround Management Leader ------------------------------------------------------------------ Clear Thinking Group disclosed that Adam Cook has joined the firm as a managing director in the Turnaround Management/Financial Services Group. Cook brings over 10 years experience in advising companies, private equity firms, hedge funds and lenders on a multitude of fronts. His expertise ranges from domestic and cross border merger and acquisition advisory to balance sheet restructuring. Representing both financial and strategic buyers and sellers, he has handled public and private deals ranging in size from $10 million to $4 billion. Mr. Cook has directed the sale or refinancing of special situation businesses in a variety of industries, including automotive, entertainment and textiles. Clients served have included Anchor Manufacturing Group, Covanta Energy Corporation, Reed Elsevier PLC, and SPX Corporation. Prior to joining Clear Thinking Group, Mr. Cook was a director at Glass & Associates, New York, where he executed merger and acquisition and refinancing transactions, primarily in the automotive arena. Previously, he was a director at Loughlin Meghji + Company in New York, focusing on special situation transactions, including the divestiture of numerous non-core businesses for Covanta Energy Corporation during its Chapter 11 bankruptcy. Earlier in his career, he was a senior associate in PricewaterhouseCoopers' Transaction Services Group and an analyst at Credit Suisse First Boston. "Adam's extensive experience in advising companies on financings, acquisitions and divestitures is a perfect fit for the firm's practice group," Lee A. Diercks, a partner and managing director of Clear Thinking Group and leader of the firm's Turnaround Management/Financial Services Group, said. "The firm looks forward to offering his expertise to the firm's clients." A resident of Norwood, New Jersey, Mr. Cook earned a Bachelor of Science in Business Administration from the University of Rhode Island. About Clear Thinking Group Headquartered in Hillsborough, New Jersey, Clear Thinking Group LLC -- http://www.clearthinkinggrp.com/-- provides a wide range of strategic consulting services to retail companies, consumer product manufacturers/distributors and industrial companies. The national advisory organization specializes in assisting small- to mid-sized companies during times of growth, opportunity, strategic change, acquisition, and crisis. * BOOK REVIEW: American Economic History ---------------------------------------- Author: Seymour E. Harris Publisher: Beard Books Paperback: 572 pages List Price: $34.95 Order your personal copy at http://www.amazon.com/exec/obidos/ASIN/158798136X/internetbankrupt American Economic History edited by Seymour E. Harris presents different points of view by a number of experts and is a valuable addition for any economic history collection. This eclectic tome is an anthology of 15 chapters by 20 notable contributors discussing and analyzing American economic history from about 1800 to the late 1950s. Each subject undertaken falls under one of four major rubrics: major issues, broad issues of policy, determinants of income, and regional growth. Specific topics include fiscal policy, patterns of employment, unionism, economic fluctuations, population and immigration, natural resources policies, etc. All of them bolster Arthur Schlesinger, Jr.'s statement in the opening chapter: "The economic experience of the United States provides a compact example of the growth of an underdeveloped country into a great and rich industrial state." ********* 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 ***