/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/070806.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, August 6, 2007, Vol. 11, No. 184 Headlines 1031 TAX GROUP: Disclosure Statement Hearing Scheduled on Aug. 16 1031 TAX GROUP: Court OKs Greenberg Traurig as Committee's Counsel A_SHADE_BETTER: Case Summary & 18 Largest Unsecured Creditors ACCELLENT INC: Incurs $4.1 Million Net Loss in Second Qtr. 2007 ACCEPTANCE INSURANCE: Panel Hires StoneRidge as Fin'l Advisor ACE SECURITIES: Fitch Junks Ratings on Three Certificate Classes ADVANCED CELL: Inks $5 Million Merger Deal with Mytogen Inc. ADVANCED MEDICAL: Posts $166 Mil. Net Loss in Second Quarter 2007 BISON BUILDING: Court Approves Wiley Rein as Trustee's Counsel BUCKEYE TECHNOLOGIES: Earns $15.9 Million in Quarter Ended June 30 CALA CORPORATION: De Joya Griffith Raises Going Concern Doubt CANARGO ENERGY: Sells Tethys Petroleum Stake for CDN$2.95/Share CHEMED CORP: Earns $9.4 Million in Second Quarter Ended June 30 CIMAREX ENERGY: Earns $78.7 Million in Second Quarter 2007 CITADEL HILL: Notes Redemption Cues S&P to Withdraw Ratings CLECO CORP: Earns $63.2 Million in Second Quarter 2007 CONNECTOR 2000: Possible Payment Default Cues S&P to Junk Rating CREDIT BASED: Fitch Affirms BB Rating on $9.7MM Class B3 Certs. CYBERCARE INC: Phoenix Balks at CyberCare's Disclosure Statement DORAL FINANCIAL: 1-for-20 Reverse Split To Take Effect on Aug. 17 DRESSER-RAND: Earns $26.2 Million in Second Quarter of 2007 EASTMAN KODAK: Earns $592 Million in Quarter Ended June 30, 2007 EXHIBITION HALL: S&P Lifts Rating to BB, Outlook Now Positive GO DEBT: S&P Lifts Rating to BB from B with Stable Outlook GRAY TELEVISION: Paying $0.03/Share Dividend on Sept. 28 HOLLINGER INC: Initiates Changes to Sun-Times Board of Directors HOLLINGER INC: To Pay $24.5 Million to Class Action Claimants HUNTSMAN CORP: Holders Connected w/ MatlinPatterson Sell Shares INDEPENDENCE TAX: March 31 Balance Sheet Upside-down by $5.8 Mil. INTCOMEX INC: S&P Holds 'B' Corporate Credit Rating INSIGHT HEALTH: S&P Junks Rating on $315MM Senior Secured Notes INTERNATIONAL COAL: Closed Offering Cues S&P to Lift Rating to B- ISLE OF CAPRI: Posts $14.6 Million in Fourth Qtr. Ended April 29 JP MORGAN: Fitch Junks Ratings on Two Certificate Classes KARA HOMES: Judge Kaplan Approves Disclosure Statement KARA HOMES: Plan Confirmation Hearing Scheduled for September 12 KIMBALL HILL: S&P Lowers Corporate Credit Rating to B+ from BB- KRISPY KREME: S&P Assigns B- Credit Rating with Negative Outlook LCM VII: Fitch Assigns BB Ratings on Classes E-1 and E-2 Notes LEBARON DRYWALL: Taps Minkemann & Associates as Accountants LIBERTY TAX: June 15 Balance Sheet Upside-Down by $26.6 Million LINDA BRYANT: Voluntary Chapter 11 Case Summary MASTEC INC: Earns $15.9 Million in Second Quarter Ended June 30 MEDIFACTS INT'L: Wants to Enter Into Lease Pact w/ James Campbell MGM MIRAGE: Earns $360.2 Million in Second Quarter Ended June 30 MITEL(R) NETWORKS: $723MM Merger Gets Inter-Tel Shareholders' OK MORGAN STANLEY: Fitch Takes Various Rating Actions on 100 Certs. MORGAN STANLEY: Stable Performance Cues S&P to Hold Low-B Ratings MYRTLECREST RESIDENTIAL: Voluntary Chapter 11 Case Summary N-STAR REAL: Fitch Lifts Rating on $15 Mil. Class D Notes to BB+ NEW CENTURY: Fitch Lowers Rating on $15MM Class M-9 Certs. to BB NORTEL NETWORKS: Posts $37 Million Net Loss in Qtr. Ended June 30 NORTHWEST AIRLINES: Inks Pact with ALPA on Contract Improvements NORTHWEST SUBURBAN: Case Summary & 20 Largest Unsecured Creditors OMNICARE INC: Earns $49.2 Million in Quarter Ended June 30 OSAGE EXPLORATION: Posts $257,453 Net Loss in Qtr. Ended June 30 OWNIT MORTGAGE: Disclosure Statement Hearing Scheduled on Sept. 9 PIEDMONT HAWTHORNE: DAE Deal Cues S&P to Withdraw Ratings PAIVIS CORP: To Acquire Detroit Phone's Stake for Cash and Stock POLY-PACIFIC: Completes $261,050 2nd Tranche of Private Placement PRIMEDIA INC: S&P Lifts Rating to BB- and Removes Negative Watch QUANTUM CORP: Posts $22.6 Million Net Loss in Qtr. Ended June 30 REABLE THERAPEUTICS: Inks $2.75/Share Merger Pact With Iomed Inc. RESMAE MORTGAGE: Fitch Lowers Ratings on Six Certificate Classes RICHARD PIECHOWSKI: Case Summary & 19 Largest Unsecured Creditors RITE AID: July 2007 Total Drugstore Sales Reach $2 Billion ROGNES CORP: Case Summary & 23 Largest Unsecured Creditors SHERWOOD MANOR: Case Summary & 18 Largest Unsecured Creditors SIMON GROUP: Case Summary & 20 Largest Unsecured Creditors SONIC CORP: Board Approves Additional $75 Million Stock Repurchase STANDARD AERO: DAE Aviation Deal Cues S&P to Withdraw Ratings STEWART & STEVENSON: S&P Junks Rating on $150 Mil. Senior Notes SUPERVALU INC: Fitch Affirms BB- Issuer Default Rating TECUMSEH PRODUCTS: Names Edwin L. Buker as Chief Executive Officer TENFOLD CORP: Incurs $1.2 Million Net Loss in Qtr. Ended June 30 TEST CENTER: Prometric Deal Cues S&P's BB- Credit Rating TRAVELSTAR INC: March 31 Balance Sheet Upside-Down by $3.9 Million TRUMP ENTERTAINMENT: Names Mark Juliano as Chief Executive Officer USEC INC: Posts $13.4 Million Net Loss in Quarter Ended June 30 VALEANT PHARMACEUTICALS: Earns $16.8 Mil. In Second Qtr. 2007 VYTERIS INC: Names Anthony Cherichella as Chief Financial Officer WELLCARE HEALTH: Earns $54.6 Million in Second Quarter 2007 * Fitch Takes Rating Actions on Various Transactions * King & Spalding Adds Henry Kaim as Parnter at Houston Branch * BOND PRICING: For the Week of July 30 - August 4, 2007 ********* 1031 TAX GROUP: Disclosure Statement Hearing Scheduled on Aug. 16 ----------------------------------------------------------------- The United States Bankruptcy Court for the Southern District of New York will convene a hearing on Aug. 16, 2007, at 2:00 p.m., to consider the adequacy of 1031 Tax Group LLC and its debtor- affiliates' Joint Disclosure Statement explaining their Joint Chapter 11 Plan of Reorganization. Objections to the Debtors' Disclosure Statement are due Aug. 13, 2007. Under the Plan, the net proceeds of the Debtors' assets, together with additional funding by the Okun Entities, are being pooled and distributed to the Debtors' creditors. Treatment of Claims Under the Plan, Administrative, Priority and Secured Claims will be paid in full. Each holder of General Unsecured Claim, totaling $162,200,000, will receive: a. one or more distributions in cash or other consideration on account of its pro rata share; and b. pro rata share of the beneficial interest in the liquidating trust and distributable proceeds from the liquidating trust assets. Holders of Okun Plan Claims will receive no distribution under the Plan. The Debtors tell the Court that the holders agreed to waive and release the claims. Edward H. Okun is the sole member of The 1031 Tax Group LLC. Also, holders of Intercompany and Equity Interests Claims will not receive a distribution or retain any property under the Plan. Headquartered in Richmond, Virginia, The 1031 Tax Group LLC -- http://www.ixg1031.com/-- is a privately held consolidated group of qualified intermediaries created to service real property exchanges under Section 1031 of the Internal Revenue Code. The company and 15 of its affiliates filed for Chapter 11 protection on May 14, 2007 (Bankr. S.D.N.Y. Case No. 07-11447 through 07-11462). Norman N. Kinel, Esq., and Steven E. Fox, Esq., at Dreier, LLP, represents the Debtors in their restructuring efforts. David Y. Wolnerman, Esq., at Greenberg Traurig, LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of over $100 million. 1031 TAX GROUP: Court OKs Greenberg Traurig as Committee's Counsel ------------------------------------------------------------------ The United States Bankruptcy Court for the Southern District of New York gave the Official Committee of Unsecured Creditors in 1031 Tax Group LLC and its debtor-affiliates' bankruptcy cases permission to employ Greenberg Traurig LLP as its cousnel. The firm is expected to: a. consult with the Committee as well as the Debtors, their professionals or other representatives concerning the administration of these cases; b. prepare and reviewing pleadings, motions and correspondence; c. appearing at the being involved in proceedings before this Court and other courts; d. provide legal counsel to the Committee in its investigation of the acts, conduct, assets, liabilities, and financial condition of the Debtors, the operation of the Debtors' businesses, and any other matters relevant to these cases; e. analyze any proposed use of cash collateral or DIP financing; f. advise the Committee with respect to its rights, duties and powers in these cases; g. assist the Committee in analyzing the claims of the Debtors' creditors and in negotiating with the creditors; h. assisting the Committee in its analysis of and negotiations with the Debtors or any third party concerning matters related to, among other things, the terms of a sale, plan of reorganization or other conclusion of these cases; i. assist and advise the Committee as to its communications to the general creditor body regarding significant matters in these cases; j. assist the Committee in determining a course of action that best serves the interest of the unsecured creditors; k. investigate the acts and conduct of the Debtors' officers, directors, insiders and affiliates and instituting any legal proceedings; and l. perform other legal services as may be required under the circumstances of these cases and ared deemed to tbe in the interest of the Committee in accordance with the Committee's powers and duties as set forth in the Bankruptcy Code. The firm's professionals and their compensation rates are: Designation Hourly Rate ----------- ----------- Shareholders $300-$900 Associates $170-$490 Paralegals $65-$350 Professional Designation Hourly Rate ------------ ----------- ----------- Steven Mastbaum , Esq. Shareholder $730 Thomas J. Weber, Esq. Shareholder $710 Melanie L. Cyganowski, Esq. Shareholder $650 Allen G. Kadish, Esq. Shareholder $650 David Y. Wolnerman, Esq. Associate $395 Gino G. Tonetti, Esq. Associate $295 Angela Chua Paralegal $185 Melanie L. Cyganowski, Esq., assures the Court that his firm does not hold any interest adverse to the Debtors' estate and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Ms. Cyganowski can be reached at: Melanie L. Cyganowski, Esq. Greenberg Traurig LLP 200 Park Avenue New York, New York 10166 Tel: (212) 801-9200 Headquartered in Richmond, Virginia, The 1031 Tax Group LLC -- http://www.ixg1031.com/-- is a privately held consolidated group of qualified intermediaries created to service real property exchanges under Section 1031 of the Internal Revenue Code. The company and 15 of its affiliates filed for Chapter 11 protection on May 14, 2007 (Bankr. S.D.N.Y. Case No. 07-11447 through 07-11462). Norman N. Kinel, Esq., and Steven E. Fox, Esq., at Dreier, LLP, represents the Debtors in their restructuring efforts. David Y. Wolnerman, Esq., at Greenberg Traurig, LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of over $100 million. A_SHADE_BETTER: Case Summary & 18 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: A Shade Better Painting, Inc. 655 East King Street Meridian, ID 83642 Bankruptcy Case No.: 07-01196 Type of business: The Debtor provides painting services. See http://www.ashadebetterpainting-2.com Chapter 11 Petition Date: August 1, 2007 Court: District of Idaho (Boise) Debtor's Counsel: D. Blair Clark, Esq. Ringert Clark, Chartered P.O. Box 2773 Boise, ID 83701-2773 Tel: (208) 342-4591 Fax: (208) 342-4657 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million Debtor's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of the Cascades business line of $400,000 Credit Services credit 1125 Northwest Bond Street Bend, OR 97701 Internal Revenue Services 941 taxes $130,000 P.O. Box 802502 Cincinnati, OH 45280 K.W.A.L. business expense $73,000 8515 Westpark Street Boise, ID 83704 Columbia business expense $68,500 Wells Fargo 2006 Suzuki $25,043 Forenza; value of security: $10,500 Bank of America Business credit card $24,939 purchase U.S. Bank credit card $20,587 purchases Citibank credit card $19,843 purchases Ollie Palmer business expense $19,000 Kelly Moore Paint business expense: $16,500 painting supplies, etc. Bank of the Cascades credit card $12,765 Tampa, FL purchases Angstman, Johnson & attorney fees $7,530 Association Hallmark General Agency business insurance $7,343 Olsen & Co. CPAs accounting expense $4,792 Idaho State Tax Commission business taxes; tax $4,514 lien on building Sinclair Oil Corporation business expense $3,108 Sprint business expense $2,716 -cell phones Idaho Fleet Service business expense $2,370 -repairs ACCELLENT INC: Incurs $4.1 Million Net Loss in Second Qtr. 2007 --------------------------------------------------------------- Accellent Inc. disclosed that for the second quarter ended June 30, 2007, net loss was $4.1 million, compared to net income of $2.2 million in the corresponding period of 2006. The decrease in net income was primarily a result of reduced gross margin due to lower sales volumes, less favorable product mix and higher manufacturing costs. For the second quarter of 2007, net sales decreased 4.5% to $119.1 million, compared with $124.7 million in the corresponding period of 2006. The previously disclosed ramp-down of a specific product line reduced sales about 3.4%, and challenging orthopaedic end market conditions reduced sales about 3.4%. These decreases were partially offset by increased net sales from certain endoscopy customers. Net sales improved sequentially by 6.8% during the second quarter of 2007 compared to the first quarter of 2007. The second quarter 2007 net loss includes a non-cash charge for impairment of goodwill and other intangible assets of $1.3 million to adjust the impairment charge taken in the first quarter of 2007 to the final determined amount and a non-cash charge of $600,000 for stock-based compensation to non-employees. These charges were more than offset by a $2.9 million credit for employee stock-based compensation and a $1.3 million deferred tax credit recorded in connection with our impairment charge. Net income for the second quarter of 2006 included a charge for employee stock-based compensation of $1.5 million, and a non-cash gain on interest rate hedging instruments of $2.6 million. First Half Results Net sales decreased 6.4% to $230.6 million in the first six months of 2007, compared with $246.4 million in the first half of 2006. The previously disclosed ramp-down of a specific product line reduced sales approximately 4.2%, and challenging orthopaedic end market conditions reduced sales by about 3.8%. These decreases were partially offset by increased net sales from certain endoscopy customers. The net loss for the first half of 2007 was $89.8 million compared to a net loss in the corresponding period of 2006 of $4.4 million. The 2007 net loss includes a non-cash charge for impairment of goodwill and other intangible assets of $82.3 million incurred as a result of reduced growth expectations in the orthopaedic business and $1 million of non-employee stock-based compensation. These non-cash charges were partially offset by a credit for employee stock-based compensation of $4.8 million and a $1.3 million deferred tax credit recorded in connection with the company's impairment charge. The 2006 net income included non- cash inventory step-up charges of $6.4 million related to the 2005 acquisition of the Company by Kohlberg Kravis Roberts & Co. L.P. and Bain Capital, a $6.1 million gain on derivative instruments and employee stock-based compensation charges of $3.3 million. As of June 30, 2007, the company had $1.3 billion in total assets, $804.3 million in total liabilities, and $497.8 million in total stockholders' equity. The company held $8.4 million in cash and cash equivalents at June 30, 2007. About Accellent Inc. Accellent Inc. -- http://www.accellent.com/-- provides fully integrated outsourced manufacturing and engineering services to the medical device industry in the cardiology, endoscopy and orthopaedic markets. Accellent has broad capabilities in design & engineering services, precision component fabrication, finished device assembly and complete supply chain management. These capabilities enhance customers' speed to market and return on investment by allowing companies to refocus internal resources more efficiently. * * * As reported in the Troubled Company Reporter on May 3, 2007, Standard & Poor's Ratings Services lowered its corporate credit rating on Accellent Inc. to 'B' from 'B+'; the outlook is stable. ACCEPTANCE INSURANCE: Panel Hires StoneRidge as Fin'l Advisor ------------------------------------------------------------- The United States Bankruptcy Court for the District of Nebraska gave the Official Committee of Unsecured Creditors in Acceptance Insurance Companies Inc.'s Chapter 11 bankruptcy case, authority to employ StoneRidge Advisors LLC as its financial advisor. Robert J. Blothe, Esq., the Committee's counsel, said that the Committee selected the firm because of its investment banking experience and excellent reputation in providing financial advisory and investment banking services to the insurance industry. As the Committee's financial advisor, the firm is expected to: a) assist Debtor in the preparation of a confidential information memorandum which will be distributed by StoneRidge on behalf of Debtor to prospective purchasers which StoneRidge believes in good faith to be financially qualified and potentially interested in participating in a Transaction. This document will include a discussion of Debtor's operations, management, historical financial results, projected financial results, and any other relevant matter. b) familiarize itself to the extent it deems appropriate and feasible with the business, operations, properties, financial condition, and prospects of Debtor, in the course of the preparation of the Confidential Information Memorandum; c) identify and screen prospective purchasers; d) contact each prospective purchaser approved by the Committee and Debtor; e) schedule visits of any interested prospective purchasers to meet with Debtor, and assist the Committee and Debtor in responding to their due diligence requests. Additionally, StoneRidge will assist management in preparing a presentation to be delivered by Debtor management to each of the prospective purchasers that visit Debtor; and f) assist the Committee and Debtor in evaluating each proposal made by the prospective purchasers to assess the relative advantages and disadvantages of each proposal. The Committee disclosed that the firm received $75,000 financial advisory fee. Jeffrey A. Poorman, the firm's managing director, assures the Court that his firm does not hold any interest adverse to the Debtor's estate and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Poorman Can be reached at: Jeffrey A. Poorman Managing Director StoneRidge Advisors LLC 200 West Monroe Street, 18th Floor Chicago, Illinois 60606 Tel: (212) 626-6797 Fax: (212) 626-6799 http://stoneridgeadvisors.com/ Headquartered in Council Bluffs, Iowa, Acceptance Insurance Companies Inc. -- http://www.aicins.com/-- owns, either directly or indirectly, several companies, one of which is an insurance company that accounts for substantially all of the business operations and assets of the corporate groups. The company filed for chapter 11 protection on Jan. 7, 2005 (Bankr. D. Nebr. Case No. 05-80059). The Debtor's affiliates -- Acceptance Insurance Services Inc. and American Agrisurance Inc. -- filed separate chapter 7 petitions (Bankr. D. Nebr. Case Nos. 05-80056 and 05-80058) on Jan. 7, 2005. John J. Jolley, Esq., at Kutak Rock LLP, represents the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed to date on this case. When the Debtor filed for protection from its creditors, it listed $33,069,446 in total assets and $137,120,541 in total debts. The Debtors' exclusive period to file a plan expires on Aug. 9, 2007. ACE SECURITIES: Fitch Junks Ratings on Three Certificate Classes ---------------------------------------------------------------- Fitch Ratings has taken these rating actions on ACE Securities mortgage pass-through certificates. Affirmations total $2.7 billion and downgrades total $491.7 million. Break Loss percentages and Loss Coverage Ratios for each class are included with these rating actions as: ACE Securities, series 2005-HE6: -- $585.3 million class A affirmed at 'AAA' (BL: 52.40, LCR: 2.36); -- $59.8 million class M-1 affirmed at 'AA+' (BL: 42.58, LCR: 1.92); -- $55.1 million class M-2 affirmed at 'AA' (BL: 36.70, LCR: 1.65); -- $37.3 million class M-3 downgraded to 'A-' from 'AA-' (BL: 32.70, LCR: 1.47); -- $26.4 million class M-4 downgraded to 'BBB+' from 'AA-' (BL: 29.84, LCR: 1.34); -- $27.2 million class M-5 downgraded to 'BBB' from 'A+' (BL: 26.88, LCR: 1.21); -- $23.3 million class M-6 downgraded to 'BB+' from 'A' (BL: 24.30, LCR: 1.09); -- $24.1 million class M-7 downgraded to 'BB' from 'A-' (BL: 21.54, LCR: 0.97); -- $17.9 million class M-8 downgraded to 'B+' from 'BBB+' (BL: 19.49, LCR: 0.88); -- $17.9 million class M-9 downgraded to 'B' from 'BBB' (BL: 17.38, LCR: 0.78); -- $12.4 million class M-10 downgraded to 'CCC' from 'BBB-' (BL: 15.84, LCR: 0.71); -- $15.5 million class M-11 downgraded to 'CCC' from 'BB+' (BL: 13.99, LCR: 0.63); -- $25.6 million class B-1 downgraded to 'CCC' from 'BB' (BL: 10.80, LCR: 0.49). Deal Summary -- Originators: (61% Fremont); -- 60+ day Delinquency: 22.29%; -- Realized Losses to date (% of original balance): 0.74%; -- Expected Remaining Losses (% of Current Balance): 22.21%; -- Cumulative Expected Losses (% of Original Balance): 14.38%. ACE Securities, series 2006-HE1: -- $1.06 billion class A affirmed at 'AAA' (BL: 45.69, LCR: 2.72); -- $101.4 million class M-1 affirmed at 'AA+' (BL: 36.24, LCR: 2.16); -- $92.6 million class M-2 affirmed at 'AA+' (BL: 33.02, LCR: 1.96); -- $57.1 million class M-3 affirmed at 'AA' (BL: 30.22, LCR: 1.80); -- $48.2 million class M-4 affirmed at 'AA' (BL: 27.32, LCR: 1.63); -- $45.6 million class M-5 downgraded to 'A-' from 'AA-' (BL: 24.58, LCR: 1.46); -- $41.8 million class M-6 downgraded to 'BBB+' from 'A+' (BL: 22.02, LCR: 1.31); -- $40.6 million class M-7 downgraded to 'BBB-' from 'A' (BL: 19.49, LCR: 1.16); -- $36.8 million class M-8 downgraded to 'BB+' from 'A-' (BL: 17.25, LCR: 1.03); -- $26.6 million class M-9 downgraded to 'BB-' from 'BBB+' (BL: 15.66, LCR: 0.93); -- $31.7 million class M-10 downgraded to 'B+' from 'BBB' (BL: 14.16, LCR: 0.84). Deal Summary -- Originators: (77% Fremont) ; -- 60+ day Delinquency: 22.48%; -- Realized Losses to date (% of original balance): 0.98%; -- Expected Remaining Losses (% of Current Balance): 16.81%; -- Cumulative Expected Losses (% of Original Balance): 11.97%. ACE Securities, series 2006-HE2: -- $441.7 million class A affirmed at 'AAA' (BL: 44.15, LCR: 2.98); -- $38.1 million class M-1 affirmed at 'AA+' (BL: 33.97, LCR: 2.29); -- $34.8 million class M-2 affirmed at 'AA' (BL: 31.32, LCR: 2.12); -- $20.7 million class M-3 affirmed at 'AA-' (BL: 29.09, LCR: 1.97); -- $17.4 million class M-4 affirmed at 'A+' (BL: 26.67, LCR: 1.80); -- $16.9 million class M-5 affirmed at 'A' (BL: 24.12, LCR: 1.63); -- $16.4 million class M-6 affirmed at 'A-' (BL: 21.60, LCR: 1.46); -- $14.6 million class M-7 affirmed at 'BBB+' (BL: 19.31, LCR: 1.30); -- $13.6 million class M-8 downgraded to 'BBB-' from 'BBB' (BL: 17.20, LCR: 1.16); -- $9.4 million class M-9 downgraded to 'BB+' from 'BBB-' (BL: 15.63, LCR: 1.06); -- $8.5 million class M-10 downgraded to 'BB' from 'BB+' (BL: 14.09, LCR: 0.95); -- $9.4 million class M-11 downgraded to 'B+' from 'BB' (BL: 12.65, LCR: 0.85). Deal Summary -- Originators: (35% Ameriquest) ; -- 60+ day Delinquency: 21.22%; -- Realized Losses to date (% of original balance): 0.43%; -- Expected Remaining Losses (% of Current Balance): 14.80%; -- Cumulative Expected Losses (% of Original Balance): 10.88%. In addition, these classes are removed from Rating Watch Negative: -- Class M9 (from series 2006-HE1); -- Class M10 (from series 2006-HE1); -- Class M11 (from series 2006-HE2). ADVANCED CELL: Inks $5 Million Merger Deal with Mytogen Inc. ------------------------------------------------------------ Advanced Cell Technology Inc. has entered into a definitive merger agreement to acquire all of the outstanding capital stock of Mytogen Inc. The merger agreement provides for an aggregate purchase price of $5 million payable in ACTC common stock plus the assumption of certain Mytogen liabilities. Mytogen shareholders will also receive a warrant to purchase an additional 1.5 million shares of ACTC common stock at $0.75 subject to the achievement of certain milestones. In May 2007, the company had entered into a letter of intent to acquire Mytogen Inc. and its Myoblast Program for the treatment of heart failure. With the definitive merger agreement approved and executed by both parties, ACT and Mytogen will move quickly to close the transaction, which is signed subject to certain closing conditions. Mytogen brings to the company over ten years of experience in clinical trial and FDA experience in developing and advancing cellular therapies including the area of stem cells. Mytogen has completed Phase I human clinical trials utilizing the myoblast therapy safely in over forty patients. The FDA has reviewed the "end-of-Phase I" data and allowed Mytogen to proceed with a Phase II human clinical trial. Upon closing the acquisition, Advanced Cell Technology plans to begin the Phase II human clinical trial for the treatment of heart failure in approximately 160 patients. If successful, the company expects to proceed with a pivotal Phase III trial for the therapy. The Myoblast Program may prove beneficial for patients that have experienced a serious heart attack and have a high risk of heart failure. This stem cell therapy involves transplantation of expanded autologous myoblasts derived from a small biopsy of skeletal muscle from a patient's leg. The technology allows for the expansion of myoblasts into hundreds of millions of cells over a period of two to three weeks. The resulting myoblasts are then transplanted back into the patient's scarred heart tissue through the use of a catheter-based procedure. While the Phase I human clinical trials were focused on the safety of the therapy, the clinical data from those trials suggests that the myoblasts often improve function in the heart and can lead to a significant increase in quality of life for the patient. "Advanced Cell Technology has always been on the cutting edge of regenerative medicine and we are excited to join their team," Dr. Jonathan Dinsmore, president and chief scientific officer of Mytogen Inc., noted. "By merging with Advanced Cell, we can now more rapidly move forward with our clinical trials and bring our novel therapies to cardiac patients in need of treatment." "We remain committed to the field of human embryonic stem cell research and believe that the promise of the Myoblast Program combined with the synergies with our Hemangioblast Program provide a diverse technology platform in stem cell therapy focused on the treatment of heart attack and heart failure, William M. Caldwell, IV, chairman and CEO of Advanced Cell Technology remarked. ''We are excited about this merger and look forward to focusing our efforts on commencing the Phase II clinical trials. The signing of this definitive agreement signals ACTC's transition from a development stage to a clinical stage company." About Mytogen Inc. Based in Massachusetts, Mytogen Inc. – http://www.mytogen.com/-- is a privately held biotech company developing cell-therapy products. Mytogen's initial program focuses on using myoblasts - stem cells that form muscle - to treat patients with congestive heart failure, a progressive deterioration of the heart muscle. The company is a consolidation of experts, in the areas of clinical manufacturing of biologics, cell transplantation, and stem cell biology, exploiting intellectual property assets acquired from Genvec and Diacrin, Inc. About Advanced Cell Technology Inc. Headquartered in Alameda, California, Advanced Cell Technology Inc. (OTCBB:ACTC) -- http://www.advancedcell.com/-- is a biotechnology company focused on developing and commercializing human stem cell technology in the emerging field of regenerative medicine. It has developed and maintained a portfolio of patents and patent applications that form the proprietary base for its embryonic stem cell research and development. The company operates facilities in Alameda, California and Worcester, Massachusetts. * * * As reported in the Troubled Company Reporter on March 26, 2007, Stonefield Josephson Inc. in Los Angeles, California, raised substantial doubt about the ability of Advanced Cell Technology Inc. to continue as a going concern after auditing the company's financial statements as of Dec. 31, 2006. The auditing firm pointed to the company's minimal sources of revenue, substantial losses, substantial monetary liabilities in excess of monetary assets and accumulated deficits as of Dec. 31, 2006. ADVANCED MEDICAL: Posts $166 Mil. Net Loss in Second Quarter 2007 ----------------------------------------------------------------- Advanced Medical Optics Inc. reported financial results for the second quarter of 2007. AMO reported a second-quarter net loss under Generally Accepted Accounting Principles of $166.8 million, which included the impact of the recall. These results also included: * $85.4 million pre-tax, non-cash in-process research and development charge and a $7.7 million pre-tax, non-cash inventory step-up to fair value charge related to the IntraLase acquisition. * approximately $14.5 million in pre-tax transaction-related charges. * $1.2 million in a pre-tax, non-cash deferred financing cost write-off related to the IntraLase acquisition financing and a gain on derivative instruments. * $9.8 million unfavorable tax impact associated primarily with acquisition-related items. In the same period last year, AMO reported a GAAP net loss of $2.7 million. The company's second-quarter 2007 net sales rose 1.7% to $261.4 million. The sales increases related to the April 2007 acquisition of IntraLase Corp. and organic growth were offset by lost sales and product returns related to the May 2007 MoisturePlus recall. Foreign currency impacts increased net sales by 1.7%. ''In the second quarter, we moved aggressively to integrate IntraLase,” Jim Mazzo, AMO chairman, president and chief executive officer, said. ''Our Advanced CustomVue(R) technology and IntraLase(R) FS laser drove laser vision correction sales to new highs, demonstrating the strategic value of this combination. In addition, our portfolio of refractive implants delivered double- digit growth on a sequential and year-over-year basis and helped fuel an 8 percent rise in intraocular lens sales. Furthermore, our eye care business moved quickly and responsibly to execute a global recall, and developed a comprehensive plan to re-enter the multipurpose contact lens care market ahead of schedule.” AMO estimated that the recall reduced eye care sales by approximately $54 million, including approximately $31 million in returns and an estimated $23 million in lost sales. As a result of the sales returns, the company reported negative multipurpose sales of $7.8 million. The company incurred recall-related costs of approximately $27 million, which were recognized in cost of sales and SG&A expense. Gross profit decreased 22.3% to $127.9 million, including a $7.7 million non-cash inventory step-up to fair value charge related to the IntraLase acquisition. Gross profit was also impacted by approximately $50.9 million in returns and costs and an estimated $15.9 million related to lost sales associated with the recall. R&D expense rose 24.8% to $20.7 million, or approximately 7.9% of sales, compared to 6.4 percent in the second quarter of 2006. The increase was due primarily to the addition of IntraLase and WaveFront Sciences Inc. Six-Month Financial Results Net sales for the first six months of 2007 rose 3.6% to $513.1 million, including a 2.1% increase related to foreign currency fluctuations. The rise reflects the addition of the IntraLase and WaveFront Sciences acquisitions and organic growth, which were largely offset by estimated recall-related lost sales and returns. The company reported a GAAP net loss for the first six months of 2007 of $154.7 million. The per-share loss was increased by $2.02 due to an $87 million charge for in-process R&D, approximately $22.2 million in transaction-related charges, a $1.3 million deferred financing cost write-off, a $300,000 loss on derivative instruments and a $9.7 million unfavorable tax impact associated primarily with acquisition-related items. About Advanced Medical Optics Headquartered in Santa Ana, California, Advanced Medical Optics -- http://www.amo-inc.com/-- (NYSE: EYE) develops, manufactures and markets ophthalmic surgical and contact lens care products. The company has operations in Germany, Japan, Ireland, Puerto Rico and Brazil. * * * As reported in the Troubled Company Reporter on July 9, 2007, Moody's Investors Service maintains Advanced Medical Optics, Inc. ratings on review for possible downgrade following AMO's announcement of its offer for Bausch & Lomb, Inc. for $75 per common share in a combination of $45 in cash and $30 in AMO common stock. These ratings remain on review for possible downgrade: B1 Corporate Family Rating; B1 Probability of Default Rating; Ba1 (LGD2/14%) rating on $300 million senior secured revolver due 2013; Ba1 (LGD2/14%) rating on $450 million senior secured term loan B due 2014; B1 (LGD4/50%) rating on $250 million senior subordinated notes due 2017; and B3 (LGD5/81%) rating on $251 million convertible senior subordinated notes due 2024. BISON BUILDING: Court Approves Wiley Rein as Trustee's Counsel -------------------------------------------------------------- The United States Bankruptcy Court for the Eastern District of Virginia gave H. Jason Gold, the Chapter 7 Trustee for Bison Building Company LLC's bankruptcy case, permission to employ Wiley Rein LLP as his counsel. The firm is expected to: a. advise and consult the Trustee concering matters related to administration of the estate and concerning the Trustee's rights and remedies with regard to the estate's assets and the claim of creditors and other in interest; b. appear for, prosecute, defend, and represent the Trustee's interest in suits arising in or related to the Debtor's case; c. investigate and prosecute preference ando ther actions arising under the Trustee's avoidance powers; d. assist in the preparation of the pleadings as are required for the orderly administration of this state; and f. assist in other legal matters as the Trustee may require. The Trustee did not disclose the firm's compensation rates for this engagement. To the best of the Trustee's knowledge, the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Based in Springfield, Virginia, Bison Building Company LLC -- http://www.bisonbuildingcompany.com/-- is a custom home-builder. The company filed for chapter 11 protection on Nov. 17, 2006 (Bankr. E.D. Va. Case No. 06-11534). Darrell William Clark, Esq., at Stinson Morrison Hecker, LLP, represents the Debtor in its restructuring efforts. Bradford F. Englander, Esq., at Linowes and Blocher LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from its creditors, it listed total assets of $9,943,454, and total liabilities of $12,367,901. BUCKEYE TECHNOLOGIES: Earns $15.9 Million in Quarter Ended June 30 ------------------------------------------------------------------ Buckeye Technologies Inc. announced on Wednesday that it earned $15.9 million after tax in the quarter ended June 30, 2007. The company's results included a $2.0 million pre-tax benefit from a water conservation partnership payment, a $2.1 million pre-tax benefit from reversal of accrued interest related to cancellation of a contingent note owed to Stac-Pac Technologies Inc., and a $3.3 million tax benefit from adjustments relating to federal and state valuation allowances and credits. During the same quarter of the prior year the company earned $1.2 million after tax which included an $800,000 tax benefit related to a reduction in Canadian federal and provincial tax rates and restructuring and impairment expenses of $500,000 after tax primarily associated with equipment sales at the closed operations in Lumberton, North Carolina and Glueckstadt, Germany. During the 2007 fiscal year, the company earned $30.1 million after tax which included the benefit of the $5.7 million after tax discussed above and restructuring charges of $800,000 after tax. This compares to fiscal year 2006 earnings of $2.0 million after tax, including restructuring and impairment expenses of $3.6 million after tax. Net sales for the April-June quarter were $200 million, 3.5% above the $193 million achieved in the same quarter of the prior year. Net sales for fiscal year 2007 were $769 million, 5.6% above the $728 million achieved in the prior year. Chairman and chief executive officer John B. Crowe said, "We are pleased with the improved results, both for the quarter and fiscal year. We credit the improved earnings to strong demand across all of our businesses and to the combination of higher prices, better mix and cost reductions. Reduced costs and higher volumes at our Americana plant also contributed to improved earnings, both for the quarter and total year. Our Nonwoven materials segment sales and earnings were strong for the total year, but even though sales were higher, operating income for the quarter was down compared to the January - March quarter due to higher corporate SRA allocations and special maintenance items. We continue to generate strong cash flow and we lowered our debt during the year by $76 million (from $521 million to $445 million), which includes the cancellation of the $5.0 million Stac-Pac note." At June 30, 2007, the company's consolidated balance sheet showed $951.8 million in total assets, $604.7 million in total liabilities, and $347.1 million in total stockholders' equity. About Buckeye Technologies Headquartered in Memphis, Tennessee, Buckeye Technologies Inc. (NYSE:BKI) -- http://www.bkitech.com/-- manufactures and markets specialty fibers and nonwoven materials. The company currently operates facilities in the United States, Germany, Canada, and Brazil. Its products are sold worldwide to makers of consumer and industrial goods. * * * As reported in the Troubled Company Reporter on June 19, 2007, Moody's upgraded Buckeye Technologies Inc.'s corporate family rating to B1 from B2 and maintained a stable outlook. All other ratings were upgraded by one notch while the unsecured notes were affirmed at B2. CALA CORPORATION: De Joya Griffith Raises Going Concern Doubt ----------------------------------------------------------- Henderson, Nev.-based De Joya Griffith & Company LLC expressed substantial doubt about Cala Corp.'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 losses, negative cash flow from operations and net working capital deficit. The company posted a $904,233 net loss on $34,176 of total revenues for the year ended Dec. 31, 2006, as compared with a $798,862 net loss on zero revenue in the prior year. At Dec. 31, 2006, the company's balance sheet showed $1,172,479 in total assets, $730,746 in total liabilities and $441,733 in stockholders' equity. The company reported strained liquidity in its Dec. 31, 2006, balance sheet with $36,099 in total current assets and $150,126 in total current liabilities, resulting in a $114,027 working capital deficit. A full-text copy of the company’s 2006 annual report is available for free at http://ResearchArchives.com/t/s?2212 About Cala Corporation Headquartered in Titusville, Fla. Cala Corp. (Other OTC: CCAA) -- http://www.undersearesort.com/-- operates two restaurants, Forli Restaurant and Mangia Italia, which primarily offer Italian food in California. It also develops an undersea resort and residence project. The company, formerly known as Magnolia Foods, Inc., was incorporated in 1985. CANARGO ENERGY: Sells Tethys Petroleum Stake for CDN$2.95/Share --------------------------------------------------------------- CanArgo Energy Corporation sold its entire shareholding of 8,000,000 shares in Tethys Petroleum Limited. The shares of Tethys Petroleum were sold in brokered transactions beginning July 31, 2007. The shares represent 17.7% of the shares of Tethys Petroleum outstanding shares. The shares will be offered for sale at prices not less than CDN$2.95. The gross proceeds of the sale, before commission and expenses, amounts to CDN$23.6 million. The settlement date is Aug. 3, 2007. Net proceeds received from the sale of these shares will be used by CanArgo to repay a portion of its existing debt under its outstanding senior secured notes due July 25, 2009, and to the extent of any excess net proceeds, its outstanding senior subordinated convertible guaranteed notes due Sept. 1, 2009. Jennings Capital Inc. act as the sole placing agent or sole participating organization for the sale. About Tethys Petroleum Tethys Petroleum Limited (TSX: TPL) – http://www.tethyspetroleum.com/-- is focused on oil and gas exploration and production activities in Central Asia with activities currently in the Republic of Kazakhstan and more recently the Republic of Tajikistan. About CanArgo Energy CanArgo Energy Corp. -- http://www.canargo.com/-- (AMEX: CNR) (OSLO: CNR) is an oil and gas exploration and production company operating in the oil and gas provinces of the former Soviet Union. CanArgo is currently focused primarily on Georgia in the Caucasus, and more recently has become involved in the major hydrocarbon producing country of Kazakhstan. In Georgia, the company has been actively exploring for new deposits of oil and gas, and is currently appraising what could be a substantial new discovery of oil. Going Concern Doubt As reported in the Troubled Company Reporter on March 26, 2007, LJ Soldinger Associates LLC raised substantial doubt about the ability of CanArgo Energy Corp. to continue as a going concern after auditing the company's financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm stated that the company may not have sufficient funds to execute its business plan. CHEMED CORP: Earns $9.4 Million in Second Quarter Ended June 30 --------------------------------------------------------------- Chemed Corporation, which operates VITAS Healthcare Corporation, reported net income of $9.4 million for the second quarter ended June 30, 2007, as compared with net income of $12.8 million for the second quarter ended June 30, 2006. Revenue increased 9% to $271 million for the second quarter ended June 30, 2007, over the comparable prior-year period. The company had revenue of $249.1 million for the second quarter ended June 30, 2006. VITAS recorded net revenue of $186 million in the second quarter of 2007, which was an increase of 8.3% over the prior-year period. Net income from continuing operations for the second quarter was $14.2 million, an increase of 16.9%. Roto-Rooter's plumbing and drain cleaning business generated sales of $86 million for the second quarter of 2007, 10.5% higher than the $78 million reported in the comparable prior-year quarter. Net income for the quarter was $10.7 million, an increase of 53% over the prior year. For the six months ended June 30, 2007, the company had $25.7 million net income, as compared with $25 million net income for the six months ended June 30, 2006. Revenue for the six months ended June 30, 2007, was $541.8 million, as compared with revenue of $493 million for the six months ended June 30, 2006. Balance sheet as of June 30, 2007, showed total assets of $779.5 million, total liabilities of $454.9 million, and total stockholders' equity of $324.7 million. The company's June 30 balance sheet also showed strained liquidity with total current assets of $145.1 million available to pay total current liabilities of $148.1 million. Guidance for 2007 VITAS is estimated to generate full-year revenue growth from continuing operations, prior to Medicare Cap, of 9% to 11%. This range is a 100 basis point decrease from the previous guidance to reflect the revenue mix shift to routine home care noted earlier. Admissions are estimated to increase 4% to 6%, increased ADC of 8% to 10% and adjusted EBITDA margins, prior to Medicare Cap, of 13.5% to 14.5%. This guidance assumes the hospice industry receives a full Medicare basket price increase of 3.3% in the fourth quarter of 2007. Full-year 2007 Medicare contractual billing limitations are estimated at $2.5 million. Roto-Rooter is estimated to generate an 8.5% to 9.5% increase in revenue in 2007, job count growth between 0.5% and 1.5% and adjusted EBITDA margin in the range of 19% to 20%. Based upon these factors, an effective tax rate of 38.5% and an average diluted share count for the second half of 2007 of 24.5 million, our estimate is that full-year 2007 earnings per diluted share from continuing operations, excluding early extinguishment of debt, expense for stock options and other long- term incentive compensation, gain on sale of building, or any other charges or credits not indicative of ongoing operations, will be in the range of $3.10 to $3.20. About Chemed Corp. Based in Cincinnati, Ohio, Chemed Corp. (NYSE: CHE) -- http://www.chemed.com/-- fka Roto-Rooter Inc. operates two wholly owned subsidiaries: VITAS Healthcare and Roto-Rooter. VITAS provides end-of-life hospice care and Roto-Rooter provides plumbing and drain cleaning services. * * * As reported in the Troubled company Reporter on March 29, 2007, Standard & Poor's Rating Services revised its outlook on the hospice and plumbing/drain-cleaning services provider Chemed Corp. to positive, from stable, and affirmed its existing ratings on Chemed, including the 'BB-' corporate credit rating. CIMAREX ENERGY: Earns $78.7 Million in Second Quarter 2007 ---------------------------------------------------------- Cimarex Energy Co. reported second-quarter 2007 net income of $78.7 million. This compares to second-quarter 2006 earnings of $82.9 million. Total revenue in the second quarter of 2007 were $342.1 million, as compared with total revenue in the second quarter of 2006 of $313.4 million. Revenues from oil and gas sales in the second quarter of 2007 were $325.8 million, up from $300.5 million in the same period of 2006. Second-quarter 2007 cash flow from operations totaled $236.3 million versus $235.9 million in the same period of 2006. Second-quarter 2007 oil and gas production volumes averaged 442.6 million cubic feet equivalent per day (MMcfe/d) versus 447.9 MMcfe/d in the second quarter of 2006. The latest quarter's average daily production was comprised of 323.8 million cubic feet of gas and 19,800 barrels of oil. Second-quarter 2007 realized gas prices increased 17% to $7.30 per thousand cubic feet (Mcf) and oil prices decreased 6% to $61.51 per barrel. For the six month period ended June 30, 2007, Cimarex reported net income of $143.3 million, as compared to $193 million for the first six months of 2006. First-half 2007 cash flow from operations totaled $451.7 million versus $463 million in the same period of 2006. Total revenue in the six month period ended June 30, 2007, was $649 million, as compared with total revenue in the six month period ended June 30, 2006, of $648.6 million. As of June 30, 2007, the company had $5.1 billion in total assets, $2 billion in total liabilities, and $3.1 billion in total stockholders' equity. Capital Second-quarter 2007 exploration and development expenditures totaled $236.9 million as compared to $281.7 million in the second quarter of 2006. In the second quarter of 2007 Cimarex drilled 115 gross wells, completing 89% as producers. Exploration and development capital investment for 2007 is projected to be about $1 billion. Property Sales Second-quarter 2007 property sales totaled $21 million. An additional $11 million in sales are pending. Total proved reserves associated with the closed and pending property sales approximates 9.8 billion cubic feet equivalent and related production is 3.5 MMcfe/d. The properties are located in South Texas, North Dakota and California. Share Repurchases In December 2005, the Board of Directors authorized the repurchase of up to four million shares of common stock. Second-quarter 2007 repurchases totaled 197,300 shares at an average price of $40.47. Cumulative purchases under the authorization through June 30, 2007 total 447,400 shares at an average price of $42.45. Outlook Including the impact of the asset sales, expected timing of Gulf of Mexico well-hookups and net risked exploration drilling potential, full-year 2007 production volumes are expected to average between 445-455 MMcfe/d. Third-quarter 2007 production volumes are also projected to average between 445-455 MMcfe/d. About Cimarex Energy Headquartered in Denver, Cimarex Energy Co. (NYSE:XEC) –- http://www.cimarex.com/-- is an independent oil and gas exploration and production company with principal operations in the Mid-Continent, Gulf Coast, Permian Basin of West Texas and New Mexico and Gulf of Mexico areas of the U.S. * * * As reported in the Troubled Company Reporter on April 16, 2007, Moody's assigned a 'B1' note rating to Cimarex Energy's pending $300 million senior unsecured 10 year note offering. At the same time, Moody's affirmed XEC's existing 'Ba3' corporate family rating, 'Ba3' Probability of Default Rating, and 'B1' senior unsecured note rating. Under Moody's Loss Given Default debt notching methodology, the two note issues are rated 'B1' (LGD 5; 70%). CITADEL HILL: Notes Redemption Cues S&P to Withdraw Ratings ----------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings on the class A-1L, A-2L, A-3L, B-1C, B-1L, and B-2L notes issued by Citadel Hill 2000 Ltd., an arbitrage high-yield CLO transaction managed by Citadel Hill Advisors. The rating withdrawals follow the redemption of the notes pursuant to section 9.1(a) of the indenture. The redemption of the notes took place on the July 30, 2007, payment date. Ratings Withdrawn Citadel Hill 2000 Ltd. Rating Balance ------ ------- Class To From Current Previous ----- -- ---- ------- -------- A-1L NR AAA $0.00 $68,686,000 A-2L NR AAA $0.00 $45,000,000 A-3L NR A+ $0.00 $35,000,000 B-1C NR BBB $0.00 $7,500,000 B-1L NR BBB $0.00 $17,500,000 B-2L NR BB- $0.00 $15,000,000 NR — Not rated. CLECO CORP: Earns $63.2 Million in Second Quarter 2007 ------------------------------------------------------ Cleco Corp. reported 2007 second-quarter net income of $63.2 million, up $40.4 million from the $22.8 million recorded in the second quarter of 2006. Second-quarter net income includes $48.1 million from the sale of the allowed unsecured claims against Calpine Energy Services L.P., and Calpine Corp. The claims related to two long-term tolling agreements CES held for the output of the 1,160-megawatt Acadia power plant and Calpine's guaranty of those agreements. The company generated operating revenue of $261.5 million for the three months ended June 30, 2007, as compared with operating revenue of $251 million for the three months ended June 30, 2006. Milder weather and higher expenses from a plant outage were the primary contributors to the decrease at Cleco Power for the quarter. Excluding net proceeds from the CES claims, Cleco Midstream's second quarter 2007 results were down primarily due to the absence of the 2006 partial drawdown of the $15 million letter of credit at Acadia and an increase in replacement power as a result of an unplanned outage. Cleco's results for the first six months of 2007 include net income of $71.8 million, as compared with net income of $35.4 million for the same period of 2006. Operating revenue, net, for the first six months of 2007 were $485.3 million, as compared with operating revenue, net, of $474.4 million for the first six months of 2006. On July 30, 2007, Cajun Gas Energy L.L.C., an affiliate of pooled investment funds managed by King Street Capital Management, L.L.C., emerged as the successful bidder for Calpine's 50% ownership interest in the Acadia project. Cajun's offer of $189 million includes payments to Cleco of $85 million for the agreed upon value of Cleco's priority distributions from Acadia, plus a $2.9 million break-up fee, and reimbursement of expenses up to $350,000. As of June 30, 2007, the company's balance sheet showed total assets of $2.6 billion, total liabilities of $1.7 billion, and total stockholders' equity of $952.3 million. "This completes the monetization of the value we built in the Acadia tolling agreements. Not only did we receive our $85 million claim in Calpine's bankruptcy, but Cleco also will receive an additional $85 million of proceeds from Cajun," Cleco president and chief executive officer Michael Madison said. "We look forward to beginning work with Cajun very soon to develop a common strategy that will continue to bring maximum value to the Acadia project." Strategic Update Cleco Midstream "The results of the Calpine bankruptcy process further validate Cleco Midstream's risk management strategies. Both the Perryville and Acadia projects faced weakened markets and bankrupt counterparties, but in both cases, the terms we negotiated into the tolling and partnership agreements enabled Cleco to extract its investment from the bankruptcy processes and realize the value we'd built," Madison said. "On the Evangeline project, we are working with Williams and Bear Stearns to complete the transfer of the project's tolling agreement to Bear Stearns. We expect the transfer to be complete later this year. The terms of the agreement will be unchanged, but we anticipate an improvement in Evangeline's senior secured debt rating due to the more favorable credit rating of Bear Stearns," Madison said. Cleco Power "We are into our 16th month of construction on our Rodemacher 3 project, and progress continues to go well, with capital expenditures, including AFUDC totaling $405 million since inception. Just as importantly, we recently celebrated one million work hours without a lost time accident," Mr. Madison said. Although intended primarily for petroleum coke, Rodemacher 3 utilizes CFB or circulating fluidized boiler technology which has the capability of using many types of fuels. "This additional flexibility is becoming more and more important given the current regulatory environment," Mr. Madison said. "While Congress has not yet imposed a national renewable energy mandate, we at Cleco are preparing for that eventuality. Most recently we have entered into a Cooperative Research and Development Agreement with the U.S. Army Corps of Engineers Engineer Research and Development Center to study the viability of geothermal power production in Louisiana. Other than biomass, geothermal power is the best renewable opportunity that we see in Louisiana. We see future renewable energy legislation as an opportunity to grow our business as well as help the environment." "Also looking to the future, during the second quarter we issued the informational draft of our long-term RFP for up to approximately 600 megawatts of intermediate and peaking capacity. We currently target selecting winning bids by third quarter of 2008," Mr. Madison continued. "Preparation for the securitization of storm costs is still continuing as planned. We expect to have the LPSC's financing order by the third quarter, with securitization completed by the end of the year. That securitization will include storm costs from 2005 as well as a $50 million dollar reserve for future storm damage." Guidance "We are maintaining guidance at $1.20 to $1.30 per share for the year, excluding the results of the Calpine bankruptcy process," Mr. Madison concluded. Earnings estimates assume normal weather, 2007 capital expenditures of about $440 million on the Rodemacher project, the continuation of our current rate plan at Cleco Power, continued performance by Evangeline's tolling counterparty, and certain assumptions about Acadia's plant operations and market conditions. About Cleco Corp. Headquartered in Pineville, Louisiana, Cleco Corp. (NYSE:CNL) -- http://www.cleco.com/-- is a regional energy services holding company that conducts substantially all of its business operations through its two principal operating business segments, Cleco Power LLC and Cleco Midstream Resources LLC. Cleco Power is an integrated electric utility services subsidiary which also engages in energy management activities. Cleco Midstream is a merchant energy subsidiary that owns and operates a merchant generation station, invests in a joint venture that owns and operates a merchant generation station, and owns and operates transmission interconnection facilities. * * * As of May 24, 2007, Cleco Corp. carries a Ba2 Preferred Stock rating which Moody's Investors Service assigned to the company in March 2003. CONNECTOR 2000: Possible Payment Default Cues S&P to Junk Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Connector 2000 Association Inc., South Carolina's bonds to 'CCC' from 'B-', based on the increased likelihood of a payment default by 2010, absent a debt restructuring. The outlook is stable. The association currently has $66 million in series 1998A senior current interest toll road revenue bonds and $144.8 million in series 1998B senior capital appreciation toll road revenue bonds. Standard & Poor's does not rate the $80.5 million in series 1998C subordinate capital appreciation toll road revenue bonds that also financed the project. The Southern Connector is a 16-mile, four-lane startup toll road, opened in March 2001, extending from the intersection of I-85/185 to the intersection of I-385 in Greenville, South Carolina. The toll road provides the major east-west traffic flow in the southern part of Greenville, which currently has no comparable roads. The rating reflects the continued failure of traffic and revenues to reach projected levels and the use of the debt service reserve account for debt service payments in fiscals 2003-2006, a practice which is expected to accelerate beginning in fiscal 2008. Toll rates increased on Jan. 3, 2005, resulting in toll revenues increasing 24.5% for the year compared with the previous fiscal year; revenues increased an additional 9.0% in 2006. However, skepticism remains regarding the project's long-term ability to pay timely principal and interest under the current back-ended amortization schedule. Current estimates provided by the association assume that the senior debt service reserve fund will be exhausted in 2009 if no restructuring occurs, with a payment default occurring in 2010. "In the absence of debt restructuring, this rating is intended to remain in place until it is apparent that nonpayment of debt service has occurred," said Standard & Poor's credit analyst Laura Macdonald. The project has been affected by substantially lower traffic demand than expected in the initial feasibility study completed in 1997. For the first six months of 2007, average daily transactions were at 15,721, 10% higher than the same period last year. In general, traffic has steadily increased since operations began on March 14, 2001, with average daily transactions growing an average of 2% per month. However, given the significantly lower transaction base compared with the original forecasts, the project--unless significant growth occurs--is likely to remain troubled for the foreseeable future. It is likely that the association will default on its debt service obligations at some point, given the backloaded amortization schedule and current low debt service coverage levels, and assuming no dramatic improvement in traffic. As a result, the association has initiated internal financial restructuring discussions in an effort to avoid any default and is also preparing an updated traffic and revenue study. CREDIT BASED: Fitch Affirms BB Rating on $9.7MM Class B3 Certs. --------------------------------------------------------------- Fitch Ratings has taken these rating actions on Credit Based Asset Servicing and Securitization LLC mortgage pass-through certificates. Affirmations total $1.16 billion. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: C-BASS 2006-CB8 -- $349.6 million class A affirmed at 'AAA' (BL: 43.40, LCR: 3.40); -- $22.3 million class M1 affirmed at 'AA+' (BL: 38.68, LCR: 3.03); -- $30 million class M2 affirmed at 'AA+' (BL: 31.91, LCR: 2.50); -- $11.4 million class M3 affirmed at 'AA' (BL: 30.21, LCR: 2.37); -- $11.7 million class M4 affirmed at 'AA-' (BL: 27.94, LCR: 2.19); -- $13.7 million class M5 affirmed at 'A+' (BL: 25.18, LCR: 1.97); -- $8 million class M6 affirmed at 'A' (BL: 23.52, LCR: 1.84); -- $10.6 million class M7 affirmed at 'A-' (BL: 21.27, LCR: 1.67); -- $2.9 million class M8 affirmed at 'BBB+' (BL: 20.63, LCR: 1.62); -- $15.4 million class B1 affirmed at 'BBB' (BL: 17.20, LCR: 1.35); -- $10.6 million class B2 affirmed at 'BBB-' (BL: 14.84, LCR: 1.16); -- $9.7 million class B3 affirmed at 'BB' (BL: 12.88, LCR: 1.01). Deal Summary -- Originators: 29.26% Ameriquest Mortgage Company, 29.11% Ownit, 13.28% NC Capital Corp. -- 60+ day Delinquency: 11.05%; -- Realized Losses to date (% of original balance): 0.03%; -- Expected Remaining Losses (% of Current Balance): 12.75%; -- Cumulative Expected Losses (% of Original Balance): 11.49%. C-BASS 2006-CB9 -- $542.4 million class A affirmed at 'AAA' (BL: 32.33, LCR: 3.09); -- $28.3 million class M1 affirmed at 'AA+' (BL: 27.95, LCR: 2.67); -- $22.9 million class M2 affirmed at 'AA' (BL: 24.70, LCR: 2.36); -- $13.8 million class M3 affirmed at 'AA-' (BL: 22.69, LCR: 2.17); -- $11.8 million class M4 affirmed at 'A+' (BL: 20.92, LCR: 2.00); -- $12.2 million class M5 affirmed at 'A' (BL: 19.04, LCR: 1.82); -- $9.6 million class M6 affirmed at 'A-' (BL: 17.53, LCR: 1.68); -- $9.2 million class M7 affirmed at 'BBB+' (BL: 16.00, LCR: 1.53); -- $8.8 million class M8 affirmed at 'BBB' (BL: 14.40, LCR: 1.38); -- $6.1 million class M9 affirmed at 'BBB-' (BL: 13.32, LCR: 1.27). Deal Summary -- Originators: 29.45% NC Capital Corp., 28.43% Ameriquest Mortgage Company, 24.16% OwnIt, 11.98% AIG Federal Savings Bank -- 60+ day Delinquency: 6.39%; -- Realized Losses to date (% of original balance): 0.01%; -- Expected Remaining Losses (% of Current Balance): 10.45%; -- Cumulative Expected Losses (% of Original Balance): 9.65%. CYBERCARE INC: Phoenix Balks at CyberCare's Disclosure Statement ---------------------------------------------------------------- Phoenix Leasing Incorporated, a secured creditor, objects to the Second Amended Joint Disclosure Statement explaining CyberCare Inc. and its debtor-affiliate, CyberCare Technologies Inc.'s Chapter 11 Plan of Reorganization. Phoenix Leasing points out that the Debtors' Amended Disclosure Statement is defecient because the Debtors failed to provide: a. accurate information on their assets; b. sufficient information the value of the Technology business; c. sufficient financial information for creditors to evalute the proposed distribution of stock if the the Debtors' Plan is confirmed by the Court; and d. sufficient information with respect to the U.S. Sustainable Energy Corporation stock claims. In addition, Phoenix Leasing tells the Court that the Debtors' liquidation analysis provides inconsistent information with respect to the liquidation value of the Debtors' assets. Treatment of Claims Under the Debtors' Plan, Administrative Claims will be paid in full, in cash. All Priority Claims will be paid on the distribution date. To the extent possible holders of Tax Lien Claims remain upaid, holders will be paid in full on the effective date. Secured Claim of Cast-Crete, as DIP lender, will be paid through the issuance of new stock of the Debtor, which will be contributed by the DIP lender to the equity stock pool for distribution to the holders. Secured Claims of CC Fortune will be paid through the: a. transfer of CC Fortune of an 80% ownership interest in license of all Debtors rights to the technology and intellectual property; and b. issuance of new warrants to purchase additional shares of new CyberCare stock. Holders of Secured Claims of Tang Entities, as well as Tang Entities Unsecured Claims and Equity Interest, are subject to compromise and agreement between the Debtors and holders. These judgment lien creditors will receive the value of their secure claims through the surrender of the tangible personal property: -- A. Razzak Tai, M.D., -- Phoenix Leasing Inc., -- Equilease Financial Services Inc., -- International Business Machines Corp., and -- Rodger Hochman. They also have the right to enforce the lein againts the property in accordance with the priority of their lien. Dr. Tai's claim will be treated as equity interest and will be subordinated under Section 510 of the Bankrupcty Code. Dr. Tai, according to the Debtors, contends that his debt arose from the Debtors' breach of contract in failing and refusing to pay the purchase of his medical practice. General Unsecured Claims against the Debtors will receive new Debtors stock. Unsecured Claim of Cast-Crete will be receive 100% shares of the total new stock in the reorganized Debtors. Holders of Intercompany Claims will not receive any distribution. Holders of Equity Interest will receive a pro rata distribution of new stock from the equity stock pool based on the proportional amount of common stock previously held by the holder as of the petition date. Headquartered in Tampa, Florida, CyberCare, Inc., fka Medical Industries of America, Inc. (PINKSHEETS: CYBR) is a holding company that owns service businesses, including a physical therapy and rehabilitation business, a pharmacy business, and a healthcare technology solutions business. The Company and its debtor- affiliate, CyberCare Technologies, Inc., filed for chapter 11 protection on Oct. 14, 2005 (Bankr. M.D. Fla. Case No. 05-27268). Scott A. Stichter, Esq., at Stichter, Riedel, Blain & Prosser represents the Debtors in their restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtors' case. When the Debtors filed for protection from their creditors, they listed $5,058,955 in assets and $26,987,138 in debts. DORAL FINANCIAL: 1-for-20 Reverse Split To Take Effect on Aug. 17 ----------------------------------------------------------------- Doral Financial Corporation reported that the 1-for-20 reverse split of its common stock, approved by Doral's shareholders at the annual meeting of shareholders, will become effective as of 5:00 p.m. Eastern Time on Aug. 17, 2007. Upon the effectiveness of the reverse split, Doral shareholders will receive one new share of Doral common stock for every twenty shares they hold. Doral's common stock will begin trading on a split-adjusted basis when the market opens on Aug. 20, 2007. The purpose of the reverse split is to increase the trading price of Doral's common stock. Doral, however, cannot assure that the price of its common stock after the reverse split will reflect the 1-for-20 reverse split ratio, that the price per share after the effective time of the reverse split will be maintained, or that the price will remain above the pre-split trading price. In connection with the reverse split, the total number of common shares authorized under Doral's Restated Certificate of Incorporation will be reduced from 1,950,000,000 to 97,500,000 shares. As of July 31, 2007, there were approximately 1,076,202,204 shares of Doral's common stock outstanding. Effecting the 1-for-20 reverse split will reduce that amount to approximately 53,810,110 shares. The reverse split will not change the number of shares of Doral's serial preferred stock authorized, which will remain at 40,000,000 shares. The number of common shares into which Doral's outstanding stock options and convertible preferred stock, well as their relevant exercise or conversion price per share, and any outstanding restricted stock units will be proportionally adjusted to reflect the reverse split. The number of shares authorized for issuance under Doral's Omnibus Incentive Plan will also be proportionally reduced to reflect the reverse split. Doral will not issue any fractional shares of its common stock as a result of the reverse split. Instead, Doral's transfer agent, Mellon Investor Services LLC, will aggregate all fractional shares held by Doral shareholders into whole shares and arrange for them to be sold on the open market at prevailing prices. In lieu of fractional shares, shareholders will receive a cash payment equal to their allocable share of the total proceeds of these sales. Shareholders will not be entitled to receive interest for the period of time between the effective date of the reverse split and the date the shareholder receives his or her cash payment. Shareholders holding fewer than twenty shares of Doral common stock will receive only cash for all their shares held before the reverse split and will no longer hold any shares of Doral common stock as of the effective date of the split. Doral will adopt a new stock certificate in connection with the implementation of the reverse split. Mellon Investor Services was retained to manage the exchange of stock certificates. Shareholders of record will receive a letter of transmittal providing instructions for the exchange of their old certificates soon as practicable following the effectiveness of the reverse split. For more information, shareholders and securities brokers should contact Mellon Investor Services at 1-800-777-3674. About Doral Financial Corp. Based in New York City, Doral Financial Corporation (NYSE: DRL) -- http://www.doralfinancial.com/-- is a diversified financial services company engaged in mortgage banking, banking, investment banking activities, institutional securities and insurance agency operations. Its activities are principally conducted in Puerto Rico and in the New York City metropolitan area. Doral is the parent company of Doral Bank, a Puerto Rico based commercial bank, Doral Securities, a Puerto Rico based investment banking and institutional brokerage firm, Doral Insurance Agency Inc. and Doral Bank FSB, a federal savings bank based in New York City. * * * As reported in the Troubled Company Reporter on Aug. 1, 2007, Fitch Ratings affirmed and removed all of Doral Financial Corporation's ratings from rating watch negative. DRL's Rating outlook is positive. Fitch currently rates DRL's long-term Issuer Default Rating 'CCC'. The support rating floor for DRL and its principal subsidiary remains unchanged at 'No Floor'. DRESSER-RAND: Earns $26.2 Million in Second Quarter of 2007 ----------------------------------------------------------- Dresser-Rand Group Inc. reported net income of $26.2 million for the second quarter 2007. This compares to a net income of $10.7 million for the second quarter 2006. Second quarter 2007 income included a provision for litigation and related interest of $4.2 million and a charge of $ 2.3 million related to a change in an accounting estimate for workers' compensation. "The improvements in our second quarter 2007 results over last year were somewhat tempered by the litigation provision and a change in accounting estimate,” Vincent R. Volpe, Jr., President and Chief Executive Officer of Dresser- Rand, said. ''The impact of these two items was approximately $0.05 per diluted share. Additionally, changes in procurement processes and a delay in the budget appropriations by certain of our national oil company clients resulted in lower than expected aftermarket bookings and revenues for the period. Total revenues increased 4%, operating income increased 14%, and our backlog grew 59% over the year ago period. New unit bookings were strong as the upstream, midstream and downstream markets remain very active, with the most notable order coming for a floating, production, storage and offloading project for British Petroleum for approximately $154 million. Total revenues for the second quarter 2007 of $441.2 million increased $17.2 million or 4% compared to $424 million for the second quarter 2006. Total revenues for the six months ended June 30, 2007 of $755.6 million increased $40.1 million or 6% compared to $715.5 million for the corresponding period in 2006. Operating income for the second quarter 2007 was $50.1 million. This compares to operating income of $27.2 million for the second quarter 2006 which included $16.8 million for stock-based compensation expense for exit units. Second quarter 2007 operating income increased from the year ago quarter due to higher pricing and productivity improvements. Operating income for the six months ended June 30, 2007 was $83 million. This compares to operating income of $57.4 million for the corresponding period in 2006, which included a net charge of $5 million comprised of the $16.8 million for stock-based compensation expense for exit units partially offset by a $12 million curtailment gain. Operating income increased from the year ago six month period primarily due to higher pricing. As of June 30, 2007, cash and cash equivalents totaled $160.8 million and borrowing availability under the $350 million revolving credit portion of the company's senior credit facility was $147.5 million, as $202.5 million was used for outstanding letters of credit. In first six months of 2007, cash provided by operating activities was $136.2 million, which compared to $6.9 million for the corresponding period in 2006. The increase of $129.3 million in net cash provided by operating activities was principally from changes in working capital. In the first six months of 2007, capital expenditures totaled $8.6 million and the company prepaid $110.1 million of its outstanding indebtedness under its senior secured credit facility. As of June 30, 2007, total debt was $396.9 million and total debt net of cash and cash equivalents was approximately $236.1 million. In July 2007, the company prepaid the remaining $26.8 million of outstanding indebtedness under its senior secured credit facility. About Dresser-Rand Headquartered in Houston, Texas, Dresser-Rand Group Inc. (NYSE: DRC) is a supplier of rotating equipment solutions to the worldwide oil, gas, petrochemical, and process industries. It operates manufacturing facilities in the United States, France, Germany, Norway, India, and Brazil, and maintains a network of 24 service and support centers covering 105 countries. * * * Standard & Poor's Ratings Services raised on Sept. 13, 2006, its corporate credit rating on rotating equipment maker Dresser-Rand Group Inc. to 'BB-' from 'B+' and revised the outlook on the rating to stable from positive. EASTMAN KODAK: Earns $592 Million in Quarter Ended June 30, 2007 ---------------------------------------------------------------- Eastman Kodak Company reported on Thursday its financial results for the second quarter ended June 30, 2007. Eastman Kodak reported net income of $592 million for the quarter ended June 30, 2007, compared with a net loss of $282 million for the same period last year. Results for the quarters ended June 30, 2007, and 2006, included total company earnings from the discontinued operations of the company's Health Group segment to Onex Healthcare Holdings Inc. on April 30, 2007, of $727 million (including a pre-tax gain on sale of $980 million) and $73 million, respectively. The company reported a $121 million year-over-year improvement in pre-tax results from continuing operations, reflecting gross profit margin improvements across all of its major business units. The company achieved a $97 million improvement in digital earnings and a $31 million improvement in traditional earnings, as expenses declined. In addition, the company reported a $135 million after-tax loss from continuing operations, an improvement of $220 million, as compared to the prior year. Kodak also reaffirmed its plan to achieve its full-year financial goals for net cash generation, digital revenue growth and digital earnings. "Our second-quarter results reinforce our confidence in our full-year performance," said Antonio M. Perez, chairman and chief executive officer, Eastman Kodak Company. "Revenues during the second quarter were in line with our expectations. Earnings improved across all of our major business units, reflecting our strong focus on cost reduction and operational efficiencies. We continue to expect a strong second half, with double-digit sales growth in both of our major digital businesses, driven by a stronger-than-ever portfolio of digital products, including our revolutionary consumer inkjet printing system, new image sensors, workflow software, and an expanded line of NEXPRESS digital color printing presses. I'm pleased with our first-half results, and I remain confident in our ability to achieve our 2007 key strategic objectives." On the basis of generally accepted accounting principles in the U.S. (GAAP), the company reported a second-quarter loss from continuing operations of $173 million pre-tax, $135 million after tax, compared with a loss of $294 million pre-tax, $355 million after tax in the year-ago period. Items of expense impacting comparability in the second quarter of 2007 totaled $266 million after tax. The most significant item was restructuring costs of $316 million before tax and $248 million after tax. In the second quarter of 2006, items that impacted comparability totaled $206 million after tax primarily reflecting restructuring costs. For the second quarter of 2007: -- Sales totaled $2.510 billion, a decrease of 7% from $2.688 billion in the second quarter of 2006. Digital revenue totaled $1.460 billion, a 3% increase from $1.417 billion. Traditional revenue totaled $1.044 billion, a 17% decline from $1.262 billion in the year-ago quarter. -- The company's second-quarter loss from continuing operations, before interest, other income (charges), net, and income taxes was $163 million, compared with a loss of $257 million in the year-ago quarter. Other financial details: -- Gross Profit margin was 26.2% for the quarter, up from 21.4% in the prior year, primarily attributable to lower costs, driven by manufacturing footprint reductions and the favorable impact of foreign exchange, offset by adverse silver and aluminum costs. -- Selling, General and Administrative expenses decreased $87 million from the year-ago quarter, reflecting the company's cost reduction activities. SG&A as a percentage of revenue was 17%, down from 19% in the year-ago quarter. -- Net Cash Generation for the second quarter was negative $251 million, compared with negative $74 million in the year- ago quarter. Net Cash Generation for the first half of 2007 was negative $704 million, compared with negative $691 million in the year-ago period. This corresponds to net cash used in operating activities from continuing operations of $298 million for the second quarter, compared with $17 million in the year-ago quarter, driven primarily by changes in working capital. For the first half of 2007, net cash used in operating activities from continuing operations was $695 million, compared with $554 million in the year-ago period. -- On April 30, 2007, the company completed the sale of its Health Group to an affiliate of Onex Corporation for $2.350 billion. As previously announced, the company used a portion of the cash proceeds from that transaction to fully repay $1.145 billion of outstanding secured term debt. As of June 30, 2007, the company's debt level was $1.624 billion, a $1.154 billion reduction from the 2006 year-end debt level of $2.778 billion. -- Kodak held $1.925 billion in cash and cash equivalents as of June 30, 2007. 2007 Outlook Reaffirmed Kodak remains focused on three financial metrics as it continues to transform its business: net cash generation, digital earnings from operations and digital revenue growth. The company's goal for net cash generation this year is in excess of $100 million after restructuring disbursements of approximately $600 million. This outlook corresponds to expected net cash provided by continuing operations from operating activities, on a GAAP basis, in the range of $200 million to $450 million. Additionally, the company's goal for 2007 full-year digital earnings from operations is $150 million to $250 million, which corresponds to a GAAP loss from continuing operations before interest, other income (charges), net, and income taxes for the full year of $550 million to $650 million. Finally, the company continues to forecast 2007 digital revenue growth of 3% to 5%, with total 2007 revenue expected to be down between 4% and 7%. At June 30, 2007, the company's consolidated balance sheet showed $13.074 billion in total assets, $10.582 billion in total liabilities, and $2.492 billion in total stockholders' equity. Headquartered in Rochester, New York, Eastman Kodak Co. (NYSE: EK)-- http://www.kodak.com/-- develops, manufactures, and markets digital and traditional imaging products, services, and solutions to consumers, businesses, the graphic communications market, the entertainment industry, professionals, healthcare providers, and other customers. The company has operations in Argentina, Chile, Denmark, Greece, Jordan, Yemen, Australia, China among others. * * * As reported in the Troubled Company Reporter on May 18, 2007, Fitch Ratings upgraded Eastman Kodak Company's senior unsecured debt to 'B/RR4' from 'B-/RR5' due to improved recovery prospects following the company's redemption on May 3, 2007, of a $1.15 billion secured term loan funded with a portion of the proceeds from the sale of its Health Group to Onex Healthcare Holdings, Inc., for $2.35 billion on April 30, 2007. In addition, Fitch has affirmed these Kodak ratings: -- Issuer Default Rating 'B'; -- Secured credit facility 'BB/RR1'. EXHIBITION HALL: S&P Lifts Rating to BB, Outlook Now Positive ------------------------------------------------------------- Standard & Poor's Ratings Services raised its underlying rating (SPUR) on New Orleans Exhibition Hall Authority, Louisiana's series 1996A, 1996C, 1998, and 2000 hotel-occupancy tax and special-tax bonds three notches to 'BB' from 'B' based on the improved pledged revenue stream. The outlook is stable. The rating service also revised its outlook on the 'B' SPUR on the authority's series 2003A and 2004 senior-subordinated special-tax bonds to 'positive' from 'stable' and affirmed the rating. The different outlooks reflect the greater potential for Standard & Poor's to raise the subordinated bond ratings should pledged revenues continue to grow to a point where they would be self- supporting while the senior bonds are already self-supporting. The stable outlook on the senior bonds indicates the authority has the funds in place, as well as the ongoing tax collections, to make debt service payments through January 2008. The positive outlook on the subordinate bonds indicates the progress being made in the current year and into the outlook horizon toward meeting debt service coverage entirely with pledged revenues. The upgrade and outlook revision reflect a post-Hurricane Katrina stabilization of pledged revenues at about 70% of previous levels by fiscal year-end 2006. Pledged revenues have since grown by about 12% during fiscal 2007 as the convention and tourism industry has begun to recover; it, however, is far from the point of permitting all bonds to be fully supported only by pledged revenues. "It is our belief that the further direction of revenue streams pledged to the bonds will provide either upward or downward pressure on the rating," said Standard & Poor's credit analyst Alexander Fraser. "We also believe the potential to better match pledged revenue streams with annual debt service through a restructuring could also stabilize or improve credit quality." The senior bonds benefit from a closed lien and a senior pledge of certain taxes, primarily combined 2% hotel and food and beverage taxes, received by the authority. In fiscal 2006, coverage of senior bonds by pledged revenues was 1.65x. Residual revenues, along with a separate and dedicated 1% hotel tax and other revenues, provided just 0.62x coverage of the senior-subordinate bonds in fiscal 2006. Combined coverage would equate to 0.72x. On Dec. 31, 2006, the authority had $81.1 million in debt service payment and reserve accounts and $88.9 million in other cash and investments. With the tourism industry largely shut for the first half of the year, total fiscal 2006 pledged tax revenues were $25.8 million, allowing coverage of just 0.72x for all debt. Through May 2007, fiscal 2007 revenues have improved by 12%. The 'BB' and 'B' ratings also reflect the substantial and ongoing disruption of the convention and tourism-driven hotel market due to Katrina and the long-term dependence of tourism and convention business on the recovery and long-term health of New Orleans' economy. The rating action affects roughly $491.6 million of debt outstanding. GO DEBT: S&P Lifts Rating to BB from B with Stable Outlook ---------------------------------------------------------- Standard & Poor's Ratings Services raised its standard long-term rating and underlying rating on New Orleans, Louisiana's GO debt three notches to 'BB' from 'B' and its SPUR on the city's limited- tax GO debt three notches to 'BB-' from 'B-' because the city's long-term ability to meet its obligations is less vulnerable than it was after hurricanes Katrina and Rita. The outlook remains stable. Ongoing uncertainties, especially as they relate to the rebuilding of the city, however, will continue to exist over the next several years. Management currently has funds set aside, through a loan from the state, to meet its near-term financial commitment on its obligations. Rating factors include the gradual recovery of the property and sales tax bases since the storms; the modest growth of the overall revenue stream in the current year -- The budget, however, remains out of structural balance; the reliance on substantial amounts of external loans to provide budget balance over the five-year operating budget horizon; and the profound and lasting effect of damage caused by Katrina and Rita in 2005. "We believe New Orleans' general fund revenues, coupled with extraordinary grants and loans, will allow management to set aside adequate funds for debt repayment in the near future," said Standard & Poor's credit analyst Alexander Fraser. "Until city officials can establish a repayment schedule and build it into future budget assumptions or until terms for loan forgiveness are settled, the status of the loans from the federal and state governments will remain a long-term budget concern." New Orleans' current fiscal year will end on Dec. 31, 2007; and revenue projections are close to forecast levels. The pace of recovery has been the dominant factor in determining revenues and, consequently, the city's ability to raise service levels. New Orleans has historically relied on sales taxes for the majority of its revenues; therefore, economic activity generated by residents and visitors is critical to budget stability. In the city's five-year capital plan, released with the current budget, external payments such as Federal Emergency Management Agency infrastructure repair grants; the use of $120 million of community disaster loan funds; and a $70 million state loan to support debt service will be critical to maintaining liquidity for at least the next three years. Assumptions within the plan call for revenue growth of about 10% annually and continued expenditure restraint keeping overall costs below 2005 levels through 2010. Should assumptions hold, management will achieve structural budget balance in fiscal 2011. The property tax collection apparatus has produced current collection rates of about 90% this year, which is in-line with historical collection rates. Additional revenues, such as sales tax revenues, are currently at about 75% of historical levels. City management has just released the fiscal 2005 audit, which indicates results are in-line with the assumptions made with fiscal 2007 in mind. The rating action affects roughly $840 million of debt outstanding. GRAY TELEVISION: Paying $0.03/Share Dividend on Sept. 28 -------------------------------------------------------- Gray Television Inc.'s board of directors has declared a dividend of $.03 per share, payable on Sept. 28, 2007, to stockholders of record of its Common Stock and Class A Common Stock on Sept. 14, 2007. This is the 40th consecutive year that Gray has paid a common stock cash dividend. Headquartered in Atlanta, Georgia, Gray Television Inc. (NYSE: GTN and GTN.A) -- http://www.gray.tv/-- is a television broadcast company. Gray currently operates 36 television stations serving 30 markets. Each of the stations are affiliated with either CBS (17 stations), NBC (10 stations), ABC (8 stations) or FOX (1 station). In addition, Gray currently operates 39 digital second channels including 1 ABC, 5 Fox, 8 CW and 16 MyNetworkTV affiliates plus 7 local news/weather channels and 2 "independent" channels in certain of its existing markets. * * * Moody's Investor Services assigned Ba3 on Gray Television Inc.'s long term corporate family rating on February 2007. The outlook is stable. HOLLINGER INC: Initiates Changes to Sun-Times Board of Directors ---------------------------------------------------------------- Hollinger Inc., as the holder of a majority in voting interest of the common stock of Sun-Times Media Group, Inc., delivered a written consent in lieu of a meeting to Sun-Times adopting resolutions that: (i) removed three current directors from the Sun-Times Board of Directors, (ii) increased the size of the Sun-Times Board of Directors to eleven directors and (iii) elected each of William E. Aziz, Brent D. Baird, Albrecht Bellstedt, Peter Dey, Edward C. Hannah and G. Wesley Voorheis as directors to the Sun-Times Board of Directors. "The concerns we expressed in our June 11, 2007, letter to Sun- Times remain, and have been heightened as the value of Sun-Times' shares continues to decline,” G. Wesley Voorheis, the CEO of Hollinger, said. ''We have always believed that Sun-Times should implement a formal strategic process to enhance value for all Sun- Times shareholders. The actions we have taken are consistent with this." "As we have said before, we do not intend to interfere in any way with the mandate of the Special Committee of the Sun-Times Board of Directors, which will deal with the claims between Sun-Times and Hollinger, or the Special Monitor, Mr. Richard Breeden,” Mr. Voorheis added. ''We have not removed any of the members of the Special Committee. We are committed to working with the Special Committee and the entire Board of Directors, as well as Mr. Breeden." "Hollinger intends to immediately engage in a formal process, in consultation with other Sun-Times shareholders, to identify other qualified directors to join the Sun-Times Board of Directors in addition to or in lieu of those elected on July 31, 2007," Mr. Voorheis noted. "Our interests," Mr. Voorheis explained, "as the largest shareholder of Sun-Times are aligned with the interests of all of Sun-Times shareholders. We will work very hard to improve the value of Sun-Times for all shareholders." About Hollinger Inc. Based in Toronto, Ontario, Hollinger Inc. (TSX: HLG.C)(TSX: HLG.PR.B) -- http://www.hollingerinc.com/-- owns approximately 70.1% voting and 19.7% equity interest in Sun-Times Media Group Inc. (formerly Hollinger International Inc.), a media company with assets which include the Chicago Sun-Times newspaper and Suntimes.com and a number of community newspapers and websites serving communities in the Chicago area. * * * As reported in the Troubled Company Reporter on Aug. 3, 2007, Hollinger Inc., together with two of its Canadian subsidiaries 4322525 Canada Inc. and Sugra Limited, initiated a Court- supervised restructuring under the Companies' Creditors Arrangement Act (Canada) and a companion proceeding in the United States pursuant to Chapter 15 of the U.S. Bankruptcy Code. Pursuant to a Canadian Court Order obtained Aug. 1, 2007, Ernst & Young Inc. was appointed by the Court as Monitor to assist the companies through their restructuring process. The Canadian Court Order stayed all of the companies' obligations to creditors for an initial period of 30 days, and may be extended upon subsequent motions being made to the Court. A companion Order has been obtained from the U.S. bankruptcy court, which will remain in effect pending a further hearing. HOLLINGER INC: To Pay $24.5 Million to Class Action Claimants ------------------------------------------------------------- Hollinger Inc. entered into an agreement to settle securities class action suits pending against the company, Sun-Times Media Group Inc. and a number of its former directors and officers in the United States and Canada, and an agreement to settle litigation over the directors and officers insurance coverage of the company. These agreements are subject to court approval in the United States and Canada. If approved, the securities class action settlement will resolve the claims asserted against STMG, a number of its former directors and officers, certain affiliated companies, STMG's auditor, KPMG LLP, and the Company in a consolidated class action in the United States District Court for the Northern District of Illinois entitled In re Hollinger International Inc. Securities Litigation, No. 04C-0834, and in similar actions that have been initiated in Saskatchewan, Ontario, and Quebec, Canada. Those actions assert, among other things, that from 1999 to 2003, defendants breached U.S. federal, state and/or Canadian law by allegedly making misleading disclosures and omissions regarding certain "non- competition" payments and the payment of allegedly excessive management fees. The company's settlement of the securities class action lawsuits will be funded entirely by proceeds from its insurance policies. The settlement includes no admission of liability by the company or any of the settling defendants, and the company continues to deny any such liability or damages. In addition, the company's insurers will deposit $24.5 million in insurance proceeds into an escrow account to fund defense costs incurred in the securities class action and other litigation or other claimed losses. The insurance carriers will then be released from any other claims for the July 1, 2002 to July 1, 2003 policy period. The company and other parties, including STMG, will then seek a judicial determination regarding how to allocate the $24.5 million in insurance proceeds among the insureds who assert claims to the proceeds. STMG and the company have had negotiations concerning how any such proceeds awarded to them should be allocated between the two companies. If they cannot reach an agreement on that issue, they have agreed to resolve it through binding arbitration. The securities class action settlement is conditioned upon prior approval of the insurance settlement, and the insurance settlement agreement is conditioned upon subsequent approval of the class action settlement. The parties will seek these approvals in the appropriate courts in the United States and Canada. About Hollinger Inc. Based in Toronto, Ontario, Hollinger Inc. (TSX: HLG.C)(TSX: HLG.PR.B) -- http://www.hollingerinc.com/-- owns approximately 70.1% voting and 19.7% equity interest in Sun-Times Media Group Inc. (formerly Hollinger International Inc.), a media company with assets which include the Chicago Sun-Times newspaper and Suntimes.com and a number of community newspapers and websites serving communities in the Chicago area. * * * As reported in the Troubled Company Reporter on Aug. 3, 2007, Hollinger Inc., together with two of its Canadian subsidiaries 4322525 Canada Inc. and Sugra Limited, initiated a Court- supervised restructuring under the Companies' Creditors Arrangement Act (Canada) and a companion proceeding in the United States pursuant to Chapter 15 of the U.S. Bankruptcy Code. Pursuant to a Canadian Court Order obtained Aug. 1, 2007, Ernst & Young Inc. was appointed by the Court as Monitor to assist the companies through their restructuring process. The Canadian Court Order stayed all of the companies' obligations to creditors for an initial period of 30 days, and may be extended upon subsequent motions being made to the Court. A companion Order has been obtained from the U.S. bankruptcy court, which will remain in effect pending a further hearing. HUNTSMAN CORP: Holders Connected w/ MatlinPatterson Sell Shares --------------------------------------------------------------- Huntsman Corporation disclosed that certain existing stockholders affiliated with MatlinPatterson Global Advisers LLC have entered into an underwriting agreement providing for a registered public secondary sale of 56,979,062 shares of Huntsman common stock. This sale is pursuant to the shelf registration statement filed with the Securities and Exchange Commission on July 31, 2007. The sale is expected to close on Aug. 6, 2007, subject to customary closing conditions. Huntsman will not receive any of the proceeds from this offering. Credit Suisse Securities (USA) LLC is the underwriter for the offering. A copy of the prospectus and, when available, a copy of the prospectus supplement may be obtained from: Credit Suisse Prospectus Department One Madison Avenue New York, NY 10010 Tel 1-800-221-1037 Headquartered in Salt Lake City, Utah, Huntsman Corp. (NYSE: HUN) -- http://www.huntsman.com/-- manufactures and markets differentiated and commodity chemicals. Its operating companies manufacture products for a variety of global industries including chemicals, plastics, automotive, aviation, textiles, footwear, paints and coatings, construction, technology,agriculture, health care, detergent, personal care, furniture, appliances and packaging. * * * As reported in the Troubled Company Reporter on June 28, 2007, Moody's Investors Service placed the debt ratings and the corporate family ratings (CFR -- Ba3) for Huntsman Corporation and Huntsman International LLC, a subsidiary of Huntsman under review for possible downgrade. INDEPENDENCE TAX: March 31 Balance Sheet Upside-down by $5.8 Mil. ----------------------------------------------------------------- Independence Tax Credit Plus L.P.'s consolidated balance sheet for the year ended March 31, 2007, showed $130.9 Million in total assets, $131.1 million in total liabilities, and $5.7 million in minority interests, resulting in a total partners' deficit of $5.8 million. The partnership reported a net loss of $6.3 million on rental income of $21.4 million for the year ended March 31, 2007, compared with a net loss of $5.1 million for the year ended March 31, 2006. Rental income increased approximately 3% for the 2006 fiscal year as compared to the 2005 fiscal year, primarily due to increases in tenant assistant payments at two local partnerships and rental rate increases at the other local partnerships. The increase in net loss primarily reflects an increase in total expenses from operations. Total operating expenses increased to $28.4 million for the year ended March 31, 2007, from $26.5 million for the year ended March 31, 2006, primarily due to an increase in general and administrative expenses and the recognition of a loss on impairment of property of $1.2 million during the year ended March 31, 2007. General and administrative increased approximately $579,000 for the 2006 fiscal year as compared to the 2005 fiscal year, primarily due to an increase in several lawsuit settlements at one local partnership. Full-text copies of the company's consolidated financial statements for the year ended March 31, 2007, are available for free at http://researcharchives.com/t/s?220f About Independence Tax Independence Tax Credit Plus LP is a limited partnership which originally held ownership interests in 28 other subsidiary partnerships owning leveraged complexes that are eligible for the low-income housing tax credit. The company's investment in each of these other partnerships represents from 98% to 98.99% of the company's interests in these other partnerships. As of March 31, 2007, the partnership has disposed on one of the 28 original properties and held ownership in 27 local partnerships. Independence Tax Credit Plus LP's general partner is Related Independence Associates LP. Related Independence Associates LP is also the general partner of Independence Tax Credit Plus LP II. In turn, Related Independence Associates Inc. is the general partner of Related Independence Associates LP. Opa-Locka, one of the subsidiary partnerships, is in default on its third and fourth mortgage notes and continues to incur significant operating losses. Independence Tax Credit's investment in Opa-Locka at Dec. 31, 2006, was approximately $2,827,000. INTCOMEX INC: S&P Holds 'B' Corporate Credit Rating --------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Miami, Florida-based Intcomex Inc. to positive from stable, following its recent S-1 filing to raise equity and use a portion of proceeds to redeem debt. S&P also affirmed the corporate credit rating at 'B' and the senior secured rating at 'B-'. Proceeds from the planned IPO would strengthen the company's capital structure with a repayment of up to 35% of its current outstanding debt, as permitted under the indenture. This would result in improved pro forma leverage of 2.8x from the March 31, 2007, level of about 4x. "The rating reflects the company's position as a second-tier distributor of IT products to the Latin American and Caribbean markets, historically modest earnings and cash flow from operations, exposure to more volatile end-market economic conditions, and a leveraged balance sheet," said Standard & Poor's credit analyst Lucy Patricola. These factors are offset partially by Intcomex's diverse customer base and good growth prospects in the Latin American PC market. Total debt to EBITDA as of March 31, 2007, was about 4x, which could improve by as much as a full turn depending on the ultimate disposition of proceeds from a potential IPO. Without the external source of funds, improvement in leverage over the intermediate term would be modest. INSIGHT HEALTH: S&P Junks Rating on $315MM Senior Secured Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating to InSight Health Services Corp. The outlook is negative. At the same time, S&P assigned it bank loan and recovery ratings to the company's $315 million senior secured floating-rate notes due 2011. The notes are rated 'CCC+' with a recovery rating of '5', indicating expectation of modest recovery (10%-30%) in the event of a default. InSight Health Services Holdings Corp. and its wholly owned subsidiary InSight Health emerged from bankruptcy on Aug. 1, 2007. The company filed for Chapter 11 protection with the U.S. Bankruptcy Court for the District of Delaware on May 29, 2007. "The negative outlook reflects the challenges InSight Health faces to stabilize and grow its business," said Standard & Poor's credit analyst Cheryl E. Richer. S&P will revise the outlook to stable if business prospects stabilize and improve. INTERNATIONAL COAL: Closed Offering Cues S&P to Lift Rating to B- ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on the $175 million 10.25% senior unsecured notes due 2014 of International Coal Group Inc. to 'B-' from 'CCC+'. The higher rating is the same as the corporate credit rating on subsidiary International Coal Group LLC (B-/Negative/--). S&P also removed the rating from CreditWatch, where it had been placed with positive implications on July 25, 2007. The actions followed the company's announcement that it closed on its offering of $195 million 9% convertible subordinated notes due 2012, using part of the proceeds to permanently reduce borrowing availability under its secured bank facility. As a result of the material decline in priority debt outstanding, existing bondholders are in a less disadvantaged position. Rating List International Coal Group LLC Corporate Credit Rating B-/Negative/-- Upgraded; CreditWatch/Outlook Action To From -- ---- International Coal Group Inc. Senior Unsecured notes B- CCC+/Watch Pos/-- ISLE OF CAPRI: Posts $14.6 Million in Fourth Qtr. Ended April 29 ---------------------------------------------------------------- Isle of Capri Casinos Inc. provided Thursday its financial results for the fourth fiscal quarter and fiscal year ended April 29, 2007. The company reported a net loss of $14.6 million for the fourth quarter ended April 29, 2007, compared with net income of $16.5 million for the fourth quarter ended April 30, 2006. For the fiscal year ended April 29, 2007, the company reported a net loss of $4.6 million, compared with net income of $18.9 million for the fiscal year ended April 30, 2006. The company reported a 17.3% decrease in net revenues from continuing operations to $255.6 million for the fourth quarter compared to net revenues from continuing operations of $309.1 million for the same quarter in fiscal 2006. Loss from continuing operations was $13.1 million during the fourth quarter of fiscal 2007 compared to income of $10.5 million for the fourth quarter of fiscal 2006. Adjusted EBITDA from continuing operations for the fourth quarter of fiscal 2007 decreased 22.9% to $57.3 million compared to Adjusted EBITDA from continuing operations of $74.3 million for the same quarter in fiscal 2006. The fourth quarter ended April 29, 2007, included thirteen weeks of operating results compared to the fourth quarter ended April 30, 2006, which included fourteen weeks of operating results. This accounts for approximately 7.5% of the year over year decrease in revenues and Adjusted EBITDA. Other factors contributing to the year over year declines include increased competition in several of the company's markets, most significantly Biloxi, Mississippi and severe weather in several markets in the first period of the fourth quarter of fiscal 2007. For the twelve months ended April 29, 2007, the company reported a 1.4% increase in net revenues from continuing operations to $1.0 billion, compared to $987.4 million for the comparable period in the prior year. For the twelve months of fiscal 2007, the company reported a loss from continuing operations of $21.3 million, compared to income of $8.6 million for the same period in fiscal 2006. Adjusted EBITDA from continuing operations in the twelve-month period reported a 4.5% decrease to $194.6 million, compared to $203.7 million for the comparable twelve-month period in fiscal 2006. During the twelve months ended April 29, 2007, the company recognized a pretax gain of $23.2 million related to the sale of its Isle-Bossier City and Isle-Vicksburg properties. This gain on sale is included in income from discontinued operations. Isle-Bossier City, Isle-Vicksburg and Colorado Grande-Cripple Creek are reflected as discontinued operations for all periods presented. Accordingly, the operating results for these properties are not included in the net revenue, income from continuing operations and Adjusted EBITDA results. The sale of Isle-Bossier City and Isle-Vicksburg closed on July 31, 2006. "Fiscal 2007 was a transitional year for the company, as we prepared for the opening of three properties under our new brand 'the isle(R),' in addition to opening a new hotel and acquiring a new property. The response from our guests has been very positive, and we look forward to growing our database and elevating the gaming experience for our customers. In addition, we implemented new technology initiatives that will help us operate and market more efficiently, and introduced additional programs across the Company to improve margins," said Bernard Goldstein, president and chief executive officer. "Our search for a new president and chief operating officer has come to a close and we are pleased to welcome Virginia McDowell to the Isle of Capri family. We believe that we have selected the ideal candidate as Virginia brings just the right mix of gaming expertise and leadership capabilities to her new role. Everyone has eagerly welcomed Virginia to the Isle of Capri family," Mr. Goldstein noted. Operational Review for the Fourth Quarter The operating results for the fourth quarter of fiscal 2007 include some significant additional expenses, as compared to the fourth quarter of fiscal 2006. These include an increase of approximately $4.5 million in property insurance expense over the prior year's fourth quarter, for a twelve-month total increase of approximately $18.0 million over the prior fiscal year, which was allocated across all operating properties. The company also recorded approximately $1.6 million of stock compensation expense in the fourth quarter of fiscal 2007, for a twelve-month total increase of approximately $7.2 million over the prior fiscal year. Pre-opening costs increased $10.4 million compared to the fourth quarter of fiscal 2006 primarily due to costs related to the company's casino developments in Pompano Beach, Florida; Waterloo, Iowa and Coventry, England. In Mississippi, the company's three continuing operations contributed 24.3% of net revenues. Isle-Biloxi's net revenues and Adjusted EBITDA decreased significantly from abnormally high prior year operating results due to increased competition in the market as competitors have re-opened after closures caused by Hurricane Katrina and while the Isle-Biloxi remains negatively impacted by the destruction of the Biloxi/Ocean Springs bridge, which is the primary thoroughfare for travelers from Florida to east Biloxi where Isle-Biloxi is located. Two lanes of the Biloxi/Ocean Springs bridge are scheduled to re-open in November and the complete new bridge with six lanes is scheduled to re-open in June 2008. Isle-Natchez continues to experience decreases in both net revenues and Adjusted EBITDA primarily resulting from the re- opening of casinos along the Gulf Coast. Isle-Lula's net revenues and Adjusted EBITDA decreased slightly due to increased competition impacting certain of the property's outlying feeder markets and disruption due to renovations of the casino floor. In Louisiana, Isle-Lake Charles contributed 16.8% of net revenues. Isle-Lake Charles experienced a decrease in net revenues and Adjusted EBITDA due to increased competition in the market as competitors have fully re-opened following closures caused by Hurricane Rita and post hurricane normalization of population levels in the property's feeder markets. In Missouri, the company's two properties contributed 17.2% of net revenues. The company's Missouri operations were impacted by severe winter weather in the first period of the fourth quarter. Isle-Kansas City's net revenues and Adjusted EBITDA were down due to increased competition related to the completion of competitors' expansion projects in the market. Isle- Boonville's net revenues and Adjusted EBITDA increased due to the opening of the company's new hotel and an increase in marketing efforts. In Iowa, the company's three casinos contributed 17.7% of net revenues. Combined, the company's three Iowa properties, the Isle-Bettendorf, Rhythm City-Davenport, and Isle-Marquette showed a decrease in both net revenues and Adjusted EBITDA due to increased competition in certain of the company's feeder markets in which it operates, including new and expanded gaming product by several of its competitors, as well as severe winter weather in the first period of the fourth quarter. In Colorado, the company's two Black Hawk casino operations contributed 15.7% of net revenues. The Black Hawk properties experienced a decrease in net revenues and Adjusted EBITDA as compared to the prior year period primarily due to severe weather in the first period of the quarter and disruption at the Colorado Central Station gaming floor as it was redesigned for wider aisles and the implementation of 100% ticketing capabilities on slots. In International operations, Isle-Our Lucaya recorded a reversal of approximately $9.4 million in certain prior year expenses related to the company's agreement with the Bahamian government and the company's landlord to keep the casino open. Additionally, the company reversed its $2.2 million lease termination fee paid in the first quarter of fiscal 2007, which has now been recorded as pre-paid rent. Corporate and other includes the company's corporate office operations, new development costs and the operating results of Pompano Park. The decrease in corporate and other compared to the fourth quarter of fiscal 2006 is primarily due to a $6.2 million decrease in new development costs primarily due to costs incurred in the prior year fiscal quarter related to the pursuit of gaming licenses in Pittsburgh, Pennsylvania and Singapore. In December 2006, the company was notified that it was not awarded either gaming license. The operating results of Pompano Park reflected a $3.6 million decrease in Adjusted EBITDA, which relates primarily to construction disruption, increased property insurance premiums and increased repairs and maintenance costs incurred on the existing track facility prior to the opening of the Isle-Pompano casino facility. The Isle Pompano was only opened for the last two weeks of the fourth quarter of fiscal 2007. Also, the increase in corporate and other expenses includes approximately $2.0 million in costs incurred related to the completion of the restatement of the company's historical financial statements. These increased costs are partially offset by lower bonus, franchise taxes and other legal costs. The company recorded a $7.8 million valuation charge during the fourth quarter of fiscal 2007 related to the Isle-Lula, based on lower projected cash flows going forward. Comparatively, the company recorded a $13.4 million valuation charge in the fourth quarter of fiscal 2006 related to its Blue Chip, plc operations in the United Kingdom and the Isle-Our Lucaya. At April 29, 2007, the company's consolidated balance sheet showed $2.08 billion in total assets, $1.77 billion in total liabilities, $27.8 million in minority interest, and $281.8 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the year ended April 29, 2007, are available for free at http://researcharchives.com/t/s?2210 About Isle of Capri Casinos Based in Biloxi, Missippi and founded in 1992, Isle of Capri Casinos Inc. (Nasdaq: ISLE) -- http://www.islecorp.com/-- owns and operates casinos in Biloxi, Lula and Natchez, Mississippi; Lake Charles, Louisiana; Bettendorf, Davenport, Marquette and Waterloo, Iowa; Boonville, Caruthersville and Kansas City, Missouri and a casino and harness track in Pompano Beach, Florida. The company also operates and has a 57 percent ownership interest in two casinos in Black Hawk, Colorado. Isle of Capri Casinos' international gaming interests include a casino that it operates in Freeport, Grand Bahama, a casino in Coventry, England, and a two-thirds ownership interest in casinos in Dudley and Wolverhampton, England. There are four Isle of Capri Casinos brands including "the isle," Isle of Capri, Colorado Central Station and Rhythm City, providing over 16,000 slot machines, 550 table games and 3000 hotel rooms for our guests' enjoyment. * * * As reported in the Troubled Company Reporter on June 21, 2007, Standard & Poor's Ratings Services revised its rating outlook on Isle of Capri Casinos Inc. to negative from stable. Ratings on the company, including the 'BB-' corporate credit rating, were affirmed. JP MORGAN: Fitch Junks Ratings on Two Certificate Classes --------------------------------------------------------- Fitch Ratings has taken these rating actions on nine J.P. Morgan Mortgage Acquisition Corp. asset-backed mortgage pass-through certificates. Affirmations total $6.4 billion and downgrades total $796.7 million. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: Series 2005-FRE1 -- $356.4 million class A affirmed at 'AAA' (BL: 46.19, LCR: 2.63); -- $32.2 million class M-1 affirmed at 'AA+' (BL: 41.47, LCR: 2.36); -- $31.2 million class M-2 affirmed at 'AA' (BL: 36.11, LCR: 2.05); -- $22.1 million class M-3 affirmed at 'AA-' (BL: 32.29, LCR: 1.84); -- $17.3 million class M-4 affirmed at 'A+' (BL: 29.28, LCR: 1.67); -- $16.8 million class M-5 affirmed at 'A' (BL: 26.34, LCR: 1.50); -- $14.9 million class M-6 affirmed at 'A-' (BL: 23.68, LCR: 1.35); -- $15.4 million class M-7 downgraded to 'BBB-' from 'BBB+' (BL: 20.85, LCR: 1.19); -- $11.5 million class M-8 downgraded to 'BB+' from 'BBB' (BL: 18.73, LCR: 1.07); -- $12 million class M-9 downgraded to 'BB' from 'BBB-' (BL: 16.68, LCR: 0.95); -- $15.9 million class M-10 downgraded to 'B+' from 'BB+' (BL: 14.40, LCR: 0.82); -- $12 million class M-11 downgraded to 'CCC' from 'BB' (BL: 12.77, LCR: 0.73). Deal Summary -- Originators: 100% Fremont Investment & Loan; -- 60+ day Delinquency: 19.22%; -- Realized losses to date (% of Original Balance): 1.18%; -- Expected Remaining Losses (% of Current Balance): 17.58%; -- Cumulative Expected Losses (% of Original Balance): 11.80%. Series 2006-FRE1 -- $378.9 million class A affirmed at 'AAA' (BL: 49.65, LCR: 3.60); -- $40.5 million class M-1 affirmed at 'AA+' (BL: 42.51, LCR: 3.08); -- $37 million class M-2 affirmed at 'AA' (BL: 33.72, LCR: 2.45); -- $22.3 million class M-3 affirmed at 'AA-' (BL: 31.64, LCR: 2.29); -- $20.2 million class M-4 affirmed at 'A+' (BL: 29.22, LCR: 2.12); -- $17.7 million class M-5 affirmed at 'A' (BL: 26.37, LCR: 1.91); -- $16.2 million class M-6 affirmed at 'A-' (BL: 23.70, LCR: 1.72); -- $15.7 million class M-7 affirmed at 'BBB+' (BL: 21.04, LCR: 1.53); -- $14.2 million class M-8 affirmed at 'BBB' (BL: 18.63, LCR: 1.35); -- $11.1 million class M-9 affirmed at 'BBB-' (BL: 16.72, LCR: 1.21); -- $12.1 million class M-10 affirmed at 'BB+' (BL: 14.87, LCR: 1.08); -- $10.6 million class M-11 affirmed at 'BB' (BL: 13.62, LCR: 0.99). Deal Summary -- Originators: 100% Fremont Investment & Loan; -- 60+ day Delinquency: 20.02%; -- Realized losses to date (% of Original Balance): 1.29%; -- Expected Remaining (% of Current Balance): 13.79%; -- Cumulative Expected Losses (% of Original Balance): 9.87%. Series 2006-HE1 -- $264.3 million class A affirmed at 'AAA' (BL: 43.80, LCR: 3.29); -- $23.2 million class M1 affirmed at 'AA+' (BL: 38.05, LCR: 2.86); -- $21.1 million class M2 affirmed at 'AA' (BL: 31.55, LCR: 2.37); -- $13.9 million class M3 affirmed at 'AA-' (BL: 28.97, LCR: 2.18); -- $10.2 million class M4 affirmed at 'A+' (BL: 26.45, LCR: 1.99); -- $10.2 million class M5 affirmed at 'A' (BL: 23.92, LCR: 1.80); -- $9.3 million class M6 affirmed at 'A-' (BL: 21.57, LCR: 1.62); -- $9 million class M7 affirmed at 'BBB+' (BL: 19.21, LCR: 1.44); -- $7.1 million class M8 affirmed at 'BBB' (BL: 17.33, LCR: 1.30); -- $6.5 million class M9 affirmed at 'BBB-' (BL: 15.60, LCR: 1.17); -- $5.3 million class M10 affirmed at 'BB+' (BL: 14.37, LCR: 1.08); -- $6.2 million class M11 affirmed at 'BB' (BL: 13.24, LCR: 0.99). Deal Summary -- Originators: 89.85% ResMAE Mortgage Corporation; 10.15% Accredited; -- 60+ day Delinquency: 15.63%; -- Realized losses to date (% of Original Balance): 1.04%; -- Expected Remaining Losses (% of Current Balance): 13.31%; -- Cumulative Expected Losses (% of Original Balance): 9.73%. Series 2006-HE3 -- $489.4 million class A affirmed at 'AAA' (BL: 41.68, LCR: 2.62); -- $36.9 million class M-1 affirmed at 'AA+' (BL: 35.74, LCR: 2.25); -- $40.6 million class M-2 affirmed at 'AA' (BL: 29.78, LCR: 1.87); -- $14.8 million class M-3 affirmed at 'AA-' (BL: 27.69, LCR: 1.74); -- $18.5 million class M-4 downgraded to 'A' from 'A+' (BL: 25.04, LCR: 1.57); -- $15.6 million class M-5 downgraded to 'A-' from 'A' (BL: 22.76, LCR: 1.43); -- $12.7 million class M-6 downgraded to 'BBB+' from 'A-' (BL: 20.85, LCR: 1.31); -- $13.5 million class M-7 downgraded to 'BBB-' from 'BBB+' (BL: 18.73, LCR: 1.18); -- $11.1 million class M-8 downgraded to 'BB+' from 'BBB' (BL: 16.96, LCR: 1.07); -- $10.3 million class M-9 downgraded to 'BB' from 'BBB-' (BL: 15.55, LCR: 0.98). Deal Summary -- Originators: 59.75% ResMAE Mortgage Corporation, 22.05% NovaStar Mortgage Inc, 16.16% Fieldstone Mortgage Company; -- 60+ day Delinquency: 13.32%; -- Realized losses to date (% of Original Balance): 0.45%; -- Expected Remaining Losses (% of Current Balance): 15.90%; -- Cumulative Expected Losses (% of Original Balance): 14.08%. Series 2006-RM1 -- $589 million class A affirmed at 'AAA' (BL: 37.19, LCR: 2.32); -- $35.6 million class M-1 affirmed at 'AA+' (BL: 32.73, LCR: 2.04); -- $32.3 million class M-2 affirmed at 'AA' (BL: 28.43, LCR: 1.77); -- $17.1 million class M-3 downgraded to 'A+' from 'AA-' (BL: 26.31, LCR: 1.64); -- $17.5 million class M-4 downgraded to 'A' from 'A+' (BL: 24.13, LCR: 1.50); -- $16.2 million class M-5 downgraded to 'BBB+' from 'A' (BL: 22.13, LCR: 1.38); -- $14.8 million class M-6 downgraded to 'BBB' from 'A-' (BL: 20.29, LCR: 1.26); -- $13.9 million class M-7 downgraded to 'BBB-' from 'BBB+' (BL: 18.42, LCR: 1.15); -- $11.5 million class M-8 downgraded to 'BB+' from 'BBB' (BL: 16.78, LCR: 1.05); -- $9.2 million class M-9 downgraded to 'BB' from 'BBB-' (BL: 15.42, LCR: 0.96); -- $9.2 million class M-10 downgraded to 'BB-' from 'BB+' (BL: 14.40, LCR: 0.90). Deal Summary -- Originators: 100% ResMAE Mortgage Corporation; -- 60+ day Delinquency: 16.01%; -- Realized losses to date (% of Original Balance): 0.69%; -- Expected Remaining Losses (% of Current Balance): 16.06%; -- Cumulative Expected Losses (% of Original Balance): 14.64%. Series 2006-WMC1 -- $570.8 million class A affirmed at 'AAA' (BL: 40.35, LCR: 3.06); -- $44.1 million class M-1 affirmed at 'AA+' (BL: 34.98, LCR: 2.66); -- $37.1 million class M-2 affirmed at 'AA' (BL: 30.45, LCR: 2.31); -- $21.2 million class M-3 affirmed at 'AA-' (BL: 27.86, LCR: 2.12); -- $19.4 million class M-4 affirmed at 'A+' (BL: 25.46, LCR: 1.93); -- $19.4 million class M-5 affirmed at 'A' (BL: 23.06, LCR: 1.75); -- $17.1 million class M-6 affirmed at 'A-' (BL: 20.91, LCR: 1.59); -- $16.5 million class M-7 affirmed at 'BBB+' (BL: 18.77, LCR: 1.42); -- $14.7 million class M-8 affirmed at 'BBB' (BL: 16.85, LCR: 1.28); -- $10.6 million class M-9 affirmed at 'BBB-' (BL: 15.39, LCR: 1.17); -- $10 million class M-10 affirmed at 'BB+' (BL: 14.14, LCR: 1.07); -- $11.2 million class M-11 affirmed at 'BB' (BL: 13.07, LCR: 0.99). Deal Summary -- Originators: 100% WMC Mortgage Corporation; -- 60+ day Delinquency: 14.01%; -- Realized losses to date (% of Original Balance): 1.18%; -- Expected Remaining Losses (% of Current Balance): 13.17%; -- Cumulative Expected Losses (% of Original Balance): 10.36%. Series 2006-WMC2 -- $697.1 million class A affirmed at 'AAA' (BL: 38.23, LCR: 2.19); -- $45.3 million class M1 affirmed at 'AA+' (BL: 33.49, LCR: 1.92); -- $40.8 million class M2 downgraded to 'A+' from 'AA' (BL: 28.91, LCR: 1.66); -- $24.2 million class M3 downgraded to 'A' from 'AA-' (BL: 26.39, LCR: 1.52); -- $21 million class M4 downgraded to 'BBB+' from 'A+' (BL: 24.19, LCR: 1.39); -- $21.7 million class M5 downgraded to 'BBB' from 'A' (BL: 21.92, LCR: 1.26); -- $19.1 million class M6 downgraded to 'BBB-' from 'A-' (BL: 19.89, LCR: 1.14); -- $18.5 million class M7 downgraded to 'BB+' from 'BBB+' (BL: 17.87, LCR: 1.03); -- $16.6 million class M8 downgraded to 'BB-' from 'BBB' (BL: 16.05, LCR: 0.92); -- $12.1 million class M9 downgraded to 'B+' from 'BBB-' (BL: 14.68, LCR: 0.84); -- $10.8 million class M10 downgraded to 'B' from 'BB+' (BL: 13.59, LCR: 0.78); -- $12.8 million class M11 downgraded to 'CCC' from 'BB' (BL: 12.38, LCR: 0.71). Deal Summary -- Originators: 100% WMC Mortgage Corporation; -- 60+ day Delinquency: 15.69%; -- Realized losses to date (% of Original Balance): 1.29%; -- Expected Remaining Losses (% of Current Balance): 17.42%; -- Cumulative Expected Losses (% of Original Balance): 14.46%. Series 2006-WMC3 -- $607 million class A affirmed at 'AAA' (BL: 34.42, LCR: 2.10); -- $32.6 million class M-1 affirmed at 'AA+' (BL: 30.38, LCR: 1.85); -- $28.8 million class M-2 downgraded to 'A+' from 'AA' (BL: 26.60, LCR: 1.62); -- $17.3 million class M-3 downgraded to 'A-' from 'AA-' (BL: 24.48, LCR: 1.49); -- $15.3 million class M-4 downgraded to 'BBB+' from 'A+' (BL: 22.60, LCR: 1.38); -- $15.3 million class M-5 downgraded to 'BBB' from 'A' (BL: 20.72, LCR: 1.26); -- $13.9 million class M-6 downgraded to 'BBB-' from 'A-' (BL: 19.00, LCR: 1.16); -- $13.4 million class M-7 downgraded to 'BB+' from 'BBB+' (BL: 17.32, LCR: 1.06); -- $11.5 million class M-8 downgraded to 'BB' from 'BBB' (BL: 15.82, LCR: 0.96); -- $8.6 million class M-9 downgraded to 'B+' from 'BBB-' (BL: 14.43, LCR: 0.88); -- $9.6 million class M-10 downgraded to 'B' from 'BB+' (BL: 13.15, LCR: 0.80). Deal Summary -- Originators: 100% WMC Mortgage Corporation; -- 60+ day Delinquency: 13.14%; -- Realized losses to date (% of Original Balance): 0.75%; -- Expected Remaining Losses (% of Current Balance): 16.40%; -- Cumulative Expected Losses (% of Original Balance): 14.42%. Series 2006-WMC4 -- $1.4 billion class A affirmed at 'AAA' (BL: 32.10, LCR: 2.30); -- $66.9 million class M-1 affirmed at 'AA+' (BL: 28.19, LCR: 2.02); -- $56.4 million class M-2 affirmed at 'AA' (BL: 24.73, LCR: 1.77); -- $34.4 million class M-3 downgraded to 'A+' from 'AA' (BL: 22.70, LCR: 1.62); -- $31.5 million class M-4 downgraded to 'A-' from 'AA-' (BL: 20.81, LCR: 1.49); -- $30.6 million class M-5 downgraded to 'BBB+' from 'A+' (BL: 18.96, LCR: 1.36); -- $27.7 million class M-6 downgraded to 'BBB' from 'A' (BL: 17.22, LCR: 1.23); -- $27.7 million class M-7 downgraded to 'BBB-' from 'A-' (BL: 15.35, LCR: 1.10); -- $19.1 million class M-8 downgraded to 'BB' from 'BBB+' (BL: 13.93, LCR: 1.00); -- $17.2 million class M-9 downgraded to 'BB-' from 'BBB' (BL: 12.67, LCR: 0.91); -- $19.1 million class M-10 downgraded to 'B+' from 'BBB-' (BL: 11.54, LCR: 0.83). Deal Summary -- Originators: 100% WMC Mortgage Corporation; -- 60+ day Delinquency: 9.36%; -- Realized losses to date (% of Original Balance): 0.05%; -- Expected Remaining Losses (% of Current Balance): 13.98%; -- Cumulative Expected Losses (% of Original Balance): 12.83%. In addition, class M11 from series 2005-FRE1 is removed from Rating Watch Negative. -- 'U.S. Subprime RMBS/HEL Upgrade/Downgrade Criteria' (June 12 ,2007); -- 'Fitch Affirms $20B & Downgrades $2.4B of U.S. Subprime RMBS; New 2005-2006 Surveillance Criteria' (Aug. 1, 2007). KARA HOMES: Judge Kaplan Approves Disclosure Statement ------------------------------------------------------ The Honorable Michael Kaplan of the U.S. Bankruptcy Court for the District of New Jersey approved the Disclosure Statement describing Kara Homes Inc. and its debtor-affiliates' Amended Chapter 11 Plan of Reorganization, BankruptcyLaw360 reports. As reported in the Troubled Company Reporter on July 5, 2007, the Debtors filed with the Court an Amended Plan which provides that Holders of Municipal Tax and Municipal Utility Authorities Claims will be paid in full. Upon full payment of these claims, any lien securing the claim will be cancelled. Holder of Senior Secured Mortgage Claims against Kara Homes Inc., Bergen Mills Estates, LLC, and Horizons at Woods Landing, LLC., termed as the Operating Debtors, will either: i. receive title to and surrender of their collateral in exchange for release of any lien, security interest, or other encumbrance securing repayment of any and all claim held by the holders against the Operating Debtors; or ii. be paid by the applicable Operating Debtor under the terms of the applicable agreement under which the claim arose, provided that the applicable Operating Debtor will cure any arrearages under the agreement. At the option of Galloway Woods, LLC, Hartley Estates by Kara, LLC, Horizons at Birch Hill, LLC, and Horizons at Shrewsbury Commons, LLC, the Liquidating Debtors, Holders of Senior Secured Mortgage will either: i. receive the collateral of the their claims; or ii. schedule a sale pursuant to Section 363 of the Bankruptcy Code. Any and all of the applicable liens in favor of the Holders of Secured Claim, if any, against any of the Operating and Liquidating Debtors will attach to, and be satisfied from, the value realized from its collateral in the order of their priority. In the event that the value realized from a secured creditor's collateral is less than the amount of its allowed Secured Claim, the holder will have a deficiency claim. General Unsecured Claims against the Operating and Liquidating Debtors will receive a pro rata share of: i. cash payment; and ii. proceeds, if any, of any causes of action commenced by the litigation trust. Under the Plan, each holder of Equity Interest against the Operating and Liquidating Debtors will be expunged, extinguished and all outstanding stock and membership interest will be cancelled. Headquartered in East Brunswick, New Jersey, Kara Homes Inc. aka Kara Homes Development LLC, builds single-family homes, condominiums, town homes, and active-adult communities. The company filed for chapter 11 protection on Oct. 5, 2006 (Bankr. D. N.J. Case No. 06-19626). On Oct. 9, 2006, nine affiliates filed separate chapter 11 petitions in the same Bankruptcy Court. On Oct. 10, 2006, 12 more affiliates filed chapter 11 petitions. On June 8, 2007, 20 more affiliates filed separate chapter 11 petitions. David L. Bruck, Esq., at Greenbaum, Rowe, Smith, et al., represents the Debtors. Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard represents the Official Committee of Unsecured Creditors. Traxi LLC serves as the Debtors' crisis manager. The Debtors engaged Perry M. Mandarino as chief restructuring officer, and Anthony Pacchia as chief financial officer. When Kara Homes filed for protection from its creditors, it listed total assets of $350,179,841 and total debts of $296,840,591. KARA HOMES: Plan Confirmation Hearing Scheduled for September 12 ---------------------------------------------------------------- The Honorable Michael Kaplan of the U.S. Bankruptcy Court for the District of New Jersey will convene a hearing on Sept. 12, 2007, to confirm Kara Homes Inc. and its debtor-affiliates' Amended Chapter 11 Plan of Reorganization, BankruptcyLaw360 reports. Headquartered in East Brunswick, New Jersey, Kara Homes Inc. aka Kara Homes Development LLC, builds single-family homes, condominiums, town homes, and active-adult communities. The company filed for chapter 11 protection on Oct. 5, 2006 (Bankr. D. N.J. Case No. 06-19626). On Oct. 9, 2006, nine affiliates filed separate chapter 11 petitions in the same Bankruptcy Court. On Oct. 10, 2006, 12 more affiliates filed chapter 11 petitions. On June 8, 2007, 20 more affiliates filed separate chapter 11 petitions. David L. Bruck, Esq., at Greenbaum, Rowe, Smith, et al., represents the Debtors. Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard represents the Official Committee of Unsecured Creditors. Traxi LLC serves as the Debtors' crisis manager. The Debtors engaged Perry M. Mandarino as chief restructuring officer, and Anthony Pacchia as chief financial officer. When Kara Homes filed for protection from its creditors, it listed total assets of $350,179,841 and total debts of $296,840,591. KIMBALL HILL: S&P Lowers Corporate Credit Rating to B+ from BB- --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Kimball Hill Inc. to 'B+' from 'BB-'. In addition, S&P lowered the rating on the company's senior subordinated notes to 'B-' from 'B'. The outlook remains negative. The rating actions affect $203 million of rated debt. "The downgrade reflects our expectations that the company's weak profitability will persist, straining internal liquidity," explained Standard & Poor's credit analyst Elizabeth Campbell. "Continued high incentives and cancellation rates, inventory impairments, and lot option write-downs are contributing to expectations for very weak profitability and operating cash flow during the remainder of 2007 and likely into 2008." Standard & Poor's expects these issues to continue to pressure Kimball Hill's debt coverage metrics and internal liquidity, given the currently weak housing conditions and S&P's expectation for a prolonged recovery for the sector. Kimball Hill will be heavily reliant upon its credit facility for liquidity through this housing cycle's trough. Kimball Hill senior management's long and conservative operating history continues to support the ratings; last year's equity offering deleveraged the company's balance sheet and bolstered liquidity at that time, anticipating continued weak industrywide demand. The negative outlook reflects Standard & Poor's expectation that the company's slim profit margins and debt service coverage measures will be further stressed over the next several quarters due to the still very challenging housing market conditions. Kimball Hill has generally modest near-term liquidity needs, but the company will be heavily reliant upon external sources--largely its credit facility--as internally generated cash flow is likely to be limited. Standard & Poor's would lower its ratings again if Kimball Hill's operating results weaken further, such that liquidity becomes stressed. However, Standard & Poor's would revise the outlook to stable if it becomes clear that the company's margins and/or sales are strengthening and are sustainable, which would enable a return to previously sound credit metrics. KRISPY KREME: S&P Assigns B- Credit Rating with Negative Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its ratings, including its corporate credit rating of 'B-', to Winston Salem, North Carolina-based Krispy Kreme Doughnuts Inc. The outlook is negative. At the same time, Standard & Poor's assigned its bank loan and recovery ratings to the $160 million senior secured credit facility borrowed by Krispy Kreme Doughnut Corp., a subsidiary of KKDI. The facility is rated 'B', one notch above the corporate credit rating on KKDI, and assigned a '2' recovery rating, indicating the expectation for substantial (70%-90%) recovery of principal in the event of default. The facility consists of a $50 million revolving credit facility and a $110 million first-lien term loan, of which $101 million was outstanding as of April 29, 2007. KKDI guarantees the debt of its subsidiary. "The negative outlook reflects the company's material weaknesses over reporting controls, which may cause errors or delays in the company's filing of its financial statements," explained Standard & Poor's credit analyst Charles Pinson-Rose. Furthermore, S&P believe that the company's U.S. operations are vulnerable to competitive inroads. "If the company cannot file its financial statements in a timely fashion," added Mr. Pinson-Rose, "the rating will likely be downgraded." LCM VII: Fitch Assigns BB Ratings on Classes E-1 and E-2 Notes -------------------------------------------------------------- Fitch assigns these ratings to LCM VII, Ltd.: -- $126,000,000 class A-1 revolving notes, due 2019 'AAA'; -- $250,000,000 class A-2 term notes, due 2019 'AAA'; -- $20,000,000 class B notes, due 2019 'AA'; -- $42,763,000 class C notes, due 2019 'A'; -- $29,040,000 class D notes, due 2019 'BBB'; -- $937,000 class E-1 notes, due 2019 'BB'; -- $937,000 class E-2 notes, due 2019 'BB'. LEBARON DRYWALL: Taps Minkemann & Associates as Accountants ----------------------------------------------------------- LeBaron Drywall Inc. asks permission from the U.S. Bankruptcy Court of Alaska to employ Minkemann & Associates, CPA, as its accountants. Russell Minkemann, the lead accountant for the firm, will: a) work with the Debtor in the preparation of current and past due tax returns; b) work with the Internal Revenue Service, the State of Alaska and other taxing entity regarding taxes due by the Debtor; and c) analyze the tax consequences of the sale of assets. The Debtor says that Mr. Minkemann will be paid an hourly rate of $200. The Debtor also tell the Court that none of the accountants at the firm represent any interest adverse to its estates and creditors. Based in Anchorage, Alaska, LeBaron Drywall Inc. builds condominiums. The company filed for Chapter 11 protection on February 21, 2007 (Bankr. D. Alaska Case No. 07-00070). John C. Siemers, Esq., at Burr Pease & Kurtz, represents the Debtor in its restructuring efforts. Erik J. Leroy, Esq., serves as the Debtor's co-counsel. No Official Committee of Unsecured Creditors has been appointed in this case. When the Debtor filed for protection from its creditors, it listed estimated assets of $18,955,000. LIBERTY TAX: June 15 Balance Sheet Upside-Down by $26.6 Million --------------------------------------------------------------- Liberty Tax Credit Plus LP's consolidated balance sheet at June 15, 2007, showed $44.3 million in total assets, $71.4 million in total liabilities, and $551,759 in minority interests, resulting in a $26.6 million total partners' deficit. The partnership reported a net loss of $1.6 million on total revenues of $2.69 million for the first quarter ended June 15, 2007, compared with a net loss of $2.1 million on total revenues of $2.70 million for the same period ended June 15, 2006. Rental income decreased approximately 3% for the three months ended June 15, 2007, as compared to the corresponding period in 2006, primarily due to an increase in vacancies due to the cancellation of a Section 8 contract at one Local Partnership offset by an increase in rental rates and decreases in vacancies at several Local Partnerships. Loss from operations decreased slightly to $1.27 million from $1.28 million for the corresponding period ended June 15, 2006. The decrease in net loss primarily reflects the decrease in loss from discontinued operations from $805,863 in the 2006 quarter to $367,001 in the 2007 quarter. As of June 15, 2007, Charles Drew, Concourse Artists, Grand Concourse, Greenleaf, Robin Housing, United Penn, Willoughby and West Kinney were classified as discontinued operations on the consolidated balance sheets. Full-text copies of the limited partnership's consolidated financial statements for the quarter ended June 15, 2007, are available for free at http://researcharchives.com/t/s?2201 Going Concern Doubt Weinberg Ciullo & Fazzari LLP, in New York, expressed substantial doubt about the ability of two of Liberty Tax Credit Plus LP's subsidiary partnerships to continue as a going concern after auditing the limited partnership's consolidated financial statements for the years ended March 15, 2007, and 2006. The auditing firm reported that these subsidiary partnerships' net losses aggregated $1.0 million in fiscal 2006, $491,638 in fiscal 2005 and $484,798 in fiscal 2004. About Liberty Tax Liberty Tax Credit Plus L.P. (Other OTC: XXLTC.PK) is a limited partnership that invests in other limited partnerships, each of which owns one or more leveraged low- and moderate-income multifamily residential complexes that are eligible for the low- income housing tax credit enacted in the Tax Reform Act of 1986, and to a lesser extent, in local partnerships owning properties that are eligible for the historic rehabilitation tax credit. The partnership is currently in the process of disposing of its investments. As of June 15, 2007, the partnership has disposed of twenty-three of its thirty-one original investments and entered into an agreement to sell its limited partnership interest in one Local Partnership and one Local Partnership has entered into agreement to sell its property and the related assets and liabilities. LINDA BRYANT: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Linda R. Bryant 1201 Glen Cove Parkway, Suite 102 Vallejo, CA 94591 Bankruptcy Case No.: 07-26033 Chapter 11 Petition Date: August 2, 2007 Court: Eastern District of California (Sacramento) Judge: Christopher M. Klein Debtor's Counsel: R. Kenneth Bauer, Esq. 500 Ygnacio Valley Road, Suite 300 Walnut Creek, CA 94596 Tel: (925) 945-7945 Estimated Assets: Unstated Estimated Debts: $1 Million to $100 Million The Debtor does not have a list of it largest unsecured creditors. MASTEC INC: Earns $15.9 Million in Second Quarter Ended June 30 --------------------------------------------------------------- MasTec Inc. announced on Wednesday its results of operations for the quarter ended June 30, 2007. Net income was $15.9 million, income from continuing operations was $16.1 million, on revenue of $256.3 million. This compares with a net loss of $23.7 million, income from continuing operations of $12.3 million, on revenue of $230.5 million in the prior year quarter. The company also disclosed that a number of other financial measures have also improved this quarter. The most significant was income from continuing operations increasing to 6.3% of revenue for the quarter, an improvement over 5.3% in the same quarter last year. Cash and liquidity both improved, with quarter-end balances of $119 million and $139 million, respectively. The company defines liquidity as availability under its credit facility plus unrestricted bank cash. Cash collections, as measured by accounts receivable days sales outstanding, or DSOs, improved again this quarter, down to 59 days, the best in the company's recent history. Jose R. Mas, MasTec's president and chief executive officer, commented, "We are pleased with our progress in 2007. While our operating margins are at their highest level in years, we are far from satisfied. We will continue focusing on margin improvement and growth as we position the company to take advantage of the opportunities in the markets we serve." In addition, MasTec narrowed the range for its full year 2007 guidance. The company still expects revenue to be in the range of $1.04 to $1.06 billion, but has now announced that it expects earnings per share from continuing operations to be between $0.84 and $0.90 per share. At June 30, 2007, the company's consolidated balance sheet showed $675.3 million in total assets, $343.3 million in total liabilities, and $332.0 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2007, are available for free at http://researcharchives.com/t/s?2208 About MasTec Inc. Headquartered in Coral Gables, Florida, MasTec Inc. (NYSE: MTZ) -- http://www.mastec.com/ -- is a leading specialty contractor operating mainly throughout the United States across a range of industries. The company's core activities are the building, installation, maintenance and upgrade of communication and utility infrastructure systems. * * * As reported in the Troubled Company Reporter on Jan. 18, 2007, Moody's Investors Service assigned a B1 rating to the proposed $150 million senior unsecured notes of MasTec Inc. In addition, Moody's affirmed the company's existing Ba3 corporate family rating. The ratings assigned to the notes reflect both the overall probability of default of the company, to which Moody's affirms the Ba3 rating, and a loss given default of LGD4 for the senior unsecured notes. The rating outlook is stable. The rating on the notes is subject to final documentation. MEDIFACTS INT'L: Wants to Enter Into Lease Pact w/ James Campbell ----------------------------------------------------------------- Medifacts International Inc. asks authority from the U.S. Bankruptcy Court for the District of Delaware to enter and assume an amended lease agreement with James Campbell Company LLC. The parties' lease agreement concerns certain office space located at 2101 Gaither Road, Rockville, Maryland, which represents the corporate headquarters of the Debtor. After the Debtor's bankruptcy filing, the parties agreed to amend the lease to provide for: a) the early termination of approximately 11,773 rentable square feet of the upper level premises and 1,176 rentable square feet of the lower level premises; b) both the landlord and the Debtor to be released from any further obligation under the Lease after the termination date at June 30, 2007; and c) the landlord making certain modifications in the upper level premises to separate retained space from the terminated space. As a result of the amendment, the Debtor's aggregate annual base rent will be decreased significantly because the parties have reduced the amount of space leased by the Debtor. For the upper level premises, the Debtor's monthly base rent will be $27,335 after the termination date instead of the prior base rent of $52,870. The lower level premises cost will also be decreased to a monthly base rent of $4,885 instead of $6,480. The Debtor tells the Court that the lease agreement will result in annual savings of approximately $325,562. About Medifacts International Based in Rockville, Maryland, Medifacts International Inc. -- http://www.medifacts.com/-- provides quality clinical trial services to pharmaceutical, biotech and medical device companies that are developing therapeutic drugs and products. The company employs 176 people in the North America, China and Europe. The company filed for chapter 11 protection on Jan. 28, 2007 (Bankr. D. Del. Case No. 07-10110). Joseph A. Malfitano, Esq., at Young, Conaway, Stargatt & Taylor, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $10 million to $50 million. MGM MIRAGE: Earns $360.2 Million in Second Quarter Ended June 30 ---------------------------------------------------------------- MGM MIRAGE reported on Thursday its financial results for the second quarter ended June 30, 2007. Earnings benefited from strong revenue trends, solid operating margins, and profits from sales of Tower 3 of The Signature at MGM Grand. Net income, including discontinued operations, was $360.2 million for the quarter ended June 30, 2007, compared with net income of $146.4 million for the same period a year ago. During the second quarter, the company recognized a pre-tax gain of $201 million on the sale of Primm Valley Resorts and a pre-tax gain of $63 million on the sale of its Laughlin Properties – Colorado Belle and Edgewater. Net revenues for the second quarter increased 10% to $1.9 billion, an all-time record quarter for the company. In addition to the incremental revenue from Beau Rivage, which reopened in August 2006, the company benefited from strong hotel revenues and the impact of new amenities at many of its Las Vegas Strip resorts. Key results from the quarter include: -- Las Vegas Strip Revenue per Available Room (REVPAR) increased 7%, which represents the sixteenth consecutive quarter of year-over-year REVPAR increases for these resorts; -- Occupancy at the company’s Las Vegas Strip resorts was 97.8%, the highest occupancy level achieved since 2000; -- Property EBITDA, which is EBITDA before corporate expense and stock compensation expense, of $686 million was also a record for the second quarter, and represented a 9% increase over the prior year; -- MGM Grand Las Vegas earned Property EBITDA of $108 million, a 43% increase over prior year second quarter and its best quarter ever. TI and Excalibur also earned all-time record Property EBITDA of $34 million and $38 million, respectively; -- The Mirage achieved record Property EBITDA for the second quarter of $59 million, a 41% increase over prior year. New York–New York also had a record second quarter Property EBITDA performance, earning $37 million; -- Non-gaming revenues increased 13%, 10% excluding Beau Rivage, with continued strong results from non-gaming amenities; -- Gaming revenues increased 5%, but decreased 5% excluding Beau Rivage due to a lower table games hold percentage. Slot revenues increased 4% at the company’s Las Vegas Strip resorts; -- Beau Rivage, which was closed in the prior year quarter, earned Property EBITDA of $23 million; -- Earned $63 million of profit from closings on units of Tower 3 at The Signature at MGM Grand; -- Successfully issued $750 million of 7.5% senior notes maturing in 2016. In June, the company signed a letter of intent with Kerzner International to form a 50/50 joint venture to develop a multi- billion dollar integrated resort to be located on the corner of Las Vegas Boulevard and Sahara Avenue. The company will provide 40 acres of land, which is being valued at $20 million per acre, and Kerzner International and one of its financial partners will contribute cash equity. "Our targeted capital investments, particularly in our non-gaming operations, have led to strong returns and record earnings," said Terry Lanni, MGM MIRAGE’s chairman and chief executive officer. "The opening of MGM Grand Detroit and MGM Grand Macau later this year, and our recently announced joint venture project with Kerzner International, further illustrate the powerful momentum created by our accelerated growth platform. The company’s operating income increased 12% to $469 million, which includes $63 million of profit from closings on units of Tower 3 of The Signature at MGM Grand and $11 million of operating income from Beau Rivage. The prior year quarter included $28 million of income from Tower 1 of The Signature at MGM Grand. Excluding these items, operating income increased slightly from prior year with a margin of 22% in both quarters. Property EBITDA increased 9% to a record $686 million; excluding the above items, Property EBITDA increased slightly compared to the prior year quarter with a 33% margin, slightly below the 34% margin in the 2006 quarter. Detailed Discussion of Certain Charges In the second quarter of 2007 the company had minimal property transactions. In the 2006 period, net property transactions of $13 million largely related to the write-off of assets in connection with expansion projects at MGM Grand Las Vegas and Mandalay Bay and the write-off of Luxor’s investment in the Hairspray show. Preopening and start-up expenses of $14 million in 2007 primarily related to CityCenter, MGM Grand Detroit, and MGM Grand Macau. Preopening and start-up expenses of $15 million in the 2006 quarter related primarily to CityCenter, the Love show at The Mirage, The Signature at MGM Grand, and the company's share of preopening related to the Borgata expansion. Financial Position Second quarter capital investments totaled $1.3 billion, which included $441 million for CityCenter, $81 million for the permanent MGM Grand Detroit resort, and $23 million for trailing payments on the construction of Beau Rivage. Also during the quarter, the company purchased 34 acres of land north of Circus Circus Las Vegas for $580 million, 26 acres of which are part of the land to be contributed to the joint venture with Kerzner International. Remaining capital expenditures included spending of $54 million on room and suite remodel projects, primarily at Mandalay Bay, expenditures for corporate aircraft of $27 million, and $90 million of other routine capital expenditures on various new and upgraded amenities at the company’s resorts. During the quarter the company received an additional $19 million of insurance recoveries related to Hurricane Katrina. These amounts were not recognized as income pending the final settlement of the company’s insurance claim. At June 30, 2007, the company had $2.0 billion of available borrowings under its senior credit facility. "Our operating results this quarter once again prove the power of our portfolio to generate consistent cash flows,” said Jim Murren, MGM MIRAGE president, chief financial officer and treasurer. "More exciting is the pace of future growth. We will continue to develop strategic relationships designed to create additional value from our significant real estate portfolio. Of course, CityCenter is at the heart of our growth strategy; we are very pleased with the quality of the development and the pace of residential sales, and we continue on track for a late 2009 opening." At June 30, 2007, the company's consolidated balance sheet showed $23.50 billion in total assets, $19.17 billion in total assets, and $4.33 billion in total stockholders' equity. The company's consolidated balance sheet at June 30, 2007, also showed strained liquidity with $981.9 million in total current assets available to pay $1.82 billion in total current liabilities. About MGM MIRAGE Headquartered in Las Vegas, Nevada, MGM Mirage (NYSE: MGM) -- http://www.mgmmirage.com/-- is a hotel and gaming company. It owns and operates 17 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. * * * As reported in the Troubled Company Reporter on June 25, 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. MITEL(R) NETWORKS: $723MM Merger Gets Inter-Tel Shareholders' OK ---------------------------------------------------------------- Mitel(R) Networks Corp. applauded Inter-Tel (Delaware) Incorporated stockholders for approving the two companies' $723 million merger. The vote fulfills another condition to the merger which the company believes will create a market leader in the SMB IP communications industry with the scale to strengthen and extend its reach in the enterprise market. ''The company is delighted that Inter-Tel shareholders have voted to approve the merger with Mitel,” Don Smith, CEO of Mitel, said. ''By bringing together the unique strengths of each company, this transaction will accelerate our growth strategy. Together, we believe that Mitel and Inter-Tel will possess the intellectual property, technology depth, breadth of portfolio, managed services, partnerships, and people to be a leader in the rapidly changing IP telephony landscape." Subject to the outcome of the preliminary injunction hearing arising from Inter-Tel's litigation before the Delaware Court of Chancery, Mitel and Inter-Tel expect that the merger will close after the Aug. 8, 2007, hearing. Headquartered in Ottawa, Ontario, Mitel Networks Corp -- http://www.mitel.com/-- provides integrated internet protocol based enterprise telephony solutions for small and medium sized businesses. * * * As reported in the Troubled Company Reporter on Aug. 1, 2007, Moody's Investors Service revised Mitel Network Corporation's first lien senior secured rating to B1 from Ba3 and second lien senior secured rating to Caa1 from B3. The B2 corporate family rating remains unchanged. The outlook is stable. Standard & Poor's Ratings Services revised its bank loan and recovery ratings on Ottawa, Ontario-based business communications solutions provider Mitel Networks Corp.'s proposed $460 million senior secured credit facility. The bank loan rating on Mitel's proposed $330 million first-lien credit facility has been revised to 'B+', with a recovery rating of '2', from 'BB-', with a recovery rating of '1'. The '2' recovery rating reflects S&P's expectation of substantial (70%-90%) recovery of principal in a default scenario. MORGAN STANLEY: Fitch Takes Various Rating Actions on 100 Certs. ---------------------------------------------------------------- Fitch Ratings has taken these rating actions on Morgan Stanley mortgage pass-through certificates. Affirmations total $12.04 billion and downgrades total $1.28 billion. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: Morgan Stanley Capital I Inc. Trust 2006-HE1 -- $578 million class A affirmed at 'AAA' (BL: 38.03, LCR: 3.10); -- $42.4 million class M-1 affirmed at 'AA+' (BL: 35.21, LCR: 2.87); -- $40 million class M-2 affirmed at 'AA' (BL: 30.96, LCR: 2.52); -- $23 million class M-3 affirmed at 'AA' (BL: 28.23, LCR: 2.30); -- $20.6 million class M-4 affirmed at 'AA-' (BL: 25.78, LCR: 2.10); -- $20 million class M-5 affirmed at 'A+' (BL: 23.42, LCR: 1.91); -- $17.6 million class M-6 affirmed at 'A' (BL: 21.32, LCR: 1.74); -- $17.6 million class B-1 affirmed at 'BBB+' (BL: 19.19, LCR: 1.56); -- $16.3 million class B-2 affirmed at 'BBB' (BL: 17.31, LCR: 1.41); -- $12.1 million class B-3 affirmed at 'BBB-' (BL: 16.17, LCR: 1.32). Deal Summary -- Originators: 77% WMC; -- 60+ day Delinquency: 14.48%; -- Realized Losses to date (% of original balance): 1.04%; -- Expected Remaining Losses (% of Current Balance): 12.27%; -- Cumulative Expected Losses (% of Original Balance): 9.46%. Morgan Stanley Capital I Inc. Trust 2006-HE2 -- $1.21 billion class A affirmed at 'AAA' (BL: 36.35, LCR: 2.48); -- $78.2 million class M-1 affirmed at 'AA+' (BL: 32.79, LCR: 2.23); -- $71.4 million class M-2 affirmed at 'AA' (BL: 28.87, LCR: 1.97); -- $43 million class M-3 affirmed at 'AA-' (BL: 26.33, LCR: 1.79); -- $37.4 million class M-4 affirmed at 'A+' (BL: 24.13, LCR: 1.64); -- $36.2 million class M-5 affirmed at 'A' (BL: 22.00, LCR: 1.50); -- $32.8 million class M-6 downgraded to 'BBB+' from 'A-' (BL: 20.05, LCR: 1.37); -- $32.8 million class B-1 downgraded to 'BBB' from 'BBB+' (BL: 18.07, LCR: 1.23); -- $29.4 million class B-2 downgraded to 'BBB-' from 'BBB' (BL: 16.39, LCR: 1.12); -- $23.8 million class B-3 downgraded to 'BB+' from 'BBB-' (BL: 15.23, LCR: 1.04). Deal Summary -- Originators: 73% WMC; -- 60+ day Delinquency: 15.79%; -- Realized Losses to date (% of original balance): 0.90%; -- Expected Remaining Losses (% of Current Balance): 14.68%; -- Cumulative Expected Losses (% of Original Balance): 11.72%. Morgan Stanley ABS Capital I Inc. Trust 2006-HE3 -- $1.13 billion class A affirmed at 'AAA' (BL: 34.62, LCR: 2.26); -- $91.9 million class M-1 affirmed at 'AA+' (BL: 31.24, LCR: 2.04); -- $62.6 million class M-2 affirmed at 'AA' (BL: 27.92, LCR: 1.82); -- $37.6 million class M-3 affirmed at 'AA-' (BL: 25.56, LCR: 1.67); -- $33.4 million class M-4 downgraded to 'A' from 'A+' (BL: 23.46, LCR: 1.53); -- $33.4 million class M-5 downgraded to 'BBB+' from 'A' (BL: 21.36, LCR: 1.39); -- $29.2 million class M-6 downgraded to 'BBB' from 'A-' (BL: 19.51, LCR: 1.27); -- $29.2 million class B-1 downgraded to 'BBB-' from 'BBB+' (BL: 17.65, LCR: 1.15); -- $26.1 million class B-2 downgraded to 'BB+' from 'BBB' (BL: 16.03, LCR: 1.04); -- $20.8 million class B-3 downgraded to 'BB' from 'BBB-' (BL: 14.60, LCR: 0.95). Deal Summary -- Originators: 40% WMC, 40% New Century; -- 60+ day Delinquency: 17.96%; -- Realized Losses to date (% of original balance): : 0.76%; -- Expected Remaining Losses (% of Current Balance): 15.35%; -- Cumulative Expected Losses (% of Original Balance): 12.24%. Morgan Stanley ABS Capital I Inc. Trust 2006-HE4 -- $1.23 billion class A affirmed at 'AAA' (BL: 34.00, LCR: 2.29); -- $74.5 million class M-1 affirmed at 'AA+' (BL: 31.35, LCR: 2.12); -- $65.8 million class M-2 affirmed at 'AA' (BL: 28.43, LCR: 1.92); -- $39.9 million class M-3 affirmed at 'AA-' (BL: 26.07, LCR: 1.76); -- $34.5 million class M-4 affirmed at 'A+' (BL: 24.03, LCR: 1.62); -- $35.6 million class M-5 downgraded to 'A-' from 'A' (BL: 21.93, LCR: 1.48); -- $32.4 million class M-6 downgraded to 'BBB+' from 'A-' (BL: 20.01, LCR: 1.35); -- $30.2 million class B-1 downgraded to 'BBB' from 'BBB+' (BL: 17.99, LCR: 1.21); -- $28 million class B-2 downgraded to 'BB+' from 'BBB' (BL: 15.99, LCR: 1.08); -- $21.6 million class B-3 downgraded to 'BB' from 'BBB-' (BL: 14.60, LCR: 0.99). Deal Summary -- Originators: 45% WMC; -- 60+ day Delinquency: 17.55%; -- Realized Losses to date (% of original balance): 0.64%; -- Expected Remaining Losses (% of Current Balance): 14.82%; -- Cumulative Expected Losses (% of Original Balance): 12.08%. Morgan Stanley ABS Capital I Inc. Trust 2006-HE5 -- $925.9 million class A affirmed at 'AAA' (BL: 38.56, LCR: 2.54); -- $75.2 million class M-1 affirmed at 'AA+' (BL: 32.17, LCR: 2.12); -- $59.2 million class M-2 affirmed at 'AA' (BL: 27.99, LCR: 1.84); -- $29.6 million class M-3 affirmed at 'AA-' (BL: 25.75, LCR: 1.69); -- $27.2 million class M-4 downgraded to 'A' from 'A+' (BL: 23.69, LCR: 1.56); -- $26.4 million class M-5 downgraded to 'A-' from 'A' (BL: 21.70, LCR: 1.43); -- $24.8 million class M-6 downgraded to 'BBB+' from 'A-' (BL: 19.78, LCR: 1.30); -- $23.2 million class B-1 downgraded to 'BBB-' from 'BBB+' (BL: 17.89, LCR: 1.18); -- $21.6 million class B-2 downgraded to 'BB+' from 'BBB' (BL: 16.20, LCR: 1.07); -- $16.8 million class B-3 downgraded to 'BB' from 'BBB-' (BL: 15.00, LCR: 0.99). Deal Summary -- Originators: 59% New Century; -- 60+ day Delinquency: 15.89%; -- Realized Losses to date (% of original balance): 0.72%; -- Expected Remaining Losses (% of Current Balance): 15.20%; -- Cumulative Expected Losses (% of Original Balance): 13.32%. Morgan Stanley ABS Capital I Inc. Trust 2006-HE6 -- $969.6 million class A affirmed at 'AAA' (BL: 33.29, LCR: 2.36); -- $64 million class M-1 affirmed at 'AA+' (BL: 29.94, LCR: 2.12); -- $62.5 million class M-2 affirmed at 'AA' (BL: 25.67, LCR: 1.82); -- $22.8 million class M-3 affirmed at 'AA-' (BL: 23.89, LCR: 1.69); -- $30.9 million class M-4 downgraded to 'A' from 'A+' (BL: 21.44, LCR: 1.52); -- $23.5 million class M-5 downgraded to 'BBB+' from 'A' (BL: 19.54, LCR: 1.38); -- $21.3 million class M-6 downgraded to 'BBB' from 'A-' (BL: 17.78, LCR: 1.26); -- $21.3 million class B-1 downgraded to 'BBB-' from 'BBB+' (BL: 15.82, LCR: 1.12); -- $12.5 million class B-2 downgraded to 'BB+' from 'BBB' (BL: 14.59, LCR: 1.03); -- $17.6 million class B-3 downgraded to 'BB-' from 'BBB-' (BL: 13.01, LCR: 0.92). Deal Summary -- Originators: 44% New Century; -- 60+ day Delinquency: 15.81%; -- Realized Losses to date (% of original balance): 0.31%; -- Expected Remaining Losses (% of Current Balance): 14.12%; -- Cumulative Expected Losses (% of Original Balance): 12.68%. Morgan Stanley ABS Capital I Inc. Trust 2006-NC4 -- $1.12 billion class A affirmed at 'AAA' (BL: 40.07, LCR: 2.84); -- $102.4 million class M-1 affirmed at 'AA+' (BL: 31.29, LCR: 2.21); -- $100.3 million class M-2 affirmed at 'AA' (BL: 27.03, LCR: 1.91); -- $34.5 million class M-3 affirmed at 'AA-' (BL: 24.92, LCR: 1.76); -- $38.8 million class M-4 affirmed at 'A+' (BL: 22.55, LCR: 1.60); -- $34.5 million class M-5 downgraded to 'A-' from 'A' (BL: 20.43, LCR: 1.45); -- $30.2 million class M-6 downgraded to 'BBB+' from 'A-' (BL: 18.52, LCR: 1.31); -- $31.2 million class B-1 downgraded to 'BBB-' from 'BBB+' (BL: 16.45, LCR: 1.16); -- $23.7 million class B-2 downgraded to 'BB+' from 'BBB' (BL: 14.87, LCR: 1.05); -- $22.6 million class B-3 downgraded to 'BB' from 'BBB-' (BL: 13.51, LCR: 0.96). Deal Summary -- Originators: 100% New Century; -- 60+ day Delinquency: 18.53%; -- Realized Losses to date (% of original balance): 0.49%; -- Expected Remaining Losses (% of Current Balance): 14.13%; -- Cumulative Expected Losses (% of Original Balance): 11.06%. Morgan Stanley ABS Capital I Inc. Trust 2006-WMC2 -- $1.64 billion class A affirmed at 'AAA' (BL: 33.24, LCR: 2.07); -- $89.8 million class M-1 affirmed at 'AA+' (BL: 29.02, LCR: 1.81); -- $72.8 million class M-2 downgraded to 'A' from 'AA' (BL: 25.58, LCR: 1.59); -- $45.5 million class M-3 downgraded to 'A-' from 'AA-' (BL: 23.43, LCR: 1.46); -- $41.6 million class M-4 downgraded to 'BBB+' from 'A+' (BL: 21.46, LCR: 1.34); -- $40.3 million class M-5 downgraded to 'BBB' from 'A' (BL: 19.56, LCR: 1.22); -- $36.4 million class M-6 downgraded to 'BBB-' from 'A-' (BL: 17.83, LCR: 1.11); -- $35.1 million class B-1 downgraded to 'BB' from 'BBB+' (BL: 16.15, LCR: 1.01); -- $27.3 million class B-2 downgraded to 'BB-' from 'BBB' (BL: 14.87, LCR: 0.93); -- $26 million class B-3 downgraded to 'B+' from 'BBB-' (BL: 13.48, LCR: 0.84). Deal Summary -- Originators: 100% WMC; -- 60+ day Delinquency: 17.18%; -- Realized Losses to date (% of original balance): 0.93%; -- Expected Remaining Losses (% of Current Balance): 16.06%; -- Cumulative Expected Losses (% of Original Balance): 14.05%. Morgan Stanley Home Equity Loan Trust 2006-3 -- $608.6 million class A affirmed at 'AAA' (BL: 36.28, LCR: 2.32); -- $41.4 million class M-1 affirmed at 'AA+' (BL: 33.84, LCR: 2.17); -- $38.6 million class M-2 affirmed at 'AA' (BL: 30.68, LCR: 1.96); -- $22.4 million class M-3 affirmed at 'AA' (BL: 28.09, LCR: 1.80); -- $20.1 million class M-4 affirmed at 'A+' (BL: 25.76, LCR: 1.65); -- $19 million class M-5 affirmed at 'A' (BL: 23.57, LCR: 1.51); -- $17.3 million class M-6 downgraded to 'BBB+' from 'A-' (BL: 21.55, LCR: 1.38); -- $17.3 million class B-1 downgraded to 'BBB' from 'BBB+' (BL: 19.51, LCR: 1.25); -- $15.6 million class B-2 downgraded to 'BBB-' from 'BBB' (BL: 17.44, LCR: 1.12); -- $12.3 million class B-3 downgraded to 'BB' from 'BBB' (BL: 15.96, LCR: 1.02). Deal Summary -- Originators: Various; -- 60+ day Delinquency: 18.69%; -- Realized Losses to date (% of original balance): 0.76%; -- Expected Remaining Losses (% of Current Balance): 15.62%; -- Cumulative Expected Losses (% of Original Balance): 12.64%. Morgan Stanley IXIS Real Estate Capital Trust 2006-1 -- $710.8 million class A affirmed at 'AAA' (BL: 33.81, LCR: 2.34); -- $47.5 million class M-1 affirmed at 'AA+' (BL: 31.74, LCR: 2.20); -- $43.7 million class M-2 affirmed at 'AA' (BL: 28.80, LCR: 1.99); -- $25.7 million class M-3 affirmed at 'AA-' (BL: 26.86, LCR: 1.86); -- $23.1 million class M-4 affirmed at 'A+' (BL: 24.55, LCR: 1.70); -- $21.8 million class M-5 affirmed at 'A' (BL: 22.37, LCR: 1.55); -- $21.2 million class M-6 affirmed at 'A-' (BL: 20.23, LCR: 1.40); -- $19.2 million class B-1 downgraded to 'BBB' from 'BBB+' (BL: 18.16, LCR: 1.26); -- $18.6 million class B-2 downgraded to 'BBB-' from 'BBB' (BL: 16.06, LCR: 1.11); -- $14.1 million class B-3 downgraded to 'BB' from 'BBB-' (BL: 14.60, LCR: 1.01). Deal Summary -- Originators: Various; -- 60+ day Delinquency: 19.56%; -- Realized Losses to date (% of original balance): 0.51%; -- Expected Remaining Losses (% of Current Balance): 14.46%; -- Cumulative Expected Losses (% of Original Balance): 11.63%. MORGAN STANLEY: Stable Performance Cues S&P to Hold Low-B Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on four classes of commercial mortgage pass-through certificates from Morgan Stanley Capital I Inc.'s series 1999-CAM1. Concurrently, S&P affirmed its ratings on seven other classes from the same transaction. The raised and affirmed ratings reflect the stable performance of the seasoned pool and credit enhancement levels that provide adequate support through various stress scenarios. As of the July 16, 2007, remittance report, the collateral pool consisted of 70 loans with an aggregate principal balance of $240.2 million, down from 152 loans with a balance of $806.5 million at issuance. The master servicer, KeyBank Real Estate Capital, provided primarily year-end 2006 and interim 2006 financial information for 98% of the pool. Based on this information, Standard & Poor's calculated a weighted average debt service coverage of 1.55x, up from 1.41x at issuance. All of the loans are current in their respective debt service payments, and no loans are with the special servicer. To date, the trust has experienced four losses totaling $9.2 million. The top 10 exposures have an aggregate outstanding balance of $98.1 million (41%). The weighted average DSC for the top 10 exposures is 1.49x, up from 1.33x at issuance. Despite the increase in DSC, three of the top 10 loans are on the servicer's watchlist and are discussed below. Standard & Poor's reviewed property inspections provided by the master servicer for the properties securing the top 10 exposures, and all were characterized as "good." KeyBank reported a watchlist with an aggregate outstanding balance of $52.4 million (22%) consisting of 13 loans, including the fourth-, fifth-, and eighth-largest loans in the pool, which were placed on the watchlist because of low DSCs. The fourth-largest loan ($9.7 million, 4%) in the pool is secured by Ram's Village Apartments, a multifamily property in Fort Collins, Colorado. The year-end 2006 DSC was 0.67x, and occupancy was 59% as of Aug. 17, 2006. Mid Rivers Shopping Center, the fifth-largest loan ($9.6 million, 4%) in the pool, is secured by a 190,640-sq.-ft. retail center in St. Peters, Missouri. The year-end 2006 DSC for this property was 0.93x, and the property was 83% occupied as of the same period. Stoneridge II Office Building, the eighth-largest loan ($7.6 million, 3%) in the pool, is secured by an 84,434-sq.-ft. office property in Bloomfield Hills, Mich. The loan's year-end 2006 DSC was 1.49x, and the property was 71% occupied as of March 31, 2007. Standard & Poor's stressed the loans on the servicer's watchlist, along with other loans with credit issues, as part of its pool analysis. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised Morgan Stanley Capital I Inc. Commercial mortgage pass-through certificates series 1999-CAM1 Rating ------ Class To From Credit enhancement ----- -- ---- ---------------- E AAA AA- 26.37% F AA+ A+ 23.01% G AA- BBB+ 17.14% H A- BBB- 11.26% Ratings Affirmed Morgan Stanley Capital I Inc. Commercial mortgage pass-through certificates series 1999-CAM1 Class Rating Credit enhancement ----- ------ ------------------ A-4 AAA 61.62% B AAA 50.71% C AAA 39.80% D AAA 34.76% J BB+ 8.75% K BB- 5.39% X AAA N/A N/A — Not applicable. MYRTLECREST RESIDENTIAL: Voluntary Chapter 11 Case Summary ---------------------------------------------------------- Debtor: Myrtlecrest Residential Care Home, LLC 2802 McCords Ferry Road Eastover, SC 29044 Bankruptcy Case No.: 07-04094 Chapter 11 Petition Date: August 2, 2007 Court: District of South Carolina (Columbia) Judge: David R. Duncan Debtor's Counsel: Carol M. Elliott, Esq. 1513 Leesburg Road Columbia, SC 29209 Tel: (803) 783-4800 Fax: (803) 783-6005 Estimated Assets: $1 Million to $100 Million Estimated Debts: $100,000 to $1 Million Debtor's List of its Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ 50 Second Injury Fund 3rd Party Workers' $12,000 Winthrop Building Compensation Claim Suite 119 220 Executive Center Columbia, South Carolina 29210 N-STAR REAL: Fitch Lifts Rating on $15 Mil. Class D Notes to BB+ ---------------------------------------------------------------- Fitch upgrades six classes and affirms three classes of the notes issued by N-Star Real Estate CDO II Ltd, a subsidiary of NorthStar Realty Finance Corp. as: -- $185,784,142 Class A-1 Notes affirmed at 'AAA'; -- $42,000,000 Class A-2A Notes affirmed at 'AAA'; -- $15,000,000 Class A-2B Notes affirmed at 'AAA'; -- $12,000,000 Class B-1 Notes upgrade to 'AAA' from 'AA+'; -- $14,500,000 Class B-2 Notes upgraded to 'AAA' from 'AA-'; -- $24,000,000 Class C-1 Notes upgraded to 'AA+' from 'A+'; -- $6,000,000 Class C-2A Notes upgraded to 'A+' from 'A-'; -- $16,000,000 Class C-2B Notes upgraded to 'A+' from 'A-'; -- $15,000,000 Class D Notes upgraded to 'BB+' from 'BB'. N-Star II is a collateralized debt obligation, which closed July 1, 2004. The portfolio consists of 70.25% commercial mortgage-backed securities, 24.09% senior unsecured real estate investment trust securities and 5.66% collateralized debt obligations. NS Advisors, LLC (rated 'CAM2' by Fitch), a subsidiary of NorthStar Realty Finance Corp. selected the initial collateral and serves as the collateral administrator. The upgrades of classes B1, B2, C-1, C-2A, C2-B and D notes is driven primarily by the improved credit quality, seasoning of the collateral, and deleveraging of the transaction. Since Fitch's last review, approximately 31% of the portfolio has been upgraded. The Fitch weighted average rating factor of the portfolio has improved to 4.86 ('BBB'/'BBB-'), as of July 2007 trustee report from 5.94 ('BBB'/'BBB-'), at last review and from 7.34 ('BBB-'/'BB+') at close in 2004. The collateral has a maximum Fitch WARF of 7.75 ('BBB-'/'BB+'). The portfolio has also benefited from another year of seasoning. The CMBS collateral, which makes up approximately 70% of the total portfolio, is well diversified and seasoned. The vintage ranges from 1997 to 2004. There are currently no defaulted assets in the portfolio. To date, approximately $50.2 million of class A-1 notes has been redeemed with approximately 78.7% of the original class A-1 note balance currently outstanding. Each of the four overcollateralization and interest coverage ratios has remained stable since inception. Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. The ratings of the classes A-1, A-2A, and A-2B notes address the likelihood that investors will receive timely payments of interest, as per the governing documents, as well as the aggregate principal amount by the June 2039 maturity date. The ratings of the classes B-1, B-2, the C-1, C-2A, C-2B, and D notes address the likelihood that investors will receive ultimate interest payments, as per the governing documents, as well as the aggregate principal amount by the June 2039 maturity date. NEW CENTURY: Fitch Lowers Rating on $15MM Class M-9 Certs. to BB ---------------------------------------------------------------- Fitch Ratings has taken rating actions on New Century Mortgage Corporation's mortgage pass-through certificates. Affirmations total $886.9 million and downgrades total $68.3 million. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: Series 2006-1 -- $712.7 million class A affirmed at 'AAA' (BL: 33.47, LCR: 2.63); -- $54 million class M-1 affirmed at 'AA+' (BL: 30.68, LCR: 2.41); -- $48.5 million class M-2 affirmed at 'AA' (BL: 26.85, LCR: 2.11); -- $26 million class M-3 affirmed at 'AA-' (BL: 24.30, LCR: 1.91); -- $23.2 million class M-4 affirmed at 'A+' (BL: 22.02, LCR: 1.73); -- $22.5 million class M-5 affirmed at 'A' (BL: 19.80, LCR: 1.56); -- $21.2 million class M-6 downgraded to 'BBB+' from 'A-'(BL: 17.64, LCR: 1.39); -- $18.4 million class M-7 downgraded to 'BBB' from 'BBB+'(BL: 15.68, LCR: 1.23); -- $13.7 million class M-8 downgraded to 'BBB-' from 'BBB'(BL: 14.22, LCR: 1.12); -- $15 million class M-9 downgraded to 'BB' from 'BBB-'(BL: 12.77, LCR: 1.00). Deal Summary: -- Originators: New Century (100%); -- 60+ day Delinquency: 16.92%; -- Realized Losses to date (% of Original balance): 0.30%; -- Expected Remaining Losses (% of Current Balance): 12.72%; -- Cumulative Expected Losses (% of Original Balance): 9.55%. -- 'U.S. Subprime RMBS/HEL Upgrade/Downgrade Criteria' (June 12 ,2007); -- 'Fitch Affirms $20B & Downgrades $2.4B of U.S. Subprime RMBS; New 2005-2006 Surveillance Criteria' (Aug. 1, 2007). NORTEL NETWORKS: Posts $37 Million Net Loss in Qtr. Ended June 30 ----------------------------------------------------------------- Nortel Networks Corp. reported on Thursday its results for the second quarter ended June 30, 2007. The company reported a net loss of $37 million in the second quarter of 2007, compared with net income of $342 million for the same period last a year ago. The net loss of $37 million in the quarter ended June 30, 2007, included special charges of $36 million for restructuring, a $35 million provision related to ongoing discussions with the SEC, a gain of $69 million due to favourable effects of changes in foreign exchange rates and a gain of $10 million on the sale of assets. The net earnings in the second quarter of 2006 of $342 million included a shareholder litigation recovery of $510 million reflecting a mark-to-market adjustment of the share portion of the global class action settlement, special charges of $49 million for restructuring and a loss of $12 million on the sale of assets. "Good progress is being made in our effort to reshape Nortel to deliver sustained value to shareholders. On balance, the key indicators of our financial health moved in a positive direction in the quarter," said Nortel president and chief executive officer Mike Zafirovski. "Gross margin of 41.1% was the highest in eight quarters and the operating margin expanded significantly on a year-over-year basis for the fourth consecutive quarter. Revenues were down 8% this quarter, principally as a result of the UMTS divestiture and the timing of contract completion. Revenues were up 3% sequentially and we are confident that the traction we are seeing with customers will translate into much higher sequential growth for the remainder of the year." Revenues were $2.56 billion for the second quarter of 2007 compared to $2.78 billion for the second quarter of 2006. Deferred revenues decreased sequentially by $29 million from the first quarter of 2007. Order input for the quarter was $2.68 billion, down from $2.81 billion in the second quarter of 2006 (note that second quarter of 2006 UMTS Access orders associated with the assets sold were approximately $184 million), and up from $2.59 billion in the first quarter of 2007. Carrier Networks (CN) revenues in the second quarter of 2007 were $1.06 billion, a decrease of 16% compared with the year-ago quarter and an increase of 5% sequentially. In the second quarter, CN revenues were impacted by the UMTS Access divestiture and decreases in legacy products, partially offset by growth in VoIP and GSM compared with the year-ago quarter. Excluding the impact of the UMTS Access divestiture, CN revenues decreased by 5% in the second quarter of 2007 compared with the year-ago quarter. Enterprise Solutions (ES) revenues in the second quarter of 2007 were $590 million, an increase of 23% compared with the year-ago quarter and a decrease of 1% sequentially. ES recorded the fourth consecutive quarter of year over year growth, driven by strong increases in the voice, data and applications businesses, which was positively impacted by the timing of contract completions. Global Services (GS) revenues in the second quarter of 2007 were $494 million, a decrease of 9% compared with the year-ago quarter, and an increase of 10% sequentially. The year over year decrease was largely due to a decrease in network implementation services primarily due to the UMTS Access divestiture and lower GSM services revenues, partially offset by growth in network management and support services. Excluding the impact of the UMTS Access divestiture, GS revenues decreased by 3% in the second quarter of 2007 compared with the year-ago quarter. Metro Ethernet Networks (MEN) revenues in the second quarter of 2007 were $363 million, a decrease of 16% compared with the year- ago quarter and a decrease of 3% sequentially. The year over year decrease in revenues was primarily due to decreases in long-haul optical revenues not repeated in the second quarter of 2007 (due to the completion of large optical contracts in the second quarter of 2006) and in legacy data, partially offset by increases in metro optical and carrier ethernet revenues. Cash balance at the end of the second quarter of 2007 was $4.47 billion, down slightly from $4.56 billion at the end of the first quarter of 2007. This decrease was primarily driven by a cash outflow from operations of $120 million. The cash balance includes net proceeds from the $1.15 billion convertible notes offering in March 2007. In September 2007, Nortel will redeem, at par, $1.125 billion principal amount of 4.25% convertible notes plus accrued and unpaid interest. Regulatory Investigations As previously announced, in May 2007 the Ontario Securities Commission (OSC) approved a Settlement Agreement reached by the Staff of the OSC and Nortel, which settlement fully resolved all issues between Nortel and the OSC. The decision recognized the extensive efforts made by Nortel's senior management and Board of Directors to be forthcoming and transparent in reporting significant accounting and internal control issues, and then solving them. Nortel has been under investigation by the SEC since April 2004 in connection with previous restatements of its financial statements. As a result of discussions with the Enforcement Staff of the SEC for purposes of resolving the investigation, Nortel concluded that a reserve should be provided. Accordingly, an accrual was recorded in the second quarter of 2007 in the amount of $35 million, which Nortel believes represents its current best estimate for the liability associated with this matter. However, this matter is ongoing and the ultimate outcome is still uncertain. Outlook Commenting on the company's financial expectations, David Drinkwater, interim chief financial officer, Nortel said, "For the full year 2007, we continue to expect revenues to be flat to down slightly compared to 2006, reflecting a decrease in revenues as a result of the UMTS Access disposition (note that 2006 UMTS Access revenues associated with the assets sold were approximately $660 million). We continue to expect full year 2007 gross margin to be in the low 40's, as a percentage of revenues, and we now expect operating margin to be around 5 percent, of revenues). For the third quarter of 2007, we expect revenues to be down in the mid single digits compared to the year ago quarter (note that third quarter 2006 UMTS Access revenues associated with the assets sold were approximately $156 million). We expect third quarter 2007 gross margin to be around 40, as a percentage of revenue, and operating expenses (SG&A and R&D) to be down slightly, compared to the year ago quarter." At June 30, 2007, the company's consolidated balance sheet showed $18.95 billion in total assets, $15.35 billion in total liabilities, $788 million in minority interests in subsidiary companies, and $2.81 billion in total stockholders' equity. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel does business in more than 150 countries around the world. * * * On March 27, 2007, Moody's Investors Service affirmed Nortel Networks' existing ratings, including its B3 corporate family rating, and assigned a B3 rating to the proposed US$1 billion convertible senior unsecured notes offering. Moody's said the outlook remains stable. NORTHWEST AIRLINES: Inks Pact with ALPA on Contract Improvements ---------------------------------------------------------------- Northwest Airlines Corp. and negotiators for the Air Line Pilots Association have reached a tentative agreement on a variety of contract issues and pilot work rules. The tentative agreement, the product of a collaborative process between the union and NWA, is subject to ratification by the Northwest ALPA Master Executive Council. “This is an important part of our efforts to achieve operational reliability,” Doug Steenland, Northwest Airlines president and CEO, said. “I’m pleased that we’ve been able to work collaboratively with ALPA on these contract improvements and that both parties share a commitment to caring for our customers.” In broad outline, the airline obtained contractual changes on several work rules pertaining to international flying as well as the settlement of outstanding grievances in exchange for the reinstatement of premium pay of 50% for all pilots, for any flying over 80 hours, effective Aug. 1, 2007. Summer Reliability Incentive Program The company is implementing a Summer Reliability Incentive Program under which all contract employees, including pilots if the proposal is ratified by the MEC, who achieve perfect attendance from August 4 through September 3, inclusive, will receive incentive pay equal to 15% of eligible earnings up to $1000. “We are committed to delivering a reliable, convenient product for our customers,” Steenland said. “We believe these steps will provide additional support for our operation during the month of August and beyond.” About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. * * * As reported in the Troubled Company Reporter on June 12, 2007, Standard & Poor's Ratings Services raised its ratings on certain enhanced equipment trust certificates of Northwest Airlines Inc. (B+/Stable/--) and removed the ratings from CreditWatch. Certain other ratings were withdrawn or remain on CreditWatch, and ratings of 'AAA' rated, insured EETCs, which were not on CreditWatch, were affirmed. As reported in the Troubled Company Reporter on June 4, 2007, Standard & Poor's Ratings Services raised its ratings on Northwest Airlines Corp. and its Northwest Airlines Inc. subsidiary, including raising the long-term corporate credit ratings on both entities to 'B+' from 'D', following their emergence from Chapter 11 bankruptcy proceedings. The rating outlook is stable. In addition, S&P assigned a 'BB-' bank loan rating, one notch above the corporate credit rating, with a '1' recovery rating, to Northwest Airlines Inc.'s $1.225 billion bankruptcy exit financing, based on S&P's expectation of a full recovery of principal in the event of a second Northwest bankruptcy. That bank facility converted from a debtor-in-possession credit facility; S&P withdrew the 'BBB-' rating on the DIP facility. NORTHWEST SUBURBAN: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Northwest Suburban Community Hospital, Inc. 135 South Prospect Street Ypsilanti, MI 48198 Bankruptcy Case No.: 07-11018 Type of business: The Debtor owns and operates of a 55-bed hospital. Chapter 11 Petition Date: July 31, 2007 Court: District of Delaware (Delaware) Judge: Kevin Gross Debtor's Counsel: Derek C. Abbott, Esq. Thomas F. Driscoll, Esq. Morris, Nichols, Arsht & Tunnell, L.L.P. 1201 North Market Street Wilmington, DE 19801 Tel: (302) 658-9200 Fax: (302) 658-3989 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Blue Cross Blue Shield of purported setoff $7,228,743 Illinois rights related Corporate Recoveries to alleged claimed Mail Code 0410 overpayment(s) P.O. Box 366 Detroit, MI 48231-0366 Illinois Department of purported tax $1,584,000 Healthcare and Family assessment Services liability 201 South Grand Avenue East Springfield, IL 61008 Bonwell Qualified Settlement lawsuit settlement $202,601 Attention: Brian E. DeVilling Clausen Miller, P.C. 10 South LaSalle Street Chicago, IL 60603-1098 Cassidy Schade & Gloor, legal services $81,832 L.L.P. Boone County Treasurer real property taxes $75,088 National Emergency Services $37,633 Jorgensen, Richard A. services $12,600 Purcell Wardrope legal services $5,350 Office Depot, Inc. trade debt $4,642 Audio Engineering, Inc. trade debt $4,505 College of American services $4,271 Pathologists Gallano, John trade debt $4,265 Aspect Medical Systems, Inc. trade debt $4,140 Ecolab trade debt $3,245 Rockford Association of services $3,000 Pathologists Immucor, Inc. trade debt $2,980 Smiths Medical A.S.D., Inc. trade debt $2,938 Allergan trade debt $2,806 Mayer Brown Rowe & Maw, legal services $2,731 L.L.P. Grainger trade debt $2,653 OMNICARE INC: Earns $49.2 Million in Quarter Ended June 30 ---------------------------------------------------------- Omnicare Inc. reported net income of $49.2 million for the second quarter ended June 30, 2007, compared with $8.4 million for the second quarter ended June 30, 2006. Second quarter 2007 sales were $1.5 billion as compared with second quarter 2006 sales of $1.6 billion. Financial results for the six months ended June 30, 2007, include net income of $92.2 million as compared with $61.6 million for the six months ended June 30, 2006, and sales of $3.1 billion for the six months ended June 30, 2007, as compared with $3.3 billion for the six months ended June 30, 2006. Results for both the second quarter of 2007 and 2006 include special items of $20.2 million pretax and $86.7 million pretax, respectively. Adjusting for these special items, results for the quarter ended June 30, 2007, and 2006, respectively, were adjusted net income of $61.6 million as compared to $82.1 million. The second quarter 2007 results were also impacted by a higher tax rate owing primarily to certain state income tax changes, including new tax legislation, during the second quarter of 2007. Moreover, the results for the second quarter of 2007 and 2006 are impacted by the unilateral reduction by UnitedHealth Group Inc. and its affiliates in the reimbursement rates paid by United to Omnicare by switching to its PacifiCare pharmacy network contract for services rendered by Omnicare to beneficiaries of United's drug benefit plans under the Medicare Part D program. The differential in rates that resulted from United's actions reduced sales and operating profit in the second quarter 2007 and 2006 by about $32.3 million pretax, and $22 million pretax, respectively. For the six months ended June 30, 2007 and 2006, the differential in rates has impacted sales and operating profit by about $62.8 million pretax, and $22 million pretax, respectively. The cumulative impact of United's unilateral reduction in reimbursement beginning in April of 2006 has impacted sales and operating profit by about $131.1 million pretax. This matter is currently the subject of litigation initiated by Omnicare and is before the federal court in the Northern District of Illinois. Financial Position Total assets were $7.4 billion, total liabilities were $4.2 billion, and total stockholders' equity were $3.2 billion as of June 30, 2007. Cash flow from operations for the quarter ended June 30, 2007 was $61.1 million versus $45.3 million in the comparable prior-year quarter. During the second quarter of 2007, the company repaid $50 million in debt and at June 30, 2007 had $165.6 million in cash on its balance sheet. Its total debt to total capital at June 30, 2007 was 46.9%, down about 325 basis points from June 30, 2006. Management's Comments Commenting on the results, Joel F. Gemunder, Omnicare's president and chief executive officer, said "Coming off the difficult first quarter of 2007, Omnicare's results for the second quarter reflect what, we believe, is a stabilizing of the trends we saw earlier in the year. Measured progress has been made in a number of key areas and, despite a lower number of beds served, our overall gross margin improved to its highest level in three years. Importantly, the continued shift toward generic drugs reduced costs for the Company as well as favorably impacting payors. Moreover, progress was made in reducing our drug acquisition costs as well as temporary labor expenses. Our CRO business also saw substantial improvement during the second quarter of 2007 on both a sequential, as well as year-over-year basis. Then too, cash flow remained strong, allowing us to reduce debt as well as fund attractive acquisition opportunities." Omnicare Outlook "It is clear that our entire industry – from payors to providers – is still navigating through the complexities brought about by the continued evolution of the Medicare Drug Benefit. We remain committed to working through these challenges toward an efficient operating system that truly provides seniors the pharmaceutical care they need and deserve," said Mr. Gemunder. "As 2007 unfolds, we continue to view the year as a building year, one in which we work to resolve prior challenges and move ahead with those activities that enhance shareholder value. We have seen some stabilization in the trends that impacted our first quarter results and we remain committed to making further progress toward reinvigorating our growth and improving profitability. However, given where we are today in the process and timing issues around certain of our initiatives, we now expect diluted earnings per share to be in the range of $2.15 to $2.20 for 2007. Our operating cash flow guidance has been raised to $375 million to $425 million for the full year 2007. "Longer term, we believe the fundamentals in our business remain intact. Given demographics, coupled with the long-term trends we see and the ongoing implementation of initiatives such as the Omnicare Full Potential Plan, we continue to believe that our strategies are appropriate and that our scale will position us uniquely within our industry to generate longer-term growth." About Omnicare Inc. Headquartered in Covington, Kentucky, Omnicare Inc. (NYSE: OCR) -- http://www.omnicare.com/-- provides pharmaceutical care for the elderly. Omnicare serves residents in long-term care facilities and other chronic care settings comprising approximately 1.4 million beds in 47 states, the District of Columbia and Canada. Omnicare is the largest U.S. provider of professional pharmacy, related consulting and data management services for skilled nursing, assisted living and other institutional healthcare providers as well as for hospice patients in homecare and other settings. Omnicare's pharmacy services also include distribution and patient assistance services for specialty pharmaceuticals. Omnicare offers clinical research services for the pharmaceutical and biotechnology industries in 30 countries worldwide. * * * As reported in the Troubled Company Reporter on July 30, 2007, Moody's Investors Service lowered the Speculative Grade Liquidity rating of Omnicare, Inc to SGL-2 from SGL-1. Moody's believes that as a result of lower than expected cash flow and the potential need for Omnicare to draw on external facilities to fund extraordinary items, the company's liquidity is more weakly positioned than before. Omnicare's Corporate Family Rating is Ba3 with a negative outlook. OSAGE EXPLORATION: Posts $257,453 Net Loss in Qtr. Ended June 30 ---------------------------------------------------------------- Osage Exploration and Development Inc. reported a net loss of $257,453 for the second quarter ended June 30, 2007, compared with a net loss of $226,549 for the same period a year ago. Revenues from oil sales were $92,443, an increase of $60,236, or 187.0%, in the quarter ended June 30, 2007, compared to $32,207 of revenues in the quarter ended March 31, 2006. The increase in net loss primarily reflects the increase in interest expenses. Loss from operations was $107,226 and $205,785 for the quarter ended June 30, 2007, and June 30, 2006, respectively. Interest expense was $154,282 and $21,745 in the quarter ended June 30, 2007 and June 30, 2006, respectively. At June 30, 2007, the company's consolidated balance sheet showed $1.7 million in total assets, $365,247 in total liabilities, and $1.3 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2007, are available for free at http://researcharchives.com/t/s?21fe Going Concern Doubt Goldman & Parks, in Tarzana, Calif., expressed substantial doubt about Osage Exploration and Development Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's recurring losses from operations and accumulated deficit of $648,166 as of Dec. 31, 2006. About Osage Exploration Osage Exploration and Development Inc. (Other OTC: OEDV.PK) -- engages in the acquisition, development, exploration, and production of oil and natural gas in the United States. It holds 100% working interests in the Hopper and Osage leases in Osage County, Oklahoma; 85% of the working interest in a gas property in Hansford County, Texas. The company was formerly known as Osage Energy Corporation and changed its name to Osage Exploration and Development Inc. in July 2007. Osage Exploration and Development Inc. is based in La Jolla, California. OWNIT MORTGAGE: Disclosure Statement Hearing Scheduled on Sept. 9 ----------------------------------------------------------------- The Honorable Kathleen Thompson of the U.S. Bankruptcy Court for the Central District of California will convene a hearing on Sept. 6, 2007, 2:00 p.m., at Courtroom 1339, 255 E. Temple St., in Los Angeles, to consider the adequacy of the Disclosures Statement explaining OWNIT Mortgage Solution Inc's Chapter 11 Plan of Liquidaiton. Overview of the Plan The Plan contemplates the transfer o the Debtor's assets, including all causes of action, to OWNIT Liquidating Trust, which will liquidate the assets, and distribute the proceeds to the Debtor's creditors. Treatment of Claims Under the Plan, Administrative and Priority Tax Claims will be paid in full. After the effective date, holders of Secured Claims will receive, either: a. the collateral of the holder's interest; b. proceeds from the sale of the collateral; c. cash in the amount of its secured claim; or d. other distribution or treatment. Priority Non-Tax Claims, totaling $4,100,00, will be paid in full on the effective date. After the effective date, holders of General Unsecured Claims, totaling $116,300,000, will receive on account of their respective allowed claim under the Plan. Under the Pan, each holder of Subordinated General Unsecured Claim will also receive on account of their respective allowed claim until all General Unsecured Claims has been paid. Equity Interest Claims will be deemed cancelled under the Plan. Headquartered in Agoura Hills, California, Ownit Mortgage Solutions Inc. is a subprime mortgage lender, which specializes in making loans to borrowers with poor credit or limited incomes. The Debtor filed for chapter 11 protection on Dec. 28, 2006 (Bankr. C.D. Calif. Case No. 06-12579). Ira D. Kharasch, Esq., Linda F. Cantor, Esq., Jonathan J. Kim, Esq., and Scotta E. McFarland, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, represent the Debtor. Stutman, Treister & Glatt represents the Official Committee of Unsecured Creditors. The Debtor's schedules show total assets of $697,550,849 and total liabilities of $819,131,179. PIEDMONT HAWTHORNE: DAE Deal Cues S&P to Withdraw Ratings --------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings, including the 'B+' corporate credit rating, on Piedmont Hawthorne Holdings Inc. The ratings were also removed from CreditWatch, where they were placed with negative implications on March 22, 2007. "The ratings action follows the announcement . . . that DAE Aviation Holdings Inc. completed its acquisition of the company and that all rated debt has been repaid," said Standard & Poor's credit analyst Christopher DeNicolo. As part of the transaction, DAE Aviation also acquired Standard Aero Holdings Inc., for a total consideration for both companies of $1.9 billion. PAIVIS CORP: To Acquire Detroit Phone's Stake for Cash and Stock ---------------------------------------------------------------- Paivis Corp. has entered into a Letter of Intent with Detroit Phone Cards Inc., a private eastern-based United States corporation that generates approximately $30,000,000 in revenue to acquire 100% of its outstanding stock. The transaction is subject to due diligence, the usual and customary conditions, and entering into a definitive agreement. In accordance with the terms of the LOI, Paivis would purchase 100% of the outstanding shares of its stock in exchange for stock and cash. The target acquisition company generates approximately $6,000,000 annually in prepaid cellular phone revenue. The balance of revenue, approximately $24,000,000, is from the sale of prepaid long distance cards. The company expects that upon closing this acquisition will add earnings to the company's income statement. Paivis management anticipates this acquisition will improve its infrastructure and therefore provide costs savings and eventually increase margins. "We are excited about joining the Paivis team and look forward to getting the Definitive Agreement signed,” Rami Chahine, president and chief executive officer of Detroit Phone Cards Inc., said. "We are excited about all of our acquisition prospects, but this particular acquisition puts us into the prepaid cellular service business, which gives a high margin business line to expand upon and increase our potential for quality earnings,” Gregory L. Bauer, president and chief executive officer of Paivis, said. ''The combination with this business also expands our revenue base in the prepaid card business and brings additional infrastructure that will develop certain positive economies of scale. We look forward to completing this transaction and providing more growth and value to our shareholders." The executed LOI stipulates that the parties will work in good faith to execute a definitive agreement soon as possible, the purchase price will be a combination of stock and cash final terms will be disclosed in the definitive agreement. Paivis has also agreed to provide working capital financing as part of the transaction. About Paivis Corp. Headquartered in Atlanta, Georgia, Paivis Corp. (OTC BB: PAVC.OB) -- http://www.paivis.com/-- is a facility-based wholesale telecommunications carrier that delivers many application/value- added services within the prepaid services space. The company operates and maintains a switching facility, offering over 16,000 ports with connectivity to most of the tier 1 carriers in the US and manages an extensive international (A-Z) network. In addition to the wholesale business, Paivis maintains a large retail distribution network for direct to consumer services. Going Concern Doubt As reported in the Troubled Company Reporter on March 7, 2007, Jaspers+Hall PC, in Denver, Colorado, expressed substantial doubt about Paivis Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Sept. 30, 2006. The auditing firm pointed to the company's recurring losses and its difficulties in generating sufficient cash flow to meet its obligations and sustain its operation. POLY-PACIFIC: Completes $261,050 2nd Tranche of Private Placement ----------------------------------------------------------------- Poly-Pacific International Inc. has closed $261,050 in the second and final tranche of a non-brokered private placement consisting of 1,450,277 units at a subscription price of $0.18 per Unit, subject to regulatory approval. Each Unit consists of one common share and one common share purchase warrant. The Warrants are exercisable at a price of $0.30 per common share during the first year after the date of closing and at $0.40 per common share during the subsequent year. The company raised $603,514 on July 20, 2007, for a total of $864,564. The securities issued under this private placement are subject to a four-month hold period. The company paid Finder's Fees of $18,540 to arm's length parties in connection with the second closing of the placement. The proceeds of this private placement will be used for general working capital purposes and to investigate other reclamation sites in North America and perform due diligence on other related technologies. Poly-Pacific also intends to complete a private placement of subordinate, unsecured, convertible debentures in the aggregate principal amount of $300,000. The Debentures will mature and be due and payable on the date that is six months from the closing date. The principal amount of the Debentures will be convertible into units of the company at the conversion price of $0.31 per Debenture Unit, each Debenture Unit consisting of one common share of the company and one common share purchase warrant, with each Debenture Warrant entitling the holder thereof to purchase one common share for a price of $0.35 per share until two years from the closing date. The principal amount of the Debentures will bear interest at the rate of 15% per annum, calculated and paid on the maturity date. The Debentures and any securities issued upon the conversion of the Debentures will be subject to a four month hold period. Poly- Pacific intends to use the proceeds from the Debentures to perform due diligence on the McAdoo Landfill site granted under the access agreement, and for general working capital. The private placement is subject to the approval of the TSX Venture Exchange. Poly-Pacific is actively developing its business model to include the reclamation of industrial polymer fiber throughout North American landfill sites. About Poly-Pacific International Inc. Based in Edmonton, Alberta, Poly-Pacific International Inc. - http://www.poly-pacific.com/-- (TSX: PMB.V) (OTCBB:PLYPF)(BERLIN:A0LGDN)(FRANKFURT:POZ) manufactures a line of plastic media blasting for commercial and industrial applications including paint stripping, coating removal, surface preparation and conditioning. Going Concern Doubt As reported in the Troubled Company Reporter on May 10, 2007, Collins Barrow Edmonton LLP, in Edmonton, Alberta, raised substantial doubt about Poly-Pacific International Inc.'s ability to continue as a going concern after auditing the company's financial statements for the years ended Dec. 31, 2006, and 2005. The auditor pointed to the company's recurring losses from operations and net working capital deficiency. PRIMEDIA INC: S&P Lifts Rating to BB- and Removes Negative Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on PRIMEDIA Inc. to 'BB-' from 'B', and removed all ratings from CreditWatch. Ratings were originally placed on CreditWatch with negative implications on Oct. 25, 2005, based on PRIMEDIA's announcement that it was selling its specialty magazine business. A revision of CreditWatch implications to positive on June 29, 2007, recognized that PRIMEDIA planned to use proceeds from this sale to retire its existing debt. The outlook is stable. "The upgrade reflects the completed sale of the Enthusiast Media segment and PRIMEDIA's subsequent recapitalization," said Standard & Poor's credit analyst Michael Altberg. S&P expect that the roughly $1.1 billion in net proceeds from the sale, along with PRIMEDIA's proposed $350 million senior secured credit facilities and cash on hand, will be used to repay all of the company's existing debt and accrued interest, and to fund a $96 million shareholder dividend. Pro forma for the proposed transaction, total debt outstanding was $250 million as of March 31, 2007. The ratings on PRIMEDIA reflect its remaining publications' exposure to rental occupancy rates and new construction in the apartment real estate sector, risks from the migration of real estate advertising to the Internet, and the company's narrower business base following the sale of its specialty magazine business. These factors are only partially offset by the company's established position within the consumer rental and home sale guides publishing segment, its good geographic diversity and population reach through its proprietary distribution network, and its low debt leverage and strong credit measures following its refinancing. QUANTUM CORP: Posts $22.6 Million Net Loss in Qtr. Ended June 30 ---------------------------------------------------------------- Quantum Corp. announced on Wednesday its results for the fiscal first quarter ended June 30, 2007. The company reported a GAAP net loss of $22.6 million for the first quarter of fiscal 2008, compared to a net loss of $3.6 million in the first quarter of fiscal 2007. The $22.6 million net loss in the first quarter of fiscal 2008 reflected a number of major expense items totaling $28 million, much of which was also driven by the ADIC acquisition: $13 million in amortization of intangibles, $12 million in restructuring and other transition expenses related to the acquisition, and $3 million in stock-based compensation charges. Revenue for the first quarter of fiscal 2008 was $246 million. This represented a 32% increase over the same quarter last year, largely resulting from Quantum's acquisition of Advanced Digital Information Corp. (ADIC) in August 2006. One of the highlights of the June quarter was Quantum's gross margin results. The company's GAAP gross margin rate was 31.8%, a significant increase over the 27.9% rate in the same quarter last year and its best performance in three years. Operating expenses were $92 million, up from $55 million in the first quarter of fiscal 2007 primarily as a result of the ADIC acquisition. "It has been just under a year since we completed the ADIC acquisition, and we are very pleased with what we have been able to achieve as a combined company in this relatively short time," said Rick Belluzzo, chairman and chief executive officer of Quantum. "As in previous years, the June quarter was challenging from a revenue standpoint, but our operating income as a percentage of revenue over the last three quarters has been the best we've achieved in more than five years, when amortization, stock-based compensation and acquisition-related expenses are excluded. In addition, we've completed the vast majority of the integration and strategic actions that will now allow us to focus on growing the business by taking advantage of our expanded opportunities." Quantum's product revenue, which includes sales of the company's hardware and software products and services, totaled $222 million in the first quarter of fiscal 2008. This represented a net increase of $63 million over the first quarter of fiscal 2007, with greater revenue contributions from tape automation, disk systems and software, and services offsetting a decline in royalties and device revenues. Quantum continued to increase the percentage of its product revenue coming from branded sales, which rose to 58% in the June quarter. Quantum had $24 million in royalty revenue for the first quarter of fiscal 2008, down approximately $3.5 million from the same quarter last year. Disk Systems and Software Momentum In announcing its June quarter results, Quantum also highlighted the momentum in its disk systems and software business. The company began shipping its DXi3500 and DXi5500 disk backup appliances with data de-duplication and remote replication capabilities less than six months ago, and in the last two months alone has sold nearly twice as many units as it did in the previous four months. These DXi-Series products have attracted a broad range of customers around the world -- from smaller organizations to leading brand name companies to major governmental agencies -- with representation across a wide array of industries, including telecommunications, financial services, health care, education, technology, and consumer products. Quantum also pointed to several competitive advantages that position it to capitalize on the opportunities in disk-based data protection moving forward. Along with Quantum's global scale and strong sales and service infrastructure, these advantages include a large installed base of tape automation customers it can help in transitioning to disk backup and an industry-leading tape library portfolio the company can leverage in bundled disk-tape offerings. Quantum is already seeing the benefits of this combination, as roughly 20% to 25% of customers that purchase a DXi-Series unit also buy tape at the same time. In addition to building momentum in its disk-based backup business over the last several months, Quantum has strengthened its StorNext data management software portfolio. In April, the company introduced StorNext 3.0, which extends high performance, resilient data sharing to local area network clients and offers data de-duplication for archiving. Quantum has also enhanced its StorNext market position with HP as a global reseller and continued to gain new enterprise customers such as Microsoft, Fox News and the U.S. Bureau of Land Management. At June 30, 2007, the company's consolidated balance sheet showed $1.1 billion in total assets, $872.0 million in total liabilities, and $238.4 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2007, are available for free at http://researcharchives.com/t/s?2209 About Quantum Corp. Headquatered in San Jose, California, Quantum Corp. (NYSE: QTM) -- http://www.quantum.com/-- is a global storage company specializing in backup, recovery and archive. Quantum provides a comprehensive, integrated range of disk, tape, and software solutions supported by a world-class sales and service organization. The company works closely with a broad network of resellers, OEMs and other suppliers to meet customers' evolving data protection needs. * * * As reported in the Troubled Company Reporter on June 20, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on San Jose, California-based Quantum Corp. At the same time, Standard & Poor's revised its outlook on Quantum to positive from stable. REABLE THERAPEUTICS: Inks $2.75/Share Merger Pact With Iomed Inc. ----------------------------------------------------------------- ReAble Therapeutics has established a per share consideration in accordance with the merger agreement with IOMED Inc. IOMED shareholders will receive from ReAble Therapeutics cash equal to $2.75 per share in exchange for their IOMED common stock if the merger agreement is approved by IOMED's shareholders and the other closing conditions are satisfied or waived in accordance with the merger agreement. IOMED's board of directors has approved the merger agreement and recommends that shareholders vote "for" the approval and adoption of the merger agreement. A special meeting of shareholders to vote on the merger was scheduled for Aug. 8, 2007, at 10:00 a.m. local time to be held at: IOMED Headquarters 2441 South 3850 West Salt Lake City, Utah. Investors and security holders may obtain free copies of the proxy statement, well as other filed materials containing information about IOMED by contacting: Brian Mower, CFO, IOMED Inc. 2441 South 3850 West, Suite A Salt Lake City, UT 84120 Tel (801) 975-1191 Fax (801) 972-9072 About Iomed Inc. Headquartered in Salt Lake City, Utah, IOMED Inc. (AMEX: IOX) – http://http://www.iomed.com/-- is a diversified drug delivery product and technology company, focused primarily on iontophoresis. Iontophoresis is a technology that delivers pharmaceuticals transdermally using electric current to ionize drug molecules and propel them through the skin. Iontophoresis is used to deliver medication both locally and systemically. About ReAble Therapeutics Inc. Headquartered in Austin, Texas, ReAble Therapeutics Inc. fka Encore Medical Corporation -- http://www.reableinc.com/-- is a diversified rehabilitation and orthopedic device company, that develops, manufactures and distributes a comprehensive range of medical devices used by physicians, therapists, athletic trainers, orthopedic surgeons, and other healthcare professionals to treat patients with musculoskeletal conditions resulting from degenerative diseases, deformities, traumatic events, and sports- related injuries. Through its Orthopedic Rehabilitation Division, ReAble is a distributor of electrical stimulation and other orthopedic products used for pain management, orthopedic rehabilitation, physical therapy, fitness and sport performance enhancement. * * * As reported in the Troubled Company Reporter on July 18, 2007, Moody's Investors Service placed ReAble Therapeutics Inc. ratings on review for possible downgrade. These ratings include: B2 corporate family rating; B2 probability of default rating; and the speculative grade liquidity rating is SGL-2. The liquidity rating will be reviewed upon conclusion of the proposed transactions. RESMAE MORTGAGE: Fitch Lowers Ratings on Six Certificate Classes ---------------------------------------------------------------- Fitch Ratings has taken these rating actions on ResMae mortgage pass-through certificates. Affirmations total $446.2 million and downgrades total $66.5 million. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: Series 2006-1 -- $358.7 million class A affirmed at 'AAA' (BL: 40.77, LCR: 2.35); -- $29.1 million class M-1 affirmed at 'AA+' (BL: 38.00, LCR: 2.19); -- $26.9 million class M-2 affirmed at 'AA' (BL: 33.67, LCR: 1.94); -- $16.4 million class M-3 affirmed at 'AA-' (BL: 30.70, LCR: 1.77); -- $14.9 million class M-4 affirmed at 'A+' (BL: 27.99, LCR: 1.62); -- $14.2 million class M-5 downgraded to 'A-' from 'A' (BL: 25.41, LCR: 1.47); -- $12.7 million class M-6 downgraded to 'BBB+' from 'A-' (BL: 23.05, LCR: 1.33); -- $11.5 million class M-7 downgraded to 'BBB' from 'BBB+' (BL: 20.83, LCR: 1.20); -- $10.4 million class M-8 downgraded to 'BB+' from 'BBB' (BL: 18.86, LCR: 1.09); -- $8.6 million class M-9 downgraded to 'BB' from 'BBB-' (BL: 17.29, LCR: 1.00); -- $8.9 million class B downgraded to 'BB-' from 'BB+' (BL: 16.06, LCR: 0.93). Deal Summary -- Originators: (100% ResMAE); -- 60+ day Delinquency: 18.15%; -- Realized Losses to date: (% of original balance): 0.54%; -- Expected Remaining Losses (% of Current Balance): 17.32%; -- Cumulative Expected Losses (% of Original Balance): 13.24%. RICHARD PIECHOWSKI: Case Summary & 19 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Richard B. Piechowski dba Piechowski, Inc. dba Angelos Express, Inc. Mary A. Piechowski fka Mary A. Hogan 1257 Donal Drive Flint, MI 48532 Bankruptcy Case No.: 07-32528 Chapter 11 Petition Date: August 2, 2007 Court: Eastern District of Michigan (Flint) Judge: Daniel S. Opperman.Flint Debtor's Counsel: James J. Zimmer, Esq. 934 Church Street Flint, MI 48502 Tel: (810) 239-6637 Estimated Assets: Unstated Estimated Debts: $1 Million to $100 Million Debtor's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Chase Home Finance consumer debt; value of $441,747 P.O. Box 78116 collateral: $395,000 Phoenix, AZ 85062-8116 ABNAMRO consumer debt; $150,000 2600 West Big Beaver Road value of collateral: Troy, MI 48084-3323 $190,000 Tammy & Roger Dudi business debt; $107,000 6469 Bennett Lake Road value of collateral: Fenton, MI 48430-9094 $40,000 Countrywide Home Loans business debt; $93,432 value of collateral: $70,000 Neil Helmkay business debt $72,000 Helmkay-Courtland Center business debt $72,000 Flint and Neil Helmkay Michigan Department of business debt $45,137 Treasury I.R.S. business debt $33,462 Garb-Ko, Inc. business debt $30,000 Citizens Bank consumer debt; $23,293 value of collateral: $13,125 G.M.A.C. consumer debt; $22,293 value of collateral: $15,630 I.R.S. business debt $20,989 T.D.C. Courtland Leaseco, business debt $20,053 L.L.C. Fifth Third Bank consumer debt; $15,908 value of collateral: $10,000 Discover Card business debt $12,984 Guardian Alarm business debt $9,385 Winegarden, Haley, Lindholm business debt $7,920 & Robertson A.&A. Management business debt $6,475 Harris, Goyette, Winterfield, business debt $6,000 Penskar RITE AID: July 2007 Total Drugstore Sales Reach $2 Billion ---------------------------------------------------------- Rite Aid Corporation reported same store sales that increased 1.6% for the four weeks ended July 28, 2007,over the prior-year period. Pharmacy same store sales increased 2.1%, which included an approximate 445 basis points negative impact from new generic introductions. Front-end same store sales increased 0.7%. Total drugstore sales for the four-week period increased 54.9% to $2 billion, compared to $1.3 billion for the same period last year. Prescription revenue accounted for 67.2% of drugstore sales, and third party prescription revenue represented about 95.8% of pharmacy sales. Total sales include all of the stores operated during the period, including stores acquired in the Brooks Eckerd acquisition on June 4, 2007. The acquired Brooks Eckerd stores are excluded from the same store sales calculation but will be included in same store sales twelve months after the close of the acquisition, which will be in June 2008. Year-to-Date Sales Same store sales for the 21-week period ended July 28, 2007, increased 1.9%, consisting of a 2.2% pharmacy same store sales increase and a 1.3% increase in front-end same store sales. Total drugstore sales for the 21-weeks ended July 28, 2007, increased 22.5% to $8.5 billion from $6.9 billion in last year's like period. Prescription revenue accounted for 65.6% of total drugstore sales, and third party prescription revenue was about 95.8% of pharmacy sales. About Rite Aid Rite Aid Corporation (NYSE:RAD) -- http://www.riteaid.com/-- is one of the United States' leading drugstore chains with annual revenues of more than $27 billion. On July 28, 2007, Rite Aid operated 5,151 stores, including the Brooks and Eckerd stores acquired June 4, 2007. * * * As reported in the Troubled Company Reporter on May 17, 2007, Standard & Poor's Ratings Services assigned its 'BB-' rating and '1' recovery rating to Rite Aid Corp's $1.105 billion senior secured tranche 2 term loan facility. The '1' recovery rating indicating the high expectation for full recovery of principal in the event of a payment default. Concurrently, Standard & Poor's raised the ratings on the three existing second-lien notes to 'B+' from 'B' and assigned a '1' recovery rating, indicating the high expectation for full recovery of principal in the event of a default. The secured notes ratings have been removed from CreditWatch with developing implications. At the same time, Standard & Poor's affirmed all other ratings, including the 'B' corporate credit rating. The outlook is stable. ROGNES CORP: Case Summary & 23 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Rognes Corp. 2005 South Ankeny Boulevard, Suite 400 Ankeny, IA 50023 Bankruptcy Case No.: 07-02557 Type of business: The Debtor is a general contractor engaged in heavy construction. Chapter 11 Petition Date: August 3, 2007 Court: Southern District of Iowa (Des Moines) Debtor's Counsel: Jerrold Wanek, Esq. Garten & Wanek 835 Insurance Exchange Building 505 Fifth Avenue Des Moines, IA 50309 Tel: (515) 243-1249 Fax: (515) 244-4471 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million Debtor's 23 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ H.D. Supply Waterworks, Ltd. $333,445 P.O. Box 91036 Chicago, IL 60693 Cretex Concrete Products $218,101 P.O. Box 91036 Chicago, IL 60693 American Case Iron Pipe Co. $144,913 P.O. Box 402659 Atlanta, GA 30384-2659 Central Service & Supply $132,597 Warren Rognes $265,194 Daimler Chrysler Struck $127,464 Finance Lease Servicing Center $106,609 City State Bank $83,191 Lakeview Concrete Product $83,173 First Insurance Funding $82,428 Volvo Commercial Finance $70,095 Synergy Contracting, L.L.C. $62,412 PowerPlan Murply Tractor $58,315 Warren Rognes $45,000 Payment Remittance Center $44,365 City State Bank $42,327 Carpenter Erosion Control $35,861 Rognes Corp. 401K $35,000 Wellmark Blue Cross $34,170 Blue Shield Schildberg Construction Co. $33,554 Manifest Funding Services $30,474 McLaughlin Manufacturing Co. $28,483 SHERWOOD MANOR: Case Summary & 18 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Sherwood Manor, LLC 6402 West Linebaugh Avenue Suite A Tampa, FL 33625 Bankruptcy Case No.: 07-06801 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Sherwood Manor North, LLC 07-06802 Tucher Pond, LLC 07-06803 Chapter 11 Petition Date: August 1, 2007 Court: Middle District of Florida (Tampa) Debtors' Counsel: David W. Steen, Esq. David W. Steen, P.A. 602 South Boulevard Tampa, FL 33606-2630 Tel: (813) 251-3000 Fax: (813) 251-3100 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million A. Sherwood Manor, LLC's List of its Six Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Laurie S. Burcaw $3,300,000 17511 North Dale Mabry Lutz, FL 33548 Byrd Corporation $700,000 100 South Carillon Parkway, Suite 100 Saint Petersburg, FL 33716 Burcaw & Associates $280,000 6402 West Linebaugh Avenue Tampa, FL 33625 Donna Feldman, P.A. $30,000 Burcase Geotechnical Group $10,000 Doug Beldon Tax Collector Unknown B. Sherwood Manor North, LLC's List of its Seven Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Laurie S. Burcaw $2,300,000 17511 North Dale Mabry Lutz, FL 33548 KB Homes $400,000 3450 Buschwood Park Tampa, FL 33618 Burcaw & Associates, Inc. $224,000 6402 West Linebaugh Avenue Tampa, FL 33625 Donna Feldman, P.A. $25,000 Burcaw Geotechnical Group, Inc. $5,000 Doug Beldon Tax Collector Unknown Hillsborough Co. Solid Waste Unknown C. Tucher Pond, LLC's List of its Five Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Laurie S. Burcaw $875,000 17511 North Dale Mabry Lutz, FL 33548 Burcaw & Associates, Inc. $21,000 6402 West Linebaugh Avenue Tampa, FL 33625 Donna Feldman, P.A. $8,000 19321 West Linebaugh Avenue Tampa, FL 33625 Burcaw Geotechnical Group, Inc. $5,000 Doug Beldon Tax Collector Unknown SIMON GROUP: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Simon Group, LLC 5101 Summit Drive Edmond, OK 73034 Bankruptcy Case No.: 07-12741 Chapter 11 Petition Date: August 2, 2007 Court: Western District of Oklahoma (Oklahoma City) Judge: T.M. Weaver Debtor's Counsel: Mark B. Toffoli, Esq. Holbrook & Toffoli 120 North Robinson, Suite 2205 Oklahoma City, OK 73102 Tel: (405) 232-3664 Fax: (405) 236-1286 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's List of its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Phillips McFall McCaffrey Trade Debt $38,000 McVay & Murrah 101 North Robinson 13th Floor Oklahoma City, OK 73102 Fellers Snider Blankenship Trade Debt $35,988 Bailey & Tippens 100 North Broadway Avenue Suite 1700 Oklahoma City, OK 73102 CitiBusiness Select Card Trade Debt $16,665 P.O. Box 6415 The Lakes, NV 88901 Max Distributing Trade Debt $24,952 City of OKC - Waste Water Trade Debt $6,342 Woodall's Travel Trade Debt $4,386 Directory Advertising Trailer Life Travel Guide Trade Debt $3,891 AT&T Yellow Pages Trade Debt $3,600 United Equipment Rental Trade Debt $1,797 Advanced Pools Trade Debt $1,686 Global Insurance Premium Trade Debt $1,640 Delaina J. Mackey Trade Debt $1,552 United Leasing Trade Debt $1,450 Doug Earnest Trade Debt $1,000 Brenda Morris Trade Debt $880 First Comp. Trade Debt $372 Accurate Environmental Trade Debt $325 Alltel Wireless Trade Debt $189 Waste Managementof OKC Trade Debt $170 AT&T Trade Debt $109 SONIC CORP: Board Approves Additional $75 Million Stock Repurchase ------------------------------------------------------------------ Sonic Corp.'s board of directors has authorized an additional $75 million under the company's stock repurchase authorization. The board also extended the term for the repurchase of the newly authorized amount to Aug. 31, 2008. Share repurchases under the prior authorization of $100 million were completed in July. Share repurchases under the program will be made from time-to-time in the open market depending on market conditions. In October 2006, the company completed the buyback of $366 million of its common stock through a tender offer. Subsequent to the tender offer, Sonic has repurchased approximately $180 million of stock in the open market under the prior repurchase authorization. Collectively, the total stock repurchased thus far in fiscal year 2007 amounts to 24 million shares or approximately $546 million, representing over 28% of the company's outstanding stock at Sept. 1, 2006, the beginning of the current fiscal year. Headquartered in Oklahoma City, Oklahoma, Sonic Corp. (Nasdaq: SONC) -- http://www.sonicdrivein.com/-- originally started as a hamburger and root beer stand in 1953, in Shawnee, Oklahoma, called Top Hat Drive-In, and then changed its name to Sonic in 1959. The first drive-in to adopt the Sonic name is still serving customers in Stillwater, Oklahoma. Sonic has more than 3,200 drive-ins coast to coast and in Mexico, where more than a million customers eat every day. At Feb. 28, 2007, the company's balance sheet showed total assets of $719 million and total liabilities of $745 million, resulting in a $26 million stockholders' deficit. STANDARD AERO: DAE Aviation Deal Cues S&P to Withdraw Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings, including the 'B+' corporate credit, 'B-' subordinated debt, and 'BB-' bank loan ratings on aggregate U.S. $375 million bank financing, on Standard Aero Holdings Inc. "The ratings action follows the announcement that DAE Aviation Holdings Inc. completed its acquisition of the company and that all rated debt has been repaid," said Standard & Poor's credit analyst Greg Pau. As part of the transaction, DAE Aviation also acquired Landmark Aviation, for a total consideration for both companies of $1.9 billion. STEWART & STEVENSON: S&P Junks Rating on $150 Mil. Senior Notes --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on capital equipment provider Stewart & Stevenson LLC. At the same time, Standard & Poor's lowered its rating on the company's $150 million senior notes due 2014 to 'CCC+' from 'B-'. The outlook remains stable. The upward revision of the borrowing base on Stewart & Stevenson's credit facility to $250 million from $125 million prompted the downgrade of the unsecured notes. If S&P assume a fully drawn credit facility, Stewart & Stevenson's priority debt exceeds 30% of the book value of the company's assets, which is our guideline for lowering a debt class rating by two notches relative to the corporate credit rating. As of May 2007, Houston, Texas-based Stewart & Stevenson had about $320 million in total debt, adjusted for operating lease expenses. "Underpinning the ratings on Stewart & Stevenson are the risks associated with its strong reliance on the cyclical end-markets, its short track record as an operating company in its current configuration, and its aggressive financial profile," said Standard & Poor's credit analyst Amy Eddy. "Somewhat offsetting concerns are the stable cash flow and margin characteristics of the company's after-market business, the company's low annual maintenance capital spending requirements, and its long-standing relationships with OEM suppliers." The stable outlook reflects S&P's expectation that strong backlog and improved margins should be favorable for cash flow and credit measures in the intermediate term. However, if in the near term the company executes an IPO and there is material debt repayment, positive rating actions are possible. Conversely, if operating performance deviates materially from S&P's expectations, or if the company pursues growth initiatives in a more leveraging manner, negative rating actions could result. SUPERVALU INC: Fitch Affirms BB- Issuer Default Rating ------------------------------------------------------ Fitch Ratings affirmed SUPERVALU Inc.'s ratings as: -- Issuer Default Rating at 'BB-'; -- $2 billion revolving bank credit facility at 'BB'; -- $1.25 billion Term Loan A at 'BB'; -- $750 million Term Loan B at 'BB'; -- New Albertson's, Inc. and American Stores, Inc. senior unsecured notes at 'BB-'. In addition, these rating actions have been taken as New Albertson's Inc. is no longer reporting separate financial statements and therefore all senior unsecured debt is considered pari passu on a consolidated basis: -- SUPERVALU senior unsecured notes upgraded to 'BB-' from 'B+'; -- New Albertson's, Inc.'s 'BB-' rated IDR withdrawn. The Rating Outlook has been changed to Positive from Negative given the successful integration of the Albertson's Inc. assets acquired in June 2006 and steady operating results. As of June 16, 2007, SUPERVALU had $9.3 billion of debt outstanding including capital leases. The ratings reflect SUPERVALU's broad geographic presence, strong positions in key markets across its banners, and defined operating strategy. The ratings also consider the company's financial leverage and the highly competitive operating environment. Future rating decisions will consider the company's ability to effectively execute on its operating strategy as well as the level of debt reduction. SUPERVALU is one of the largest operators in the U.S. grocery business with annual sales of $44 billion across its 2,464 food stores and supply chain services operations. The company has strong positions in important markets including Southern California, Chicago, New England, and the Mid-Atlantic states. Since the June 2006 acquisition of 1,117 Albertson's, Inc. stores, SUPERVALU has developed a strategy to strengthen operating results centered on its 'Premium, Fresh, and Healthy' concept which focuses on merchandise offerings and store conditions. While SUPERVALU has begun to introduce aspects of its strategy to the acquired stores, Fitch expects SUPERVALU to more fully execute its strategy in the coming year. As a result, store remodel activity is anticipated to increase and total capital expenditures including capital leases is expected to grow to $1.2 billion in 2008 up from $1 billion in 2007. Store remodels and improved merchandise offerings as well as the realization of acquisition synergies should benefit operating results, including identical store sales and operating profitability, over time. In addition, debt levels are expected to decline as the company directs $400 million of free cash flow after capital expenditures and dividends to debt reduction per year. As a result, credit metrics should improve modestly over time. For the twelve months ended June 16, 2007, total adjusted debt to operating EBITDAR was 3.8 times and EBITDAR coverage of interest and rents was 2.8x. However, Fitch remains concerned about the significant competition in the food retailing industry which includes other supermarket operators, discount stores, warehouse clubs, dollar stores, and drug stores. As a result, maintaining operating profit margins remains challenging, requiring effective execution of operating strategies to compete over time. TECUMSEH PRODUCTS: Names Edwin L. Buker as Chief Executive Officer ------------------------------------------------------------------ Tecumseh Products Company has appointed Edwin "Ed" L. Buker as its chief executive officer. Mr. Buker, whose appointment is effective Aug. 13, 2007, joins Tecumseh from Citation Corporation, a supplier of metal components based in Birmingham, Alabama, where he had served as president and chief executive officer since March 2002. Prior to joining Citation, Mr. Buker, 54, served as vice president and general manager of the Chassis Systems Division at Visteon Automotive; as president, Electrical Systems-The Americas, for United Technologies Automotive; and as vice president of new model development for BMW Manufacturing Corporation in Munich, Germany. He also held leadership positions at BMW's Spartanburg, South Carolina, facility and at Honda's East Liberty, Ohio, manufacturing plant. Among other accomplishments, Mr. Buker was co-leader of the design, building and operations management of Honda's East Liberty facility and of BMW's Spartanburg plant. Mr. Buker holds a bachelor's degree in mechanical engineering from Tri-State University in Angola, Indiana, and an MBA from Ohio University in Athens, Ohio. "The appointment of Ed Buker as chief executive officer adds a seasoned, proven, highly successful executive to Tecumseh,” David M. Risley, chairman of Tecumseh, said. ''His manufacturing expertise, customer orientation and overall management and strategic acumen make him an ideal choice to lead Tecumseh's continuing efforts to improve its operational and financial performance." Mr. Buker will become a member of Tecumseh's board of directors when he joins the company this month, and will eventually succeed Mr. Risley as chairman. Since January 2007, the company has been functioning under the leadership of interim president and chief operating officer James J. Bonsall, who will provide transition services to Mr. Buker before returning to his ongoing role as a managing director of AlixPartners LLP. "Jim Bonsall provided capable leadership at a challenging time for the company,” Mr. Risley said. I want to thank Jim for his outstanding work at Tecumseh in our continuing efforts to place the company on a solid strategic, operational and financial footing. Tecumseh has a long and proud history of serving customers around the world. We look forward to Ed's role as a team builder and team leader as Tecumseh continues to serve its customers and drive for improved performance and market position." About Tecumseh Products Company Headquartered in Tecumseh, Mich., Tecumseh Products Company (Nasdaq: TECUA, TECUB) -- http://www.tecumseh.com/-- manufactures hermetic compressors for air conditioning and refrigeration products, gasoline engines and power train components for lawn and garden applications, submersible pumps, and small electric motors. The company has offices in Italy, United Kingdom, Brazil, France, and India. At March 31, 2007, the company's balance sheet showed total assets of $97.3 million, total liabilities of $101.4 million, resulting to a shareholders' deficit of $4.1 million. TENFOLD CORP: Incurs $1.2 Million Net Loss in Qtr. Ended June 30 ---------------------------------------------------------------- TenFold Corporation announced on Wednesday its financial results for the second quarter ended June 30, 2007. For the three months ended June 30, 2007, TenFold reported a net loss of $1.21 million, an operating loss of $1.24 million and revenues of $1.6 million. For the first half of 2007, TenFold reported a net loss of $2.14 million, an operating loss of $2.20 million and revenues of $3.4 million. TenFold's second quarter ending cash balance was $1.7 million, and net cash used in operating activities for the second quarter was $1.4 million. Operating expenses for the three and six months ended June 30, 2007, include $519,000 and $1.1 million, respectively, of stock based compensation expense. "We used more cash than I expected in the second quarter, primarily due to not closing some expected sales, investments we made in staff and equipment needed to grow our business, and unexpected large medical claims," said Robert Felton, TenFold's chairman, president and chief executive officer. "However, we intend to improve our financial performance in the third quarter and fourth quarter as we are seeing interest in our technology and services, and believe that we are poised to close some of that business and regain our momentum." At June 30, 2007, the company's consolidated balance sheet showed $2.8 million in total assets, $1.9 million in total liabilities, and $912,000 in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2007, are available for free at http://researcharchives.com/t/s?220c Going Concern Doubt As reported in the Troubled Company Reporter on March 5, 2007, Tanner LC in Salt Lake City, Utah, expressed substantial doubt about Tenfold Corp.'s ability to continue as a going concern after auditing the company's financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm cited that the company used significant balances of its cash in operating activities and at present levels of cash consumption will not have sufficient resources to meet operating needs. About TenFold Corporation TenFold Corporation (OTC BB: TENF) -- http://www.tenfold.com/-- licenses its patented technology for applications and services development, EnterpriseTenFold SOA, to organizations that face the daunting task of replacing obsolete applications or building complex SOA-compliant applications systems. TEST CENTER: Prometric Deal Cues S&P's BB- Credit Rating -------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating and stable outlook to Test Center LLC, a holding company formed by Princeton, New Jersey-based not-for-profit organization Educational Testing Service (ETS; A+/Stable) to acquire Prometric Holdings LLC from The Thomson Corp. At the same time, Standard & Poor's assigned its 'BB' bank loan rating, one notch higher than the corporate credit rating on Test Center LLC, and a '2' recovery rating to Test Center's $215 million bank facility. The '2' recovery rating indicates that lenders can expect substantial (70%-90%) recovery in the event of a payment default. The facility consists of a $25 million revolving credit maturing in 2012 and a $190 million term loan B maturing in 2013. (A $125 million 6% senior subordinated note issue due 2014 held by the seller, Thomson, is unrated.) Baltimore, Maryland-based Prometric will have pro forma total debt of $315 million as of June 30, 2007. "The ratings reflect the leveraged acquisition of Prometric, somewhat offset by its good competitive position in the highly fragmented and competitive standardized-test delivery market and its ownership by ETS, a tax-exempt, not-for-profit organization," said Standard & Poor's credit analyst Hal F. Diamond. Prometric is the larger of two principal providers of computer- based testing services, primarily to the academic, government, financial, IT, and health care market segments. The main competitor is Pearson VUE, a division of U.K.-based Pearson PLC. TRAVELSTAR INC: March 31 Balance Sheet Upside-Down by $3.9 Million ------------------------------------------------------------------ Travelstar Inc.'s balance sheet at March 31, 2007, showed $6.5 million in total assets, $10.4 million in total liabilities, and $3.9 million in total stockholders' equity. The company's balance sheet at March 31, 2007, also showed strained liquidity with $6.1 million in total current assets available to pay $10.4 million in total current liabilities. The company reported net income of $1.0 million and an operating loss of $438,348 for the first quarter ended March 31, 2007, compared with a net loss of $1.4 million and an operating loss of $483,079 for the same period last year. Revenues for the three months ended March 31, 2007 increased to $2.5 million, compared to $2.2 million for the three months ended March 31, 2006. The increase in revenues is due to continued growth of the company's travel agent network and higher preferred supplier commission levels. Offsetting these increases was the fact that the company took a reserve against revenues of 15% in the three months ended March 31, 2007, while no reserve was taken in the three months ended March 31, 2006. The net income of $1.0 million for the three months ended March 31, 2007, primarily reflects net other income of $1.4 million, compared to net other expense of $940,502 in the three months ended March 31, 2006. This change was primarily due to changes in the fair value of warrants and stock purchase rights. At March 31, 2007 the company has 13,257,302 warrants outstanding to purchase shares of common stock at exercise prices ranging from $0.35 to $1.00. The warrants have lives of one to five years remaining. Full-text copies of the company's financial statemens for quarter ended March 31, 2007, are available for free at: http://researcharchives.com/t/s?220d Going Concern Doubt Mendoza Berger & Company LLP, in Irvine, Calif., expressed substantial doubt about Joystar Inc.'s (nka Travel Star Inc.) ability to continue as a going concern after auditing the company's financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm said the the company's viability is dependent upon its ability to obtain future financing and the success of its future operations. About Joystar Inc. Travelstar inc. fka. Joystar Inc. (OTC BB: TVLS.OB) is a leisure travel agency and a leading seller of cruises and vacations. The company sells complex travel products including cruises, vacation packages and group travel through its growing national sales force of virtual travel agents and online affiliates. TRUMP ENTERTAINMENT: Names Mark Juliano as Chief Executive Officer ------------------------------------------------------------------ Trump Entertainment Resorts Inc. has named Mark Juliano as chief executive officer, and Ivanka M. Trump as member of the board of directors. Both appointments are effective immediately. Mr. Juliano's first order of business will be to capitalize on the brand's strength and utilize his operational expertise to bolster revenue in the near and long term. ''The company has faced a variety of challenges during the past year, but I am confident that the changes we are implementing in our business model will show results as we move forward,” Mr. Juliano stated. ''In addition to our extensively renovated properties, we now have the infrastructure in place to accomplish the goal of attracting new customers and expanding our already large player base,” he continued. ''The company's has designed a casino revenue action plan to improve operating performance during the remainder of 2007 and beyond through customer acquisition, retention and reactivation. New initiatives include the Trump One Card, new customer development campaigns, and the implementation of the revenue management system and cash sales programs.” ''Mark is the right man for the job. His understanding of the gaming industry, innovative operational and marketing techniques and impressive leadership are exactly the right qualities needed to lead the company,” Donald J. Trump, the chairman of the company's board, said.” With nearly 30 years of experience in the gaming industry, veteran executive Mr. Juliano joined the leadership team of the company in August 2005 as chief operating officer. He has served as interim chief executive officer since July 1, 2007. Prior to joining the company, Mr. Juliano held a wide variety of gaming positions, including president of Caesars Palace, Las Vegas, president of Caesars Atlantic City, and president of Caesars World Marketing Corporation. Ms. Trump currently serves as vice president of development and acquisitions for the Trump Organization LLC. She is responsible for development projects in the United States and abroad and participates in all aspects of real estate development from deal evaluation, analysis and pre-development planning to construction, marketing, operations, sales and leasing. Ms. Trump, 25, is a graduate of the Wharton School of Finance at the University of Pennsylvania and is a resident of New York City. ''Ivanka brings a fresh new perspective,” Mr. Trump continued. Her appeal to a younger demographic combined with her recognition as a young business leader will be invaluable in a changing marketplace.” About Trump Entertainment Resorts Inc. Based in Atlantic City, New Jersey, Trump Hotels & Casino Resorts Inc. now known as Trump Entertainment Resorts Inc. (Nasdaq: TRMP) -- http://www.trumpcasinos.com/-- through its subsidiaries, owns and operates four properties and manages one property under the Trump brand name. The company and its debtor-affiliates filed for Chapter 11 bankruptcy protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). The Court confirmed the Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005. The Plan took effect on May 20, 2005. * * * As reported in the Troubled Company Reporter on March 13, 2007, Standard & Poor's Ratings Services placed its ratings for Trump Entertainment Resorts Holdings L.P., including the 'B' corporate credit rating, on CreditWatch with developing implications. USEC INC: Posts $13.4 Million Net Loss in Quarter Ended June 30 --------------------------------------------------------------- USEC Inc. reported on Wednesday its results of operations for the second quarter ended June 30, 2007. USEC Inc. reported a net loss of $13.4 million for its second quarter ended June 30, 2007, compared to net income of $21.6 million in the same quarter of 2006. Pro forma net income before American Centrifuge expenses was $9.5 million in the second quarter of 2007 compared to $39.0 million in the same quarter last year. USEC reported net income of $25.9 million in the six-month period ended June 30, 2007, compared to $56.2 million in the same period of 2006. Pro forma net income before American Centrifuge expenses was $70.5 million in the first six months of 2007, compared to $86.2 million in the same period last year. The financial results in both periods reflect the impact of higher electric power costs and higher purchase costs from Russia. These costs are increasing more rapidly than the average price billed to customers under long-term contracts, thereby reducing gross profit. The gross profit margin for the first half of 2007 was 14.9% compared to 19.4% in the same period of 2006. Most of the spending on the American Centrifuge project to-date has been expensed, which directly reduces net income. Advanced technology costs for the six-month period totaled $69.3 million in 2007 compared to $47.1 million in 2006. "We continue to seek ways to optimize our Paducah operations and improve our financial results in the near term, which will generate additional cash flow from operations that can help reduce external financing requirements for the American Centrifuge project," said John K. Welch, USEC president and chief executive officer. "In fact, our efforts have allowed us to fully fund the technology demonstration so far this year from internally generated cash." "Our new five-year power contract with TVA will provide additional flexibility for our Paducah operations to produce more SWU and obtain additional uranium from underfeeding the enrichment process," Welch added. USEC currently expenses most of its spending related to the American Centrifuge, which directly reduces net income. Revenue Revenue for the six-month period was $676.1 million, a decrease of $210.5 million over the same period of 2006. Revenue from the sale of separative work units (SWU) was $550.9 million compared to $638.3 million in the same period last year, a 14% decline. Revenue from the sale of uranium was $32.0 million compared to $146.8 million in the same period of 2006, a 78% decline. Revenue from the company's U.S. government contracts segment was $93.2 million compared to $101.5 million in the prior year, reflecting reduced Department of Energy contract work. Revenue for the second quarter was $211.1 million compared to $525.3 million in the same quarter last year, a decline of 60%. Revenue from the sales of SWU was $145.9 million, compared to $404.3 million in the second quarter of 2006. The $258.4 million decline reflects a 65% decrease in volume of SWU sold and a 3% increase in average prices billed to customers. Uranium revenue was $16.2 million compared to $71.0 million last year, reflecting a limited number of deliveries this year. Revenue from the U.S. government contracts segment was $49.0 million, nearly unchanged from the prior year. Cost of Sales, Gross Profit Margin and Expenses Cost of sales for the six-month period for SWU and uranium was $496.0 million, a decrease of $134.2 million or 21% that reflects lower SWU sales volume and higher SWU and uranium unit costs. The gross profit for the first six months of 2007 was $100.9 million, a decline of $70.7 million or 41% over the same period in 2006. For the second quarter, the gross profit was $27.7 million compared to $79.6 million in the same quarter last year. The gross profit margin for the six-month period and quarter were 14.9% and 13.1%, respectively, compared to 19.4% and 15.2% in the same periods last year. Selling, general and administrative (SG&A) expenses totaled $24.0 million in the six-month period, a decrease of $1.8 million over the same period of 2006. The decrease was due to a reversal of an accrued tax penalty and reduced consulting expense, partially offset by higher compensation expenses resulting from the impact of increases in the company's stock price on incentive compensation plans. Advanced technology expenses, primarily related to the demonstration of the American Centrifuge technology, were $69.3 million in the first half of 2007, an increase of $22.2 million compared to the same period of 2006. The higher spending reflects work to prepare for Lead Cascade operations this summer. Spending by NAC on its spent fuel storage technology is included in the total and was less than $1 million in both periods. In addition, $31.5 million in spending related to the commercial American Centrifuge Plant was capitalized in the six- month period, compared to $11.7 million capitalized in the first half of 2006. Cash Flow At June 30, 2007, USEC had a cash balance of $48.3 million, compared to $171.4 million at Dec. 31, 2006, and $238.6 million at March 31, 2007. Cash used by operations in the first six months of 2007 was $82.8 million, compared to cash flow from operations of $39.7 million in the corresponding period in 2006. The $122.5 million difference was primarily due to a net inventory increase of $190.9 million in the six months ended June 30, 2007, that was a result of higher production and lower sales. The increased inventory level was planned to meet delivery obligations to customers in the second half of 2007. Capital expenditures totaled $37.4 million for the six-month period, compared to $16.1 million for the corresponding period of 2006. The majority of capital expenditures were related to the American Centrifuge project. TVA Electric Power Contract During the second quarter, USEC reached a new five-year pricing agreement with the Tennessee Valley Authority (TVA), which supplies most of the power for the Paducah plant. Although the new contract provides USEC with a predictable and reliable source of power for the production plant, it maintains the roughly 50% increase in the company's power costs that took effect in June 2006. Cost of sales increased during the first half of the year and will continue to increase during 2007 as a result of higher electricity prices since June 2006 to power the Paducah plant. The impact of this increase is being realized over time due to the monthly moving average inventory methodology and higher power prices will put significant pressure on gross profit margin this year and beyond. At June 30, 2007, the company's consolidated balance sheet showed $1.85 billion in total assets, $861.3 million in total liabilities, and $989.4 million in total stockholders' equity. About USEC Inc. Headquartered in Bethesda, Maryland, USEC, Inc. (NYSE: USU) -- http://www.usec.com/-- is a global supplier of low enriched uranium to nuclear power plants and is the exclusive executive agent for the U.S. Government under the Megatons to Megawatts program with Russia. * * * As reported in the Troubled Company Reporter on April 13, 2007, Moody's Investors Service downgraded USEC Inc.'s corporate family rating to B3 from B1 and downgraded the rating on the company's senior unsecured debt to Caa2 from B3. The rating outlook is negative. This concludes Moody's review of USEC, which was placed under review for possible downgrade on Feb. 15, 2007. VALEANT PHARMACEUTICALS: Earns $16.8 Mil. In Second Qtr. 2007 ------------------------------------------------------------- Valeant Pharmaceuticals International reported revenues totaling $231 million for the three months ended June 30, 2007, compared to $230.4 million for the three months ended June 30, 2006. Product sales for the second quarter 2007 increased 2% to $212.1 million, compared to $208.8 million for the second quarter 2006. Second quarter 2007 net income was $16.8 million, compared to a loss of $42.3 million for the second quarter 2006. As of June 30, 2007, the company posted total cash and marketable securities of $386.7 million, as compared with total cash and marketable securities of $335.7 million at Dec. 31, 2006. The company had Long-term debt of $776.5 million at the end of the second quarter 2007. For the six months ended June 30, 2007, the company reported revenues totaling $444.4 million, as compared with total revenues of $429.9 million for the six months ended June 30, 2006. The company had net income of $25 million for the first half of 2007, as compared with net loss of $48.5 million for the first half of 2006. Timothy C. Tyson, president and chief executive officer, said, "We are encouraged that product sales improved in the second quarter, led by growth in many promoted products in North America and EMEA. Although it still had a negative impact on the quarter as a whole, we resolved the wholesaler distribution issue in Mexico toward the end of the quarter and sales in that market are returning to normal. We continue to believe that we will achieve our goal of industry-average growth for the full year. We remained disciplined in our spending, controlling overhead costs while investing in promoted products and advancing our development pipeline." Regional Sales Performance North America product sales increased 8% in the 2007 second quarter, primarily due to increased sales of Efudex, Cesamet and Migranal(R). Sales in the International region decreased 12% in the 2007 second quarter, essentially due to the issues in the Mexican distribution chain that began earlier in the year. Sales in the Europe, Middle East and Africa region increased 7% in the 2007 second quarter, primarily due to the effects of foreign currency. Share Repurchase Update On June 11, 2007, the company announced that its board of directors had approved a share repurchase program that authorized the company to repurchase up to $200 million of its outstanding common stock over a two-year period. In connection with this program, the company has repurchased 3.7 million shares of its common stock through July 31, 2007, at an aggregate amount of $63 million. Of the cumulative total, 1.6 million shares were repurchased in the 2007 second quarter at an aggregate amount of $28 million. Restructuring Update The company completed the sale of its manufacturing facilities in Switzerland and Puerto Rico in June 2007, which concludes the restructuring plan announced in April 2006. Restructuring charges in the 2007 second quarter totaled $6.3 million, bringing the overall total restructuring charges to $152 million, of which $34 million is cash related. The restructuring will result in cost savings of more than $50 million annually. About Valeant Pharmaceuticals Headquartered in Costa Mesa, California, Valeant Pharmaceuticals International -- http://www.valeant.com/-- is a global specialty pharmaceutical company with US$823 million of 2005 revenues. It has offices in Argentina, Singapore and Taiwan. * * * In January 2007, Moody's Investors Service confirmed the ratings of Valeant, including the B2 Corporate Family Rating, and concluded the rating review for possible downgrade, which was first initiated on Oct. 23, 2006. Valeant's rating outlook is stable. VYTERIS INC: Names Anthony Cherichella as Chief Financial Officer ----------------------------------------------------------------- Vyteris Inc. appointed Anthony J. Cherichella as chief financial officer and principal accounting officer, overseeing financing, forecasts and investor relations. "[Mr. Cherichella] brings an enormous wealth of public healthcare company experience which will prove an integral part of our efforts in moving towards commercialization of our products," said Timothy J. McIntyre, president and chief executive officer of Vyteris. "A financial executive with his background strengthens our management team and delivers on our commitment enhance our relationship with present and future Vyteris shareholders and the investment community." Most recently, Mr. Cherichella, 39, was the chief financial officer and acting president for Cardinal Health's Healthcare Marketing Services unit based in Wayne, NJ, a position he held from 2002 to the present. In that capacity, he had overall responsibility for establishing and managing financial budgets and forecasts, evaluating acquisitions and exploring strategic alternatives for this unit of Cardinal Health. Prior to that, he served at BLP Group Companies from 2000-02, where he was chief financial officer, executive vice president, secretary and treasurer. Before that, he served as a senior audit manager for Andersen LLP from 1990-2000. "I am grateful for the opportunity to come in at such an exciting time for Vyteris where we are poised to fully commit towards the commercialization and sale of LidoSite and provide pain relief for patients, and also future opportunities to increase value for our shareholders," Mr. Cherichella said. "This is a tremendous opportunity and one I look forward to." Mr. Cherichella received his Bachelor of Science degree in Accounting from Fairleigh Dickinson University. He is a certified public accountant and a member of the American Institute of Certified Public Accountants. He serves on the Board of Trustees of Caldwell College of New Jersey as well as on its Finance Committee. He is married with two daughters. Going Concern Doubt Amper, Politziner & Mattia P.C., in Edison, N. J., expressed substantial doubt about Vyteris Holdings (Nevada) 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 losses and dependence upon outside financing to fund operations. During the three-month period ending March 31, 2007, the company financed its operations with a $400,000 loan in the form of a senior secured promissory note from Spencer Trask Specialty Group, LLP. In addition, in the first quarter of 2007 the company raised a total of $8.1 million pursuant to stock purchase agreements for the sale of shares of common stock at $0.75 per share. About Vyteris Inc. Vyteris Inc. (OTC BB: VYHN.OB) -- http://www.vyteris.com/-- formerly Vyteris Holdings (Nevada) Inc., has developed and produced the first electronically controlled transdermal drug delivery system that delivers drugs through the skin comfortably, without needles. In January 2005, the company received approval from the United States Food and Drug Administration for its manufacturing facility and processes for LidoSite. The company holds over 60 U.S. patents relating to the delivery of drugs across the skin using a mild electric current. WELLCARE HEALTH: Earns $54.6 Million in Second Quarter 2007 ----------------------------------------------------------- WellCare Health Plans Inc. reported second quarter 2007 net income of $54.6 million, up 146% over the second quarter 2006. Membership grew over 14% to 2.3 million as of June 30, 2007, yielding total revenues of $1.34 billion, up 57% over the prior year. Total revenues for the second quarter 2007 rose 57% year over year to $1.3 billion. The growth is attributable principally to the increase in the Company's membership, including the launch of the Georgia Medicaid health plan which began operations in June 2006, as well as growth in Medicare products. Medicare Advantage membership growth was 87% year over year and 72% year to date. Net income for the first half of 2007 was $79.6 million, as compared with net income for the first half of 2006 of $38.9 million. Total revenues for the first half of 2007 were $2.6 billion, as compared with total revenues for the first half of 2006 of $1.6 billion. "Our operating results demonstrate our commitment to providing quality service to our members, providers and government partners," said Todd S. Farha, chairman and chief executive officer. "We will continue our focus on delivering high quality healthcare tailored to the communities we serve." Cash Flow and Financial Condition For the six months ended June 30, 2007, the company's net cash provided by operations was $209.9 million, or 2.6 times net income, after adjusting for the timing of receipt of payments from the company's government partners. Days in claims payable were 51 as of June 30, 2007, compared with 49 as of March 31, 2007, and 54 as of June 30, 2006. The quarter to quarter increase resulted principally from the 2007 launch of the company's Medicare private fee-for-service products. As of June 30, 2007, the company had cash and cash equivalents of $1.47 billion as well as investments classified as current assets of $166.3 million, for a total of $1.64 billion in cash and short- term investments. As of June 30, 2007, the company had total assets of $2.3 billion, total liabilities of $1.6 billion and total stockholders' equity of $678.3 million. Financial Guidance WellCare is updating its full-year 2007 guidance with diluted EPS of $5 to $5.05, based on 42.1 million weighted average shares outstanding; and total revenues of $5.2 to $5.3 billion. For the third quarter, the company expects diluted EPS of $1.48 to $1.51; and total revenues of $1.35 billion. About WellCare Health WellCare Health Plans Inc. -- http://www.wellcare.com/-- provides managed care services exclusively for government-sponsored healthcare programs, focusing on Medicaid and Medicare. Headquartered in Tampa, Florida, WellCare offers a variety of Medicaid and Medicare plans, including health plans for families, children, the aged, blind and disabled and prescription drug plans, serving over 2.3 million members nationwide as of June 30, 2007. * * * As reported in the Troubled Company Reporter on June 27, 2007, Moody's Investors Service placed the Ba3 senior secured debt rating of WellCare Health Plans Inc. and the Ba1 insurance financial strength rating of WellCare of Florida Inc. - WellCare's primary operating subsidiary - under review for possible upgrade. * Fitch Takes Rating Actions on Various Transactions ---------------------------------------------------- Fitch has taken these rating actions on the collateralized debt obligations (CDOs) listed below , which are backed primarily by trust preferred securities (TruPS) issued by real estate investment trusts (REITs) and homebuilders. Kodiak CDO I, Ltd./Inc. (Kodiak I) -- $306,325,000 class A-1 notes affirmed at 'AAA'; -- $103,500,000 class A-2 notes affirmed at 'AAA'; -- $83,000,000 class B notes affirmed at 'AA'; -- $30,000,000 class C notes affirmed at 'AA'; -- $13,000,000 class D-1 notes affirmed at 'AA-'; -- $5,000,000 class D-2 notes affirmed at 'AA-'; -- $29,000,000 class D-3 notes affirmed at 'AA-'; -- $5,000,000 class E-1 notes affirmed at 'A'; -- $29,000,000 class E-2 notes affirmed at 'A'; -- $7,000,000 class F notes affirmed at 'BBB+'; -- $50,000,000 class G notes downgraded to 'BB' from 'BBB' and placed on Rating Watch Negative; -- $27,000,000 class H notes downgraded to 'B+' from 'BB+' and placed on Rating Watch Negative. Taberna Preferred Funding III, Ltd. -- $43,750,000 class D notes, rated 'BBB', placed on Rating Watch Negative; -- $31,500,000 class E notes, rated 'BB+', placed on Rating Watch Negative. Taberna Preferred Funding IV, Ltd. -- $24,375,000 class E notes, rated 'BB+', placed on Rating Watch Negative; Taberna Preferred Funding V, Ltd. -- $40,500,000 class B-1L notes, rated 'BBB', placed on Rating Watch Negative; -- $23,000,000 class B-2L notes, rated 'BB', placed on Rating Watch Negative; -- $5,000,000 class B-2FX notes, rated 'BB', placed on Rating Watch Negative. Taberna Preferred Funding VI, Ltd. -- $17,000,000 class E-1 notes, rated 'BBB', placed on Rating Watch Negative; -- $17,000,000 class E-2 notes, rated 'BBB', placed on Rating Watch Negative; -- $15,000,000 class F-1 notes, rated 'BB+', placed on Rating Watch Negative; -- $10,000,000 class F-2 notes, rated 'BB+', placed on Rating Watch Negative. Downgraded collateralized debt obligation liabilities total $77 million, or 0.65% of all rated liabilities issued by CDOs backed primarily by TruPS issued by REITs and homebuilders. CDO liabilities placed on Rating Watch Negative, inclusive of those that are also downgraded, total $304.1 million, or 2.56% of all rated liabilities issued by CDOs backed primarily by TruPS issued by REITs and homebuilders. Fitch's rating actions reflect the rapid deterioration in the credit quality of a number of residential mortgage REITs, finance companies specializing in residential mortgage lending and homebuilders underlying these CDOs. With respect to one underlying issuer of trust preferred securities, a residential mortgage REIT, a missed dividend payment occurred on July 30, 2007. In the case of Kodiak CDO I, the transaction had previously experienced a collateral default which resulted in a reduction of the credit enhancement available to the rated notes. As such, Fitch believes that rating action is warranted at this time as a result of the missed payment of a second underlying issuer. Given the negative, but evolving nature of several other underlying exposures, Fitch's believes further rating action may be warranted in the future, as evidenced by the Rating Watch Negative also assigned to the Class G and H notes. In the cases of Taberna III-VI, the missed dividend payment represents the first experienced by any of these CDOs. While this on its own may not jeopardize the ratings assigned to the notes, the recent deterioration of other underlying assets, combined with the potential for further defaults and/or deterioration, increases the likelihood of future rating actions, at least on the more junior classes of notes. Fitch rates a number of other CDOs backed primarily by trust preferred securities issued by REITs, finance companies specializing in mortgage lending and homebuilders. In most instances, these transactions also have exposure to issuers which are experiencing credit deterioration at present. However, Fitch does not believe rating actions at this time are warranted in these instances due to transaction-specific factors including: the size of the exposures relative to available credit enhancement; overall portfolio credit quality; or the more senior nature of the securities held relative to trust preferred securities. That said, further credit deterioration in underlying collateral could expose these transactions to negative rating actions in the future as well. Derivative Fitch, in concert with Fitch's REIT, Financial Institutions and Homebuilder groups will continue to monitor underlying collateral quality as it evolves. Fitch notes that CDOs backed solely by trust preferred securities issued by banks and insurance companies continue to exhibit stable credit attributes. * King & Spalding Adds Henry Kaim as Parnter at Houston Branch -------------------------------------------------------------- King & Spalding continued expansion of its financial restructuring practice in Houston with the addition of noted bankruptcy lawyer Henry J. Kaim, Esq., as a partner. Mr. Kaim, a renowned figure in the Texas legal market and national bankruptcy bar, has an extensive background in bankruptcy law, with preeminence in debtor-side representation. King & Spalding established a financial restructuring capability in Houston in May of this year to complement existing practices in Atlanta and New York, with the arrival of senior counsels Myron Sheinfeld, Esq., and Jarrel McDaniel, Esq.. "We are pleased to welcome Henry to King & Spalding," said Robert E. Meadows, Esq., managing partner of King & Spalding's Houston office. "He is an exceptional lawyer who will add depth to the representation we provide our clients." Mr. Kaim joins King & Spalding from Bracewell & Giuliani LLP, where he was a partner. Mr. Kaim, who was co-head of the financial restructuring and bankruptcy section of his previous firm, represents and counsels business clients in all aspects of out-of-court financial restructurings, as well as Chapter 11 reorganizations, including the negotiation of complex plans of reorganization and the litigation of contested matters and adversary proceedings. For the past 18 years, he has practiced exclusively in business bankruptcy law, representing Chapter 11 debtors in possession, creditors' committees, secured creditors, landlords and acquirers in bankruptcy, across a broad array of industries. Mr. Kaim earned a B.A. degree from Southern Methodist University, and a J.D. degree from the University of Houston Law Center. He is a fellow of the American College of Bankruptcy, a member of the American Bankruptcy Institute and an adjunct professor at the University of Houston Law Center. Paul K. Ferdinands, Esq., leader of King & Spalding's financial restructuring practice, said, "[Mr. Kaim]'s skill and experience in bankruptcy law will add value to the services we provide our clients, especially in debtor-side representations. The firm and our clients are very fortunate to have Henry as a member of the King & Spalding team." About King & Spalding King & Spalding, LLP -- http://www.kslaw.com/-- is an international law firm with more than 800 lawyers in Atlanta, Dubai, Houston, London, New York, Riyadh (affiliated office) and Washington, D.C. The firm represents half of the Fortune 100, and in a Corporate Counsel survey in August 2006 was ranked one of the top ten firms representing Fortune 250 companies overall. King & Spalding boasts one of the nation's preeminent financial restructuring practices. It provides valuable knowledge and in- depth experience to virtually all facets of corporate reorganizations, in-court and out-of-court debt restructuring, bankruptcy and insolvency litigation, and distressed asset mergers and acquisitions. This practice is regularly retained in large bankruptcy matters and workouts to represent debtors, trustees, creditors' committees, institutional lenders, other critical creditors and parties-in-interest, and potential acquirers of businesses and large assets. The Houston office of King & Spalding, with more than 100 lawyers, provides a variety of services to clients the world over. Chief among its practices are those focusing on litigation and transactional law, especially energy, international arbitration and Latin American matters. * BOND PRICING: For the Week of July 30 - August 4, 2007 -------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- ABC Rail Product 10.500% 01/15/04 0 ABC Rail Product 10.500% 12/31/04 0 Acme Metals Inc 12.500% 08/01/02 0 AHI-DFLT07/05 8.625% 10/01/07 71 Aladdin Gaming 13.500% 03/01/10 0 Allegiance Tel 12.875% 05/15/08 16 Alltell Corp. 6.800% 05/01/29 75 Amer & Forgn Pwr 5.000% 03/01/30 66 Atherogenics Inc 1.500% 02/01/12 47 Atlantic Coast 6.000% 02/15/34 6 Bank New England 8.750% 04/01/99 8 Bank New England 9.500% 02/15/96 14 Bank New England 9.875% 09/15/99 9 Budget Group Inc 9.125% 04/01/06 0 Builders Transport 6.500% 05/01/11 0 Burlington North 3.200% 01/01/45 54 Calpine Gener Co 11.500% 04/01/11 36 Cell Therapeutic 5.750% 06/15/08 72 Collins & Aikman 10.750% 12/31/11 2 Comed in III 6.350% 03/15/33 75 Complete Mgmt 5.000% 08/15/03 0 Comprehensive Care 7.500% 04/15/10 60 Decode Genetics 3.500% 04/15/11 73 Delta Mills Inc 9.625% 09/01/07 16 Desa Intl Inc 9.875% 12/15/07 0 Dura Operating 8.625% 04/15/12 62 Dura Operating 9.000% 05/01/09 7 Dura Operating 9.000% 05/01/09 4 Dvi Inc 9.875 02/01/04 10 Encysive Pharma 2.500% 03/15/12 74 Exodus Comm Inc 5.250% 02/15/08 0 Exodus Comm Inc 11.625% 07/15/10 0 Fedders North Am 9.875% 03/01/14 29 Finova Group 7.500% 11/15/09 21 Florsheim Group 12.750 09/01/02 0 Ford Motor Co 6.375% 02/01/29 69 Ford Motor Co 6.625% 02/15/28 71 Ford Motor Co 6.625% 10/01/28 71 Ford Motor Co 7.125% 11/15/25 73 Ford Motor Co 7.400% 11/01/46 72 Ford Motor Co 7.450% 07/16/31 75 Ford Motor Co 7.500% 08/01/26 75 Ford Motor Co 7.700% 05/15/97 73 Ford Motor Co 7.750% 06/15/43 73 GMAC 5.900% 01/15/19 75 GMAC 6.000% 03/15/19 75 Gulf States STL 13.500% 04/15/03 0 Harrahs Oper Co. 5.625% 06/01/15 73 Harrahs Oper Co. 5.750% 10/01/17 73 Insight Health 9.875% 11/01/11 33 Iridium LLC/CAP 10.875% 07/15/05 15 Iridium LLC/CAP 11.250% 07/15/05 15 Iridium LLC/CAP 13.000% 07/15/05 16 Iridium LLC/CAP 14.000% 07/15/05 14 JTS Corp 5.250% 04/29/02 0 Kaiser Aluminum 9.875% 02/15/02 21 Kaiser Aluminum 12.750% 02/01/03 6 Kellstrom Inds 5.500% 06/15/03 0 Kmart Corp 9.350% 01/02/20 12 Kmart Corp 9.780% 01/05/20 8 Lehman Bros Holding 10.000% 10/30/13 69 Liberty Media 3.750% 02/15/30 62 Liberty Media 4.000% 11/15/29 67 Lifecare Holding 9.250% 08/15/13 61 Motorola Inc 5.220% 10/01/97 71 Movie Gallery 11.000% 05/01/12 26 Natl Steel Corp 9.875% 03/01/09 0 New Orl Grt N RR 5.000% 07/01/32 65 Northern Pacific RY 3.000% 01/01/47 52 Northern Pacific RY 3.000% 01/01/47 52 Northwest Steel & Wire 9.500% 06/15/01 0 NTK Holdings Inc 10.750% 03/01/14 66 Nutritional Src 1.125% 08/01/09 66 O'Sullivan Ind 10.630% 10/01/08 0 Oakwood Homes 7.875% 03/01/04 11 Oscient Pharma 3.500% 04/15/11 74 Outboard Marine 9.125% 04/15/17 0 Pac-West Telecom 13.500% 02/01/09 2 Pac-West Telecom 13.500% 02/01/09 9 PCA LLC/PCA FIN 11.875 08/01/09 5 Pegasus Satellite 9.625% 10/15/49 0 Pegasus Satellite 12.375% 08/01/08 0 Piedmont Aviat 10.250% 01/15/49 0 Polaroid Corp 6.750% 01/15/02 0 Polaroid Corp 7.250% 01/15/07 0 Polaroid Corp 11.500% 02/15/06 0 Primus Telecom 3.750% 09/15/10 70 Primus Telecom 8.000% 01/15/14 70 Radnor Holdings 11.000% 03/15/10 0 Reliance Grp Hld 9.000% 11/15/00 0 Rite Aid Corp. 6.875% 12/15/28 74 RJ Tower Corp. 12.000% 06/01/13 4 SLM Corp 5.000% 06/15/28 70 SLM Corp 5.400% 03/15/28 73 SLM Corp 5.400% 03/15/30 74 SLM Corp 5.400% 06/15/30 73 SLM Corp 5.450% 06/15/28 74 SLM Corp 5.500% 06/15/29 72 SLM Corp 5.500% 03/15/30 73 SLM Corp 5.500% 06/15/30 74 SLM Corp 5.500% 12/15/30 71 SLM Corp 5.650% 12/15/29 73 SLM Corp 5.650% 06/15/30 75 SLM Corp 5.750% 03/15/30 75 Spacehab Inc 5.500% 10/15/10 50 Spectrum Brands 7.375% 02/01/15 69 Tenet Healthcare 6.875% 11/15/31 74 Times Mirror Co 6.610% 09/15/27 71 Tom's Foods Inc 10.500% 11/01/04 2 Tousa Inc 7.500% 03/15/11 59 Tousa Inc 7.500% 01/15/15 56 Tousa Inc 10.375% 07/01/12 66 TransTexas Gas 15.000% 03/15/05 0 Tribune Co 5.250% 08/15/15 73 United Air Lines 9.200% 03/22/08 52 United Air Lines 10.125% 03/22/15 52 United Homes Inc. 11.000% 03/15/05 0 US Air Inc. 10.550% 01/15/49 0 US Air Inc. 10.680% 06/27/08 0 US Air Inc. 10.700% 01/01/49 0 US Air Inc. 10.700% 01/15/49 0 US Air Inc. 10.800% 01/01/49 0 US Air Inc. 10.800% 01/01/49 0 US Air Inc. 10.900% 01/01/49 0 USAutos Trust 2.212% 03/03/11 7 Werner Holdings 10.000% 11/15/07 3 Westpoint Steven 7.875% 06/15/05 0 Winstar Comm Inc 10.000% 03/15/08 0 Winstar Comm Inc 12.750% 04/15/10 0 ********* 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, Sheena Jusay, 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 ***