/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/070830.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 27, 2007, Vol. 11, No. 202 Headlines ACCREDITED HOME: Discloses Strategic Restructuring Plans ACCREDITED HOME: CFO John Buchanan to Resign Effective Aug. 31 AEGIS ASSET: S&P Junks Rating on Class B7 Certificates AI HOLDINGS: Voluntary Chapter 11 Case Summary AIRPORT EXECUTIVE: Case Summary & 15 Largest Unsecured Creditors ALERIS INT'L: $1 Billion Exchange Offer of Senior Notes Expires AMORTIZING RESIDENTIAL: Poor Credit Cues S&P to Lower Ratings ANWORTH MORTGAGE: Unit Gets Default Notice from Two Lenders ASSET BACKED: Moody's Junks Rating on Class M-4 Certificates AUSTIN HOUSING: Moody's Holds B3 Rating on S. 1998A Revenue Bonds AUSTIN HOUSING: Moody's Holds B1 Rating on S. 1999A Revenue Bonds BALLY TOTAL: Court Approves Two Pacts with Harbinger, et al. BALLY TOTAL: $292,000,000 Morgan Stanley DIP Loan Gets Final OK BALLY TOTAL: Court Gives Final Okay on Cash Collateral Use BNC MORTGAGE: Operations to be Shut Down by Lehman Brothers BOSTON SCIENTIFIC: Prepays $1B Term Loan Under Amended Credit Pact C-BASS MORTGAGE: S&P Lowers Ratings and Removes Negative Watch CAPITAL AUTO: S&P Rates $15.023 Million Class D Notes at BB CDC MORTGAGE: Moody's Junks Ratings on Two Certificate Classes CENTEX HOME: Moody's Puts "Ba3" Class B Cert. Rating Under Review CHALLENGER POWERBOATS: Has $21MM Shareholders' Deficit at June 30 CHAPARRAL STEEL: Completes Merger Deal with Gerdau Ameristeel CHL MORTGAGE: Moody's Puts Ba2 Class B-3 Cert. Rating Under Review CII CARBON: Moody's Withdraws "B1" Corporate Family Rating COUDERT BROS: Wants to Solicit Plan Acceptances Until Jan. 2008 CROSSWINDS AT ARROYO: Voluntary Chapter 11 Case Summary CRYSTAL SPRINGS: Voluntary Chapter 11 Case Summary CURRIE TECHNOLOGIES: Section 341(a) Meeting Set for Tomorrow CURRIE TECHNOLOGIES: Files Schedules of Assets and Liabilities DEBT RESOLVE: June 30 Balance Sheet Upside-Down by $159,607 DELTA AIR: Former Northwest Exec. Richard Anderson Named as CEO DISCOVERY CAPITAL: Shareholders Approve Plan of Liquidation DOBSON COMM: To Redeem Shares of S. F Convertible Preferred Stock EARTH BIOFUELS: Posts $34.7 Million Net Loss in Qtr. Ended June 30 EASTCOAST GENERAL: Voluntary Chapter 11 Case Summary ENHANCED MORTGAGE: Moody's Reviews B2 Rating on Class A-3 Certs. ETHOS ENVIRONMENTAL: Inks Pact Selling Calif. Property for $7.8MM ETHOS ENV'TAL: Posts $6.8MM Net Loss in Year Ended June 30, 2007 FEDDERS CORP: Obtains Court Approval on $79 Million DIP Financing FIRST MAGNUS: Wants to Hire Greenberg Traurig as Counsel FIRST MAGNUS: U.S. Trustee Sets Section 341 Meeting on Oct. 11 FRIENDLY ICE: Extends Tender Offer Period for 8-3/8% Notes GAP INC: Authorizes Additional $1.5 Billion Share Repurchase GAP INC: Net Earnings Increases 19% to $152 Million in Second Qtr. GE COMMERCIAL: Loan Defeasance Cues S&P to Lift Low-B Ratings GENERAL DATACOMM: Unit Gets $4.5 Million Fund from Atlas Partners GERDAU AMERISTEEL: Chaparral Steel Merger Waiting Period Expires GLOBAL PAYMENT: Posts $1.6 Million Net Loss in Qtr. Ended June 30 GSC ABS: Fitch Assigns Low-B Ratings on Three Note Classes GSC ABS: Fitch Junks Ratings on Two Note Classes HAWAIIAN TELCOM: Operational Difficulties Cue S&P's Neg. Outlook INTERDENT INC: Liquidity Concerns Cue S&P to Cut Rating to "B-" ION MEDIA: Recapitalization Cuts Obligations by $187 Million J.P. MORGAN: Moody's Rates $41 Mil. Class L Certificates at Ba1 JP MORGAN: S&P Affirms Low-B Ratings on Six Certificate Classes KARA HOMES: Court Moves Exclusive Solicitation Period to Oct. 9 LANDRY'S RESTAURANT: S&P Retains Developing Watch on "CCC" Rating LEVI STRAUSS: Fitch Lifts Issuer Default Rating to BB- from B LKH ASSETS: Voluntary Chapter 11 Case Summary MARSHALL HOLDINGS: Earns $355,896 in Second Quarter Ended June 30 MASTR ASSET: Moody's Cuts Ratings on Two Cert. Classes to Low-B MGM MIRAGE: Names Jim Murren as Pres. & Chief Operating Officer MGM MIRAGE: Moody's Holds "Ba2" Corporate Family Rating MORGAN STANLEY: Fitch Rates $7.701MM Class L Certificates at BB- MOVIE GALLERY: Receives Two Nasdaq Non-Compliance Letters MOVIE GALLERY: Pays-in-Kind 100% of Loans' Interest NAAC REPERFORMING: Moody's Junks Ratings on Two Cert. Classes NANO SUPERLATTICE: Posts $252,594 Net Loss in Qtr. Ended June 30 NCO GROUP: Completes $165 Mil. and $200 Mil. Offers of Sr. Notes NELLSON NUTRACEUTICAL: Court Okays Sale to First-Lien Creditors NEW CENTURY: Moody's Junks Rating on S. 2002-NC5, Cl. B-2 Loans NEWTON WHITE: Case Summary & 12 Largest Unsecured Creditors OEM/ERIE: Involuntary Chapter 11 Case Summary PETSMART INC: Share Repurchase Program Cues Moody's Stable Outlook PHYSICIANS & SURGEONS: Voluntary Chapter 11 Case Summary PITTSBURGH BREWING: Buyer Expects Sale To Close This Week POWDER COATING: Case Summary & 20 Largest Unsecured Creditors ROBERT HORNE: Case Summary & Four Largest Unsecured Creditors ROCKFORD PRODUCTS: Files Schedules of Assets and Liabilities ROCKFORD PRODUCTS: Wants to Employ BMC Group as Claims Agent SCOTTS COVE: Voluntary Chapter 11 Case Summary SECURITY WITH: Posts $5.3 Million Net Loss in Qtr. Ended June 30 SPATIALIGHT INC: Common Shares Trading Commenced on Aug. 24 STANDARD DRILLING: Posts $966,083 Net Loss in Qtr. Ended June 30 STRUCTURED ASSET: S&P Lowers Ratings on Class A and B Units STRUCTURED ASSET: S&P Junks Ratings on 10 Certificate Classes STUART COOPER: Case Summary & 20 Largest Unsecured Creditors SURF 2003: Credit Support Erosion Cues Moody's Ratings Review TEGRANT CORPORATION: Moody's Places Corporate Family Rating at B3 TERWIN MORTGAGE: Moody's Junks Rating on Class 1-B-4 Certificates THISTLE MINING: Names John Bredenhann as Chief Executive Officer THORNBURG MORTGAGE: Sells $20.5 Billion of Mortgage Portfolio TIDELANDS OIL: Posts $3.7 Million Net Loss in Qtr. Ended June 30 TRANSDIGM INC: Completes $300 Mil. Offer of 7-3/4% Senior Notes TRANSLAND FINANCIAL: Involuntary Chapter 11 Case Summary TRINITY CHURCH: Case Summary & 12 Largest Unsecured Creditors US INVESTIGATIONS: Highly Leveraged Capital Cues S&P to Cut Rating VOIP INC: Posts $11.9 Million Net Loss in Quarter Ended June 30 WHOLE FOODS: Court Junks FTC's Motion, Wild Oats Merger to Proceed XERIUM TECHNOLOGIES: Completes Restatement of Financial Reports * Fitch to Incorporate Enhancements to Existing MI Capital Model * Seyfarth Shaw Transfers to New York Times Building * BOND PRICING: For the Week of August 20 -- August 25, 2007 ********* ACCREDITED HOME: Discloses Strategic Restructuring Plans -------------------------------------------------------- Accredited Home Lenders Holding Co. disclosed on Aug. 22, 2007, that it will take several steps to restructure the company's overall operations in response to the ongoing turmoil in the non- prime mortgage industry. The company will implement these changes to its loan origination and settlement services platforms: * Substantially all of the retail lending business consisting of 60 retail branch locations and 5 centralized retail support locations will be effectively closed as of Sept. 5, 2007, impacting approximately 480 positions nationwide. Accredited will continue to operate its San Diego-based customer retention unit that assists the company's loan servicing customers. * Five of the company's ten wholesale divisions will be substantially closed effective Sept. 5, 2007. These closures, combined with reductions in staff at the remaining five divisions, will reduce the wholesale workforce by approximately 490 positions, leaving approximately 340 employees in the wholesale operation. * Effective immediately, no new U.S. loan applications will be accepted, although the company will honor existing commitments. Accredited intends to resume wholesale loan originations based upon improvement in market conditions. * The company's settlement and insurance services division, Inzura Settlement Services, which provides appraisal, title insurance and other settlement services, will be substantially reduced. * Headquarters staff in San Diego will be significantly reduced to approximately 220 people from its current workforce of approximately 400. After completion of the restructuring, the company expects that the total workforce, including Canada, will be approximately 1,000 employees, down from the previously announced 2,600 employees as of June 30, 2007. James A. Konrath, chairman and chief executive officer, commented, "These difficult decisions were made out of necessity in light of the continued and widely publicized turbulence in the mortgage and financial markets, but with a heavy heart. Many of the people who are affected by these decisions have been productive, dedicated, and loyal colleagues for many years. We will miss them and the enthusiasm and creativity that they brought to their jobs every day at Accredited." The company reported that neither its Canadian operations nor its servicing platform for its loan portfolio of $8.4 billion as of June 30, 2007 will be affected by the restructuring. Mr. Konrath added, "Accredited's delinquency and loss numbers have historically been among the best in the industry. Even though our servicing ratings have been downgraded over liquidity concerns in recent months, we intend to maintain the quality of our servicing operations and expect to continue providing the highest level of loan servicing for our bond investors." With this restructuring and the recently announced trade of approximately $1 billion of the company's loan inventory with a right to repurchase, Accredited believes that the cash flows from the company's securitized loans, servicing income and other income will enable the company to maintain its downsized operations until market conditions improve and the Company can resume loan origination operations. The company expects to maintain its three existing warehouse credit facilities with a total capacity of $1.6 billion for U.S. loan originations and $150 million Canadian for Canada loan originations. The trade of loans substantially reduces the outstanding borrowings under the Company's warehouse credit facilities, as well as the company's exposure to margin calls by the warehouse lenders. Mr. Konrath added, "We believe that the streamlining of our operations and significant curtailment of new loan originations are required to preserve liquidity during the current and anticipated market conditions, and are also designed to position Accredited to compete in the mortgage market when it functions more rationally. We will closely monitor the market in order to be responsive to changes in the future." About Accredited Home Headquartered in San Diego, California, Accredited Home Lenders Holding Co. (NASDAQ:LEND) -- http://www.accredhome.com/-- is a mortgage company operating throughout the U.S. and in Canada. Accredited originates, finances, securitizes, services, and sells non-prime mortgage loans secured by residential real estate. ACCREDITED HOME: CFO John Buchanan to Resign Effective Aug. 31 -------------------------------------------------------------- Accredited Home Lenders Holding Co. disclosed in a regulatory filing with the U.S. Securities and Exchange Commission that as part of its company-wide restructuring, Chief Financial Officer John S. Buchanan will be resigning from the company effective Aug. 31, 2007. Headquartered in San Diego, California, Accredited Home Lenders Holding Co. (NASDAQ:LEND) -- http://www.accredhome.com/-- is a mortgage company operating throughout the U.S. and in Canada. Accredited originates, finances, securitizes, services, and sells non-prime mortgage loans secured by residential real estate. AEGIS ASSET: S&P Junks Rating on Class B7 Certificates ------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating on class B6 from Aegis Asset Backed Securities Trust Mortgage Pass Through Certificates Series 2005-4 to 'B' from 'BB+'. At the same time, S&P lowered its rating on class B7 to 'CCC' from 'BB' and removed it from CreditWatch, where it was placed with negative implications on May 24, 2007. The lowered ratings reflect a rapid deterioration of credit support caused by recent monthly net losses that have exceeded monthly excess interest. As of the July 2007 remittance period, these severe losses had reduced overcollateralization to $751,490. During the February 2007 remittance period, O/C was at its target of $5.50 million, but has declined by $4.75 million since that time. Cumulative losses are approximately $15.04 million, or 1.50% of the original pool balance, while serious delinquencies (90-plus days, foreclosures, and REOs)total $97.20 million, or 17.04% of the current principal balance. The pool factor for this deal is 57.09% of the original principal balance. S&P removed the rating on class B7 from CreditWatch negative because S&P lowered it to 'CCC'. According to Standard & Poor's surveillance practices, ratings lower than 'B-' on classes of certificates or notes from RMBS transactions are not eligible to be on CreditWatch negative. The initial deal composition included subprime home equity loans consisting of conventional, first- and second-lien, adjustable- and fixed-rate, fully amortizing and balloon residential mortgage loans. AI HOLDINGS: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: AI Holdings LLC 853 Broadway, Suite 1120 New York, NY 10003 Bankruptcy Case No.: 07-12692 Chapter 11 Petition Date: August 23, 2007 Court: Southern District of New York (Manhattan) Debtor's Counsel: Jennifer Lauren Saffer, Esq. J.L. Saffer, P.C. 20 Vesey Street, 7th Floor New York, NY 10007 Tel: (212) 608-6968 Fax: (212) 608-1878 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. AIRPORT EXECUTIVE: Case Summary & 15 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Airport Executive Commerce Park, LLC 7330 Northwest 12th Street Suite 101 Miami, FL 33126 Bankruptcy Case No.: 07-16691 Chapter 11 Petition Date: August 21, 2007 Court: Southern District of Florida (Miami) Judge: Robert A. Mark Debtor's Counsel: Steven J. Solomon, Esq. Robert A. Schatzman, Esq. Adorno & Yoss LLP 2525 Ponce De Leon Boulevard, Suite 400 Coral Gables, FL 33134 Tel: (305) 460-1020 Fax: (305) 460-1422 Total Assets: $10,000,252 Total Debts: $7,593,239 Debtor's List of its 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Alfredo Carbonell General Contracting $150,000 1255 Southwest 129 Court Suite 04 Miami, FL 33186 Eagle Enterprises Roofing Services $46,085 P.O. Box 835057 Miami, FL 33283 Ceballos, Inc. Services $27,520 2801 Southwest 114th Street Miami, FL 33136 Certified Home Loan Advanced to Debtor $15,000 Iberia Electrical Corp. Services $15,000 Barreiro Concrete Services $14,623 Amaralto Concrete & Pump Services $12,382 World Waste Services Services $4,668 Everglades Lumber Services $3,462 United Rentals Services $2,968 The Home Depot Services $2,927 Stock Building Supply Services $726 United Site Services Services $466 South-Green Scaffolds Services $361 C&C Concrete Pumping Services $252 ALERIS INT'L: $1 Billion Exchange Offer of Senior Notes Expires --------------------------------------------------------------- Aleris International Inc.'s offer to exchange up to $600 million aggregate principal amount of its 9%/9-3/4% Senior Notes due 2014, and up to $400 million aggregate principal amount of its 10% Senior Subordinated Notes due 2016 for an equal aggregate principal amount of 9%/9-3/4% Senior Notes due 2014 and 10% Senior Subordinated Notes due 2016 that have been registered under the Securities Act of 1933, as amended, has expired. The exchange offer expired at 12:00 a.m., Eastern Time, on Aug. 23, 2007. As of that time, all $600 million in aggregate principal amount of the 9%/9-3/4% Senior Notes due 2014 and $400 million in aggregate principal amount of the 10% Senior Subordinated Notes due 2016 had been tendered in the exchange offer. Aleris International will issue certificates for the registered 9%/9-3/4% Senior Notes due 2014 and 10% Senior Subordinated Notes due 2016 as soon as practicable. Headquartered in Beachwood, Ohio, Aleris International Inc. (NYSE: ARS) -- http://www.aleris.com/-- manufactures rolled aluminum products and offers aluminum recycling and the production of specification alloys. The company also manufactures value- added zinc products that include zinc oxide, zinc dust and zinc metal. The company operates 50 production facilities in North America, Europe, South America and Asia, and has approximately 8,500 employees. * * * Standard & Poor's assigned Aleris International Inc. a B+ senior secured first-lien term loan rating and gave the company a '2' recovery rating after the report that the company increased the term loan by $125 million. With the add-on, the total amount of the facility is now $1.23 billion. AMORTIZING RESIDENTIAL: Poor Credit Cues S&P to Lower Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class M3 mortgage pass-through certificates from Amortizing Residential Collateral Trust's series 2002-BC6 to 'BB' from 'BBB'. At the same time, S&P lowered its rating on class B to 'B' from 'BBB-' and removed it from CreditWatch, where it was placed with negative implications on Nov. 22, 2006. The lowered ratings reflect a deterioration of credit support caused by recent monthly net losses that have outpaced monthly excess interest. Overcollateralization, excess spread, and subordination provide credit enhancement for this transaction. Over the past three months, average losses have increased to $508,063, compared with the six- and 12-month averages of approximately $378,650 and $385,309, respectively. Comparatively, average excess interest has totaled approximately $242,185 for the past three months. O/C is currently below its target of $3.43 million by $1.17 million. As of July 25, 2007, cumulative losses amounted to $24.82 million, or 2.03% of the original principal balance. Serious delinquencies (90-plus days, foreclosures, and REOs) are 28.97% of the current principal balance, and this deal has paid down to 6.09% of its original principal balance. The collateral initially consisted of subprime adjustable-rate mortgage loans (78.20%) and fixed-rate mortgage loans (21.80%) secured by conventional first and second liens on one- to four- family properties. ANWORTH MORTGAGE: Unit Gets Default Notice from Two Lenders ----------------------------------------------------------- Anworth Mortgage Asset Corporation's wholly owned subsidiary, Belvedere Trust Mortgage Corporation, has received a notice of default from two of its repurchase agreement lenders. Belvedere Trust has received additional, substantial margin requests from several of its repurchase agreement lenders, and will continue to explore all of its alternatives with respect to its sudden liquidity issues. It is likely that a substantial amount of Belvedere Trust's portfolio of MBS may need to be sold in an effort to satisfy the requests of its lenders. Given the substantial uncertainty in the secondary market for securities similar to those owned by Belvedere Trust, it is likely that any sale prices for its securities may be below their estimated fair value as of June 30, 2007. Anworth's exposure to its Belvedere Trust subsidiary consists of its initial investment of $100 million, $83 million net of the Accumulated Other Comprehensive Loss at June 30, 2007, and intercompany loans that total $42.8 million to date. Anworth does not expect its intercompany loan balance to increase substantially in the near future. Anworth is not a counterparty to Belvedere Trust's repurchase agreement borrowings and has not provided any guarantee with respect to those borrowings. Anworth continues to hold balance of Agency MBS which are not pledged to counterparties relative to its outstanding repurchase agreement borrowings. These unpledged assets provide a source of liquidity relative to Anworth's financing secured by its Agency MBS if necessary. Headquartered in Santa Monica, California, Anworth Mortgage Asset Corporation (NYSE:ANH) -- http://www.anworth.com/is a mortgage real estate investment trust which invests in mortgage assets, including mortgage pass-through certificates, collateralized mortgage obligations, mortgage loans and other real estate securities. Anworth generates income for distribution to shareholders primarily based on the difference between the yield on its mortgage assets and the cost of its borrowings. Through its subsidiary, Belvedere Trust Mortgage Corporation, Anworth also invests in high quality jumbo adjustable-rate mortgages and finances these loans though securitizations. ASSET BACKED: Moody's Junks Rating on Class M-4 Certificates ------------------------------------------------------------ Moody's Investors Service downgraded thirteen classes issued by Asset Backed Securities Corporation Home Equity Loan Trust in 2003 and 2004. The underlying assets in each transaction consist of fixed- and adjustable-rate, subprime residential mortgage loans. The classes being downgraded from each transaction issued in 2003 have experienced deterioration of credit enhancement due to a combination of step-down and back-ended losses. The downgraded tranches from the 2004-HE4 transaction have experienced a sustained rapid pace of losses stemming at least in part from high loss severities on liquidated collateral. Complete rating actions are: Issuer: Asset Backed Securities Corporation Home Equity Loan Trust 2003-HE1 -- Class M-3; Downgraded to B3, previously Baa2, -- Class M-4; Downgraded to Ca, previously Caa2. Issuer: Asset Backed Securities Corporation Home Equity Loan Trust 2003-HE2 -- Class M-5; Downgraded to Ba2, previously Baa3. Issuer: ABSC Home Equity Loan Trust, Series 2003-HE3 -- Class M-5; Downgraded to Ba2, previously Baa3. Issuer: Asset Backed Securities Corporation Home Equity Loan Trust 2003-HE4 -- Class M-5; Downgraded to Ba3, previously Baa3. Issuer: Asset Backed Securities Corporation Home Equity Loan Trust 2003-HE5 -- Class M-5; Downgraded to B3, previously Baa3. Issuer: Asset Backed Securities Corporation Home Equity Loan Trust 2004-HE4 -- Class M-4; Downgraded to A3, previously A1, -- Class M-5; Downgraded to Baa3, previously A3, -- Class M-6; Downgraded to Ba2, previously Baa1, -- Class M-7; Downgraded to B1, previously Baa2, -- Class M-8; Downgraded to Caa1, previously Ba2, -- Class M-9; Downgraded to Ca, previously B1, -- Class M-10; Downgraded to C, previously B3. AUSTIN HOUSING: Moody's Holds B3 Rating on S. 1998A Revenue Bonds ----------------------------------------------------------------- Moody's Investors Service affirmed the B3 rating on Austin Housing Finance Corporation Multifamily Housing Revenue Bonds (Rutland Place Apartments Project), Series 1998A, of which $11,675,000 remain outstanding. The taxable Series 1998B bonds have matured on Nov. 1, 2005 and no longer carry Moody's rating. The B3 rating affirmation is based upon Moody's review of un-audited, 12-month operating report ending June 30, 2007 and occupancy reports provided by the property owner which demonstrates debt service coverage level of 1.08x (and 1x when we assume regularly scheduled deposits into the Replacement and Repair Fund) and current physical occupancy around 94%. This is an improvement from Moody's last review in December 2006 (0.98x) and also for the same time period ending June 30, 2006 (0.94x). The negative outlook has also been affirmed at this time due to length of time we anticipate that will be required to replenish the Debt Service Reserve Fund and the Replacement and Repair Fund, both currently well below levels required pursuant to the transaction documents assuming the project is able to stabilize in the coming years. Legal Security The bonds are limited obligations payable solely from the revenues, receipts and security from the project. Credit Strengths Project has been generating positive cash flow over the past year, which excess is being used to replenish the Debt Service Reserve Fund and the Replacement and Repair Fund. Physical occupancy shows sign of improvement over the past 12 months, currently at 95%. Occupancy in the submarket is forecasted to remain stable in the next two years at about 96%, while rent growth in the submarket is forecasted to grow over the same period by about from 3.4% and 4.2% in 2007 and 2008. Credit Challenges Debt Service Reserve Fund remains underfunded by approximately $816,000 of the total requirement of $917,000 (as of Nov. 30, 2006) Very thin debt service coverage level of 1.08x (1x assuming regularly scheduled deposits into the Replacement and Repair Fund based on un-audited, 12-month operating statement, ending June 30, 2007, but a notable improvement since same 12-month period in 2006. Recent Developments/Results The debt service coverage level for 12 months ending June 30, 2007 (calculated from un-audited operating report) has improved to 1.08 x from 0.94x since same period last year. This coverage does not incorporate any deposits into the Replacement and Repair Fund which has been inconsistent on a month-to-month basis. The project has been able to generate excess cash flows, which is being used to replenish the Debt Service Reserve Fund and the Replacement and Repair Fund. Nevertheless, given the challenges that the project faced in the recent past during which time it needed to rely on various surplus funds to pay for operating, maintenance and repair and replacement needs over the past three years as well as to pay debt service on the bonds, both the Debt Service Reserve Fund and Replacement and Repair fund remain underfunded; balances as of Nov. 30, 2006 are about $101,000 and $39,000 respectively. Property owner reports that the major renovations (including repairs caused by March 2005 hail storm paid with insurance moneys) are complete and moving forward will be repair expenses will be those related to maintenance. Rent levels increases at the project have been successful, with current average rent for a two-bedroom/one-bathroom unit at $709 and for a one-bedroom/one-bathroom unit at $591. Market data provided by Torto Wheaton Research indicate that average rent in first quarter of 2007 was $791 and $591 respectively, and average rent for buildings constructed in the 1980's was $583. Occupancy at the project has been steadily improving since 2004 from the low 70's to current level of 94% in spite of strong competition, particularly from those offering rent concessions. In the project's submarket (North Central Austin), forecasted occupancy for 2007 is 96%. TWR also forecasts that occupancy in the submarket will be stable in the next two years, estimating 95% in 2008 and 2009. Moody's believes that B3 rating for the bonds is appropriate and reflects the thin debt service coverage and the volatility the project has been experiencing which required taps on reserves. Outlook The rating outlook for the bonds remains negative based upon the underfunded reserve funds which will require the project to be stable for some time to be fully replenished. What could change the rating - Up -- Fully funded reserves -- Significant improvement in debt service coverage What could change the rating - Down -- Continued tapping Debt Serve Reserve Fund to pay bondholders or a default on the bonds. AUSTIN HOUSING: Moody's Holds B1 Rating on S. 1999A Revenue Bonds ----------------------------------------------------------------- Moody's Investors Service affirmed the B1 rating on Austin Housing Finance Corporation Multifamily Housing Revenue Bonds (Stony Creek/Princeton Apartments Project), Series 1999A, of which $9,135,000 remain outstanding. The taxable Series 1999B bonds have matured on November 1, 2004 and no longer carry Moody's rating. The B1 rating is based upon Moody's review of un-audited, 12-month, consolidated operating report ending Sept. 30, 2007 and occupancy reports for the two separate properties provided by the property owner. The unaudited information demonstrates a weakened debt service coverage level of 0.89x (calculated based on Maximum Annual Debt Service of $805,000 and assuming no deposit into the Replacement and Repair Fund), which is a decline from 1.06x from the same period in 2006, which decline we had also observed in December 2006 when we downgraded the rating to B1 from Baa3. Current physical occupancy at Stony Creek Apartments is 97% while occupancy at Princeton Apartments 83%. The outlook has been revised to negative from stable given the properties' combined weakened financial position. Stony Creek is a 132-unit multifamily rental housing facility constructed in 1982, located in the Southwest Austin submarket of Texas. Princeton Apartments is a 90-unit multifamily rental housing facility constructed in 1965, and is located in the East Austin submarket. The bonds are secured by the revenues from these two cross-collateralized properties. Legal Security The bonds are limited obligations payable solely from the revenues, receipts and security from the project. Credit Strengths Nearly fully funded Debt Service Reserve Fund (about $800,000 as of Nov. 30, 2006 of the $805,000 as required) Credit Challenges Thin debt service coverage level of 1x based on un-audited, 12-month operating statement, ending Sept. 30, 2006 Replacement and Reserve Fund is nearly depleted and likely will not be replenished in the immediate future Recent Developments/Results The debt service coverage level for 12 months ending June 30, 2007 (calculated from un-audited operating report) is at 0.89x. This coverage does not incorporate any required deposits into the Replacement and Repair Reserve Fund which if included, will reduce the debt service coverage to 0.8x. The coverage has represents a decline from 1.06x, excluding any deposits in to the Replacement and Repair Reserve Fund. Overall revenues have declined due to rent concessions necessary for the Princeton Apartments to attract tenants. Stony Creek Apartments is performing better than Princeton Apartments, with occupancy currently at 97% and has been generating positive cash flow on a standalone basis, separate from Princeton Apartments. Princeton Apartments, on the other hand, has experienced significant declines in occupancy, generally in the low 80's since our review in December. The weakened financial position is attributable in part to uncollectible rents from displaced tenants from Hurricane Katrina in 2005 and construction on nearby streets that have limited access to the property and also hurt curb appeal. Princeton Apartments wrote off about $11,400 in losses and the property owner provided an additional $25,000 to make repairs to these units. Overall revenues declined by 2% in 2007 from 2006. Operating expenses on the other hand increased by 15% due to a 41% increase in utility expenses and 31% increase in maintenance and repair; administration expenses also increased by 31% from last year. The Replacement and Repair Reserve Fund remains underfunded and Moody's does not anticipate the properties will replenish the reserve fund or increase the level debt service coverage in the near term. However, the debt service reserve fund has remained untapped to-date which provides a level of comfort in the immediate future with the next debt service payment date scheduled for Nov. 1, 2007. Rent levels at the project have remained the same over the past few years. The average rent at Stony Creek is about $572 for a one-bedroom unit and $749 for a two-bedroom unit, which are at levels below the average rents for Southwest Austin as of the first quarter of 2007, which are $730 and $925 respectively, as provided by Torto Wheaton Research. The average rent for buildings constructed in the 1980's is $687. Occupancy at Stony Creek is currently at 97% which is inline with the level for Southwest Austin. The property has always had stronger occupancy levels than Princeton Apartments. Forecasted occupancy in 2008 and 2009 in this submarket is 95% for the next two years. The average rent at Princeton Apartments is about $699 for a one- bedroom unit and $849 for a two-bedroom unit, which are at levels above the average rents for East Austin as of the first quarter of 2007, which are $569 and $734 respectively, as provided by Torto Wheaton Research. The average rent for buildings constructed in the 1960's is $588. Occupancy at Princeton Apartments has average 83% over the past eight months, most recently up to 98% for the month of July. Forecasted occupancy in 2008 and 2009 in this submarket is 95% for the next two years. Outlook The outlook for the bonds has been revised to negative due to the weakened financial position of the project. However the debt service reserve fund has remained untapped which is consistent with the B1 rating. What could change the rating - Up -- Fully funded reserves -- Significant improvement in debt service coverage What could change the rating -Down -- Further deterioration in the financial position due to low occupancy levels at Princeton -- Any tap on the Debt Serve Reserve Fund to pay bondholders or a default on the bonds. BALLY TOTAL: Court Approves Two Pacts with Harbinger, et al. ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York in Manhattan approved these two agreements Bally Total Fitness Holding Corporation and its debtor-affiliates entered into with Harbinger Capital Partners Master Fund I Ltd., Harbinger Capital Partners Special Situations Fund L.P., Liberation Investments L.P., and Liberation Investments Ltd.: (a) the Investment Agreement providing for Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund L.P.'s commitment to make a $233,600,000 equity investment in Bally Total Fitness Holding Corp.; and (b) the Restructuring Support Agreements among the parties, including holders of approximately 80% of the company's Senior Subordinated Notes and more than 55% of the company's Senior Notes, reflecting their commitment to implement the Harbinger-funded restructuring through the Modified First Amended Joint Prepackaged Plan on the same timetable as the company's original plan. A full-text copy of the the Debtors' Restructuring Support Agreement with Liberation Investments, L.P. and Liberation Investments, Ltd., dated August 17, 2007, is available for free at http://researcharchives.com/t/s?22ec The Debtors and the Harbinger entities reached agreement on Aug. 13, 2007, on the terms of a restructuring proposal. The agreement is reflected in (i) a first amended joint prepackaged Chapter 11 plan of Reorganization, (ii) an investment agreement with Harbinger Capital, and (iii) a new restructuring support agreement with Harbinger Capital, Liberation Investments, and certain "Consenting Subordinated Noteholders" including Tennenbaum Capital Partners, LLC. Pursuant to the Investment Agreement, Harbinger Capital will acquire 100% of the New Common Stock of Reorganized Bally issued on the effective date of the Plan in exchange for a purchase price of approximately $233,600,000. Harbinger Capital will receive protections in the form of a $10,000,000 Break-Up Fee and Expense Reimbursement capped at $5,000,000 in the event that the Investment Agreement is terminated and Bally consummates an alternative "Superior Transaction". Harbinger Capital would also be entitled to Expense Reimbursement, capped at either $3,000,000 or $5,000,000 if the Investment Agreement is terminated on certain other specified grounds, including, among others, an uncured material breach by Bally of its covenants under the Investment Agreement or the New Restructuring Support Agreement. In the event that Harbinger Capital breaches its representations, warranties or obligations under the Investment Agreement, Harbinger Capital will not be liable to the Debtors for any punitive or consequential damages and in no event will Harbinger Capital be liable for damages in excess of $50,000,000. The Investment Agreement may be terminated: (a) by the mutual consent of the parties; (b) by Harbinger Capital if (i) Bally enters into an Alternative Transaction, (ii) the Board of Directors withdraws or changes its recommendation of the Agreement in a manner materially adverse to the Investors or recommends an Alternative, (iii) the Debtors withdraw the Modified Plan or if the Debtors seek to convert any of the Chapter 11 Cases to Chapter 7, (iv) the Effective Date of the Modified Plan has not occurred by September 30, 2007, (v) Bally breaches in any material respect its representations, warranties or covenants under the Investment Agreement, subject to its right to timely cure, (vi) the consummation of the transactions contemplated is prohibited by Law or by any judicial or governmental action, (vii) any Debtor breaches the New Restructuring Support Agreement in any material respect, subject to their right to timely cure, (viii) the Break-Up Fee or Expense Reimbursement is not approved by a Final Order of the Bankruptcy Court by September 3, 2007, or (ix) an event occurs that has a Material Adverse Effect and that cannot be cured by September 30, 2007; and (c) by Bally if (i) Harbinger Capital breaches the Investment Agreement or the New Restructuring Support Agreement, subject to their rights to timely cure, (ii) the Board of Directors determines that termination of the Investment Agreement is necessary in order for Bally to accept any Superior Transaction or the if the Bankruptcy Court on its own, (iii) the Effective Date of the Plan has not occurred by September 30, 2007, which date may be extended to October 15, 2007, if the Confirmation Order has been entered by the Bankruptcy Court on or prior to Sept. 30, 2007, and the New Investors continue using commercially reasonable efforts to consummate the Modified Plan, or (iv) the consummation of the transactions contemplated is prohibited by Law or by any judicial or governmental action. A full-text copy of the Investment Agreement is available for free at http://researcharchives.com/t/s?227c Restructuring Support Agreement On June 15, 2007, the Debtors entered into a Restructuring Support Agreement with the holders of a majority of the Prepetition Senior Notes and holders of more than 80% of the Prepetition Subordinated Notes. Under the Restructuring Support Agreement, the Consenting Subordinated Noteholders agreed, among other things, and subject only to the conditions set forth in the Agreement, (i) to vote in favor of the Original Plan, (ii) not to withdraw or revoke their votes, (iii) not to object to the confirmation of the Original Plan, and (iv) not to take any other action, including, without limitation, initiating any legal proceeding that is inconsistent with, or that would delay consummation of, the Original Plan. These undertakings by the Consenting Subordinated Noteholders extend not just to the Original Plan but also to any modifications that are not inconsistent with the terms of the Original Plan. A full-text copy of the New Restructuring Support Agreement is available for free at http://researcharchives.com/t/s?227d About Bally Total Fitness Based in Chicago, Illinois, Bally Total Fitness Holding Corp. (Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates fitness centers in the U.S., with over 375 facilities located in 26 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada (R) brands. Bally Total and its affiliates filed for chapter 11 protection on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after obtaining requisite number of votes in favor of their pre-packaged chapter 11 plan. Joseph Furst, III, Esq. at Latham & Watkins, L.L.P. represents the Debtors in their restructuring efforts. As of June 30, 2007, the Debtors had $408,546,205 in total assets and $1,825,941,54627 in total liabilities. No schedule has been set to date for an organizational meeting that would create an Official Committee of Unsecured Creditors. The Court recently held that the meeting of creditors pursuant to Section 341(a) of the Bankruptcy Code will not be convened, and is canceled, if the Debtors' Plan of Reorganization is confirmed on or prior to October 16, 2007. (Bally Total Fitness Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). BALLY TOTAL: $292,000,000 Morgan Stanley DIP Loan Gets Final OK --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York in Manhattan approved, on a final basis, Bally Total Fitness Holding Corporation and its debtor-affiliates' request to obtain secured postpetition financing for $292,000,000 from Morgan Stanley Senior Funding Inc., comprised of: (i) a $50,000,000 Superpriority First Lien Revolving DIP Credit Facility, which includes a $40,000,000 letter of credit sub-facility; and (ii) a $242,000,000 Superpriority First Lien Term Loan. The Debtors are authorized to obtain the DIP loans, pursuant to the terms of the Final Order and subject to the terms of the DIP loan documents. The proceeds of the DIP Facility will be used to pay in full all Prepetition Secured Obligations "that remain outstanding as of the date of such payment." Judge Lifland also authorized the Debtors to pay in full all obligations under the Prepetition Credit Documents except for letters of credit and swap obligations. Upon the Debtors' full payment of the Prepetition Secured Obligations, valid, enforceable and perfected first priority and senior liens on, and security interests in, all of the Debtors' Prepetition Collateral will be released, and of no further force and effect. The release resolves the dispute between the Prepetition Agent and Prepetition Lenders on one hand, and the Debtors on the other hand, as to the allowability of any claims that some or all of the Prepetition Lenders may assert for payment of a prepayment premium of the Prepetition Credit Facility. Upon the closing of the DIP Facility -- which Closing was expected to take place today -- the Debtors will remit to the Pepetition Agent, to be held in an escrow account bearing interest at a money market rate, equal to 1% of the prepetition term loans held by (i) each Prepetition Lender who is not a DIP Lender, and (ii) each Prepetition Lender who is a DIP Lender and who has not delivered to the DIP Agent prior to close of business on August 21, 2007, a written waiver of its Prepayment Premium Claim. The Debtors will file with the Court a written objection to the allowance of the Prepayment Premium Claim on or before August 31, 2007. Each Prepayment Premium Claimant have until September 12 to submit its written response. The Court will convene a hearing on the allowability of timely filed Prepayment Premium Claims on September 17, 2007. Fees Payable The aggregate fees payable in connection with the DIP Credit Agreement in addition to those described in the Debtors' DIP Request are: (a) the Commitment Fee -- a fee equal to 0.75% of the total commitments payable to Morgan Stanley, which was paid prior to the filing of the Chapter 11 cases; (b) the Closing Fee -- a fee equal to a maximum of 1.00% of the total commitments, assuming none of the lenders under the Debtors' prepetition loan agreement participate, payable to Morgan Stanley; (c) Annual Administration Fees for the revolving facility agent and term facility agent of $75,000 and $50,000; and (d) the Amendment Fee -- equal to $1,000,000 for permitting the DIP Credit Agreement to be converted into either the Exit Credit Agreement or the Alternative Exit Credit Agreement, payable by Harbinger Capital Partner Masters Fund I Ltd. to Morgan Stanley, but reimbursable by the Debtors under certain circumstances. Pursuant to Section 364(c)(1) of the Bankruptcy Code, all of the Prepetition Secured Obligations and an "Alternative Commitment Fee" will constitute allowed claims against Bally Total Fitness Holding Corp. and its affiliates that are signatories to the Guarantee and Collateral Agreement, with priority over any and all administrative expenses and diminution claims. An Alternative Commitment Fee is an additional commitment fee equal to 2.5% of the total commitments minus the sum of the Commitment Fee, the Closing Fee and the Amendment Fee, payable to Morgan Stanley. Carve-Out Expenses Upon the DIP Lenders' declaration of an event of default, the DIP Lenders' liens, claims and security interests will be subject only to the right of payment of the carve-out expenses, including a fee not exceeding $4,650,000 for each unpaid professional retained by the Debtors, the Ad Hoc Noteholders' Committee, and any statutory committees appointed in the Debtors' Chapter 11 cases. "There shall not be any borrowings under the DIP Facility unless the initial funding thereunder is sufficient to repay the Prepetition Secured Obligations in full," Judge Lifland ruled. Proceeds from the Collateral will be applied first to obligations under the Revolving DIP Facility, and all bank products constituting DIP Obligations and all interest rate or foreign currency hedging obligations constituting DIP Obligations, prior to being applied to the DIP Term Loan. DIP Liens As security for the DIP Obligations, effective immediately, the Court grants security interests and liens to the DIP Lenders, subject to the payment of Carve-Out Expenses: (a) First Lien on Unencumbered Property -- Pursuant to Section 364(c)(2) of the Bankruptcy Code, a valid and binding fully-perfected first priority senior security interest in and lien on all prepetition and postpetition property of the Debtors and its proceeds, whether existing on the Petition Date or thereafter acquired, that, on or as of the Petition Date is not subject to valid, perfected and non-avoidable liens; (b) Priming Liens Securing DIP Facility -- Pursuant to Section 364 (d), a valid and binding fully-perfected first priority senior priming security interest in and lien on all prepetition and postpetition property of the Debtors that secure obligations under the Prepetition Credit Facility, senior to the liens securing the Prepetition Credit Facility to the extent not repaid, and any liens that are junior to those liens; and (c) Liens Junior to Certain Other Liens -- Pursuant to Section 364(c)(3), are valid and binding fully-perfected security interests in and liens upon all prepetition and postpetition property of the Debtors, that is subject to valid, perfected and unavoidable liens in existence on the Prepetition Date. The DIP Facility will terminate on the earlier of: (i) March 31, 2008; and (ii) the effective date of a plan of reorganization in the Debtors' cases. All objections to the Debtors' DIP Financing, to the extent not resolved by the Court's final order, are overruled. About Bally Total Fitness Based in Chicago, Illinois, Bally Total Fitness Holding Corp. (Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates fitness centers in the U.S., with over 375 facilities located in 26 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada (R) brands. Bally Total and its affiliates filed for chapter 11 protection on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after obtaining requisite number of votes in favor of their pre-packaged chapter 11 plan. Joseph Furst, III, Esq. at Latham & Watkins, L.L.P. represents the Debtors in their restructuring efforts. As of June 30, 2007, the Debtors had $408,546,205 in total assets and $1,825,941,54627 in total liabilities. No schedule has been set to date for an organizational meeting that would create an Official Committee of Unsecured Creditors. The Court recently held that the meeting of creditors pursuant to Section 341(a) of the Bankruptcy Code will not be convened, and is canceled, if the Debtors' Plan of Reorganization is confirmed on or prior to October 16, 2007. (Bally Total Fitness Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). BALLY TOTAL: Court Gives Final Okay on Cash Collateral Use ---------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York in Manhattan gave Bally Total Fitness Holding Corporation and its debtor-affiliates authority, on a final basis, to use their prepetition lenders' cash collateral and to provide those lenders with adequate protection. The Court authorized the Debtors to use the Cash Collateral during the period from July 31, 2007, through and including the termination date for general corporate purposes and costs and expenses related to the Chapter 11 cases. All uses of cash by the Debtors or the costs and expenses of administering the Chapter 11 cases will be deemed to be first from cash that is not Cash Collateral; and thereafter, from Cash Collateral. The Final Order does not address the disposition of any Prepetition Collateral outside the ordinary course of business subsequent to the Petition Date or the Debtors' use of the Cash Collateral resulting from the disposition. The Court authorizes -- but not directs -- the Agent, JPMorgan Chase Bank, N.A., in its capacity as issuing lender, to amend, replace, renew or reissue any Letter of Credit outstanding under the Credit Agreement as of the Petition Date, provided that: (a) the aggregate face amount of the sum of Letters of Credit outstanding after any amendment, replacement, renewal or reissuance, does not exceed the aggregate face amount of the Letters of Credit outstanding as of the Petition Date; and (b) any amendment, replacement, renewal or reissuance is on the same terms and conditions as any Letters of Credit outstanding under the Credit Agreement as of the Petition Date. As further adequate protection, the Court directs the Debtors to pay or reimburse all reasonable fees, costs and charges incurred by the Lenders and the Agent, within 20 days after submission of invoices for reimbursement. The liens granted will not be (i) subject to any lien that is avoided and preserved for the benefit of the Debtors' estates under Section 551 of the Bankruptcy Code, or (ii) prior to a Refinancing, subordinated to or made pari passu with any other lien under Sections 363 and 364 of the Bankruptcy Code. The Debtors' right to use the Cash Collateral will terminate on the earliest to occur of (i) the date that is 45 days after the Petition Date; (ii) consummation of a Refinancing with proceeds sufficient to repay the Prepetition Obligations, any unpaid Adequate Protection Payments and any other unpaid amounts owing in full; or (iii) upon written notice by the Agent to the Debtors after the occurrence and continuance of any event of default. Up to $50,000 of Cash Collateral in the aggregate may be used to pay the allowed fees and expenses of professionals retained by the Prepetition Noteholders Committee or any statutory committee appointed in the Debtors' Chapter 11 cases incurred investigating, but not initiating or prosecuting , any Avoidance Actions or any other claims or causes of action against the Agent or the Lenders. Upon Repayment, the Agent and the Lenders will release all liens and security interests on the Prepetition Collateral and all Replacement Liens. Based in Chicago, Illinois, Bally Total Fitness Holding Corp. (Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates fitness centers in the U.S., with over 375 facilities located in 26 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada (R) brands. Bally Total and its affiliates filed for chapter 11 protection on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after obtaining requisite number of votes in favor of their pre-packaged chapter 11 plan. Joseph Furst, III, Esq. at Latham & Watkins, L.L.P. represents the Debtors in their restructuring efforts. As of June 30, 2007, the Debtors had $408,546,205 in total assets and $1,825,941,54627 in total liabilities. No schedule has been set to date for an organizational meeting that would create an Official Committee of Unsecured Creditors. The Court recently held that the meeting of creditors pursuant to Section 341(a) of the Bankruptcy Code will not be convened, and is canceled, if the Debtors' Plan of Reorganization is confirmed on or prior to October 16, 2007. (Bally Total Fitness Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). BNC MORTGAGE: Operations to be Shut Down by Lehman Brothers ----------------------------------------------------------- Lehman Brothers disclosed on Aug. 22, 2007 that market conditions have necessitated a substantial reduction in its resources and capacity in the subprime space. As a result, the Firm is closing its BNC Mortgage LLC subsidiary. The Firm continues to originate mortgages in the U.S. through its Aurora Loan Services LLC platform. The closure affects approximately 1,200 employees in 23 U.S. locations. In connection with the closure, the Firm will record all related after-tax charges, including severance, real estate and technology costs, of approximately $25 million, and a 100% after-tax goodwill write-down of approximately $27 million. About Lehman Brothers Lehman Brothers (NYSE: LEH) -- http://www.lehman.com/-- is an innovator in global finance, serves the financial needs of corporations, governments and municipalities, institutional clients, and high net worth individuals worldwide. Founded in 1850, Lehman Brothers maintains leadership positions in equity and fixed income sales, trading and research, investment banking, private investment management, asset management and private equity. The Firm is headquartered in New York, with regional headquarters in London and Tokyo and operates in a network of offices around the world. About BNC Mortgage BNC Mortgage -- http://www.bncmortgage.com/-- originates subprime residential mortgages for customers who don't meet standard lending criteria. The company then sells virtually all of its loans, including servicing rights, into the secondary market for cash. Its client base includes first-time borrowers or borrowers with hard-to-document income or spotty credit histories. The company is a subsidiary of investment bank and brokerage Lehman Brothers Holdings through Lehman Brothers Bancorp. BOSTON SCIENTIFIC: Prepays $1B Term Loan Under Amended Credit Pact ------------------------------------------------------------------ Boston Scientific Corp. prepaid $1 billion of its term loan using $750 million of cash on hand and $250 million from a credit facility secured by the company's U.S. receivables. The prepayment is in connection with an Aug. 17, 2007 amendment of a credit agreement the company entered into with its lenders on April 21, 2006. The lenders in that amended credit agreement include: -- BSC International Holding Limited; -- Merrill Lynch Capital Corporation, as Syndication Agent; -- Bear Stearns Corporate Lending Inc.; -- Deutsche Bank Securities Inc. and Wachovia Bank, National Association, as Co-Documentation Agents; and -- Bank of America, N.A., as Administrative Agent. The amendment, among other things, extended the step-down in the company's maximum permitted Consolidated Leverage Ratio -- from 4.5 to 1.0 to 3.5 to 1.0 on March 31, 2008, to 4.5 to 1.0 to 4.0 to 1.0 on March 31, 2009; and 4.0 to 1.0 to 3.5 to 1.0 on Sept. 30, 2009. In addition, the amended credit agreement excluded from the calculation of Consolidated EBITDA up to $300 million of restructuring charges incurred through June 30, 2009, and up to $500 million of litigation and settlement expenses incurred in any period of four fiscal quarters through June 30, 2009, not to exceed $1 billion in the aggregate. Furthermore, the parties amended prepayment terms such that principal prepayments are made in direct order of maturity rather than on a pro rata basis. Headquartered in Natick, Massachusetts, Boston Scientific Corporation (NYSE: BSX) -- http://www.bostonscientific.com/-- develops, manufactures and markets medical devices used in a broad range of interventional medical specialties. The company has offices in Argentina, Chile, France, Germany, and Japan, among others. * * * As reported in the Troubled Company Reporter on Aug. 7, 2007, Standard & Poor's Ratings Services lowered its corporate credit rating on Boston Scientific Corp. to 'BB+' from 'BBB-' and placed the ratings on the company on CreditWatch with negative implications. S&P has withdrawn the commercial paper rating at the company's request. At the same time, Fitch Ratings downgraded the ratings on Boston Scientific Corp. including the company's 'BBB-' Senior Unsecured Notes rating which was lowered to 'BB+'. The Rating Outlook is Negative. C-BASS MORTGAGE: S&P Lowers Ratings and Removes Negative Watch -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class B-1 and B-2 mortgage loan asset-backed certificates from C- BASS Mortgage Loan Asset-Backed Certificates Series 2002-CB2 to 'B' from 'BBB' and 'BB+', respectively, and removed them from CreditWatch, where they were placed with negative implications on June 20, 2007. The downgrades reflect the fact that current and projected credit support levels do not support the previous ratings on the subordinate classes. As of the July 2007 remittance period, overcollateralization was below its $1.35 million target amount by approximately $470,000; additionally, the deal has realized $9.03 million, or 3.34% of the original principal balance in cumulative losses. The six-month average loss is approximately $117,000, which is slightly greater than the 12-month average loss of $104,000. Although class B-2 is subordinate to the B-1 class, S&P lowered its rating on both classes to 'B' because class B-1 only has $136,000 more in credit enhancement remaining. This transaction has paid down to 11.58% of its original principal balance. The pool for this deal was initially composed of reperforming, fixed- and adjustable-rate mortgage loans secured primarily by first liens on one- to four-family residential properties. CAPITAL AUTO: S&P Rates $15.023 Million Class D Notes at BB ----------------------------------------------------------- Standard & Poor's Ratings Services assigned its ratings to Capital Auto Receivables Asset Trust 2007-2's $2,997,106,000 asset-backed notes series 2007-2. The ratings reflect: -- The credit quality of the underlying pool, which has a weighted average FICO score of 703 and consists of prime automobile loans; -- The timely interest and principal payments made under stressed cash flow modeling scenarios consistent with the ratings being assigned to each class of notes; -- The credit enhancement; and -- The sound legal structure. Ratings Assigned Capital Auto Receivables Asset Trust 2007-2 Class Rating Type Interest Amount Legal rate final maturity ----- ------ ---- -------- ------ ------------ A-PT AAA Senior Floating $1,500,000 February 2014 A-1a A-1+ Senior Fixed $250,000,000 August 2008 A-1b A-1+ Senior Floating $40,000,000 August 2008 A-2a AAA Senior Fixed $100,000,000 March 2010 A-2b AAA Senior Floating $340,000,000 March 2010 A-3 AAA Senior Floating $380,000,000 July 2011 A-4a AAA Senior Fixed $169,364,000 February 2014 A-4b AAA Senior Floating $60,000,000 February 2014 B A Sub Fixed $97,650,000 February 2014 C BBB Sub Fixed $45,069,000 February 2014 D BB Sub Fixed $15,023,000 February 2014 CDC MORTGAGE: Moody's Junks Ratings on Two Certificate Classes -------------------------------------------------------------- Moody's Investors Service downgraded and placed on review for possible downgrade certain certificates from four deals issued by CDC Mortgage Capital Trust and IXIS Real Estate Capital Trust in 2004. The actions are based on the analysis of the credit enhancement provided by subordination, overcollateralization and excess spread relative to the expected loss. All four transactions are backed by first and second-lien fixed and adjustable subprime mortgage loans. The complete rating actions are: Issuer: CDC Mortgage Capital Trust Downgrade: -- Series 2004-HE2, Class B-2, downgraded to Ba2 from Baa2; -- Series 2004-HE2, Class B-3, downgraded to B3 from Baa3; -- Series 2004-HE2, Class B-4, downgraded to Caa2 from Ba1; -- Series 2004-HE3, Class B-3, downgraded to Ba3 from Baa3; -- Series 2004-HE3, Class B-4, downgraded to Caa2 from Ba1. Review for Possible Downgrade: -- Series 2004-HE1, Class B-2, current rating Baa3, under review for possible downgrade; -- Series 2004-HE1, Class B-3, current rating Ba3, under review for possible downgrade. Issuer: IXIS Real Estate Capital Trust Review for Possible Downgrade: -- Series 2004-HE4, Class B-3, current rating Baa3, under review for possible downgrade; -- Series 2004-HE4, Class B-4, current rating Ba1, under review for possible downgrade. CENTEX HOME: Moody's Puts "Ba3" Class B Cert. Rating Under Review ----------------------------------------------------------------- Moody's Investors Service placed two certificates issued by Centex Home Equity Loan Trust 2002-D under review for possible downgrade. This subprime deals consist of fixed-rate and adjustable-rate residential mortgage loans. The two most subordinate classes from the transaction are being placed under review for possible downgrade based on the low credit enhancement levels compared to the current loss projections. The credit support is declining due to the loan defaults. In addition, the transaction has stepped down, causing overcollateralization to be released and the subordinated certificates have started to receive their share of unscheduled prepayments. Complete rating actions are: Issuer: Centex Home Equity Loan Trust -- Series 2002-D; Class M-2, current rating A2, under review for possible downgrade; -- Series 2002-D; Class B, current rating Ba3, under review for possible downgrade. CHALLENGER POWERBOATS: Has $21MM Shareholders' Deficit at June 30 ----------------------------------------------------------------- Challenger Powerboats Inc. reported on Aug. 21, 2007, its financial results for the second quarter ended June 30, 2007. The company's consolidated balance sheet at June 30, 2007, showed $7.4 million in total assets and $28.1 million in total liabilities, resulting in as $20.7 million total shareholders' deficit. The company's consolidated balance sheet at June 30, 2007, also showed strained liquidity with $3.6 million in total current assets available to pay $10.6 million in total current liabilities. The company's net loss for the current second quarter decreased to $1.7 million which compares to a net loss of $3.7 million for the same period in 2006. Revenue for the quarter was $3.6 million, which included $395,000 related to business completed during the first quarter, compared to net revenues of ($792,895) for the three months ended June 30, 2006. "Our marketing and sales strategy is having a positive effect on our distribution channels. We are encouraged by our second consecutive quarter of record revenue, stated Laurie Phillips, Challengers president and chief executive officer. "We have also focused on improving the company's efficiencies, which have had a positive impact of gross margins. We intend to further operational efficiencies with the objective of achieving profitability in the near future." Ms. Phillips added, "Additionally, we are currently taking aggressive steps toward restructuring our balance sheet, which should substantially improve our financial condition. These changes are expected to be competed in the current quarter and will go along way toward significantly strengthening the Challenger organization." 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?22e5 Going Concern Doubt As reported in the Troubled Company Reporter on May 2, 2007, Jaspers + Hall PC expressed substantial doubt about Challenger Powerboats Inc.'s ability to continue as a going concern after auditing the company's financial statements as of Dec. 31, 2006, and 2005. The auditing firm pointed to the company's recurring losses from operations and its difficulties in generating sufficient cash flow to meet its obligation and sustain its operations. About Challenger Powerboats Based in Washington, Missouri, Challenger Powerboats Inc. (OTC BB: CPWB.0B) -- http://www.challengerpowerboats.com/-- designs and manufactures high performance 'go fast' offshore racing boats, family sport cruisers, jet boats and water ski tow boats under the brands 'Challenger Powerboats', 'Sugar Sand' and 'Gekko', which target the recreational boating market. The company's boats are sold through the company's dealer network in the United States, Canada, Mexico, Europe, Australia, the Middle East and Japan. CHAPARRAL STEEL: Completes Merger Deal with Gerdau Ameristeel ------------------------------------------------------------- Chaparral Steel Company and Gerdau Ameristeel Corporation disclosed that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in connection with the Agreement and Plan of Merger signed by Chaparral, Gerdau Ameristeel and certain other parties, expired at 11:59 p.m. (Eastern Time) on Aug. 22, 2007 without action by either the Federal Trade Commission or the Department of Justice. Expiration of the HSR waiting period without action by such regulators is a condition to completion of the proposed merger. The consummation of the merger remains subject to other customary conditions, including adoption of the Agreement and Plan of Merger by Chaparral's stockholders. About Gerdau Ameristeel Headquartered in Tampa, Florida, Gerdau Ameristeel Corporation -- http://www.gerdauameristeel.com/-- (NYSE: GNA, TSX: GNA) is a minimill steel producer in North America with annual manufacturing capacity of over 9 million tons of mill finished steel products. Through its vertically integrated network of 17 minimills (including one 50%-owned joint venture minimill), 17 scrap recycling facilities and 51 downstream operations (including seven joint venture fabrication facilities), Gerdau Ameristeel serves customers throughout North America. The company's products are generally sold to steel service centers, to steel fabricators, or directly to original equipment manufacturers for use in a variety of industries, including construction, automotive, mining, cellular and electrical transmission, metal building manufacturing and equipment manufacturing. The company is a subsidiary of Brazil's Gerdau SA. About Chaparral Steel Headquartered in Midlothian, Texas, Chaparral Steel Company (NASDAQ: CHAP) -- http://www.chapusa.com/-- is a producer of structural steel products in North America and also a major producer of steel bar products. It operates two mini-mills, one located in Midlothian, Texas, and the other located in Dinwiddie County, Virginia. The company has approximately 1,400 employees and an annual installed capacity of 2.9 million metric tons. * * * In July 2007, Moody's Investor Services placed Chaparral Steel Company's probability of default and long term corporate family ratings at "Ba3". At the same time, Standard and Poor's assigned a B+ rating on the company's long term foreign and local issuer credits. CHL MORTGAGE: Moody's Puts Ba2 Class B-3 Cert. Rating Under Review ------------------------------------------------------------------ Moody's Investors Service placed under review for possible upgrade and downgrade certain certificates issued by CHL Mortgage Pass- Through Trust and Alternative Loan Trust in 2004. The transactions are backed by first-lien fixed and adjustable-rate Alternative-A mortgage loans originated or acquired by Countrywide Home Loans, Inc. Five classes of certificates from CHL Mortgage Pass-Through Trust series 2004-15 and 2004-HYB6 are placed under review for possible upgrade based on the strong build-up in credit enhancement. The projected pipeline losses are not expected to significantly affect the credit support for these certificates. Four classes of certificates from Alternative Loan Trust series 2004-6CB, 2004-8CB and 2004-J5 are placed under review for possible downgrade because the current credit enhancement provided by subordination, overcollateralization and excess spread is low compared to the projected pipeline losses of the underlying pool. The complete rating actions are: Issuer: CHL Mortgage Pass-Through Trust Review for Possible Upgrade: -- Series 2004-15, Class M, current rating Aa2, under review for possible upgrade; -- Series 2004-15, Class B-1, current rating A2, under review for possible upgrade; -- Series 2004-15, Class B-2, current rating Baa2, under review for possible upgrade; -- Series 2004-15, Class B-3, current rating Ba2, under review for possible upgrade; -- Series 2004-HYB6, Class A-4, current rating Aa1, under review for possible upgrade. Issuer: Alternative Loan Trust Review for Possible Downgrade: -- Series 2004-6CB, Class M-2, current rating A2, under review for possible downgrade; -- Series 2004-6CB, Class M-3, current rating Baa2, under review for possible downgrade; -- Series 2004-8CB, Class M-3, current rating Baa2, under review for possible downgrade; -- Series 2004-J5, Class B, current rating Baa2, under review for possible downgrade. CII CARBON: Moody's Withdraws "B1" Corporate Family Rating ---------------------------------------------------------- Moody's Investors Service withdrew its ratings on CII Carbon LLC, corporate family rating B1. The withdrawal follows the acquisition of CII Carbon by Rain Calcining, an Indian based company, and the repayment of all rated debt at CII Carbon. This concludes Moody's review for possible downgrade of CII Carbon, initiated on June 4, 2007. Upgrades: Issuer: CII Carbon LLC -- Probability of Default Rating, Upgraded to WR from B2 Outlook Actions: Issuer: CII Carbon LLC -- Outlook, Changed To Rating Withdrawn From Rating Under Review Withdrawals: Issuer: CII Carbon LLC -- Corporate Family Rating, Withdrawn, previously rated B1 -- Senior Secured Bank Credit Facility, Withdrawn, previously rated 33 - LGD3 Headquartered in Kingwood, Texas, CII Carbon, a producer of anode grade calcined coke, had revenues of $355 million in fiscal 2006. COUDERT BROS: Wants to Solicit Plan Acceptances Until Jan. 2008 --------------------------------------------------------------- Coudert Brothers LLP asks the United States Bankruptcy Court for the Southern District of New York to further extend the exclusive periods to solicit acceptances of its PLAN until Jan. 24, 2008. The Debtor tells the Court that it needs sufficient time to solicit acceptances from its impaired creditors as well as to finalize its plan and disclosure statement. The Debtor reminds the Court that it filed a non-final version of the disclosure statement related to its plan of liquidation on March 23, 2007, with the support of its Official Committee of Unsecured Creditors. The Debtor said that its exclusive period to solicit acceptances expired on Aug. 21, 2007. Coudert Brothers LLP was an international law firm specializing in complex cross border transactions and dispute resolution. The firm had operations in Australia and China. The Debtor filed for Chapter 11 protection on Sept. 22, 2006 (Bankr. S.D.N.Y. Case No. 06-12226). John E. Jureller, Jr., Esq., and Tracy L. Klestadt, Esq., at Klestadt & Winters, LLP, represent the Debtor in its restructuring efforts. Brian F. Moore, Esq., and David J. Adler, Esq., at McCarter & English, LLP, represent the Official Committee Of Unsecured Creditors. In its schedules of assets and debts, Coudert listed total assets of $29,968,033 and total debts of $18,261,380. CROSSWINDS AT ARROYO: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: Crosswinds at Arroyo Seco, L.L.C. 2929 North Power Road, Suite 10 Mesa, AZ 85215 Bankruptcy Case No.: 07-04162 Type of business: The Debtor is engaged in the real estate business. Chapter 11 Petition Date: August 22, 2007 Court: District of Arizona (Phoenix) Judge: Charles G. Case II Debtor's Counsel: Steven N. Berger, Esq. Engelman Berger, P.C. One Columbus Plaza, Suite 700 3636 North Central Avenue Phoenix, AZ 85012-1985 Tel: 602-271-9090 Fax: 602-222-4999 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor does not have a list of its largest unsecured creditors. CRYSTAL SPRINGS: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Crystal Springs Apparel, LLC 206 West Railroad Avenue Crystal Springs, MS 39059 Bankruptcy Case No.: 07-02633 Type of Business: The Debtor wholesales quality cotton and cotton/polyester blend knit, woven, and denim shirts. See http://www.csapparel.com/ Chapter 11 Petition Date: August 23, 2007 Court: Southern District of Mississippi (Jackson) Debtor's Counsel: Craig M. Geno, Esq. Harris Jernigan & Geno, PLLC 587 Highland Colony Parkway P.O. Box 3380 Ridgeland, MS 39157 Tel: (601) 427-0048 Fax: (601) 427-0050 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. CURRIE TECHNOLOGIES: Section 341(a) Meeting Set for Tomorrow ------------------------------------------------------------ The United States Trustee for Region 16 scheduled a meeting of Currie Technologies Inc.'s creditors for tomorrow, Aug. 28, 2007, 9:00 a.m., at Room 105, 21051 Warner Center Lane in Woodland Hills, California. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Currie Technologies Inc. -- http://www.currietech.com/-- manufactures the Electro-Drive(TM) and US Pro Drive(TM) propulsion systems which serve as the backbone of the company's scooters and bicycles, powering these vehicles with efficient and environmentally friendly, high performance drive systems for sport or transportation. The Debtor filed Chapter 11 bankruptcy protection on July 26, 2007 (Bankr. C.D. Calif. Case No. 07- 12609). Philip A. Gasteier, Esq., and Jeremy Faith, Esq., at Robinson Diamant & Wolkowitz APC represent the Debtor in its restructuring efforts. CURRIE TECHNOLOGIES: Files Schedules of Assets and Liabilities -------------------------------------------------------------- Currie Technologies Inc. filed with the U.S. Bankruptcy Court for the Central District of California its schedule of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $0 B. Personal Property $7,613,336 C. Property Claimed as Exempt $0 D. Creditors Holding Secured Claims $4,190,460 E. Creditors Holding Unsecured Priority Claims $1,178 F. Creditors Holding Unsecured Non-priority Claims $12,648,220 ----------- ----------- TOTAL $7,613,336 $16,839,858 Currie Technologies Inc. -- http://www.currietech.com/-- manufactures the Electro-Drive(TM) and US Pro Drive(TM) propulsion systems which serve as the backbone of the company's scooters and bicycles, powering these vehicles with efficient and environmentally friendly, high performance drive systems for sport or transportation. The Debtor filed Chapter 11 bankruptcy protection on July 26, 2007 (Bankr. C.D. Calif. Case No. 07- 12609). Philip A. Gasteier, Esq., and Jeremy Faith, Esq., at Robinson Diamant & Wolkowitz APC represent the Debtor in its restructuring efforts. DEBT RESOLVE: June 30 Balance Sheet Upside-Down by $159,607 ----------------------------------------------------------- Debt Resolve Inc. reported on Aug. 20, 2007, its financial results for the second quarter of 2007. At June 30, 2007, the company's consolidated balance sheet showed $3.1 million in total assets and $3.2 million in total liabilities, resulting in a $159,607 total stockholders' deficit. The company's consolidated balance sheet at June 30, 2007, also showed strained liquidity with $1.0 million in total current assts available to pay $3.2 million in total current liabilities. Net loss for the second quarter of 2007 was $5.3 million compared to a loss of $1.7 million in the second quarter of 2006. The total loss for the three months ended June 30, 2007, includes $1.6 million in non-cash stock-based compensation expense and $1.2 million in a non-cash goodwill and intangibles impairment charge. Revenue for the second quarter of 2007 was $875,210, compared to $27,026 in the second quarter of 2006. 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?22e3 Going Concern Doubt Marcum & Kliegman LLP, in New York, expressed substantial doubt about Debt Resolve Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements as of the year ended Dec. 31, 2006. The auditing firm pointed to the company's significant losses since inception. About Debt Resolve Headquartered in White Plains, New York, Debt Resolve Inc. -- http://www.debtresolve.com/-- provides lenders, collection agencies, debt buyers and utilities with a patented online bidding system for the resolution and settlement of consumer debt and a collections and skip tracing solution that is effective at every stage of collection and recovery. Through its subsidiary, DRV Capital LLC, the company is actively engaged in the purchase and collections of distressed accounts receivable using its own collections solutions. Through its subsidiary, First Performance Corporation, the company is actively engaged in operating a collection agency for the benefit of its clients, which include banks, finance companies and purchasers of distressed accounts receivable. DELTA AIR: Former Northwest Exec. Richard Anderson Named as CEO --------------------------------------------------------------- The Board of Directors of Delta Air Lines has elected Richard H. Anderson to serve as the company's chief executive officer, succeeding retiring CEO Gerald Grinstein. Mr. Anderson brings a unique depth of experience to the position, having served in top jobs for several major U.S. corporations, Richard Andersonincluding executive vice president of UnitedHealth Group; chief executive officer of Northwest Airlines; staff vice president and deputy general counsel at Continental Airlines; and most recently as a member of Delta's Board of Directors. Mr. Anderson will become CEO effective Sept. 1. "After a thorough search, the Board concluded that Richard Anderson possesses the right blend of seasoned leadership, strategic skills, international experience and airline knowledge the company needs to navigate the industry's challenges and capitalize on its opportunities," said Daniel A. Carp, chairman of Delta's Board of Directors. "Well-qualified with a proven track record in this highly competitive industry, Richard has a demonstrated ability to master the competitive pressures of today's marketplace with innovation and an unwavering focus on the customer. He brings complementary strengths to Delta's highly talented leadership team and high admiration for the people of Delta and their recent success in restructuring to become a fiercely competitive airline." Mr. Anderson, age 52, has nearly 20 years of airline industry experience and will become the eighth CEO in Delta's 78-year history. "Delta people have made amazing accomplishments and have a passion for customer service that is renowned in the industry. I am honored to accept the challenge of leading this legendary company into a future that holds great promise," Anderson said. "With a solid strategy in place that provides a dynamic platform for future growth and success, I look forward to working side by side with Delta professionals to make Delta an undisputed leader in customer service, operational performance and financial strength and stability. Richard Anderson: "In the coming weeks, I will spend the majority of my time listening to Delta people to learn how we can further improve the customer experience and position our company as an even better place to work. Backed by award-winning products and services, Delta has great things in store for its customers and I am eager to support the commitment of our 48,000 dedicated professionals worldwide to remaining the airline of choice for our customers," Mr. Anderson stated. With Anderson's appointment, Gerald Grinstein, 75, will retire from his position as CEO and a member of the Board of Directors effective Sept. 1, concluding his distinguished 20-year tenure as a Delta director. "It has been a privilege to serve this company and the greatest people in the industry," Grinstein said. "I have known Richard for a long time. He is a ferocious competitor, thoroughly knowledgeable about airline operations, and understands the link between passenger satisfaction and living up to our service commitments. He has an extensive background in the Far East and Asia, which are among Delta's next growth opportunities. Richard's sound judgment and professionalism make him a great addition to Delta's battle-tested leadership team." In addition to Anderson's appointment, the Board of Directors also said that Chief Financial Officer Edward H. Bastian will be promoted to President and Chief Financial Officer, reporting to Anderson. "Richard Anderson is a true professional with a proven track record," Mr. Bastian said. "I am looking forward to working with Richard as we position our company for an even stronger future." Mr. Anderson brings to Delta extensive leadership experience at the most senior levels in the aviation industry as well as in other corporations. Most recently, Anderson served as executive vice president of UnitedHealth Group and president of UnitedHealth's Commercial Markets Group. Prior to joining UnitedHealth in 2004, he had a 14-year career at Northwest Airlines where he served as vice president and deputy general counsel; senior vice president of Technical Operations and Airport Affairs; executive vice president and chief operating officer; and as chief executive officer from 2001 to 2004. Prior to joining Northwest in 1990, Anderson worked as in-house counsel for Continental Airlines, where he ultimately served as staff vice president and deputy general counsel. Anderson also serves as a member of the Board of Directors for Cargill Inc. and Medtronic Inc. Anderson holds a bachelor's degree from the University of Houston and a Juris Doctor degree from South Texas College of Law. He and his wife, Susan, look forward to relocating to the Atlanta area this fall. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 2007, the Court confirmed the Debtors' plan. * * * As reported in the Troubled Company Reporter on July 16, 2007, Fitch Ratings has initiated coverage of Delta Air Lines Inc. with the assignment of these debt ratings: issuer default rating 'B'; First-lien senior secured credit facilities 'BB/RR1'; and Second-lien secured credit facility (Term Loan B) 'B/RR4' As reported in the Troubled Company Reporter on May 2, 2007, Standard & Poor's Ratings Services raised its ratings on Delta Air Lines Inc. (B/Stable/--), including raising the corporate credit rating to 'B', with a stable outlook, from 'D', following the airline's emergence from Chapter 11 bankruptcy proceedings. DISCOVERY CAPITAL: Shareholders Approve Plan of Liquidation ----------------------------------------------------------- At the annual and special meeting of shareholders held last Aug. 21, 2007, shareholders of Discovery Capital Corporation approved the previously announced plan for the liquidation of Discovery, including the sale of its subsidiary, Discovery Capital Management Corp., to management of Discovery and the distribution of Discovery's assets to its shareholders. Shareholders approved the plan of liquidation by over 99% of the votes cast, including over 99% of the votes cast by minority shareholders in respect of the Management Purchase, as required by the policies of the TSX Venture Exchange. Discovery will provide further information to shareholders regarding important dates with respect to their ownership of Discovery shares. With over 20 years of venture capital experience in British Columbia, Discovery Capital Corp. (TSX VENTURE:DVY.Y) -- http://www.discoverycapital.com/-- is a venture fund manager through its wholly owned subsidiary, Discovery Capital Management Corp., and venture capital investor specializing in: information technology, communications, health and life sciences, and other advanced technologies. Discovery Capital has proven expertise in strategic planning, management development, innovative financing strategies, corporate governance and positioning for liquidity. Discovery Capital Management Corp. is the manager of British Columbia Discovery Fund (VCC) Inc., a British Columbia venture capital fund that has raised approximately $43 million to date and has investment interests in eleven developing technology companies. DOBSON COMM: To Redeem Shares of S. F Convertible Preferred Stock ----------------------------------------------------------------- Dobson Communications Corporation has called for redemption of all of its outstanding shares of Series F Convertible Preferred Stock (CUSIPs: 256069709, 256069600, 256069402 and U25401206). Unless the company defaults in its payment in cash of the optional redemption price, dividends on the shares of the Series F Preferred Stock will cease to be payable on and after the optional redemption date, which is Oct. 4, 2007, and the right of holders of the Series F Preferred Stock to voluntarily convert shares of the Series F Preferred Stock into Class A Common Stock of the company will terminate at the close of business on the business day preceding the optional redemption date, subject to any extension necessary to permit the expiration of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The conversion ratio of the Series F Preferred Stock as of the date of Aug. 20, 2007, is 20 shares of Class A Common Stock of the company for each share of Series F Preferred Stock converted in accordance with the Certificate of Designation for the Series F Preferred Stock. The conversion ratio was calculated using a conversion price of $8.75 per share of Class A Common Stock of the company. The closing price of the Class A Common Stock of the company on Aug. 17, 2007 was $12.39 per share. The optional redemption price payable for each outstanding share of Series F Preferred Stock is an amount of cash equal to (i) $178.571 per share, which represents 100% of the liquidation preference, plus (ii) all accumulated and unpaid dividends (including an amount in cash equal to a prorated dividend for any partial dividend period) thereon to the optional redemption date. As of the date of August 20, there were 759,896 outstanding shares of the Series F Preferred Stock. The formal redemption notice required by the Certificate of Designation for the Series F Preferred Stock has been sent to holders of the shares of Series F Preferred Stock. The redemption of the shares of Series F Preferred Stock and the payment of the optional redemption price will be made in accordance with the terms specified in the redemption notice and the redemption procedures of: The Depository Trust Company 55 Water Street 50th Floor New York, NY 10041-0099 If any shares of the Series F Preferred Stock held by any holder are represented by one or more physical certificates, such holder must surrender such shares to the Redemption Agent: UMB Bank, N.A. Attention: Jennifer Fuller Securities Transfer Division 928 Grand Boulevard, 5th Floor Kansas City, MO 64106 Tel (816) 860-3753 About Dobson Communications Corporation Headquartered in Oklahoma City, Dobson Communications Corporation (Nasdaq:DCEL) - http://www.dobson.net/-- provides wireless service in rural and suburban areas of the US. The company owns wireless operations in 17 states. * * * As reported in the Troubled Company Reporter on July 4, 2007, Standard & Poor's Ratings Services placed its ratings Dobson Communications Corp., including the 'B-' corporate credit rating, and all related entities on CreditWatch with positive implications. Fitch Ratings placed these ratings of Dobson Communications Corp. on Rating Watch Positive: issuer default rating 'B-'; $150 million senior floating rate notes 'CCC+/RR5'; $160 million senior convertible debentures 'CCC+/RR5'; $420 million senior notes 'CCC+/RR5'; and $136 million convertible preferred stock 'CCC- /RR6. EARTH BIOFUELS: Posts $34.7 Million Net Loss in Qtr. Ended June 30 ------------------------------------------------------------------ Earth Biofuels Inc. reported a net loss of $34.7 million for the second quarter ended June 30, 2007, compared with a net loss of $14.1 million for the same period in 2006. Total revenue for the three months ended March 31, 2007, decreased $1.7 million, or 21%, to approximately $6.7 million from approximately $9 million in 2006. The decrease in total revenue is primarily the result of decreased sales of biodiesel. The increase in net loss primarily reflects an increase of $10.4 million in interest expense, a loss on equity investments of $4.2 million, and goodwill impairment losses of $10.6 million during the quarter ended June 30, 2007, partly offset by a decrease in compensation and other selling, general and administrative expenses. Compensation for three months ended March 31, 2007, decreased approximately $3.9 million and related primarily to shares issued to consultants for employees and consulting services in 2006. Other selling, general and administrative expenses for three months ended March 31, 2007, decreased approximately $2.5 million from approximately $5.9 million for the same period in 2006. The decrease consists of reductions in consulting, marketing, professional, administrative and travel expenses during 2007. Interest expense related primarily to short term convertible debts and long term debts for three months ended March 31, 2007, was approximately $13.5 million from $3.1 million for the same period in 2006. Liquidity and Capital Resources During the six months ended June, 30, 2007, the company's cash and cash equivalents increased by approximately $243,000 from the same period in 2006, primarily as the result of obtaining new credit facilities in the first quarter of 2007. Net cash used in operating activities was approximately $20.6 million for six months ended June 30, 2007, compared to net cash used in operating activities of approximately $13.8 million for the same period in 2006. The increase in net cash flow used in operating activities relates to increasing operating costs due to the ramp-up of the company's operations, including higher cost of good sold, other selling, general and administrative expenses and interest expense. Net cash used in investing activities was approximately $2.71 million for six months ended June 30, 2007, compared to net cash used in investing activities of approximately $17.5 million for the same period in 2006. The decrease in net cash used in investing activities related to purchases of fixed assets of $3.5 million during 2006 for the Durant facility, and a decrease of $13.9 million related to investments and advances related to letters of intent and investments the company has entered into to own and operate biodiesel and ethanol facilities. Net cash provided by financing activities was $22.9 million for six months ended June 30, 2007, compared to net cash provided by financing activities of approximately $26.5 million for the same period in 2006. Cash flows provided by financing activities during the six months ended June 30, 2007, relate primarily to new credit facilities totaling $30 million, less the repayment of prior debts of $8.7 million. In addition, $1.5 million relates to proceeds from the issuance of common stock. At June 30, 2007, the company's consolidated blaance sheet showed $103.5 million in total assets, $90.4 million in total liabilities, and $13.1 million in total shareholders' equity. The company's consolidated balance sheet at June 30, 2007, also showed strained liquidity with $13.3 million in total current assets available to pay $66.4 million in total current liabilities. 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?22eb Going Concern Doubt As reported in the Troubled Company Reporter on May 24, 2007, Malone & Bailey P.C., in Houston, Texas, expressed substantial doubt about Earth Biofuels 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 operating losses and working capital deficit. As reported in the Troubled Company Reporter on July 16, 2007, the note holders of the company's $52.5 million in private placement offerings dated July 24, 2006, filed with the bankruptcy courts a Chapter 7 - Involuntary Liquidation on the company. The company has filed a request for a hearing on this issue and has submitted a business plan to the courts. A hearing was set for Sept. 10, 2007. There are several outcomes that may occur pursuant to this hearing, any of which cannot be reasonably estimated at this time. About Earth Biofuels Headquartered in Dallas, Earth Biofuels Inc. (OTC BB: EBOF) -- http://www.earthbiofuels.com/ -- produces and distributes biodiesel fuel through wholesale and retail outlets. The fuel is sold under Willie Nelson's brand name, "BioWillie(R)." Earth Biofuels also produces and markets liquefied natural gas (LNG). The company is focused on meeting the growing demand for alternative and renewable fuels in the domestic market. EASTCOAST GENERAL: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Eastcoast General Contractors, Inc. 150 Westfield Road, Unit 6 Tyngsboro, Ma 01879 Bankruptcy Case No.: 07-43222 Type of business: The Debtor provides building & home construction services. Chapter 11 Petition Date: August 23, 2007 Court: District of Massachusetts (Worcester) Judge: Henry J. Boroff Debtor's Counsel: Frank D. Kirby, Esq. 111 West 8th Street South Boston, MA 02127 Tel: (617) 269-5444 Fax: (860) 257-3398 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million The Debtor does not have a list of its largest unsecured creditors. ENHANCED MORTGAGE: Moody's Reviews B2 Rating on Class A-3 Certs. ---------------------------------------------------------------- Moody's Investors Service took actions on these classes of notes issued by Enhanced Mortgage-Backed Securities Fund V Limited., a Market Value CDO issuer: -- $130,000,000 Class A-1 Senior Notes due 2012 Prior rating: Aaa Current rating: Aaa, on review for possible downgrade -- $14,000,000 Class A-2 Senior Subordinated Notes due 2012 Prior rating: A2 Current rating: A2, on review for possible downgrade -- $20,000,000 Class A-3 Subordinated Notes due 2012 Prior rating: Baa2 Current rating: B2, on review for possible downgrade According to Moody's, the rating actions reflect the fact that each of the Class A-2, Class A-3, and Class A-4 Subordination Percentages are failing to meet their required levels, and the transaction is currenlty going through the curing process to achieve the compliance with respect to these percentages. In so doing, certain assets are being liquidated to bring the test levels back into compliance. Moody's noted that the ratings action also takes into account the current stressful market conditions. While the underlying assets remain highly rated, the unprecedented illiquidity in the market for mortgage backed securities has created a high level of uncertainty around the valuation of the assets, which makes it difficult to assess the probability of the manager achieving certain prices. ETHOS ENVIRONMENTAL: Inks Pact Selling Calif. Property for $7.8MM ----------------------------------------------------------------- Ethos Environmental Inc. entered into a Commercial Property Purchase Agreement and Joint Escrow Instructions with Green Bridge Capital Partners IV LLC for the sale of the company's facility, located at 6800 Gateway Park Drive in San Diego, California, for $7,875,000 in cash. The company said that the property consist of a building approximately 60,000 total square feet, with approximately 60 on-site surface parking spaces. The company also entered into an AIR Commercial Real Estate Association Standard Industrial/Commercial Single Tenant Lease Agreement to lease back the property from Green Bridge. The company said that the lease term is 15 years and tentatively set to commence on Oct. 1, 2007, and base rent per the lease agreement is fixed at $63,000 per month. As part of the property sale sgreement, the company entered into a subscription agreement with Green Bridge for the sale of 2,500,000 shares of the company's common stock in a private placement. Going Concern Doubt Peterson Sullivan PLLC of Seattle, Washington, expressed substantail doubt about Ethos Environmental 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 the company's significant losses from operations in the last two years. About Ethos Environmental Ethos Environmental Inc. manufactures and distributes fuel products. The company was originally incorporated under the laws of the State of Idaho on Jan. 19, 1926, under the name, Omo Mining and Leasing Corporation, and on Nov. 14, 1936, the company was renamed to Kaslo Mines Corporation, and finally Victor Industries Inc. ETHOS ENV'TAL: Posts $6.8MM Net Loss in Year Ended June 30, 2007 ---------------------------------------------------------------- Ethos Environmental Inc. reported a $6,791,175 net loss on $2,599,962 of total revenues for the year ended June 30, 2007, as compared with a $49,276 net income on $1,380,307 of total revenues in the prior year. At June 30, 2007, the company's balance sheet showed $14,966,139 in total assets and $6,953,985 in total liabilities, resulting in a $8,012,154 stockholders' equity. A full-text copy of the company's 2nd Quarter 2007 report is available for free at http://ResearchArchives.com/t/s?22f3 Going Concern Doubt Peterson Sullivan PLLC of Seattle, Washington, expressed substantail doubt about Ethos Environmental 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 the company's significant losses from operations in the last two years. About Ethos Environmental Ethos Environmental Inc. manufactures and distributes fuel products. The company was originally incorporated under the laws of the State of Idaho on Jan. 19, 1926, under the name, Omo Mining and Leasing Corporation, and on Nov. 14, 1936, the company was renamed to Kaslo Mines Corporation, and finally Victor Industries Inc. FEDDERS CORP: Obtains Court Approval on $79 Million DIP Financing ----------------------------------------------------------------- Fedders Corporation had received court approval of its $79 million debtor-in-possession financing from Goldman Sachs Credit Partners L.P., subject to certain conditions and limitations. The final hearing on the financing was scheduled for September 20. The company also received Court approval during its first day hearings to pay pre-petition and ongoing employee wages, salaries, workers' compensation, health benefits and other employee obligations during its restructuring under Chapter 11. In addition, the company received authorization to continue with ordinary course customer programs, including warranty. The company also is authorized to pay ordinary course post-petition expenses without seeking court authority. Fedders president and chief executive officer Michael Giordano said he was pleased with the Court's approval of its "first-day" orders and new financing. "We expect the new financing to provide adequate funding for our supplier and employee obligations going forward," Mr. Giordano said, noting that the company has been in contact with many of its customers and suppliers, who have indicated that they will support Fedders during the restructuring process. Headquartered in Liberty Corner, New Jersey and founded in 1896, Fedders Corporation (OTC: FJCC) -- http://www.fedders.com/-- manufactures air treatment products, including air conditioners, furnaces, air cleaners and humidifiers for residential, commercial and industrial markets. The company filed for Chapter 11 protection on Aug. 22, 2007, (Bankr. D. Del. Case No.: 07-11182). Its Debtor-affiliates filed for separate Chapter 11 cases. Norman L. Pernick, Esq. of Saul, Ewing, Remick & Saul LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, it listed total assets of $186,300,000 and total debts of $322,000,000. FIRST MAGNUS: Wants to Hire Greenberg Traurig as Counsel -------------------------------------------------------- First Magnus Financial Corporation seeks authority from the U.S. Bankruptcy Court for the District of Arizona in Tucson to employ Greenberg Traurig, LLP as its general bankruptcy counsel. Gurpreet S. Jaggis, president and chief executive officer of First Magnus, says that aside from its extensive resources and experience, Greenberg is also familiar with the Debtor's operations and intentions for conclusion of its bankruptcy case. Mr. Jaggis adds that the Debtor expects Greenberg: * to provide legal advice with respect to the debtor's powers and duties as a debtor-in-possession in the management of its assets; * to prepare applications, motions, answers, orders, reports and other legal papers on behalf of the Debtor; * to appear in and protect before the Court the Debtor's interests * to assist with any disposition the Debtor's assets by sale or otherwise; and * to perform all other legal services for the debtor which may be necessary and proper in the proceedings In exchange for their services, the Debtor will pay Greenberg on an hourly basis, Mr. Jaggis says. The lawyers and paralegals designated to render services to the Debtor and their current minimum rates per hour are: John R. Clemency $475 per hour James P.S. Leshaw $610 per hour Todd A. Burgess $350 per hour Tajudeen O. Oladiran $300 per hour Daniel Gold $295 per hour Celi S. Aguilar $205 per hour Susan S. Vasquez $175 per hour Other attorneys and paralegals may render services to First Magnus as need. Generally, the firm's hourly rates are: Shareholders $300 - $900 Associates $150 - $490 Legal assistants $50 - $260 Mr. Jaggis further says that in accordance with the engagement, Greenberg received a retainer amounting to $400,000 before the Petition Date, a portion of which had been used for prepetition services it rendered to the Debtor. Aside from the retainer, the firm also received $150,000 on account of its prepetition restructuring services to the Debtor. John R. Clemency, Esq., a partner at Greenberg, says that Greenberg has in the past represented and presently represents certain parties-in-interest, including First Magnus secured lenders like Countrywide Home Loans, Inc., Merrill Lynch International, Washington Mutual, Wells Fargo Bank, N.A., in matters unrelated to Chapter 11 case. Mr. Clemency adds, however, that Greenberg does not hold or represent any interest adverse to the Debtor, its creditors, or any other party-in- interest. Mr. Clemency assures the Court that Greenberg Taurig is a "disinterested person" as that phrase is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b). Headquartered in Tucson, Arizona, First Magnus Financial Corporation -- http://www.firstmagnus.com/-- purchases and sells prime and Alt-A mortgage loans secured by one-to-four unit residences. The company filed for chapter 11 protection on August 21, 2007 (Bankr. D. Ariz. Case No.: 07-01578). When the Debtor filed for bankruptcy, it listed total assets of $942,109,860 and total debts of $812,533,046. The Debtor's exclusive period to file a plan expires on Dec. 19, 2007. (First Magnus Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). FIRST MAGNUS: U.S. Trustee Sets Section 341 Meeting on Oct. 11 -------------------------------------------------------------- Ilene J. Lashinsky, the United States Trustee for Region 14, will convene a meeting of First Magnus Financial Corporation's creditors on October 11, 2007, 12:00 p.m., at the U.S. Trustee Meeting Room, James A. Walsh Court, 38 S. Scott Ave., St. 140, in Tucson. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Tucson, Arizona, First Magnus Financial Corporation -- http://www.firstmagnus.com/-- purchases and sells prime and Alt-A mortgage loans secured by one-to-four unit residences. The company filed for chapter 11 protection on August 21, 2007 (Bankr. D. Ariz. Case No.: 07-01578). John R. Clemency, Esq., at Greenberg Traurig LLP is the proposed counsel for the Debtor. When the Debtor filed for bankruptcy, it listed total assets of $942,109,860 and total debts of $812,533,046. The Debtor's exclusive period to file a plan expires on Dec. 19, 2007. (First Magnus Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). FRIENDLY ICE: Extends Tender Offer Period for 8-3/8% Notes ---------------------------------------------------------- Friendly Ice Cream Corporation has extended the period of its cash tender offer for any and all of its outstanding $175,000,000 aggregate principal amount of 8-3/8% Senior Notes due 2012, until 5:00 p.m., New York City time, on Aug. 29, 2007. All references to the "Expiration Time" in the Offer to Purchase and Consent Solicitation Statement, dated July 26, 2007, and the related Consent and Letter of Transmittal shall be deemed to be references to the New Expiration Time. The other terms and conditions of the tender offer remain unchanged. The company expects payment to be made on or about Aug. 30, 2007. The company may further extend the period of the tender offer at its sole discretion. The previous Expiration Time in the Offer to Purchase and Consent Solicitation Statement was 12:00 midnight, New York City time, on Aug. 22, 2007. As of 12:00 midnight, New York City time, on Aug. 22, 2007, $162,199,000 in aggregate principal amount of Notes was tendered pursuant to the tender offer. The consent solicitation was completed on Aug. 8, 2007. As of the expiration of the consent period at 5:00 P.M., New York City time, on Aug. 8, 2007, tendered Notes may no longer be withdrawn. On June 17, 2007, the company entered into an Agreement and Plan of Merger by and among the company, Freeze Operations Holding Corp. and Freeze Operations Inc., a wholly owned subsidiary of Parent, pursuant to which, subject to the satisfaction or waiver of the conditions therein, Merger Sub will merge with and into the Company, with the company continuing as the surviving corporation of the Merger. The company will not be required to purchase any of the Notes tendered nor pay any consent payments unless certain conditions have been satisfied, including the closing of the Merger. The closing of the Merger is anticipated to occur on Aug. 30, 2007. The completion of the tender offer and the consent solicitation is not a condition to the consummation of the Merger. Barclays Capital Inc. is the dealer manager and solicitation agent for the tender offer and consent solicitation. Questions regarding the tender offer and consent solicitation should be directed to Barclays Capital Inc. at (212) 412-4072 (collect) or (866) 307-8991 (toll-free). Requests for documents should be directed to the Information Agent for the tender offer and consent solicitation, at: Georgeson Inc. 17 State Street, 10th Floor, New York, NY 10004 Tel (888) 605-7583 (toll-free) (212) 440-9800 Friendly Ice Cream Corporation -- http://www.friendlys.com/-- (AMEX: FRN) is a vertically integrated restaurant company serving signature sandwiches, entrees and ice cream desserts in a friendly, family environment in 515 company and franchised restaurants throughout the Northeast United States. The company also manufactures ice cream, which is distributed through more than 4,000 supermarkets and other retail locations. With a 72- year operating history, Friendly's enjoys strong brand recognition and is currently remodeling its restaurants and introducing new products to grow its customer base. In its July 1, 2007 balance sheet, Friendly Ice Cream Corporation reported total assets of $213.7 million and total liabilities of $346.4 million resulting in a total stockholders' deficit of $132.7 million. * * * As reported in the Troubled Company Reporter on June 20, 2007, Standard & Poor's Ratings Services said that its ratings, including the 'B-' corporate credit rating, Friendly Ice Cream Corp. remain on CreditWatch with developing implications. GAP INC: Authorizes Additional $1.5 Billion Share Repurchase ------------------------------------------------------------ Gap Inc.'s board of directors has authorized an additional $1.5 billion for the company's ongoing share repurchase program, underscoring the company's commitment to return excess cash to shareholders. With this announcement, the company's repurchase authorizations total $5.75 billion since October of 2004. In connection with this authorization, Gap Inc. also entered into purchase agreements with individual members of the Fisher family whose ownership represents approximately 17% of the company's outstanding shares. Multiple Fisher family members and entities currently own approximately 34% of Gap Inc. shares. The company expects that about $250 million (approximately 17%) of the $1.5 billion share repurchase program will be purchased from these Fisher family members. The shares will be purchased each month at the same weighted average market price that the company is paying for share repurchases in the open market. The company notes that the overall percentage of the company's stock held by the Fisher family could fluctuate up or down or remain the same. "Today's announcement reflects Gap Inc.'s strong cash generation and ongoing commitment to return excess cash to shareholders," said Byron Pollitt, executive vice president and chief financial officer of Gap Inc. "Members of the Fisher family have periodically sold stock since the company's initial public offering in 1976 in the normal course of investor diversification. The Fishers hold three seats on our Board of Directors and remain active in their roles as shareholders and directors in ensuring the company achieves its long-term objectives." During the second quarter of fiscal year 2007, the company purchased 11 million shares for approximately $200 million, thereby completing a $750 million share repurchase authorization which was announced in August 2006. In total, the company has repurchased about 215 million shares for $4.25 billion since October 2004. Gap Inc. (NYSE: GPS) -- http://www.gapinc.com/-- is an international specialty retailer offering clothing, accessories and personal care products for men, women, children and babies under the Gap, Banana Republic, Old Navy, Forth & Towne and Piperlime brand names. Gap Inc. operates more than 3,100 stores in the United States, the United Kingdom, Canada, France, Ireland and Japan. In addition, Gap Inc. is expanding its international presence with franchise agreements for Gap and Banana Republic inSoutheast Asia and the Middle East. At Aug. 4, 2007, the company's consolidated balance sheet showed $9.07 billion in total assets, $3.82 billion in total liabilities, and $5.25 billion in total shareholders' equity. * * * As reported in the Troubled Company Reporter on Jan. 10, 2007, Fitch has downgraded its ratings on The Gap Inc.'s Issuer Default Rating to 'BB+' from 'BBB-' and Senior unsecured notes to 'BB+' from 'BBB-'. The Rating Outlook is Negative. As reported in the Troubled Company Reporter on Nov. 21, 2006, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured ratings on San Francisco-based The Gap Inc. to 'BB+' from 'BBB-'. S&P said the outlook is stable. GAP INC: Net Earnings Increases 19% to $152 Million in Second Qtr. ------------------------------------------------------------------ Gap Inc. reported on Aug. 23, 2007, that net earnings for the second quarter, which ended Aug. 4, 2007, increased 19% to $152 million, compared with $128 million for the second quarter of last year. Second quarter net sales were down 1 percent to $3.69 billion, compared with $3.71 billion for the second quarter of last year. Due to the 53rd week in fiscal year 2006, second quarter 2007 comparable store sales are compared with the thirteen weeks ended Aug. 5, 2006. On this basis, comparable store sales decreased 5 percent, compared with a decrease of 5 percent as reported for the second quarter of 2006. The company's online sales for the second quarter increased 26 percent to $172 million, compared with $136 million for the second quarter of last year. "During the second quarter, we made solid progress stabilizing our business, streamlining our organization and importantly, hiring our new chairman and chief executive officer, Glenn Murphy," said Bob Fisher, a member of Gap Inc.'s Board of Directors. "I am confident that under Glenn's leadership and the creative direction set by our brand presidents, we will continue to make improvements to the business and deliver improved returns to our shareholders." "I want to thank Bob for his leadership in taking the necessary first steps towards stabilizing the business, said Glenn Murphy, chairman and chief executive officer of Gap Inc. "We have a lot of work ahead of us, but we have great brands with enormous potential, and I feel confident that our creative talent and dedicated store employees will help fuel our progress." Update on the Discontinued Operation of Forth & Towne Beginning with the second quarter of fiscal year 2007, Forth & Towne is recognized as a discontinued operation. For the first half of 2007, the company eliminated about 550 Forth & Towne positions. The pre-tax loss related to the discontinued operation of Forth & Towne for the second quarter of fiscal 2007 was approximately $9 million and for the first half of 2007 was approximately $54 million. Update on Gap Inc.'s Cost Reduction Initiatives As part of the company's efforts to streamline operations, the company eliminated about 1,200 positions, excluding Forth & Towne, in the second quarter of fiscal year 2007 and, as a result, recognized approximately $20 million of expenses on a pre-tax basis, the majority of which are related to severance payments. For the first half of 2007, Gap Inc. eliminated about 1,600 positions, excluding Forth & Towne. These cost reduction initiatives resulted in approximately $25 million of expenses on a pre-tax basis during this time period, the majority of which are related to severance benefits to employees at the company's headquarters. In total, the company has eliminated about 2,200 positions during the first half of 2007, of which about one-third were open positions. At this point, the majority of the company's currently planned headcount eliminations are complete. Based on the actions taken in the first half of fiscal year 2007, the total annualized cost savings from the filled positions eliminated is expected to be about $100 million on a pre-tax basis. At Aug. 4, 2007, the company's consolidated balance sheet showed $9.07 billion in total assets, $3.82 billion in total liabilities, and $5.25 billion in total shareholders' equity. About Gap Inc. Gap Inc. (NYSE: GPS) -- http://www.gapinc.com/-- is an international specialty retailer offering clothing, accessories and personal care products for men, women, children and babies under the Gap, Banana Republic, Old Navy, Forth & Towne and Piperlime brand names. Gap Inc. operates more than 3,100 stores in the United States, the United Kingdom, Canada, France, Ireland and Japan. In addition, Gap Inc. is expanding its international presence with franchise agreements for Gap and Banana Republic inSoutheast Asia and the Middle East. * * * As reported in the Troubled Company Reporter on Jan. 10, 2007, Fitch has downgraded its ratings on The Gap Inc.'s Issuer Default Rating to 'BB+' from 'BBB-' and Senior unsecured notes to 'BB+' from 'BBB-'. The Rating Outlook is Negative. As reported in the Troubled Company Reporter on Nov. 21, 2006, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured ratings on San Francisco-based The Gap Inc. to 'BB+' from 'BBB-'. S&P said the outlook is stable. GE COMMERCIAL: Loan Defeasance Cues S&P to Lift Low-B Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on four raked classes of commercial mortgage pass-through certificates from GE Commercial Mortgage Corp.'s series 2004-C3 to 'AAA'. The upgrades reflect the full defeasance of the Strategic Hotel portfolio loan, which has a current whole-loan balance of $199.7 million. The loan was participated into four pari passu pieces, $80.0 million of which serves as trust collateral. The trust portion is divided into a senior $47.9 million pooled component and a subordinate $32.1 million nonpooled component. The subordinate note is the sole source of cash flow for the upgraded classes. On Aug. 23, 2007, the real estate collateral securing the loan was replaced with defeasance collateral that meets Standard & Poor's criteria. The defeasance collateral will provide a revenue stream that will be sufficient to pay each scheduled principal and interest payment when due through April 1, 2011, the loan's permitted prepayment date, which is three months before the loan's maturity date. Ratings Raised GE Commercial Mortgage Corp. Commercial mortgage pass-through certificates series 2004-C3 Rating ------ Class To From ----- -- ---- SHP-1 AAA BBB- SHP-2 AAA BB+ SHP-3 AAA BB+ SHP-4 AAA BB GENERAL DATACOMM: Unit Gets $4.5 Million Fund from Atlas Partners ----------------------------------------------------------------- A wholly owned subsidiary of General DataComm Industries Inc. obtained a $4.5 million first mortgage loan from Atlas Partners Mortgage Investors LLC, an affiliate of Atlas Partners LLC. The loan was secured by a first mortgage lien on GDC's headquarters facility, a 340,000 square foot, four-story office and light industrial facility on 11+ acres of land located in downtown Naugatuck, CT. The interest-only loan for a term of two years, with a borrower-option for a third year, was provided by Atlas Partners Mortgage Investors with no financial covenants and no third-party guarantees and is secured by real estate only. The loan proceeds were primarily used by GDC to repay and replace an existing senior secured loan, thereby allowing GDC to take advantage of a $1.5 million loan prepayment incentive. In addition, the new mortgage loan's lower debt service payments will increase available cash flow for GDC's operations. About Atlas Partners Atlas Partners Mortgage Investors LLC is a real estate lender that is collateral focused, providing loans secured by first mortgages on real estate owned by operating businesses. The loans are collateral based and the underwriting is based on the value of the real estate, with no regard for either the credit or cash flow of the owning company. It is controlled by Atlas Partners LLC -- http://atlaspartners.com/ About General DataComm Based in Naugatuck, Connecticut, General DataComm Industries Inc. (Other OTC: GNRD.PK) -- http://www.gdc.com/-- is a provider of networking and telecommunications products, services and solutions. The company designs, assembles, markets, installs and maintains products that enable telecommunications common carriers, corporations, and governments to build, improve and more cost effectively manage their global telecommunications networks. The company and its debtor-affiliates filed for chapter 11 protection on Nov. 2, 2001. On Sept. 15, 2003, General DataComm Industries, Inc., emerged from bankruptcy. Going Concern Doubt Eisner LLP in New York expressed substantial doubt about General DataComm Industries Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Sept. 30, 2006, and 2005. The auditing firm cited that the company has both a working capital and stockholders' deficit at Sept. 30, 2006, has limited ability to obtain new financing, and has defaulted under its senior secured debt. At Dec. 31, 2006, the company's balance sheet showed $8,958,000 in total assets and $44,915,000 in total liabilities, resulting in a $35,957,000 total stockholders' deficit. GERDAU AMERISTEEL: Chaparral Steel Merger Waiting Period Expires ---------------------------------------------------------------- Gerdau Ameristeel Corporation and Chaparral Steel Company disclosed that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in connection with the Agreement and Plan of Merger signed by Gerdau Ameristeel, Chaparral and certain other parties, expired at 11:59 p.m. (Eastern Time) on Aug. 22, 2007 without action by either the Federal Trade Commission or the Department of Justice. Expiration of the HSR waiting period without action by such regulators is a condition to completion of the proposed merger. The consummation of the merger remains subject to other customary conditions, including adoption of the Agreement and Plan of Merger by Chaparral's stockholders. About Chaparral Steel Headquartered in Midlothian, Texas, Chaparral Steel Company (NASDAQ: CHAP) -- http://www.chapusa.com/-- is a producer of structural steel products in North America and also a major producer of steel bar products. It operates two mini-mills, one located in Midlothian, Texas, and the other located in Dinwiddie County, Virginia. The company has approximately 1,400 employees and an annual installed capacity of 2.9 million metric tons. About Gerdau Ameristeel Headquartered in Tampa, Florida, Gerdau Ameristeel Corporation -- http://www.gerdauameristeel.com/-- (NYSE: GNA, TSX: GNA) is a minimill steel producer in North America with annual manufacturing capacity of over 9 million tons of mill finished steel products. Through its vertically integrated network of 17 minimills (including one 50%-owned joint venture minimill), 17 scrap recycling facilities and 51 downstream operations (including seven joint venture fabrication facilities), Gerdau Ameristeel serves customers throughout North America. The company's products are generally sold to steel service centers, to steel fabricators, or directly to original equipment manufacturers for use in a variety of industries, including construction, automotive, mining, cellular and electrical transmission, metal building manufacturing and equipment manufacturing. The company is a subsidiary of Brazil's Gerdau SA. * * * As reported in the Troubled Company Reporter on July 13, 2007, Moody's Investors Service placed these ratings of Gerdau Ameristeel Corporation under review for possible downgrade: Ba1 probability of default rating, placed on review for possible downgrade; Ba1 corporate family rating, placed on review for possible downgrade, Ba1; and senior unsecured regular bond/debenture, placed on review for possible downgrade, Ba2, LGD5 74%. GLOBAL PAYMENT: Posts $1.6 Million Net Loss in Qtr. Ended June 30 ----------------------------------------------------------------- Global Payment Technologies Inc. reported on Aug. 20, 2007, its fiscal 2007 third-quarter results. Net loss for the third quarter ended June 30, 2007 was $1.6 million, as compared with a net loss of $1.9 million in the comparative prior-year period. The decrease in net loss was due to an increase in gross profit and a decrease in operating expenses, partly offset by a $108,000 equity in income of unconsolidated affiliates recorded in the thrid quarter ended June 30, 2006, versus none in the 2007 quarter. Net sales decreased by 2.0%, or $62,000, to $3.1 million in the three months ended June 30, 2007, as compared with $3.2 million in the comparative prior-year period. This sales decrease was primarily due to $259,000 decreased sales to the beverage and vending market partially offset by increased sales to the gaming market. Last year's sales included special incentives to customers in order to reduce inventory levels in the company's Aurora product. Beverage and vending sales for the three months ended June 30, 2007, were $433,000, or 13.6% of sales, as compared with $692,000, or 21.9% of sales, in the prior year period. Gaming sales for the three months ended June 30, 2007, were $2.7 million, or 86.0% of sales, as compared with $2.5 million, or 78.1% of sales, in the prior year period. Net sales decreased by 11.1%, or $1.2 million to $9.9 million in the nine months ended June 30, 2007, as compared with $11.1 million in the comparative prior-year period. This sales decrease was primarily due to $1.2 million decreased sales to the beverage and vending market. Last year's sales included special incentives to customers in order to reduce inventory levels in the company's Aurora product. Beverage and vending sales for the nine months ended June 30, 2007, were $1.5 million, or 15.1% of sales, as compared with $2.7 million, or 24.1% of sales, in the prior year period. Gaming sales for the nine months ended June 30, 2007, were $8.4 million, or 84.9% of sales, as compared with $8.4 million, or 75.9% of sales, in the prior year period. Net loss for the nine months ended June 30, 2007, was $4.2 million, as compared with a net loss of $3.2 million in the comparative prior-year period. With respect to the provision for income taxes, for the three months ended June 30, 2007, the effective rate was 0.9% as compared with 0.1% in the prior-year period. The company provided a full valuation allowance against its deferred income tax assets in the fourth quarter of fiscal 2003 and continues to provide a full valuation allowance at June 30, 2007. The valuation allowance is subject to adjustment based upon the company's ongoing assessment of its future taxable income and may be wholly or partially reversed in the future. William McMahon, GPT president and chief executive officer, stated, "In order for GPT to compete effectively in the casino and vending markets, new products must be developed and the company has continued to invest in research and development to produce new currency validators. "We have introduced the new Falcon product line; a faster vending and beverage machine, which is also targeted to the payment systems markets. Customer response to the new product has been positive and we will continue to pursue additional sales in this market. "We have substantially completed the outside development costs for our new casino grade validator and anticipate introducing this product later this year. "At June 30, the company relocated its office and production facilities, reducing its costs by approximately $300,000 annually. The company continues to look for opportunities to reduce costs, while continuing to provide the necessary service and support our customers have come to expect. At June 30, 2007, the company's consolidated balance sheet showed $9.1 million in total assets, $4.1 million in total liabilities, and $5.0 million in total shareholders' 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?22e4 Going Concern Doubt As of June 30, 2007, the company had $1.2 million outstanding on the line of credit with Laurus. The company was able to extend the line of credit with Laurus until November 2007, but the extension did not provide additional liquidity. The company is in the process of negotiating a replacement line. If the company cannot replace its line of credit with Laurus, it may be required to repay all amounts due to them. The company is developing new products for its market and will need to obtain additional capital in order to continue to fund its development costs and capital expenses related to tooling and marketing. These conditions raise substantial doubt about the company's ability to continue as a going concern. About Global Payment Headquartered in Bohemia, New York, Global Payment Technologies Inc. (NasdaqCM: GPTX) -- http://www.gptx.com/-- is a designer, manufacturer, and marketer of automated currency acceptance and validation systems used to receive and authenticate currencies in a variety of payment applications worldwide. GPT's proprietary and patented technologies are among the most advanced in the industry. GSC ABS: Fitch Assigns Low-B Ratings on Three Note Classes ---------------------------------------------------------- Fitch has affirmed five classes and downgraded four classes of notes issued by GSC ABS CDO 2006-2m, Ltd./Corp. Fitch has also removed three classes of notes from Rating Watch Negative. These rating actions are effective immediately: -- $0 class A-1A notes affirmed at 'AAA'; -- $125,000,000 class A-1B notes affirmed at 'AAA'; -- $13,500,000 class A-2 notes affirmed at 'AAA'; -- $56,500,000 class B notes affirmed at 'AA'; -- $14,500,000 class C notes affirmed at 'AA-'; -- $22,500,000 class D notes downgraded to 'A-' from 'A'; -- $21,000,000 class E notes downgraded to 'BB' from 'BBB', removed from RWN; -- $4,718,616 class F notes downgraded to 'B' from 'BB+', removed from RWN; -- $4,718,616 class G notes downgraded to 'B-' from 'BB', removed from RWN. GSC 2006-2m is an arbitrage cash flow collateralized debt obligation, with hybrid features, which closed on May 31, 2006. The portfolio is managed by GSC Group who maintains a CDO asset manager rating of 'CAM2' for structured finance CDOs. GSC 2006-2m is composed of 82.97% residential mortgage-backed securities, 6.62% commercial mortgage-backed securities, and 9.47% CDOs. The class A-1A is structured as delayed draw notes. On July 12, 2007, classes E, F and G notes were placed on Rating Watch Negative because of negative migration of subprime RMBS assets in the portfolio. Included in this review, Fitch discussed the current state of the portfolio with the asset manager. Fitch also conducted cash flow modeling for various default timing, interest rate scenarios, and prepayment assumptions to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. Approximately 67.01% of the portfolio is 2005-2007 Vintage Subprime collateral. As of the most recent trustee report on July 30, 2007, the weighted average coupon of 5.92 is passing the covenant of 5.75 and the weighted average spread of 2.05 is passing the covenant of 1.97. Since the class B and C notes were placed on Rating Watch Negative on July 12, 2007, 9.53% of the total portfolio has experienced negative credit migration and approximately 1.67% is on Rating Watch Negative. The ratings of the classes A-1A, A-1B, A-2, B and C notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings of the classes D, E, F and G notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. GSC ABS: Fitch Junks Ratings on Two Note Classes ------------------------------------------------ Fitch has affirmed one class of notes, downgraded five classes, and placed three classes of notes issued by GSC ABS CDO 2006-4u, Ltd. on Rating Watch Negative. These rating actions are effective immediately: -- $0 class A-S1VF notes affirmed at 'AAA'; -- $85,000,000 class A1 notes downgraded to 'AA' from 'AAA', placed on Rating Watch Negative; -- $45,000,000 class A2 notes downgraded to 'A' from 'AA', placed on Rating Watch Negative; -- $45,000,000 class A3 notes downgraded to 'BB' from 'A', placed on Rating Watch Negative; -- $33,000,000 class B notes downgraded to 'CCC' from 'BBB', remains on Rating Watch Negative; -- $10,000,000 class C notes downgraded to 'CC' from 'BB+', remains on Rating Watch Negative. GSC 2006-4u is a hybrid cash and synthetic arbitrage collateralized debt obligation, which closed on Oct. 6, 2006. The portfolio is managed by GSC Group who maintains a CDO asset manager rating of 'CAM2' for structured finance CDOs. GSC 2006-4u is composed of 94.28% residential mortgage-backed securities, 0.84% commercial mortgage-backed securities, and 4.88% CDOs. On July 12, 2007, class B and class C notes were placed on Rating Watch Negative because of negative migration of subprime RMBS assets in the portfolio. Included in this review, Fitch discussed the current state of the portfolio with the asset manager. Fitch also conducted cash flow modeling for various default timing, interest rate scenarios, and prepayment assumptions to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. Approximately 92.50% of the portfolio is 2005-2007 Vintage Subprime collateral. As of the most recent trustee report on July 31, 2007, the Fitch weighted Average Rating Factor of 6.70 is failing the covenant of 6.00. The class B overcollateralization test and class C interest diversion tests at 102.5% and 101.0%, respectively are failing the covenants of 103.0% and 102.5%. As a result of the test failures, the structure is delevering and on the Aug. 6, 2007 payment date, there was a $1.9 MM reduction of the Commitment Amount by deposit to the GIC. Additionally, there is $290,140 in unpaid class C interest. Since the class B and C notes were placed on Rating Watch Negative on July 12, 2007, 9.26% of the total portfolio has experienced negative credit migration and approximately 1.23% is on Rating Watch Negative. The ratings of the class A-S1VF notes, class A1 notes and class A2 notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings of the class A3, class B and class C notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. Fitch believes that this subprime exposure, along with credit deterioration in the portfolio has increased the risk profile of classes A1, A2, A3, B, and C notes. This rating analysis also incorporated Fitch's revised methodology for rating structured finance CDOs. HAWAIIAN TELCOM: Operational Difficulties Cue S&P's Neg. Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Honolulu-based Hawaiian Telcom Communications Inc. to negative from stable because of continuing operational difficulties. S&P affirmed all ratings on the company, including the 'B-' corporate credit rating. "Ongoing billing and back-office system delays, combined with heightened competition in Hawaii for voice and data telecommunication services, resulted in greater-than-expected residential voice access-line and digital subscriber line losses in the second quarter of 2007," said Standard & Poor's credit analyst Susan Madison. Consequently, revenue and EBITDA were lower than expected. Residential voice access lines declined 11.5% annually and 3.4% sequentially during the second quarter, reflecting an acceleration from the first quarter's line losses of 10.6% and 3.1%, respectively. The company attributed some of the line losses to billing and operational problems associated with the development of stand-alone back-office systems. Additionally, it is likely that Hawaiian Telcom, as with all wireline operators, will continue to lose customers to wireless competition. Nevertheless, the continued erosion in residential lines is largely due to competition from the rival telephone service offered by the incumbent cable operator, Oceanic Time Warner Cable, and this pressure is unlikely to abate anytime soon. Unlike other incumbent local exchange carriers that have been able to offset most of their revenue decline from voice access-line losses with growth in DSL services, Hawaiian Telcom's second- quarter DSL revenues declined 14.5% year over year because of anemic line growth and significant price discounting in response to competitive pressures, as well as billing and back-office issues. As a result of poor wireline performance, total revenues for the period declined 5% year over year, and EBITDA from continuing operations (adjusted for one-time transition and contingency expenses associated with the back-office build) declined about 6% sequentially. Given the second quarter's performance, management does not expect to achieve its prior guidance of consolidated EBITDA of $225 million for 2007. Hawaiian Telcom is the incumbent local exchange carrier providing integrated telephone service communications services to about 581,000 switched access lines in Hawaii. The ratings reflect concerns regarding the delayed development of back-office infrastructure, which has hurt the company's profitability and its ability to compete in an increasingly competitive marketplace, and its highly leveraged financial profile. Tempering factors include its incumbent position as a telephone provider in Hawaii and adequate liquidity. Debt outstanding at June 30, 2007, totaled about $1.4 billion. INTERDENT INC: Liquidity Concerns Cue S&P to Cut Rating to "B-" --------------------------------------------------------------- Standard & Poor's Rating Services lowered its corporate credit rating on dental practice management services provider InterDent Inc., the parent company of InterDent Service Corp., to 'B-' from 'B'. The outlook is negative. At the same time, Standard & Poor's lowered its senior secured debt rating on InterDent Service Corp.'s $80 million second-lien senior secured notes due in 2011 to 'B-' from 'B'. S&P also assigned the notes a recovery rating of '4', indicating the expectation for average recovery (30% to 50%) in the event of default. The rating action reflects increased concern regarding the company's liquidity position and a covenant violation at June 30, 2007, as well as deteriorating operating margins. "Despite some growth in revenues, InterDent demonstrated weaker-than-expected operating performance in the most recent quarter due to a number of reasons," explained Standard & Poor's credit analyst Rivka Gertzulin. Some of the factors included consulting and management fees, low dentist utilization, continued dentist turnover, and increased health care expenses. ION MEDIA: Recapitalization Cuts Obligations by $187 Million ------------------------------------------------------------ ION Media Networks Inc. has completed the recapitalization of its balance sheet pursuant to its May 3, 2007, agreement with an affiliate of Citadel Investment Group L.L.C. This transaction increases the company's financial flexibility, enabling it to proceed with the implementation of its growth plans. The recapitalization reduces the company's balance sheet obligations by $187 million, as of June 30, 2007, pro forma for the transactions, and provides $115 million of cash funding from Citadel. Further, Citadel has sponsored the company's effort to go private by acquiring approximately 87% of the outstanding Class A common shares that Citadel did not own or have a right to acquire in a tender offer earlier this year. The company expects to complete the deregistration and delisting of its Class A common shares in the coming months, pending Federal Communications Commission approval of Citadel's acquisition of the company's super-voting Class B common stock. "This transaction completes our corporate finance objectives, giving the company financial runway and streamlined ownership under Citadel Investment Group," Brandon Burgess, CEO of ION Media Networks, said. "Now we will turn our full attention to growing the business with programming and marketing initiatives for the ION Television Network, well as nurturing our digital networks and mobile television plans." The company closed the exchange offer and consent solicitation that it launched on June 8, 2007, and issued $461.9 million of 11% Series A Mandatorily Convertible Senior Subordinated Notes due 2013 and $34.1 million aggregate liquidation preference of Series B Mandatorily Convertible Preferred Stock to former holders of its 13-1/4% Cumulative Junior Exchangeable Preferred Stock and 9-3/4% Series A Convertible Preferred Stock. Including shares exchanged by Citadel, holders of 90.6% of the 14- 1/4% Preferred Stock and 99.6% of the 9_% Preferred Stock exchanged their shares for the newly issued securities and consented to the amendments to the terms of the Senior Preferred Stock. As a result of these amendments, the terms of office of the four directors previously elected to the company's board by the holders of the Senior Preferred Stock were concluded. The recapitalization included a series of related exchange transactions pursuant to the terms of the May 3, 2007, agreement, the completion of which is described in the company's Current Report on Form 8-K, dated Aug. 21, 2007, which should be reviewed in full for detailed information concerning these elements of the recapitalization. About ION Media Headquartered in West Palm Beach, Florida, ION Media Networks Inc. (AMEX: ION) -- http://www.ionmedia.tv/-- owns and operates a broadcast television station group and ION Television, reaching over 90 million U.S. television households via its nationwide broadcast television, cable and satellite distribution systems. ION Television currently features popular television series and movies from the award-winning libraries of Warner Bros., Sony Pictures Television, CBS Television and NBC Universal. In addition, the network has partnered with RHI Entertainment, which owns over 4,000 hours of acclaimed television content, to provide high-quality primetime programming beginning July 2007. ION Media Networks has launched several new digital TV brands, including qubo, a television and multimedia network for children formed in partnership with Scholastic, Corus Entertainment, Classic Media and NBC Universal, as well as ION Life, a television and multimedia network dedicated to health and wellness for consumers and families. As reported in the Troubled Company Reporter on July 10, 2007, Ion Media Networks Inc.'s balance sheet at March 31, 2007, showed $1.05 billion in total assets, $2.07 billion in total liabilities, $881.1 million in mandatorily redeemable and convertible preferred stock, and $6.9 million in contingent class B common stock and stock option purchase obligations, resulting in a $1.9 billion total stockholders' deficit. * * * As reported in the Troubled Company Reporter on May 9, 2007, Standard & Poor's Ratings Services placed its ratings on Ion Media Networks Inc., including the 'CCC+' corporate credit rating, on creditwatch with developing implications. The creditwatch placement follows Ion's announcement that it entered into an agreement with Citadel Investment Group LLC and NBC Universal Inc. for a comprehensive recapitalization of Ion. J.P. MORGAN: Moody's Rates $41 Mil. Class L Certificates at Ba1 --------------------------------------------------------------- Moody's Investors Service assigned definitive ratings to securities issued by J.P. Morgan Chase Commercial Mortgage Securities Trust 2007-FL1. The provisional ratings issued on Aug. 9, 2007 have been replaced with these definitive ratings: -- Class A-1, $989,051,000, rated Aaa -- Class A-2, $243,141,000, rated Aaa -- Class X-1, $1,648,417,577*, rated Aaa -- Class X-2, $1,648,417,577*, rated Aaa -- Class B, $57,695,000, rated Aa1 -- Class C, $41,210,000, rated Aa2 -- Class D, $39,150,000, rated Aa3 -- Class E, $47,392,000, rated A1 -- Class F, $32,968,000, rated A2 -- Class G, $32,969,000, rated A3 -- Class H, $45,331,000, rated Baa1 -- Class J, $41,211,000, rated Baa2 -- Class K, $37,089,000, rated Baa3 -- Class L, $41,210,577, rated Ba1 -- Class RS-1, $22,644,000, rated Aa3 -- Class RS-2, $24,326,000, rated A1 -- Class RS-3, $29,529,000, rated A2 -- Class RS-4, $21,114,000, rated A3 -- Class RS-5, $29,223,000, rated Baa1 -- Class RS-6, $25,091,000, rated Baa2 -- Class RS-7, $14,399,805, rated Baa3 *Approximate notional amount JP MORGAN: S&P Affirms Low-B Ratings on Six Certificate Classes --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on 23 classes of commercial mortgage pass-through certificates from J.P. Morgan Chase Commercial Mortgage Securities Corp.'s series 2004- CIBC10. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. As of the Aug. 13, 2007, remittance report, the collateral pool consisted of 201 loans with an aggregate trust balance of $1.9 billion, down slightly from 202 loans with a $2.0 billion balance at issuance. Excluding the defeased collateral portion of the pool ($295 million, 16%), Capmark Finance Inc., the master servicer, reported financial information for slightly less than 100% of the pool. Ninety-six percent of the servicer-reported information was full-year 2006 financial data. Based on this information, Standard & Poor's calculated a weighted average debt service coverage of 1.54x, compared with 1.50x at issuance. All of the loans in the pool are current, and no loans are with the special servicer. To date, the trust has not experienced any losses. The top 10 loans secured by real estate have an aggregate outstanding balance of $398.1 million (21%) and a weighted average DSC of 1.54x, up from 1.47x at issuance. The largest loan in the pool is on the watchlist and discussed below. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 loans. One of the properties was characterized as "excellent," while the remaining collateral was characterized as "good." Capmark reported a watchlist of 28 loans with an aggregate outstanding balance of $236.3 million (12%). Continental Plaza ($88 million, 5%) is the largest loan on the watchlist and the largest loan in the pool secured by real estate. The loan is secured by a 639,315-sq.-ft. office property in Hackensack, New Jersey, which includes three class B office towers, a four-level parking garage, and one single-story retail building. The property was built in phases between 1968 and 1976 and was last renovated in 1999. The loan was placed on the watchlist due to a low DSC of 0.93x as of year-end 2006. Occupancy was 82% as of year-end 2006, down from from 90% at issuance. Additionally, there are four loans that each exceed $15 million and appear on the watchlist due to low DSC and/or occupancy. The Crystal Lake Apartments loan ($20.7 million, 1%) is secured by a 491-unit multifamily complex in Miami, Florida, was built in 1970, and was last renovated in 2004. As of year-end 2006, DSC was at a low 0.84x, which was due to an increase in operating expenses. The Keeneland Crest Apartments loan ($17.5 million) is secured by a 424-unit multifamily complex and was built in 1995 in Indianapolis, Indiana. DSC was 1.07x as of June 30, 2007, and occupancy was 81% as of year-end 2006. The property was last inspected in February 2007 and was characterized as "fair." The Southport Plaza loan ($16.8 million) is secured by a 189,062- sq.-ft. office building and was built in 2002, in Staten Island, N.Y. The loan is on the watchlist because of a decline in occupancy to 62% as of Sept. 30, 2006, from 80% at issuance. DSC as of Sept. 30, 2006, was 1.26x. The Village Plaza loan ($16.3 million) is secured by a 180,097- sq.-ft. retail center and was built in 1988 in Clifton Park, N.Y. DSC and occupancy were 1.17x and 93%, respectively, as of June 30, 2007. The master servicer will remove this loan from the watchlist during September's remittance period. Standard & Poor's stressed the loans on the watchlist and other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the affirmed ratings. Ratings Affirmed J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2004-CIBC10 Class Rating Credit enhancement ----- ------ ------------------ A-2 AAA 20.73% A-3 AAA 20.73% A-4 AAA 20.73% A-5 AAA 20.73% A-6 AAA 20.73% A-1A AAA 20.73% A-J AAA 14.51% B AA 11.27% C AA- 10.36% D A+ 9.59% E A 8.68% F A- 7.51% G BBB+ 6.09% H BBB 4.92% J BBB- 3.50% K BB+ 3.24% L BB 2.85% M BB- 2.20% N B+ 1.94% P B 1.55% Q B- 1.42% X-1 AAA N/A X-2 AAA N/A N/A - Not applicable. KARA HOMES: Court Moves Exclusive Solicitation Period to Oct. 9 --------------------------------------------------------------- The Honorable Michael B. Kaplan of the U.S. Bankruptcy Court for the District of New Jersey extended, until Oct. 9, 2007, the exclusive period wherein Kara Homes Inc. and its debtor- affiliates can solicit acceptances to their Chapter 11 Plan of Reorganization, as amended. As reported in the Troubled Company Reporter on July 31, 2007, David L. Bruck, Esq., at Greenbaum Roew Smith and Davis LLP, said that the Debtors' request for extension will cover the anticipated solicitation and confirmation period. The Debtors, Mr. Bruck added, are drafting a supplement to the Disclosure Statement. The Debtors assured the Court that the request for extension will not prejudice the rights of any creditors. 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. LANDRY'S RESTAURANT: S&P Retains Developing Watch on "CCC" Rating ----------------------------------------------------------------- Standard & Poor's Rating Services said that its 'CCC' corporate credit rating on Landry's Restaurant Inc. remains on CreditWatch with developing implications, where it was placed on July 25, 2007. On Aug. 20, 2007, Houston, Texas-based Landry's announced that it had reached an agreement with a majority of the holders of its senior unsecured notes due in 2014. Landry's has agreed to increase the interest rate on the notes to 9.5% from 7.5%. The agreement also stipulates that the company will have a call option at 18 months and that the noteholders can redeem the bonds from the company at 18 months. "Once the final agreement between Landry's and its bondholders is executed," said Standard & Poor's credit analyst Charles Pinson- Rose, "we could raise the corporate credit rating on Landry's and its subsidiary, Golden Nugget Inc. by at least three notches to 'B' from 'CCC'." LEVI STRAUSS: Fitch Lifts Issuer Default Rating to BB- from B ------------------------------------------------------------- Fitch has upgraded these ratings on Levi Strauss & Co.: -- Issuer Default Rating to 'BB-' from 'B'; -- $550 million asset-based loan (ABL) to 'BB+' from 'BB/RR1'. The company's senior unsecured notes and senior unsecured term loan have been affirmed at 'BB-'. Approximately $2.1 billion of outstanding debt as well as the ABL are affected by these actions. The Rating Outlook is Stable. The upgrade of the IDR reflects the improvements LS&CO has made to streamline and stabilize its operations as well as sustain solid operating margin improvements. The ratings also consider LS&CO's well known brand names, geographic diversity and good liquidity position, offset by high debt balances and the competitive operating environment of the denim and casual bottoms market. Management's focus on growing its core product lines through more premium positioning has enabled it to stabilize its revenues over the past few years with average net sales of $4.1 billion. In addition, LS&CO's restructuring activities, including changing sourcing arrangements, realigning business units, and closing unproductive facilities, have led to reduced costs across its business. Profitability as measured by operating EBITDA margins has continued to improve, rising to 17.0% for the latest twelve months ended May 27, 2007. Fitch expects LS&CO to continue to benefit from its lower cost structure while continuing to invest in its brands despite challenges in the U.S. Levi Strauss Signature brand, which represented less than 8% of fiscal 2006 revenues and under 4% of operating income before corporate expenses. Strong operating profits along with a slight decrease in debt balances to $2.2 billion have resulted in strengthened credit metrics with leverage declining to 3.0 times for the last twelve months ended May 27, 2007 and EBITDA interest coverage of 3.0x over the comparable period. In addition, the company has good liquidity with $307.2 million in cash and cash equivalents and $245.2 million in net available borrowing capacity under its revolving credit facility. Fitch expects that management will remain committed to its plan to reduce debt and leverage over time. This commitment is a key underpinning to the 'BB-' IDR and Stable Outlook. Fitch's Recovery Ratings are a relative indicator of creditor recovery prospects on a given obligation within an issuers' capital structure in the event of a default. LKH ASSETS: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: LKH Assets LLC 853 Broadway, Suite 1120 New York, NY 10003 Bankruptcy Case No.: 07-12691 Chapter 11 Petition Date: August 23, 2007 Court: Southern District of New York (Manhattan) Judge: Robert E. Gerber Debtor's Counsel: Jennifer Lauren Saffer, Esq. J.L. Saffer, P.C. 20 Vesey Street, 7th Floor New York, NY 10007 Tel: (212) 608-6968 Fax: (212) 608-1878 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. MARSHALL HOLDINGS: Earns $355,896 in Second Quarter Ended June 30 ----------------------------------------------------------------- Marshall Holdings International Inc. reported net income of $355,896 for the second quarter ended June 30, 2007, compared with a net loss of $1.1 million for the same period last year. Total sales were at approximately $1.7 million for the three months ended June 30, 2007, compared to $156,000 for the prior period a year earlier, an increase of over 1010%. This increase was a primary result of the acquired operations of Marshall Distributing wholesale natural products distributor. The increase in net income is primarily attributable to the increase in sales and a decrease of professional services paid with stock. Selling, general and administrative expenses for the three months ended June 30, 2007, compared to 2006 decreased by $301,000 to $921,000 from $1.2 million. This was primarily due to a significant decrease in services paid with stock issuances for professional fees of the company during the period. Interest expense for the three months ended June 30, 2007, was $78,000 as compared to the same period in 2006 of $33,000, up $45,000. The interest expense increased as a result of the acquisition of Marshall Distributing assets and operations. For the six month period ended June 30, 2007, Marshall's operations used cash flow of $140,000 compared to net cash used of $1.7 million for the year ending Dec. 31, 2006, a decrease in cash used of $1.5 million. Marshall used cash flow from investing activities of $27,000 for the period ending June 30, 2007, as compared to cash used by investing activities of $6.5 million for the year ending Dec. 31, 2006. Cash, cash equivalents and marketable securities totaled $16,698 at June 30, 2007 compared to $61,083 at Dec. 31, 2006, a decrease of $44,385. At June 30, 2007, the company's consolidated balance sheet showed $14.9 million in total assets, $13.1 million in total liabilities, and $1.8 million in total stockholders' equity. The company's consolidated balance sheet at June 30, 2007, also showed strained liquidity with $5.5 million in total current assets available to pay $11.0 million in total current liabilities. 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?22e6 Going Concern Doubt As reported in the Troubled Company Reporter on May 2, 2007, Madsen & Associates CPA's Inc. expressed substantial doubt about Marshall Holdings International Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements as of the year ended Dec. 31 2006. The auditing firm pointed to the company's need for additional working capital for its planned activity and to service its debt. There have been significant recurring losses and negative cash flows from operations, which have resulted in a working capital deficiency. About Marshall Holdings Marshall Holdings International Inc. fka Gateway Distributors Ltd. (OTC BB: MHII.OB) -- http://www.mhii.net/-- distributes whole food nutrition, health and dietary supplements through its internet sales, distributors, and over 3500 health food stores. The product line has over 6,000 products, which includes top brands such as Natures Way, and Dr. Christopher, and Twin Labs. MASTR ASSET: Moody's Cuts Ratings on Two Cert. Classes to Low-B --------------------------------------------------------------- Rating actions for MASTR Asset Backed Securities Trust 2005-NC2 appear incorrectly in the August 22 release. The correct rating actions for MASTR Asset Backed Securities Trust 2005-NC2 are: -- Class M-5, Currently rated A2, no rating action was taken, -- Class M-6, Currently rated A3, no rating action was taken, -- Class M-7, Downgraded to Baa3, previously Baa1, -- Class M-8, Downgraded to Ba2, previously Baa2, -- Class M-9, Downgraded to B1, previously Baa3. MGM MIRAGE: Names Jim Murren as Pres. & Chief Operating Officer --------------------------------------------------------------- MGM MIRAGE chairman and CEO Terry Lanni reported several promotions of the company's senior management. Jim Murren was promoted to the role of president and chief operating officer. Mr. Murren had served as the company's president, chief financial officer and treasurer. Bobby Baldwin was named to serve in a new position as the company's chief design and construction officer. He will also serve as president and CEO of the company's $7.4 billion CityCenter development. Dan D'Arrigo was promoted to executive vice president and chief financial officer. Bob Selwood has been promoted to executive vice president and chief accounting officer. All of these positions report to Mr. Lanni. Additionally, senior vice president of treasury Cathy Santoro was promoted to serve as the company's Treasurer, reporting to Mr. D'Arrigo. "Each of these individuals has played a significant role in managing the successful growth and development of MGM MIRAGE," Mr. Lanni said. "These promotions recognize their contributions and strengthen our ability to move ahead aggressively with the future development of our real estate holdings and expansion of our brand presence worldwide." Mr. Murren will oversee all of the MGM MIRAGE company-owned casino-resort properties in the U.S. except Bellagio, Monte Carlo and CityCenter. These properties are part of the CityCenter "campus" and will report to Mr. Baldwin. Mr. Baldwin will oversee the design and construction of all of the company's projects and capital improvements to existing resorts in the U.S. The company has holdings in Nevada, Mississippi and New Jersey available for development. Mr. D'Arrigo joined MGM Grand, Inc. in 1995 and has served as senior vice president of finance since 2005. "Jim Murren has established a reputation as one of the leaders in our industry," Mr. Lanni said. "His ability to envision the future direction of the Las Vegas market and his contributions to positioning MGM MIRAGE as the undisputed industry leader has earned him this well deserved recognition. "Bobby Baldwin is well known as the leading expert in the development of some of the most dynamic, efficient and successful large-scale resorts anywhere in the world," Mr. Lanni said. "His keen understanding of design and construction make him the perfect choice to lead our company's efforts in growing our family of world-class resorts." "We believe that there are significant opportunities to enhance the guest experience among our existing family of resorts and enormous unrealized potential from our real estate holdings," Mr. Lanni noted. "We will continue to seek innovative ways of maximizing revenues, improving efficiencies and operating as a well-integrated company." John Redmond, who had notified the company in late 2006 of his intent to retire, has done so effective August 21. "We are all grateful to John for his many years of service," Mr. Lanni said. "John is an enormously talented man who has been significantly responsible for many of our company's successes." 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. MGM MIRAGE: Moody's Holds "Ba2" Corporate Family Rating ------------------------------------------------------- Moody's Investors Service changed MGM MIRAGE's rating outlook to stable from negative and affirmed all existing ratings, including its Ba2 corporate family rating and speculative grade liquidity rating of SGL-3. MGM Mirage signed a definitive agreement to form a long-term strategic relationship whereby Dubai World would inject up to $5.1 billion in MGM MIRAGE, comprised of a $2.7 billion investment in CityCenter and $2.4 billion for a 9.5% equity stake in the company. The outlook revision reflects lower event risk and an expectation that leverage and coverage metrics will improve in the near term. If all proceeds from Dubai World are used to repay debt, leverage would drop significantly. However, given the company's commitment to growth, leverage may begin to increase over the intermediate term and residual event risk remains a concern. In the unlikely event the transaction does not close, the rating outlook could revert back to negative. Further upward rating momentum will depend on sustainable improvement in credit metrics, the company's longer term financial policy priorities, including leverage and coverage targets, the level of future capital and investment spending, share repurchases, dividends, as well as financing plans for recently announced joint ventures. The rating outlook could improve to Positive when the company's longer term financial policy priorities are better defined and if they are consistent with a higher rating over the intermediate term. An upgrade of the SGL-3 rating is likely as a result the anticipated capital infusion and will be consider around the time the transaction closes. Moody's last rating action on MGM occurred May 8, 2007 when Moody's assigned a Ba2, LGD-3, 43% rating to MGM's issue of senior unsecured guaranteed notes due 2016. Headquartered in Las Vegas, Nevada, MGM MIRAGE owns and operates about 17 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. MGM MIRAGE has a 50% interest in MGM Grand Macau, a hotel-casino resort currently under construction in Macau S.A.R, which is expected to open in the fourth quarter of 2007. Consolidated revenue for 2006 was about $7.2 billion. MORGAN STANLEY: Fitch Rates $7.701MM Class L Certificates at BB- ---------------------------------------------------------------- Morgan Stanley Capital I Trust 2007-IQ15, commercial mortgage pass-through certificates are rated by Fitch Ratings as: -- $61,700,000 Class A-1 'AAA'; -- $278,738,000 Class A-1A 'AAA'; -- $227,400,000 Class A-2 'AAA'; -- $72,800,000 Class A-3 'AAA'; -- $796,885,000 Class A-4 'AAA'; -- $205,361,000 Class A-M 'AAA'; -- $177,124,000 Class A-J 'AAA'; -- $2,053,605,662 Class X* 'AAA'; -- $33,371,000 Class B 'AA'; -- $15,402,000 Class C 'AA-'; -- $28,237,000 Class D 'A'; -- $15,402,000 Class E 'A-'; -- $30,804,000 Class F 'BBB+'; -- $23,103,000 Class G 'BBB'; -- $20,536,000 Class H 'BBB-'; -- $10,268,000 Class J 'BB+'. -- $5,134,000 Class K 'BB'; -- $7,701,000 Class L 'BB-'. *Notional Amount and Interest Only Classes A-1, A-1A, A-2, A-3, A-4, A-M and A-J are offered publicly, while classes X, B, C, D, E, F, G, H, J, K and L are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 134 fixed rate loans having an aggregate principal balance of approximately $2,053,605,662, as of the cutoff date. MOVIE GALLERY: Receives Two Nasdaq Non-Compliance Letters --------------------------------------------------------- Movie Gallery, Inc., received two NASDAQ Staff Determination letters, each dated Aug. 17, 2007, indicating Movie Gallery was not in compliance with filing requirements for continued listing as set forth in NASDAQ Marketplace Rules 4450(a)(5) and 4450(b)(3). In one letter, Movie Gallery was notified that it is not in compliance with Rule 4450(a)(5) due to its common stock price closing below NASDAQ's minimum of $1.00 per share for the last 30 consecutive trading days. Movie Gallery was provided with 180 calendar days, or until Feb. 11, 2008 to regain compliance. Additionally, in a second letter, the company was notified that it is not in compliance with Rule 4450(b)(3) because it has not maintained a minimum market value of $15,000,000 for the last 30 consecutive trading days. The company was provided with 90 calendar days, or until Nov. 15, 2007, to regain compliance under this Rule. These notifications are customary when a NASDAQ-listed company does not meet certain Marketplace Rules. Until the dates occur, the company's common stock will remain listed and will continue to trade on the NASDAQ Global Market subject to its compliance with Marketplace Rules and other NASDAQ listing standards. Headquartered in Dothan, Alabama, Movie Gallery Inc. (Nasdaq: MOVI) -- http://www.moviegallery.com/-- is second largest North American video rental company with more than 4,550 stores located in all 50 U.S. states and Canada operating under the brands Movie Gallery, Hollywood Video and Game Crazy. The Game Crazy brand represents 606 in-store departments and 14 free-standing stores serving the game market in urban locations across the Untied States. Since Movie Gallery's initial public offering in August 1994, the company has grown from 97 stores to its present size through acquisitions and new store openings. Movie Gallery Inc.'s consolidated balance sheet at July 1, 2007, showed $892.0 million in total assets, $1.45 billion in total liabilities, resulting in a $560.3 million total stockholders' deficit. * * * As reported in Troubled Company Reporter on Aug. 16, 2007, Standard & Poor's Ratings Services said it lowered its ratings, including the corporate credit rating, on Movie Gallery Inc. to 'CC' from 'CCC+' based on the company's extremely poor liquidity position. At the same time, S&P lowered the ratings on the company's bank loans and senior unsecured debt to 'CC'. This rating level indicates a high vulnerability to nonpayment. The outlook has been revised to negative. MOVIE GALLERY: Pays-in-Kind 100% of Loans' Interest --------------------------------------------------- Movie Gallery, Inc. disclosed that last week, it elected pursuant to Section 2.5(f) of the Second Lien Credit and Guaranty Agreement dated as of March 8, 2007 among the Company, certain subsidiaries of the Company, as guarantors, various lenders party thereto, Goldman Sachs Credit Partners L.P., as lead arranger and syndication agent, and CapitalSource Finance LLC, as administrative agent and collateral agent, to pay-in-kind 100% of the interest on the entire principal amount of the loans commencing with the next interest period effective under the credit agreement. Headquartered in Dothan, Alabama, Movie Gallery Inc. (Nasdaq: MOVI) -- http://www.moviegallery.com/-- is second largest North American video rental company with more than 4,550 stores located in all 50 U.S. states and Canada operating under the brands Movie Gallery, Hollywood Video and Game Crazy. The Game Crazy brand represents 606 in-store departments and 14 free-standing stores serving the game market in urban locations across the Untied States. Since Movie Gallery's initial public offering in August 1994, the company has grown from 97 stores to its present size through acquisitions and new store openings. Movie Gallery Inc.'s consolidated balance sheet at July 1, 2007, showed $892.0 million in total assets, $1.45 billion in total liabilities, resulting in a $560.3 million total stockholders' deficit. * * * As reported in Troubled Company Reporter on Aug. 16, 2007, Standard & Poor's Ratings Services said it lowered its ratings, including the corporate credit rating, on Movie Gallery Inc. to 'CC' from 'CCC+' based on the company's extremely poor liquidity position. At the same time, S&P lowered the ratings on the company's bank loans and senior unsecured debt to 'CC'. This rating level indicates a high vulnerability to nonpayment. The outlook has been revised to negative. NAAC REPERFORMING: Moody's Junks Ratings on Two Cert. Classes ------------------------------------------------------------- Moody's Investors Service downgraded two certificates from NAAC Reperforming Loan Remic Trust Certificates, Series 2004-R1 and 2004-R2. The transactions consist of securitizations of FHA insured and VA guaranteed re-performing loans virtually all of which were repurchased from GNMA pools. The insurance covers a large percent of any losses incurred as a result of borrower defaults. The two most subordinate Moody's-rated certificates from the two transactions have been downgraded because existing credit enhancement levels are low given the current projected losses on the underlying pools. Currently there is only a small amount of credit enhancement for the two transactions in the form a subordinate bond. Complete rating actions are: Issuer: NAAC Reperforming Loan REMIC Trust Certificates Downgrades: -- Series 2004-R1; Class B-4, downgraded to Caa3 from B2; -- Series 2004-R2; Class B-4, downgraded to Caa3 from B2. NANO SUPERLATTICE: Posts $252,594 Net Loss in Qtr. Ended June 30 ---------------------------------------------------------------- Nano Superlattice Technology Inc. reported a net loss of $252,594 for the second quarter ended June 30, 2007, compared with a net loss of $50,143 for the same period ended June 30, 2006. Net sales for the three months ended June 30, 2007 were $2.1 million compared to $2.6 million for the three months ended June 30, 2006. The decrease in net sales was due to the company's focus on its nano-coating business, its reduced focus on the sale of computer accessories, individual wires and cables as well as sets of mechanical equipment used in the manufacture of electric cables, and the decrease of sales of old products. The increase in net loss is principally a result of a loss from operations of $208,358 for the three months ended June 30, 2007, as compared to income from operations of $966 for the three months ended June 30, 2006. This change was primarily the result of the decrease in net sales, partly offset by a decrease in general and administrative expenes. Cost of sales for the three months ended June 30, 2007, was $2.2 million or 104.37% of net sales, as compared to $2.3 million, or 88.2% of net sales, for the three months ended June 30, 2006. The decrease in cost of sales was due to the decrease in sales. The increase in cost of sales as compared to net sales was due to the sale of lower gross margin products. General and administrative expenses for the three months ended June 30, 2007, were $115,936 or 5.48% of net sales, as compared to $312,094 or 11.8% of net sales, for the three months ended June 30, 2006. The decrease in general and administrative expenses was due to decreases in salary, depreciation and amortization. Other expense for the three months ended June 30, 2007, was $32,562 as compared to other expense of $39,798 for the three months ended June 30, 2006. The decrease is primarily attributable to an increase in interest income and other income, partly offset by an increaese in interest expense. At June 30, 2007, the company's consolidated balance sheet showed $12.5 million in total assets, $7.9 million in total liabilities, $95,642 in minority interest, and $4.5 million in total shareholders' equity. The company's consolidated financial statements for the quarter ended June 30, 2007, also showed strained liquidity with $4.2 million in total current assets available to pay $6.3 million in total current liabilities. 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?22e7 Default on Line of Credit The company is currently in default of its line of credit because the Arc Bond Sputtering Machine which was pledged to collateralize its line of credit with a Taiwan Bank, was later sold to a third party, in violation of the credit agreement. Since the equipment sold was leased back from the third party, the company is also in default of the lease-back agreement. The total amount due under both agreements as a result of the defaults is $976,091. Going Concern Doubt Simon & Edward LLP in City of Industry, Calif., expressed substantial doubt about Nano Superlattice Technology Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements as of the year ended Dec. 31, 2006. The auditing firm reported that the company continued to experience working capital insufficiency. In addition, repayment of the total amount due of $976,091, under the company's line of credit with a Taiwan Bank and the lease-back agreement could materially affect the company's liquidity position. About Nano Superlattice Nano Superlattice Technology Inc. (OTC BB: NSLT) -- is engaged in the coating of tools and components with nano structured PVD coatings for the semiconductor, precision machinery and telecommunication industries. Nano utilizes Arc Bond Sputtering and Superlattice technology to apply multi-layers of super-hard elemental coatings on an array of precision products to achieve a variety of physical properties. NCO GROUP: Completes $165 Mil. and $200 Mil. Offers of Sr. Notes ---------------------------------------------------------------- NCO Group Inc. has completed its offer to the holders of its Floating Rate Senior Notes due 2013 (CUSIP No. 144A: 628858 AE 2, ISIN No. 144A: US628858AE21; CUSIP No. REG S: U6376M AB 7, ISIN No. REG S: USU6376MAB73) and its 11.875% Senior Subordinated Notes due 2014 (CUSIP No. 144A: 628858 AF 9, ISIN No. 144A: S628858AF95; CUSIP No. Reg. S: U6376M AC 5, ISIN No. Reg. S: USU6376MAC56), to exchange the Outstanding Notes for like principal amount of its $165 million principal amount Floating Rate Senior Notes due 2013 and its $200 million principal amount 11.875% Senior Subordinated Notes due 2014, which was registered under the Securities Act of 1933, as amended. The Outstanding Notes were sold in a private placement by the company, which was completed in November 2006. The company was required to carry out the Exchange Offer under the terms of agreements entered into in the private placement. The Exchange Offer expired at 5:00 p.m., Eastern Daylight Time, on Aug. 15, 2007. Based on information provided by the exchange agent, The Bank of New York, $163,805,000 in aggregate principal amount of the Floating Rate Senior Notes due 2013 and $200,000,000 in aggregate principal amount of the 11.875% Senior Subordinated Notes due 2014 were validly tendered and not withdrawn pursuant to the Exchange Offer. NCO has accepted for exchange all of the validly tendered and not withdrawn Outstanding Notes. NCO intends to issue the Exchange Notes for all such exchanged Outstanding Notes soon as practicable. Headquartered in Horsham, Pennsylvania, NCO Group Inc. -- http://www.ncogroup.com/-- provides business process outsourcing services including accounts receivable management, customer relationship management and other services. NCO provides services through over 100 offices in the United States, Canada, the United Kingdom, Australia, India, the Philippines, the Caribbean and Panama. * * * NCO Group carries Moody's Investor Service's "B2" long term corporate family rating and probability of default rating. The outlook is stable. The company also carries Standard & Poor's B+ long term foreign and local issuer credit rating. NELLSON NUTRACEUTICAL: Court Okays Sale to First-Lien Creditors --------------------------------------------------------------- The Hon. U.S. Bankruptcy Judge Christopher Sontchi of the United States Bankruptcy Court for the District of Delaware approved the sale of Nellson Nutraceutical Inc. to a group consisting of the Debtor's first-lien creditors after an auction conducted last Aug. 22, 2007, the Associated Press reports. The group, according to AP, consists of creditors Citigroup Inc., Goldman Sachs Group Inc., MetLife Inc., and New York Life Insurance Co. The group also includes some hedge funds like MainStay Floating Rate Funds, Endurance CLO, Flatiron Capital Management and Archimedes Funding. AP relates that after the Debtor insisted that an auction be conducted, the group put up a bid. The group offered debt plus $66 million in cash and outbid two other offers. AP says that unsecured creditors had argued the sale order should include a provision that $8.25 million of the sale proceeds should be set aside for them. Judge Sontchi however commented that such provision didn't belong in the sale order, AP adds. Headquartered in Irwindale, California, Nellson Nutraceutical Inc. formulates, makes and sells bars and powders for the nutrition supplement industry. The Debtor filed for chapter 11 protection on Jan. 28, 2006 (Bankr. D. Del. Case No. 06-10072). Laura Davis Jones, Esq., Rachel Lowy Werkheiser, Esq., Richard M. Pachulski, Esq., Brad R. Godshall, Esq., and Maxim B. Litvak, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C. represent the Debtor in its restructuring efforts. Kurt F. Gwynne, Esq., and Thomas J. Francella, Jr., Esq., at Reed Smith LLP represent the Official Committee of Unsecured Creditors. In its Schedules of Assets and Liabilities, Nellson reported $312,334,898 in total assets and $345,227,725 in total liabilities. NEW CENTURY: Moody's Junks Rating on S. 2002-NC5, Cl. B-2 Loans --------------------------------------------------------------- Moody's Investors Service downgraded the ratings of twelve tranches and confirmed the ratings of two tranches from several 2002 and 2003 deals with loans originated by New Century Mortgage Corporation. The collateral backing these classes consists of primarily first lien, fixed and adjustable-rate, subprime mortgage loans. The certificates have been downgraded based upon recent and expected pool losses and the resulting erosion of credit support. Overcollateralization amounts in all of the transactions are currently below their floors and pipeline losses are likely to cause further erosion of the overcollateralization, which could put pressure on the subordinate tranches. Furthermore, existing credit enhancement levels may be low given the current projected losses on the underlying pools. Although the deals' losses are performing within the area of original expectations, credit support deterioration seen in many of these deals can be partially attributed to the deals passing performance triggers and therefore releasing large amounts of overcollateralization. Finally, Moody's confirmed the current ratings on the Class M-1 and M-2 certificates from ABFC 2002-NC1 as credit support, provided by subordination, excess spread, and overcollateralization, is sufficient to support the current ratings on these certificates. Complete rating actions are: Downgrade: Issuer: Asset Backed Funding Corporation -- Series 2002-NC1, Class M-3, downgraded from Baa1 to Baa3 -- Series 2002-NC1, Class M-4, downgraded from Baa3 to Ba1 Issuer: Asset Backed Securities Corporation -- Series 2002-HE1, Class B, downgraded from Baa3 to B3 Issuer: Morgan Stanley Dean Witter Capital I Inc. -- Series 2002-NC3, Class B-1, downgraded from Ba3 to B2 -- Series 2002-NC3, Class B-2, downgraded from B1 to B3 -- Series 2002-NC5, Class B-1, downgraded from Ba1 to B3 -- Series 2002-NC5, Class B-2, downgraded from B2 to C Issuer: Morgan Stanley ABS Capital I Inc. -- Series 2003-NC6, Class B-2, downgraded from Baa2 to Ba2 -- Series 2003-NC6, Class B-3, downgraded from Baa3 to B3 -- Series 2003-NC7, Class B-2, downgraded from Baa2 to Ba2 -- Series 2003-NC7, Class B-3, downgraded from Baa3 to B3 -- Series 2003-NC10, Class B-3, downgraded from Baa3 to Ba2 Confirm: Issuer: Asset Backed Funding Corporation -- Series 2002-NC1, Class M-1, confirmed at Aaa -- Series 2002-NC1, Class M-2, confirmed at Aa3 NEWTON WHITE: Case Summary & 12 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Newton White Corporation 1307 Main Street Suite 2 P.O. Box 2372 Tunica, MS 38676 Bankruptcy Case No.: 07-50999 Debtor-affiliate that filed a separate Chapter 11 petition: Entity Case No. ------ -------- Helen J. Williams 07-50996 Chapter 11 Petition Date: August 21, 2007 Court: Western District of Louisiana (Lafayette/Opelousas) Debtors' Counsel: Gerald H. Schiff, Esq. Gordon Arata McCollam Duplantis & Eagan, LLP 400 East Kaliste Saloom Road Suite 4200 Lafayette, LA 70508-8517 Tel: (337) 237-0132 Fax: (337) 237-3451 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million A. Newton White Corporation' List of its Six Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ McFarlane-Chang Corporate Stock Lien $492,760 Investments, LLC 1155 Connecticut Avenue Northwest, 3rd Floor Washington, D.C. 20036 Robert T. Gordon, Jr., Esq. Attorney Fees $18,358 Am South Plaza, Suite 1088 210 East Capitol Street Jackson, MS 39201 Matrix International Loan $15,000 5318 Weslayne Avenue Houston, TX 77005 Robert W. Blair, Esq. Attorney Fees $9,387 Paradigm Corporation Monthly Rent $845 John H. Bennett Jr., Esq. Attorney Fees Unknown B. Helen J. Williams's List of her Six Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of America Recreational Vehicle $59,546 P.O. Box 538610 Atlanta, GA 30353-8610 Matrix International Loan $20,000 5318 Weslayne Avenue Houston, TX 77005 World Financial Network Purchase Household $594 National Bank Goods P.O. Box 659465 San Antonio, TX 78265-9455 Bedford Fair Lifestyles Purchase Household $350 Goods Macy's Purchase Household $126 Goods Bank of Georgia Purchase Household $114 Goods OEM/ERIE: Involuntary Chapter 11 Case Summary --------------------------------------------- Alleged Debtor: O.E.M./Erie, Inc. 1810 West 20th Street Erie, PA 16502 Case Number: 07-11344 Type of Business: The Debtor supplies injection molded plastics. Involuntary Petition Date: August 22, 2007 Court: Western District of Pennsylvania (Erie) Judge: Warren W. Bentz Petitioner's Counsel: Lawrence C. Bolla, Esq. Quinn, Buseck, Leemhuis, Toohey & Kroto, Inc. 2222 West Grandview Boulevard Erie, PA 16506-4508 Tel: (814) 833-2222 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Buckeye Polymers $672,497 104 Lee Street Lodi, OH 44254 Performance Polymers $265,184 803R Lancaster Street Leominster, MA 01453 Curbell Plastics, Inc. $178,723 7 Cobham Drive Orchard Park, NY 14127 PETSMART INC: Share Repurchase Program Cues Moody's Stable Outlook ------------------------------------------------------------------ Moody's Investors Service revised the rating outlook of PetSmart, Inc. to stable from positive and affirmed the corporate family rating at Ba2. The outlook revision is prompted by the magnitude of the $300 million share repurchase program that was recently authorized by PetSmart's Board of Directors. As a result, credit metrics are likely to moderately weaken over the intermediate term, although they are expected to remain at levels that are quite comfortable for the Ba2 rating category. Revolver borrowings are being used to partially finance this share purchase program, in contrast to previous programs that were financed with discretionary free cash flow. PetSmart's rating is: -- Corporate family rating of Ba2 Moody's does not rate the $350 million secured revolving credit facility. PetSmart's Ba2 corporate family rating acknowledges that many key credit factors have low investment grade or high non investment grade attributes, including PetSmart's geographic distribution across the U.S. and Canada, its position as the largest specialty retailer of supplies, food, and services for the growing population of household pets, and key credit metrics that have investment grade characteristics such as high retained cash flow and interest coverage and low leverage. Important factors with non-investment grade characteristics are the company's relatively small size compared to many investment grade companies, the limited cash flow for balance sheet improvement after share repurchases, and the potential for increased competition from non- specialty retailers of pet products. PetSmart, Inc., with headquarters in Phoenix, Arizona, is the largest specialty retailer of supplies, food, and services for household pets. The company currently operates 966 stores in the U.S. and Canada. Revenue for the twelve months ending July 29, 2007 was about $4.4 billion. PHYSICIANS & SURGEONS: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Physicians and Surgeons Hospital dba Tri-Lakes Medical Center 303 Medical Center Drive Batesville, MS 38606 Bankruptcy Case No.: 07-12967 Type of Business: The Debtor operates a hospital and medical center. See http://www.trilakesmedical.com/ Chapter 11 Petition Date: August 23, 2007 Court: Northern District of Mississippi (Aberdeen) Debtor's Counsel: Craig M. Geno, Esq. Harris Jernigan & Geno, PLLC P.O. Box 3380 Ridgeland, MS 39158-3380 Tel: (601) 427-0048 Fax: (601) 427-0050 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. PITTSBURGH BREWING: Buyer Expects Sale To Close This Week --------------------------------------------------------- Iron City Brewing LLP expects to close the sale of Pittsburgh Brewing Co. this week, the Associated Press reports. The deal, according to AP, is waiting the approval of the Pennsylvania Liquor Control Board for the transfer of Pittsburgh Brewing's brewery license to its new owner. As reported in the Troubled Company Reporter on June 7, 2007, the U.S. Bankruptcy Court for the Western District of Pennsylvania confirmed Pittsburgh Brewing Co. Inc. and its affiliate, Keystone Brewers Holding Co.'s reorganization plan. The brewery will have a new name -- Iron City Brewing Co. -- and approximately $4.1 million will be invested on the brewery for marketing and upgrading plans. Headquartered in Pittsburgh, Pennsylvania, Pittsburgh Brewing Company Inc. -- http://www.pittsburghbrewingco.com/-- manufactures malt liquors, such as beer and ale. Its products include Iron City Beer, IC Light Beer, and Augustiner Amber Lager. The company filed for chapter 11 protection on Dec. 7, 2005 (Bankr. W.D. Penn. Case No. 05-50347). Robert O. Lampl, Esq., at Law Office Robert O. Lampl, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, its assets and debts were estimated at $1 million to $10 million. Keystone Brewers Holding Co, a holding company for PBC's intellectual property assets, also filed a voluntary chapter 11 petition on March 10, 2006. POWDER COATING: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Powder Coating, Inc. 620 Moore Street Oxford, GA 30054 Bankruptcy Case No.: 07-73472 Type of business: The Debtor coats metals with plastic or resins. Chapter 11 Petition Date: August 23, 2007 Court: Northern District of Georgia (Atlanta) Judge: Margaret Murphy Debtor's Counsel: Paul Reece Marr, Esq. 300 Galleria Parkway, Northwest, Suite 960 Atlanta, GA 30339 Tel: (770) 984-2255 Fax: (770) 984-0044 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of Madison credit line $24,948 P.O. Box 271 secured by real Madison, GA 30650 estate of Kenneth Frank Blackmon Bonded Collection Corp. account payable $10,703 for Southeastern Freight Lines 29 East Madison Street, Suite 1650 Chicago, IL 60602-4427 Newton County Tax ad valorem property $8,071 Commissioner Barbara Dingler 1105 Usher Street, Northwest Covington, GA 30014-2439 Capital One, F.S.B. account payable $7,352 Nortek Powder Coating, account payable $5,767 L.L.C. Partek Solutions, L.L.C. account payable $5,430 Anthony Keenan account payable $3,247 American Bollerhouse, Inc. account payable $3,078 Busch & Reed, P.C. account payable $3,033 Georgia Department of Labor unemployment tax, $2,604 interest and penalty J.L. Russell & Associates, account payable $1,476 Ltd. Hopi Contracting, Inc. account payable $1,290 Excel Company account payable $1,256 Wilson Boller Service account payable $922 Mighty Hook account payable $905 Simple Air Solutions, Inc. account payable $892 Bonded Collection Corp. account payable $561 Diversified Account Systems account payable $287 Conquest Solutions, L.L.C. account payable $144 Attorney General of Georgia unknown ROBERT HORNE: Case Summary & Four Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Robert Lynn Horne 2915 West Charleston Boulevard Las Vegas, NV 89102 Bankruptcy Case No.: August 23, 2007 Type of business: Chapter 11 Petition Date: 07-15280 Court: District of Nevada (Las Vegas) Debtor's Counsel: Jeanette E. Mcpherson, Esq. Schwartzer & McPherson Law Firm 2850 South Jones Boulevard, Suite 1 Las Vegas, NV 89146 Tel: (702) 228-7590 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ David Odenath $1,500,000 30 Spring Hill Road Mendham, NJ 07945 Jeffrey Morley debt $1,198,601 26 East Washington Street Riverside, NJ 08075-3820 William Topkis debt $1,198,601 c/o Joseph E. Tesch, Esq. 314 Main Street, Suite 200 Park City, UT 84060-3390 Deborah Martz $100,000 ROCKFORD PRODUCTS: Files Schedules of Assets and Liabilities ------------------------------------------------------------ Rockford Products Corporation and its debtor-affiliate filed with the U.S. Bankruptcy Court for the Northern District of Illinois their schedule of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $0 B. Personal Property $49,002,753 C. Property Claimed as Exempt $0 D. Creditors Holding Secured Claims $21,306,955 E. Creditors Holding Unsecured Priority Claims $830,088 F. Creditors Holding Unsecured Non-priority Claims $18,301,235 ----------- ----------- TOTAL $49,002,753 $40,438,278 Rockford Products Corporation, -- http://www.rockfordproducts.com/ and http://www.rockfordinternational.com/-- originally formed in 1929, manufactures, sources and distributes high quality, cold formed steel components, fasteners and other related products to Tier 1 and 2 suppliers to automobile manufacturers, the automotive aftermarket and non-automotive customers. Most of Rockford Products' manufacturing and distribution operations are located in Rockford, Illinois, where Rockford Products leases three facilities with a combined area of 988,000 square feet. Rockford Products currently has 516 employees. Annual revenues for Rockford Products amounted to around $100 million in fiscal 2006. The Debtor and its debtor-affiliate, Rockford Products Global Services Inc., filed Chapter 11 bankruptcy protection on July 25, 2007 (Bankr. N.D. Ill. Case No. 07-71768 and 07-71769). Thomas J. Augspurger, Esq., at LeBoeuf, Lamb, Greene & MacRae LLP, represent the Debtors in their restructuring efforts. BMC Group act as the Debtors' claims, noticing, and balloting agent. ROCKFORD PRODUCTS: Wants to Employ BMC Group as Claims Agent ------------------------------------------------------------ Rockford Products Corporation and its debtor-affiliate ask the U.S. Bankruptcy Court for the Northern District of Illinois for permission to employ BMC Group Inc. as their claims, noticing, and balloting agent. BMC Group will: (a) assist the Debtor, its counsel & Office of the Clerk with noticing and claims handling; (b) assist Debtor with the compilation, administration, evaluation and production of documents and information necessary to support a restructuring effort; (c) at Debtor's, its counsel's or the clerk's direction, as the case may be, and in accordance with any court orders or rules in the bankruptcy cases, BMC Group will: 1) prepare and serve those notices required in the bankruptcy cases; 2) receive, record and maintain copies of all proofs of claim and proofs of interest filed in the bankruptcy cases; 3) create and maintain the official claims registers; 4) receive and record all transfers of claims pursuant to Bankruptcy Rule 3001(e); 5) maintain an up-to-date mailing list for all entities who have filed proofs of claim and/or requests for notices in the bankruptcy cases; 6) assist Debtor and its counsel with the administrative management, reconciliation and resolution of claims; 7) mail and tabulate ballots for purposes of plan voting; 8) assist with the preparation and maintenance of Debtors' Schedules of Assets and Liabilities, Statements of Financial Affairs and other master lists and databases of creditors, assets and liabilities preparation and maintenance of Debtors' Schedules of Assets and Liabilities, Statements of Financial Affairs and other master lists and databases of creditors, assets and liabilities; 9) assist with the production of reports, exhibits and schedules of information for use by the third parties; 10) provide other technical and document management services of a similar nature requested by Debtors or the Clerk's office; 11) facilitate or perform distributions; and 12) maintain a call center. The Debtors believe that the employment of BMC Group as claims and noticing agent will: (a) relieve the clerk's office of a significant administrative burden, (b) avoid delay in processing proofs of claim and interests, (c) reduce legal fees that would be otherwise incurred in connection with the retrieval of proof of claim copies from the clerk's office and responding to numerous claim- related inquiries, and (d) reduce costs of notice to parties and provide an efficient medium to communicate case information. The Debtors will pay BMC Group based on these customary hourly rates: Designation Hourly Rate ----------- ----------- Seniors/Principals $205 - $295 Consultants $110 - $185 Case Support $95 Data Entry/Administrative Support $45 To the best of the Debtors' knowledge, BMC Group does not hold or represent an interest adverse to the Debtor's estate. Rockford Products Corporation, -- http://www.rockfordproducts.com/ and http://www.rockfordinternational.com/-- originally formed in 1929, manufactures, sources and distributes high quality, cold formed steel components, fasteners and other related products to Tier 1 and 2 suppliers to automobile manufacturers, the automotive aftermarket and non-automotive customers. Most of Rockford Products' manufacturing and distribution operations are located in Rockford, Illinois, where Rockford Products leases three facilities with a combined area of 988,000 square feet. Rockford Products currently has 516 employees. Annual revenues for Rockford Products amounted to around $100 million in fiscal 2006. The Debtor and its debtor-affiliate, Rockford Products Global Services Inc., filed Chapter 11 bankruptcy protection on July 25, 2007 (Bankr. N.D. Ill. Case No. 07-71768 and 07-71769). Thomas J. Augspurger, Esq., at LeBoeuf, Lamb, Greene & MacRae LLP, represent the Debtors in their restructuring efforts. SCOTTS COVE: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Scotts Cove Properties, LLC 38 Delafield Island Road Darien, CT 06820 Bankruptcy Case No.: 07-50498 Type of Business: The Debtor manages real estate property. Chapter 11 Petition Date: August 23, 2007 Court: District of Connecticut (Bridgeport) Debtor's Counsel: Ellery E. Plotkin, Esq. Ellery E. Plotkin, LLC 777 Summer Street, 2nd Floor Stamford, CT 06901 Tel: (203) 325-4457 Fax: (203) 325-4376 Total Assets: $2,900,000 Total Debts: $1,840,644 The Debtor does not have any creditors who are not insiders. SECURITY WITH: Posts $5.3 Million Net Loss in Qtr. Ended June 30 ---------------------------------------------------------------- Security With Advanced Technology Inc. reported a net loss of $5.3 million for the second quarter ended June 30, 2007, compared with a net loss of $1.6 million for comparable period a year ago. Net sales for the three months ended June 30, 2007, totaled $338,700, which is a $322,300 increase from net sales of $16,400 for the three months ended June 30, 2006. The change in sales between 2007 and 2006 is attributable to a decrease in the revenues from the ShiftWatch division in 2007, offset by the sales from Vizer and Avurt, new in 2007 that totaled approximately $224,900, for the three months ended June 30, 2007. The increase in net loss primarily reflects an increase in selling, general and administrative expenses and an increase in non-cash amortization of the $3.0 million additional interest expense associated with the amount allocated to the warrants and the benefical conversion features from the the convertible debt offering completed in March and April 2007. Cost of sales for the three months ended June 30, 2007, totaled $420,600, which is a $135,000 increase as compared to the 2006 period. The change in cost of sales primarily resulted from the additional costs associated with the issues related to the ShiftWatch TVS DVR unit installation, testing and re-work costs that where incurred in 2007. Selling, general and administrative expenses in the three months ended June 30, 2007, totaled $2.0 million, which is an $896,100 or 83% increase as compared to the 2006 period. The increase is primarily attributable to an increase of $166,600 in stock based compensation resulting from option issuances in 2007 combined with additional overhead costs being incurred following the Vizer merger that closed as of Dec. 31, 2006. At June 30, 2007, the company's consolidated balance sheet showed $11.3 million in total asets, $4.7 million in total liabilities, and $6.6 million in total shareholders' 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?22ea Going Concern Doubt As reported in the Troubled Company Reporter on April 26, 2007, GHP Horwath P.C. expressed substantial doubt about Security With Advanced Technology 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 reported that the company did not generate significant revenues in 2006, reported a net loss of approximately $9,347,000 and consumed cash in operating activities of approximately $5,651,000 for the year ended Dec. 31, 2006. The company incurred a net loss and utilized net cash in operating activities of $8.6 million and $5.0 million, respectively, for the six months ended June 30, 2007. About Security With Security With Advanced Technology Inc. (Nasdaq: SWAT) -- http://www.swat-systems.com/ -- provides critical, high-tech security products and services, which include non-lethal protection devices, tactical training services, surveillance and intrusion detection systems and mobile digital video surveillance solutions. SWAT's products and services are designed for government agencies, military and law enforcement, in addition to transportation, commercial facilities and non-lethal personal protection segments. SPATIALIGHT INC: Common Shares Trading Commenced on Aug. 24 ----------------------------------------------------------- SpatiaLight Inc.'s 50 to 1 reverse split became effective as of the close of trading Aug. 23, 2007, and the company's common shares commenced trading on Aug. 24, 2007, on the OTCBB under the symbol SPLT. Effective immediately upon the reverse split the company will have 1,947,770 shares outstanding and a market capitalization of approximately $3.4 million. Headquartered in Novato, California, SpatiaLight Inc. (NasdaqCM: HDTV) (OTC BB: HDTV) -- http://www.spatialight.com/-- manufactures high-resolution liquid crystal on silicon imagers for use in high-definition display applications such as rear projection televisions, monitors, front projection systems, near- to-eye applications, micro-projectors and other display applications. Founded in 1989, the company's primary manufacturing facility is located in South Korea. As reported in the Troubled Company Reporter on Aug. 16, 2007, the company's consolidated balance sheet at June 30, 2007, showed $5.9 million in total assets and $17.8 million in total liabilities, resulting in a $11.9 million total stockholders' deficit. Going Concern Doubt Odenberg, Ulakko, Muranishi & Co. LLP, in San Francisco, expressed substantial doubt about SpatiaLight 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 auditing firm pointed to the company's recurring operating losses, negative cash flows from operations, negative working capital position, and stockholders' deficit. STANDARD DRILLING: Posts $966,083 Net Loss in Qtr. Ended June 30 ---------------------------------------------------------------- Standard Drilling Inc. reported a net loss of $966,083 for the second quarter ended June 30, 2007, compared with a net loss of $427,544 for the same period ended June 30, 2006. For the three month periods ended June 30, 2007, and 2006, the company had no revenues. Due to the company's inability to obtain additional financing, the company does not anticipate continuing to operate in the contract drilling business and will continue with the liquidation and sale of inventory until additional financing becomes available. For the three months ended June 30, 2007, operating expenses totaled $887,223. Of this amount, a total of $75,879 was for costs associated with the company's general and administrative expenses, $84,513 was for professional fees principally associated with capital raising activities, $537,682 for compensation expense, and $189,149 was depreciation expense. At June 30, 2007, the company's consolidated balance sheet showed $17.7 million in total assets, $6.7 million in total liabilities, and $11.0 million in total shareholders' equity. The company's consolidated financial statements for the quarterr ended June 30, 2007, also showed strained liquidity with $922,813 in total current assets available to pay $6.7 million in total current liabilities. 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?22e9 Going Concern Doubt Moore & Associates, in Las Vegas, expressed substantial doubt about Standard Drilling 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 reported that the company has commitments for the purchase of equipment that exceed available funds, has no revenues, and has generated operating losses since inception. About Standard Drilling Standard Drilling Inc. (OTC BB: STDRE.OB) Standard Drilling, a Nevada corporation, was organized to provide contract land drilling services to independent and major oil and gas exploration and production companies. As of June 30, 2007, the company has one 1500 horsepower land drilling rig and certain key components and partial inventory for two 1500 horsepower rigs which are under construction. The company has a contract with Romfor West Africa Ltd. to construct two additional 1500 horsepower land drilling rigs using currently owned key components together with newly purchased additional components. The company does not anticipate completing Rigs 2 and 3 and is currently selling inventory associated with Rigs 2 and 3. STRUCTURED ASSET: S&P Lowers Ratings on Class A and B Units ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class A and B units from the $75.795 million Structured Asset Trust Unit Repackaging Tribune Co. Debenture-Backed Series 2006-1 to 'B-' from 'B'. The ratings remain on CreditWatch, where they were placed with negative implications on Oct. 3, 2006. The downgrades reflect the Aug. 20, 2007, lowering of the rating on the underlying securities, the $79.795 million 7.25% debentures due Nov. 15, 2096, issued by Tribune Co., and its continued placement on CreditWatch negative. SATURNS Tribune Co. Debenture-Backed Series 2006-1 is a pass- through transaction, and its ratings are based solely on the rating assigned to the underlying collateral, Tribune Co.'s $79.795 million 7.25% debentures. STRUCTURED ASSET: S&P Junks Ratings on 10 Certificate Classes ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 29 classes of mortgage pass-through certificates from eight Structured Asset Investment Loan Trust transactions. Of the 29 lowered ratings, S&P removed 16 from CreditWatch with negative implications. At the same time, S&P affirmed its ratings on the remaining classes from various Structured Asset Investment Loan Trust transactions. The downgrades reflect realized losses that have exceeded monthly excess interest cash flow, thereby reducing overcollateralization. As a result, O/C levels for these transactions have dropped to at least 50% below their targets. Furthermore, loss projections indicate that the current performance trends may further compromise credit support for the downgraded classes. In addition, these transactions have sizeable loan amounts that are severely delinquent (90-plus days, foreclosures, and REOs), which suggests that the unfavorable performance trends are likely to continue. The severe delinquencies, as a percent of the current pool principal balances, relative to O/C are as follows (series: percent of current pool balance; approximate amount of delinquencies versus available O/C): -- 2003-BC8: 15.92%; $21,284,244 in delinquencies versus $2,122,285 in O/C; -- 2003-BC9: 16.71%; $20,287,611 in delinquencies versus $1,415,561 in O/C; -- 2003-BC12: 14.51%; $20,201,257 in delinquencies versus $1,614,009 in O/C; -- 2004-3: 10.22%; $35,101,509 in delinquencies versus $3,537,718 in O/C; -- 2004-5: 14.94%; $12,882,164 in delinquencies versus $2,210,094 in O/C; -- 2004-7: 10.46%; $37,334,459 in delinquencies versus $6,103,099 in O/C; -- 2005-HE2: 15.74%; $59,678,367 in delinquencies versus $100 in O/C; and -- 2005-HE3: 15.94%; $179,965,309 in delinquencies versus $3,555,080 in O/C. In addition, as of the July 2007 remittance report, cumulative realized losses for the transactions with lowered ratings, as a percentage of the original pool principal balances were as follows (series: percent of original pool balances; approximate amount) : -- 2003-BC8: 1.13%, $12,243,256; -- 2003-BC9: 1.21%, $13,195,255; -- 2003-BC12: 1.23%, $13,130,373; -- 2004-3: 1.07%, $24,115,520; -- 2004-5: 0.83%, $6,980,748; -- 2004-7: 0.80%, $17,314,392; -- 2005-HE2: 1.71%, $14,399,089; and -- 2005-HE3: 1.05%, $24,887,908. The affirmations reflect credit support levels that are sufficient to maintain the current ratings. The collateral consists of subprime, fixed- or adjustable-rate, first- or second-lien mortgage loans secured by one- to four- family residential properties. Ratings Lowered Structured Asset Investment Loan Trust Mortgage pass-through certificates Rating ------ Series Class To From ------ ----- -- ---- 2003-BC8 M4 BB BBB+ 2003-BC9 M4 B BBB+ 2003-BC9 M3 BBB A- 2003-BC12 M3 BBB A- 2004-3 M4 BB BBB+ 2004-3 M3 BBB A- 2004-5 M8 BB BBB 2005-HE2 B3 D CCC 2005-HE2 B1 CCC BB+ 2005-HE2 M10 B BBB- 2005-HE3 M11 CCC BBB 2005-HE3 M10 B BBB 2005-HE3 M9 B BBB Ratings Lowered and Removed from Creditwatch Negative Structured Asset Investment Loan Trust Mortgage pass-through certificates Rating ------ Series Class To From ------ ----- -- ---- 2003-BC8 B CCC BB-/Watch Neg 2003-BC8 M5 B BB/Watch Neg 2003-BC9 B CCC BB-/Watch Neg 2003-BC9 M5 CCC BB/Watch Neg 2003-BC12 B CCC B/Watch Neg 2003-BC12 M6 B- BB-/Watch Neg 2003-BC12 M5 B BB/Watch Neg 2003-BC12 M4 BB BBB+/Watch Neg 2004-3 B CCC B/Watch Neg 2004-3 M6 B- BBB-/Watch Neg 2004-3 M5 B BBB/Watch Neg 2004-5 B B BBB-/Watch Neg 2004-7 B B BBB-/Watch Neg 2005-HE2 B2 CCC B/Watch Neg 2005-HE3 B2 CCC BB+/Watch Neg 2005-HE3 B1 CCC BBB-/Watch Neg Ratings Affirmed Structured Asset Investment Loan Trust Series Class Rating ------ ----- ------ 2003-BC8 2-A,3-A2,3-A3 AAA 2003-BC8 M1 AA 2003-BC8 M2 A 2003-BC8 M3 A- 2003-BC9 2-A,3-A2,3-A3 AAA 2003-BC9 M1 AA 2003-BC9 M2 A 2003-BC12 1-A,2-A,3-A AAA 2003-BC12 M1 AA 2003-BC12 M2 A 2004-3 A3 AAA 2004-3 M1 AA 2004-3 M2 A 2004-5 A-SIO AAA 2004-5 M2 AA+ 2004-5 M3 AA 2004-5 M4 AA- 2004-5 M5 A 2004-5 M6 A- 2004-5 M7 BBB+ 2004-7 A7,A8 AAA 2004-7 M1 AA+ 2004-7 M2 AA 2004-7 M3 AA- 2004-7 M4 A 2004-7 M5 A- 2004-7 M6 BBB+ 2004-7 M7 BBB 2005-HE2 A2,A3 AAA 2005-HE2 M1 AA+ 2005-HE2 M2 AA 2005-HE2 M3 AA- 2005-HE2 M4 A+ 2005-HE2 M5 A 2005-HE2 M-6 A- 2005-HE2 M7 BBB+ 2005-HE2 M8,M9 BBB 2005-HE3 A2,A4,A5 AAA 2005-HE3 M1 AA+ 2005-HE3 M2 AA 2005-HE3 M3 AA- 2005-HE3 M4 A+ 2005-HE3 M5 A 2005-HE3 M6,M7 A- 2005-HE3 M8 BBB+ STUART COOPER: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Stuart Douglas Cooper Dana Diamomd Cooper fdba Stuart Cooper-Hauling fdba World Wide Cycles 113 Pleasant Hill Road Humboldt, TN 38343 Bankruptcy Case No.: 07-12635 Chapter 11 Petition Date: August 22, 2007 Court: Western District of Tennessee (Jackson) Judge: G. Harvey Boswell Debtor's Counsel: Timothy B. Latimer, Esq. Utley & Latimer, P.C. 425 East Baltimore Jackson, TN 38301 Tel: (731) 424-3315 Estimated Assets: $2,383,870 Estimated Debts: $2,580,689 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ First Tennessee real properties; $246,664 P.O. Box 1545 value of security: Memphis, TN 38101-1545 $571,000; value of senior lien: $411,452 Gary A. Taylor Investments real properties; $200,000 85-A Stonebrook Place value of security: Jackson, TN 38305 $571,000; value of senior lien: $658,116 Commercial Bank & Trust $53,559 P.O. Box 1000 Paris, TN 38242-1000 Regions Bank 2000 Freightliner; $32,095 value of security: $18,000 American Express $29,457 Okaloosa County Tax Collector 2005 & 2006 taxes $21,915 on real properties H.F.C. Customer Service $19,367 Bank of America time share with $14,970 Fairfield Communities, Inc. First Tennessee/Bankcard $11,971 Center Chase $11,636 Citi Cards $7,631 BancorpSouth business equity $4,819 credit lines Semmes-Murphey Clinic $4,752 L.C. Systems, Inc. Re: Five Star $4,728 Quality Care, Inc. (assisted living for Debtor's mother) City of Jackson commercial building $4,248 Madison County commercial building $4,234 Trustee/Wilma Allen United Recovery Systems Re: Capital One Bank $3,850 Bank 5291492417640840 Surveying Services, Inc. $3,300 Gibson Co. Trustee/ $2,970 Leanne Smith The C.B.E. Group, Inc. Re: Citibank/Exxon $2,925 SURF 2003: Credit Support Erosion Cues Moody's Ratings Review ------------------------------------------------------------- Moody's Investors Service placed under review for possible downgrade six tranches from three Specialty Underwriting and Residential Finance deals issued in 2003. SURF purchases loans from brokers who underwrite to its guidelines. The underlying collateral for these deals consists of adjustable and fixed rate, first lien residential mortgage loans. Although the deals' losses are performing within the area of original expectations, the certificates have been placed on review for possible downgrade based upon recent and expected pool losses and the resulting erosion of credit support. Overcollateralization amounts in all of the transactions are currently below their floors and pipeline losses are likely to cause further erosion of the overcollateralization, which could put pressure on the subordinate tranches. Furthermore, existing credit enhancement levels may be low given the current projected losses on the underlying pools. Credit support deterioration seen in these deals can be partially attributed to the deals passing performance triggers and therefore releasing large amounts of overcollateralization. Complete rating actions are: Review for Downgrade: Issuer: Specialty Underwriting and Residential Finance Trust -- Series 2003-BC1, Class B-1, Current rating Baa3, under review for possible downgrade -- Series 2003-BC1, Class B-2, Current rating B3, under review for possible downgrade -- Series 2003-BC2, Class B-1, Current rating Ba2, under review for possible downgrade -- Series 2003-BC2, Class B-2, Current rating B3, under review for possible downgrade -- Series 2003-BC3, Class B-2, Current rating Ba1, under review for possible downgrade -- Series 2003-BC3, Class B-3, Current rating B2, under review for possible downgrade TEGRANT CORPORATION: Moody's Places Corporate Family Rating at B3 ----------------------------------------------------------------- Moody's Investors Service assigned first time ratings to Tegrant Corporation, which included a B3 corporate family rating, B3 probability of default rating, B2 rating for the senior secured first lien credit facility and a Caa2 rating for the senior secured second lien credit facility. The rating outlook is stable. On March 8, 2007, Metalmark Capital acquired Tegrant from Svenska Cellulosa Aktiebolaget SCA for $400 million, excluding fees and expenses. Metalmark used a $215 million first lien term loan, $75 million second lien term loan and a $123 million equity contribution to fund the transaction. The first lien facility also included a $50 million revolver, which was undrawn at close, but is expected to be used to fund peak working capital requirements. Moody's assigned these ratings: -- B2 (LGD 3, 37%), $50 million senior secured first lien revolver due 2013 -- B2 (LGD 3, 37%), $215 million senior secured first lien term loan B due 2013 -- Caa2 (LGD 5, 85%), $75 million senior secured second lien term loan due 2015 -- B3, corporate family rating -- B3, probability of default rating The rating outlook is stable. In assigning the B3 corporate family rating Moody's gave significant consideration to Tegrant's recent operating performance, weak free cash flow to debt, lack of long term contracts with customers, exposure to cyclical end markets, small size, and status as a new stand alone entity. The company has recently experienced revenue and EBITDA declines due to deterioration in its largest segment (Industrial Products division). Moody's believes weakness in this segment will persist due to the downturn in the housing market and the negative effect on sales from housing related accounts. Free cash flow to debt is weak for the rating category and the company has environmental liabilities which may further strain free cash flow. Additionally, Tegrant is expected to continue to seek modest debt financed acquisitions which expand the current suite of products available to existing customers. The ratings are supported by the company's leading position in its markets, highly engineered and customized product mix and good liquidity. The scale and scope of the company's business provides an advantage in retaining customers, servicing national accounts and maintaining margins. Tegrant also has exposure to rapidly growing, but potentially volatile, pharmaceutical and biotechnology packaging segment. The company has a well- experienced management team and a low concentration of sales. Tegrant Corporation, headquartered in DeKalb, Illinois, is a North American provider of highly engineered, "made-to-order", packaging solutions. The company customizes its packaging solutions with a wide variety of material including various foams, corrugated paperboard, wood and thermoformed plastics. Tegrant employees about 2,200 personnel and has 34 manufacturing facilities located through the US and Mexico. Revenues for the twelve months ended March 31, 2007 were $424 million. TERWIN MORTGAGE: Moody's Junks Rating on Class 1-B-4 Certificates ----------------------------------------------------------------- Moody's Investors Service downgraded three certificates and upgraded four certificates from three Terwin Mortgage Trust transactions. All the transactions closed in 2004 and are backed primarily by fixed-rate closed-end second lien mortgage loans. These rating actions are based on the fact that the bonds' current credit enhancement levels, including excess spread, are too low or are high compared to the current projected loss numbers for the current rating levels. The complete rating actions are: Issuer: Terwin Mortgage Trust 2004-4SL -- Class B-3, downgraded from Ba2 to B3; Issuer: Terwin Mortgage Trust 2004-6SL -- Class B-3, downgraded from Ba2 to B2; Issuer: Terwin Mortgage Trust 2004-18SL -- Class I-M-3, upgraded from A3 to Aaa; -- Class 1-B-1, upgraded from Baa1 to A1; -- Class 1-B-2, upgraded from Baa2 to A2; -- Class 1-B-3, upgraded from Baa3 to Baa1; -- Class 1-B-4, downgraded from Ba2 to Caa1. THISTLE MINING: Names John Bredenhann as Chief Executive Officer ---------------------------------------------------------------- Thistle Mining Inc. has appointed John Bredenhann as chief executive officer, for an initial period of six months effective Aug. 26, 2007. He will replace Gerrit Kennedy, whose CEO term was completed. Mr. Kennedy has decided to retire from the mining industry to pursue other business interests. The board thanked Mr. Kennedy for past services and wishes him success in his future endeavours. Mr. Bredenhann is a mining executive and has over 38 years operational experience in the hard rock South African gold mining industry. Prior to joining Thistle, Mr. Bredenhann was chief executive officer of the Placer Dome - Western Areas Joint Venture that ran the South Deep Gold mine now part of the Gold Fields of South Africa group. Mr. Bredenhann has also held various executive positions in the Gold Fields group including as senior consultant - group projects, senior manager operations of the Kloof Division and mine manager of Driefontein Consolidated. Mr. Bredenhann is a South African citizen. "I am sure everyone will join me in welcoming the arrival as chief executive officer of John Bredenhann, with all the mining experience and leadership qualities that he will bring to the role, and we wish him success," Lord Lang, the chairman of Thistle, stated. Mr. Bredenhann indicated that he will conduct a review of the operations of the president Steyn Gold Mine. One of Mr. Bredenhann's key responsibilities will be to provide leadership to president Steyn Gold Mine until any divestiture of the mine is completed. Established in 1996, Thistle Mining Inc. (TSX: THT and AIM: TMG) -- http://www.thistlemining.com/-- has spent its time productively seeking out special opportunities in the mining sector. From the start, the principal focus was on operations with proven reserves. At present, the company has a geographically diversified portfolio in two continents - more specifically, in South Africa and in the Philippines. Thistle Mining's objective is to own or control reserves of 5 million ounces of gold and to have group production of 500,000 ounces of gold per annum. * * * The going concern basis of the company's financial statements presentation assumes that Thistle will continue in operation for the year ahead and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. The company incurred losses of $4.2 million during the nine months ended Sept. 30, 2006. At Sept. 30, 2006, the company's current liabilities exceeded its current assets by $51.3 million and the company's total liabilities exceeded its total assets by $14.2 million. THORNBURG MORTGAGE: Sells $20.5 Billion of Mortgage Portfolio ------------------------------------------------------------- Thornburg Mortgage, Inc. reported last week the sale of a substantial portion of its AAA-rated mortgage securities portfolio and a significant reduction in its borrowings portfolio. The company took these actions to address challenges in meeting its liquidity and financing needs caused by rapidly declining mortgage securities prices and simultaneous declines in the value of its hedging instruments. These rapid declines negatively impacted the company's ability to continue to support its borrowings collateralized by its high quality mortgage securities portfolio. As a result of these unprecedented conditions in the mortgage financing market, Thornburg Mortgage undertook these aggressive portfolio management actions: * the sale of approximately $20.5 billion of primarily AAA- rated MBS (mortgage-backed securities), underscoring the salability of the company's high credit quality portfolio; * the sale resulted in the reduction of its mortgage asset portfolio from $56.4 billion at June 30, 2007 to approximately $36.4 billion at Aug. 17, 2007; its reverse repurchase and commercial paper borrowings from $32.9 billion at June 30, 2007 to approximately $12.4 billion at Aug. 17, 2007; and its future exposure to margin calls on its short- term borrowings; and * the termination of approximately $41.1 billion of interest rate hedging instruments, thereby reducing the company's exposure to market value changes related to its hedging portfolio. Because of these actions to stabilize the company's ability to meet its financing obligations and continue its mortgage portfolio lending operation, the company estimates it will realize an approximate capital loss of $930 million as a result of mortgage securities sales for the quarter ending Sept. 30, 2007. Of this total, $700 million was already reflected as an accumulated comprehensive loss on the company's consolidated balance sheet at June 30, 2007. Further, as a result of the termination of its interest rate hedging instruments, the company realized a net gain of approximately $40 million, the majority of which will be capitalized and realized over the remaining life of those hedging instruments as required by FAS133. Dividend Payment Moved Further In light of the dramatic reduction in the company's mortgage portfolio over the past week, the company is not yet prepared to offer earnings or dividend guidance regarding the amount of any future dividends beyond the September 17, 2007 distribution that has already been declared. However, the company did sell most of its lowest yielding and negative spread assets as part of these asset sales and expects to remain profitable on an operating basis in the third quarter. Further, the company believes that mortgage yields have improved to at least 1.25% over its cost of funding new mortgage assets, which indicates an expected improvement in its portfolio margin going forward as compared to its reported margins over the past year. Finally, the company is not yet in a position to comment on any additional tax implications of these portfolio actions. Book Value The company's GAAP book value, which includes recent changes in the market value of its mortgage securities portfolio and hedging instruments, continued to decline over the course of the previous week as mortgage market conditions continued to deteriorate and as actual mortgage securities sales were completed by the company. The company's GAAP book value is estimated to be $12.40 as of Aug. 17, 2007, which includes an estimated unrealized market value loss of $2.42 per share as reflected as an accumulated comprehensive loss, compared to $14.28 per share estimate as of August 13, 2007, and $19.38 per share estimate as of June 30, 2007. The further decline in book value is reflective of the continued mortgage market deterioration as well as the market impact of the aggressive sale activities of the company in recent days, not a change in the credit quality of the company's mortgage assets. At present, 93.7% of the company's real estate assets are rated AA or AAA and its 60-day plus delinquent loans increased by only 2 basis points between June 30 and July 31, to 0.23% from 0.21% - or 79 delinquent loans out of approximately 38,000 loans in its portfolio - as compared to the national average of 2.32% as of March 31, 2007 as reported by the Mortgage Bankers Association for prime adjustable rate mortgage originators. COO Comments In reflecting on the situation, Larry Goldstone, the company's president and chief operating officer, said, "Over the past 14 years, our excellent credit quality portfolio combined with our liquidity and leverage policy limitations have proven to be more than sufficient to allow us to support our borrowing requirements even during some of the most difficult financing markets, such as 1994 and 1998. However, this mortgage financing market has been even more disruptive than either of those previous two periods for both the industry and Thornburg Mortgage. That said, we have now greatly reduced our exposure to continued widening of the spread between our mortgage assets and our hedging instruments and the associated margin calls against our collateralized borrowings and hedging instruments. As a result, we believe we have nearly stabilized our liquidity situation, which we expect will allow us to begin to resume normal operations over the next two weeks as a leading residential mortgage portfolio lender in the high quality jumbo and super-jumbo adjustable-rate mortgage market." Mr. Goldstone continued, "In response to the continued daily deterioration of the global mortgage finance markets and the decline in non-mortgage related interest rates, we took immediate, decisive action over the past two weeks to reduce the company's exposure to rapidly declining mortgage securities prices by selling assets, improving our liquidity position, reducing our borrowings and our ongoing exposure to further declines in mortgage securities prices. Additionally, we also reduced the balance of our hedging instruments in order to mitigate exposure to continued declines in the value of these instruments as a result of falling interest rates. We believe had we not taken these aggressive steps when we did, the company's financial position would have eroded even more sharply, which, in turn, would likely have resulted in even greater losses as the mortgage market continued to deteriorate. Unfortunately, the mortgage market continues to be in a state of rapid change so we will continue to evaluate the market and determine the best course of action for the company and our shareholders to further solidify our financing situation and mitigate the impact of additional margin calls in the event they should occur." Within the next two weeks, Thornburg Mortgage hopes to reopen its loan lock desk in an effort to gradually begin locking loans for clients and accepting new jumbo ARM applications. The company also anticipates the gradual resumption of funding loans for its nationwide base of lending partners and their clients. "The actions of the past week have been regrettable and disappointing for management and our shareholders," said Mr. Goldstone. "However, we expect that the mortgage market will be substantially more profitable than it has been over the past several years, and we anticipate that new high quality mortgage assets can be originated and acquired at far better portfolio margins than they have been in the past several years. We fully expect that, as we rebuild the company's lending business and its asset base, our profitability will improve. In addition, given the rapid industry consolidation, we anticipate the mortgage market will offer highly attractive growth opportunities for Thornburg Mortgage's lending business." About Thornburg Mortgage Headquartered in Santa Fe, New Mexico, Thornburg Mortgage Inc. (NYSE: TMA) -- http://www.thornburgmortgage.com/-- is a single- family prime residential mortgage lender focused principally on the jumbo segment of the adjustable rate mortgage market. It originates, acquires, and retains investments in adjustable and variable rate mortgage assets. Its ARM assets comprise of purchased ARM assets and ARM loans, including traditional ARM assets and hybrid ARM assets. * * * As reported in the Troubled Company Reporter on Aug. 22, 2007, Fitch Ratings downgraded Thornburg Mortgage Inc.'s ratings and placed them on Negative Watch. The affected ratings include the company's Issuer Default Rating which was lowered to 'CCC' from 'BB' and Preferred Stock rating which was cut to 'CC' from 'B+'. As reported in the Troubled Company Reporter on Aug. 16, 2007, Moody's Investors Service downgraded from Ba3 to B2 and from B2 to Caa1 the senior unsecured debt and preferred stock ratings, respectively, of Thornburg Mortgage Inc. The ratings remain under review for possible downgrade. TIDELANDS OIL: Posts $3.7 Million Net Loss in Qtr. Ended June 30 ---------------------------------------------------------------- Tidelands Oil & Gas Corp. reported a net loss of $3.7 million for the second quarter ended June 30, 2007, compared with a net loss of $2.0 million for the same period ended June 30, 2006. The company reported revenues of $483,999 for the three months ended June 30, 2007, compared to revenues of $407,124 for the three months ended June 30, 2006. The revenue increase resulted from increasing volumes and product prices for propane sold by the company's Sonterra Energy Corporation subsidiary to residential customers. Total costs and expenses for the three months ended June 30, 2007, were $4.2 million versus $2.4 million for the three months ended June 30, 2006. The primary reason for the increase was the non- cash impairment loss of $2.6 million incurred during the three months ended June 30, 2007, versus no impairment loss for the three months ended June 30, 2006. At June 30, 2007, the company's consolidated finacial statements showed $13.1 million in total assets, $11.9 million in total liabilities, and $1.2 million in total shareholders' equity. The company's consolidated balance sheet at June 30, 2007, also showed strained liquidity with $776,553 in total current assets available to pay $11.9 million in total current liabilities. 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?22e8 Going Concern Doubt Baum & Company P.A., in Coral Springs, Florida, expressed substantial doubt about Tidelands Oil & Gas Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements as of the years ended Dec. 31, 2006, and 2006. The auditing firm pointed to the company's recurring losses from operations and net working capital deficiency. The company has experienced and continues to experience negative cash flows from operations, as well as an ongoing requirement for substantial additional capital investment. The company needs to raise substantial additional capital to accomplish its business plan this year and over the next several years. About Tidelands Oil Based in San Antonio, Texas, Tidelands Oil & Gas Corporation (OTC BB: TIDE.OB) -- http://www.tidelandsoilandgas.com/-- focuses on development of mid-stream oil and gas projects including natural gas pipeline infrastructure, retail NGL sales, and natural gas receiving and storage facilities. TRANSDIGM INC: Completes $300 Mil. Offer of 7-3/4% Senior Notes --------------------------------------------------------------- TransDigm Inc., a whollyowned subsidiary of TransDigm Group Incorporated, has completed its offer to exchange up to $300 million aggregate principal amount of 7-3/4% Senior Subordinated Notes due 2014 that were issued on Feb. 7, 2007, for an equal principal amount of 7-3/4% Senior Subordinated Notes due 2014, that have been registered under the Securities Act of 1933, as amended. The exchange offer expired at 5 p.m., New York City time, on Aug. 22, 2007. A total of $300 million aggregate principal amount of the Additional Notes, representing 100% of the outstanding principal amount of the Additional Notes, were validly tendered and accepted for exchange by TransDigm Inc. Headquartered in Cleveland, Ohio, TransDigm Group Incorporated (NYSE: TDG) - http://www.transdigm.com/-- through its wholly owned subsidiaries, including TransDigm Inc., designs, manufactures and supplies highly engineered aircraft components for use on nearly all commercial and military aircraft in service. Major product offerings, substantially all of which are ultimately provided to end-users in the aerospace industry, include ignition systems and components, gear pumps, mechanical/electro-mechanical actuators and controls, NiCad batteries/chargers, power conditioning devices, hold-open rods and locking devices, engineered connectors, engineered latches and cockpit security devices, lavatory hardware and components, specialized AC/DC electric motors and specialized valving. * * * Moody's Investor Services placed B1 on TransDigm Inc.'s probability of default and long term corporate family rating on September 2006. The outlook is negative. These ratings still holds to date. Standard and Poor's assigned B+ on its long term foreign and local issuer credit on June 2003. The outlook is stable. These ratings still holds to date. TRANSLAND FINANCIAL: Involuntary Chapter 11 Case Summary -------------------------------------------------------- Alleged Debtor: Transland Financial Services, Inc. 2701 Maitland Center Parkway Suite 300 Maitland, FL 32751-7416 Case Number: 07-03834 Type of Business: The Debtor is a full service mortgage lender. See http://www.transland.com/ Involuntary Petition Date: August 23, 2007 Court: Middle District of Florida (Orlando) Judge: Arthur B. Briskman Petitioners' Counsel: Lynn James Hinson, Esq. Dean Mead Egerton P.O. Box 2346 Orlando, FL 32802 Tel: (407) 841-1200 Fax: (407) 423-1831 -- and -- Esther A. McKean, Esq. Akerman Senterfitt P.O. Box 231 Orlando, FL 32802-0231 Tel: (407) 419-8583 Fax: (407) 843-6610 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Tier One Bank Loan Payoffs - $12,944,501 1235 North Street Failure of Lincoln, NE 68508 Remittance Federal Trust Bank Loan Payoffs - $2,400,000 420 West 1st Street Failure of Sanford, FL 32771 Remittance MidCountry Bank Loan Payoffs - $7,600,000 1001 Labore Failure of Industrial Court, Suite 3 Remittance Vadnais Heights, MN 55110 TRINITY CHURCH: Case Summary & 12 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Trinity Church and Christian Center, Inc. 3835 Raleigh Millington Road Memphis, TN 38105 Bankruptcy Case No.: 07-28031 Type of Business: The Debtor is a religious organization. Chapter 11 Petition Date: August 23, 2007 Court: Western District of Tennessee (Memphis) Judge: Jennie D. Latta Debtor's Counsel: Ted I. Jones, Esq. Vaughn, Jones, & Vandeveer Suite 1928, 100 North Main Building Memphis, TN 38103 Tel: (901) 526-4248 Total Assets: $1,577,500 Total Debts: $937,818 Debtor's List of its 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Allstar Consulting $17,000 Group, LLC Suite 11 1930 Exeter Avenue Germantown, TN 38138 Financial Pacific Leasing Lease Purchase on $9,000 3455 South 344th Way Day Care Equipment Suite 300 Auburn, WA 98001 Monsarratt Pallet Co. $8,000 1018 North Hollywood Memphis, TN 38107 Marlin Leasing Corp. Lease Purchase on $7,957 Church Organ Great American Leasing Corp. Lease Purchase on $5,000 Copier Office Depot $4,099 Regions Bank $3,000 Daimler Chrysler Credit Vehicle $18,000 Secured: $15,000 Shelby County Trustee Real Estate Taxes $1,963 City of Memphis Treasurer $1,759 GMAC Vehicle $6,000 Secured: $4,500 U.S. Bankruptcy Court Court Expenses $1,039 US INVESTIGATIONS: Highly Leveraged Capital Cues S&P to Cut Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Falls Church, Virginia-based U.S. Investigations Services Inc. to 'B' from 'B+'. The rating was removed from CreditWatch, where it had been placed with negative implications on May 14, 2007, following the company's announcement that it had agreed to be acquired by Providence Equity Partners from Welsh, Carson, Anderson & Stowe and The Carlyle Group, for approximately $1.5 billion, exclusive of fees and expenses. The outlook is negative. At the same time, Standard & Poor's assigned its bank loan and recovery ratings to USIS' proposed senior secured facilities. The $815 million aggregate senior secured facilities, consisting of a $725 million term loan due 2015 and $90 million revolver due 2013, were rated 'B+', one notch above the corporate credit rating, with a recovery rating of '2', indicating secured lenders could expect substantial(70%-90%) recovery in the event of a payment default. Additionally, the company's bridge facilities, consisting of a $250 million senior unsecured term loan and a $190 million subordinated term loan, were rated 'CCC+', two notches below the corporate credit rating. "The downgrade reflects USIS' highly leveraged capital structure and reduced cash flow generating ability following PEP's leveraged buyout of USIS," said Standard & Poor's credit analyst Mark Salierno. Net proceeds from the new bridge facilities will be used to finance the acquisition of USIS by PEP, for a transaction value of about $1.5 billion. The ratings on USIS (a provider of preemployment screening, professional security, and background investigation services) reflect the company's highly leveraged capital structure, reduced financial flexibility post-LBO, narrow business focus, and high customer concentration. Ratings support is provided by the company's defendable leading position in preemployment screening services, the favorable growth prospects for background investigations, and the growth of the U.S. security services industry overall. VOIP INC: Posts $11.9 Million Net Loss in Quarter Ended June 30 --------------------------------------------------------------- VoIP Inc. announced on Aug. 21, 2007, its results for the second quarter and six months ended June 30, 2007. Net loss applicable to common stockholders, including discontinued operations, for the second quarter was $11.9 million, versus $5.2 million for the second quarter of 2006. Net loss for the second quarter, excluding discontinued operations, was $5.8 million, versus a net loss of $5.0 million for the second quarter of 2006. The 2007 second quarter loss includes $3.5 million in litigation credits and a $900,000 credit to reflect the fair value of the company's warrant liability; the 2006 second quarter includes a charge of $4.7 million in relation to the warrants' fair value. Revenue for the second quarter was $1.9 million, as compared with $2.0 million for the same period in 2006. The negative gross profit of $456 thousand (23% of revenues) in 2006 reflects costs paid to third party vendors that exceeded the revenues the company charged to terminate the calls of its customers. For the same period in 2007, the company's negative gross profit was $126 thousand (7% of revenues). The gross profit improvement in 2007 was achieved by using lower cost routes and negotiating more favorable pricing. The company's operating loss for the quarter was $5.1 million, versus a loss of $6.8 million for the second quarter of last year. "This quarter was one of building the business - paving the way for future growth," said Anthony J. Cataldo, VoIP Inc.'s chairman and chief executive officer. "We executed according to plan and, as recently reported, saw July revenues increase 59% sequentially from June to approximately $852,000, primarily reflecting the 47% improvement in total termination minutes of use on our network. In addition, the average price per minute charged to our customers rose approximately 15% sequentially. In August, we are experiencing even greater traffic over our network, and expect revenue for the month to climb well over $1 million, with a corresponding increase in total termination minutes. "Going forward, we will look to drive margin expansion as we continue to leverage our state-of-the-art network to increase minutes, streamline our operations, and rapidly grow the business," Mr. Cataldo continued. "Having completed the initial investment in our infrastructure, we are now positioned to service over 50 million households and businesses, offering improved quality and service to our clients nationwide. During the remainder of 2007, we plan to further build out the network, which will enable us to service over 200 million subscriber and enterprise lines by year end - with the most reliable platform in the industry. "In addition, the recent completion of our reverse stock split allows the company to attract a wider audience of investors who can appreciate our rapidly-evolving story; and at the same time, we have reduced the company's debt, improved our balance sheet and provided for increased financial flexibility, as we finalize plans to provide capital for future growth. We are encouraged by our increasing traffic and improving fundamentals, and we expect our operations to post strong growth during the second half of 2007 - positioning VoIP to truly become the leading provider of internet- enabled communications in the U.S." For the first six months of 2007, VoIP reported revenue of $3.6 million versus $4.2 million in the same period last year. The negative gross profit of $1.6 million (39% of revenues) in 2006 reflects costs paid to third party vendors that exceeded the revenues the company charged to terminate the calls of its customers. For the same period in 2007, the negative gross profit was $477 thousand (13% of revenues). The gross profit improvement in 2007 was achieved by using lower cost routes and negotiating more favorable vendor pricing. The operating loss was $9.9 million for the six months ended June 30, 2007, as compared with a loss of $15.7 million in 2006. Net loss for the period, excluding discontinued operations, was $19.9 million, versus a net loss of $17.6 million for the first six months of 2006. The 2007 results include $2.5 million in litigation credits and a $2.7 million increase in the fair value of the company's warrant liability; the 2006 second quarter includes a credit of $3.4 million in relation to the warrants' fair value. Net loss applicable to common stockholders, including discontinued operations, for the first six months of 2007 was $25.4 million, versus $19.0 million for the same period in 2006. About VoIP, Inc. At June 30, 2007, the company's consolidated balance sheet showed $31.2 million in total assets, $27.2 million in total liabilities, and $4.0 million in total stockholders' equity. The company's consolidated balance sheet at June 30, 2007, also showed strained liquidity with $654,599 in total current assets available to pay $27.0 million in total current liabilities. 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?22dd Going Concern Doubt Berkovits, Lago & Company LLP, in Fort Lauderdale, Fla., expressed substantial doubt about VoIP Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements as of the years ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's dependence on outside financing, lack of sufficient working capital, and recurring losses. VoIP Inc. is also required to file registration statements to register amounts ranging up to 200% of the shares issuable upon conversion of the company's July and October 2005, January and February 200, October 2006, February 2007, April 2007, and June 2007 convertible notes, and all of the shares issuable upon exercise of the warrants issued in connection with these notes. Certain registration statements were filed, but have since become either ineffective or withdrawn. Until sufficient registration statements are declared effective by the Securities and Exchange Commission, the company is liable for liquidated damages totaling $2,507,813 through June 30, 2007, and will continue to incur additional liquidated damages of $209,935 per month until the required shares and warrants are registered. Since October 2005, the company has been in violation of certain requirements of the convertible notes. While the investors have not declared these notes currently in default, the full amount of the notes at June 30, 2007 has been classified as current. About VoIP Based Altamonte Springs, Fla., VoIP Inc. (OTC BB: VOII.OB) -- http://www.voipincorporated.com/-- provides turnkey Voice over Internet Protocol (VoIP) communications solutions for service providers, resellers and consumers worldwide. The Company is also a certified Competitive Local Exchange Carrier (CLEC) and Inter Exchange Carrier (IXC). WHOLE FOODS: Court Junks FTC's Motion, Wild Oats Merger to Proceed ------------------------------------------------------------------ Whole Foods Market Inc. and Wild Oats Markets Inc. are now legally cleared to proceed with their merger as the U.S. Court of Appeals for the District of Columbia has denied the FTC's request for a stay to preclude the closing of the merger pending the FTC's appeal and has dissolved the Aug. 20, 2007, administrative injunction, which had prevented the transaction from going forward while the court considered the FTC's motion. "We are pleased to have cleared what we expect to be our last legal hurdle," John Mackey, chairman, CEO, and co-founder of Whole Foods Market, said. "We look forward to closing this merger and believe the synergies gained from this combination will create long-term value for our customers, vendors and shareholders well as exciting opportunities for our new and existing team members." Whole Foods Market's tender offer to purchase outstanding shares of common stock of Wild Oats expires Monday, Aug. 27, 2007, at 5:00 p.m., Eastern Time. On Feb. 21, 2007, Whole Foods Market entered into a merger agreement with Wild Oats, pursuant to which Whole Foods Market, through a wholly-owned subsidiary, has commenced a tender offer to purchase all of the outstanding shares of Wild Oats at a purchase price of $18.50 per share in cash. On June 6, 2007, the FTC filed a suit in the federal district court to block the proposed acquisition on antitrust grounds and seeking a temporary restraining order and preliminary injunction pending a trial on the merits. Whole Foods Market and Wild Oats consented to a temporary restraining order pending a hearing on the preliminary injunction, which concluded on Aug. 1, 2007. On Aug. 16, 2007, the U.S. District Court for the District of Columbia denied the FTC's motion for a preliminary injunction. In order to permit an orderly review by the District Court and the Court of Appeals, Whole Foods and Wild Oats agreed not to consummate the transaction until noon Monday, Aug. 20, 2007, in order to permit the FTC to have an opportunity to request a stay of the District Court's decision pending appeal. On Aug. 17, 2007, the FTC filed with the District Court a motion for a stay pending appeal, which was denied the same day. The FTC also filed a motion with the U.S. Court of Appeals for the District of Columbia for a stay pending appeal the District Court's order. On Aug. 20, 2007, the United States Court of Appeals for the District of Columbia Circuit issued an administrative injunction preventing the transaction from going forward, pending further order of the Court of Appeals, in order to allow the court sufficient opportunity to review the FTC's motion. For further information, please contact: Whole Foods Market Investor Contact - Cindy McCann, (512) 542 0204; Media Contact - Kate Lowery, (512) 542 0390; or Wild Oats Markets Investor and Media Contact - Sonja Tuitele (303) 396 6984. About Wild Oats Markets Headquartered in Boulder, Colorado, Wild Oats Markets Inc. -- http://www.wildoats.com/-- is a natural and organic foods retailer in North America with annual sales of approximately $1.2 billion. Wild Oats Markets was founded in Boulder, Colorado in 1987. Wild Oats Markets currently operates 110 stores in 24 states and British Columbia, Canada under four banners: Wild Oats Marketplace (nationwide), Henry's Farmers Market (Southern California), Sun Harvest (Texas), and Capers Community Market (British Columbia). About Whole Foods Market Founded in 1980 in Austin, Texas, Whole Foods Market, Inc. (NASDAQ: WFMI) -- http://www.wholefoodsmarket.com/-- is a natural and organic foods supermarket. In fiscal year 2006, the company had sales of $5.6 billion and currently has more than 190 stores in the United States, Canada, and the United Kingdom. * * * As reported in the Troubled Company Reporter on May 1, 2007, Standard & Poor's Ratings Services said that while the ratings on Whole Foods Market Inc., including the 'BBB-' corporate credit rating, currently remain on CreditWatch with negative implications, where they were placed on Feb. 22, 2007, S&P will lower the corporate credit rating to 'BB+' from 'BBB-' upon closure of its acquisition of Wild Oats Inc. At this time, ratings will also be removed from CreditWatch. The outlook will be stable. XERIUM TECHNOLOGIES: Completes Restatement of Financial Reports --------------------------------------------------------------- Xerium Technologies Inc. completed the previously-announced restatement of certain of its previously-issued financial statements, following a review of the accounting treatment of interest rate swaps that it entered into in June 2005. Thomas Gutierrez, president and chief executive officer of Xerium Technologies, commented, "We addressed the need to review our financial statements in light of evolving, complex interest rate swap accounting, and are pleased that we were quickly able to resolve all issues completely and accurately. As we noted previously, these hedging activities have been successful in fulfilling their goal of providing stability to the Company's interest rate structure. It should also be noted that this technical accounting issue affected only interest expense, related income taxes and net income (loss). There was no impact on operating cash flow, sales, operating income or Adjusted EBITDA, nor does it affect the Company's debt covenants. As can be seen in the amended financial statements, the aggregate effect of the restatement was to boost the Company's net income over the restated period. For the period of the third quarter 2007 through the second quarter 2008, at which time the current interest rate swaps are set to expire, we expect to record in the aggregate approximately $8 million of additional interest expense to our Income Statement in connection with marking to market through earnings the 2005 interest rate swaps. This additional interest expense over that period is excluded for the purposes of our bank covenant calculations and therefore has no effect on those calculations." The consolidated financial statements restated are the consolidated balance sheets as of Dec. 31, 2006 and 2005 and the consolidated statements of operations, stockholders' equity (deficit), and cash flows for the years 2006 and 2005 and the company's unaudited quarterly financial statements during these years, commencing with the quarter ended June 30, 2005, and for the quarter ended March 31, 2007. Accordingly, the company filed Thursday, an amended Annual Report on Form 10-K/A for the year ended Dec. 31, 2006, and an amended Quarterly Report on Form 10-Q/A for the quarter ended March 31, 2007, along with its Quarterly Report on Form 10-Q for the quarter ended June 30, 2007. Xerium Technologies Inc. (NYSE: XRM) -- http://xerium.com/-- manufactures and supplies two types of products used primarily in the production of paper: clothing and roll covers. The company, which operates around the world under a variety of brand names, owns a broad portfolio of patented and proprietary technologies to provide customers with tailored solutions and products integral to production, all designed to optimize performance and reduce operational costs. With 33 manufacturing facilities in 14 countries around the world, Xerium Technologies has approximately 3,800 employees. * * * As reported in the Troubled Company Reporter on Feb. 13, 2007, Moody's Investors Service downgraded Xerium Technologies': Corporate Family Rating, to B2 from B1; Senior Secured Term Loan, to B2 from B1; Senior Secured Revolving Credit Facility, to B2 from B1; and Probability of Default Rating, to B2 from B1. * Fitch to Incorporate Enhancements to Existing MI Capital Model ---------------------------------------------------------------- Effective August 23, Fitch Ratings Mortgage Insurance group said it will be incorporating several enhancements to its existing proprietary MI capital model reflecting the rapidly changing mortgage environment being experienced in the U.S. Some of these updates also correspond to recent revisions that were made by Fitch's U.S. Residential Mortgage-Backed Securities group in its mortgage default and loss model, known as ResiLogic. The revisions to the U.S. MI capital model will be mainly centered on increasing the expected default probability used to model the existing mortgage insurance-in-force exposure at each company, reflecting changes that have taken place more recently in the U.S. mortgage markets. Consistent with recent enhancements made to the ResiLogic model, Fitch will increase the default probability in its MI capital model by 20%. Fitch believes this higher assumed default rate will better incorporate the risks inherent in the U.S. mortgage market, such as greater deterioration in home prices and significantly poorer performance of loans with certain characteristics. Fitch will also be applying a more significant capital charge to all illiquid equity investments held within the investment portfolios of the MI companies. Going forward, the capital charge for illiquid assets, such as investments in subsidiaries or equity investments in unrelated third party entities will be increased to 100%. Previously, Fitch had been applying a lower capital charge against these assets. The updated charge reflects the potential challenges in extracting liquidity from such investments during periods of financial stress. The impact of this change will vary by company, with several of the MI companies being relatively unaffected. Fitch notes that since the updated default rates will produce greater gross capital charges for most MI companies, the nature of any reinsurance arrangements will take on greater importance in the overall model results going forward. To the extent a MI company has reinsurance in place to absorb modeled losses; the model will now be recognizing a greater level of reinsurance credit as a partial offset to the higher level of gross losses. This reinsurance credit may be most noteworthy for excess-of-loss captive mortgage reinsurance coverage held in trusts for the benefit of each primary MI company. Fitch views the revisions announced [Thursday] as an interim step in its development of an updated U.S. MI capital model, and believes that the revisions reflect a timely reaction to recent events. Ultimately, Fitch intends to provide further upgrades to its U.S. MI capital model, with the expectation of migrating to a platform that more closely mirrors the dynamic ResiLogic model of the agency's RMBS group. Fitch is in the process of updating all MI companies' capital model results with the revised model enhancements for the period ending Dec. 31, 2006, and will announce results of this analysis shortly. In the near future, Fitch will also be producing capital model results for each rated company's insured portfolio as of the period ending June 30, 2007. Under Fitch's updated MI model, there is a potential that some of the MI companies rated by Fitch will no longer maintain the necessary level of capital expected for their given ratings level. Fitch does not anticipate a significant number of rating actions related to these revisions, and where actions are ultimately taken, based on Fitch's preliminary analysis it is expected that any downgrades will be limited to only one notch. As discussed previously, Fitch has stated that the MI industry has historically maintained an abundant level of excess capital given their respective rating levels. That said, with the announced revisions to the U.S. MI model, the perceived level of excess capital for the U.S. MI companies will be noticeably reduced on a go-forward basis. Fitch will be reviewing the ratings of any company affected by the model revisions and expects to provide updates to the market within the next two weeks. * Seyfarth Shaw Transfers to New York Times Building ---------------------------------------------------- Seyfarth Shaw LLP said it has transferred its New York office to its new location, the New York Times Building, at 620 Eighth Avenue between 40th and 41st Streets. The firm, consisting of approximately 185 employees, including both attorneys and support staff, was previously located in Radio City Music Hall at Rockefeller Center at 1270 Avenue of the Americas. "Our New York office has more than doubled in size in the past two years, and our new home accommodates our rapid expansion with state-of-the-art technology and conferencing capabilities," said Lorie E. Almon, co-managing partner of the New York office. The firm first opened its New York office in 1979 with seven attorneys. The firm moved over 80 attorneys into its new office space on Monday, and will accommodate over 140 lawyers in the new space. In May 2006, the firm was the first tenant to sign a lease at the Renzo Piano-designed 52-story skyscraper. The firm now occupies 100,000 square feet on floors 31, 32 and 33 of the building located near the heart of bustling Times Square. "When the firm signed its 17-year lease for our space at the New York Times Building, it was a testament on behalf of the entire firm to the importance of the continued growth and strength of our New York office to fully serve our growing client base both regionally and nationally," added John P. Napoli, co-managing partner of the firm's New York office. The firm can be reached at: Seyfarth Shaw LLP 620 Eighth Avenue New York, NY 10018 Tel: (212) 218-5269 Fax: (212) 218-5526 Based in New York City, Seyfarth Shaw LLP -- http://www.seyfarth.com/-- has over 700 attorneys located in nine offices throughout the United States including Chicago, New York, Boston, Washington D.C., Atlanta, Houston, Los Angeles, San Francisco and Sacramento as well as Brussels, Belgium. Seyfarth Shaw provides a broad range of legal services in the areas of labor and employment, employee benefits, litigation and business services. The firm's practice reflects virtually every industry and segment of the country's business and social fabric. Clients include over 200 of the Fortune 500 companies, financial institutions, newspapers and other media, hotels, health care organizations, airlines and railroads. The firm also represents a number of federal, state, and local governmental and educational entities. * BOND PRICING: For the Week of August 20 -- August 25, 2007 ------------------------------------------------------------ Issuer Coupon Maturity Price ------ ------ -------- ----- ABC Rail Product 10.500% 01/15/04 0 ABC Rail Product 10.500% 12/31/04 0 Ambac Inc 6.150% 02/15/37 0 AHI-DFLT07/05 8.625% 10/01/07 71 Albertsons Inc 6.520% 04/10/28 73 Albertsons Inc 6.530% 04/10/28 73 Albertsons Inc 6.560% 07/26/27 74 Albertsons Inc 6.570% 02/23/28 74 Albertsons Inc 6.630% 06/02/28 74 Allegiance Tel 11.750% 02/15/08 53 Alltel Corp 6.800% 05/01/29 75 Amer & Forgn Pwr 5.000% 03/01/30 59 Ames Dept Stores 10.000% 04/15/06 0 Antigenics 5.250% 02/01/25 71 Atherogenics Inc 1.500% 02/01/12 37 Atlantic Coast 6.000% 02/15/34 4 Bank New England 8.750% 04/01/99 9 Bank New England 9.500% 02/15/96 14 Bank New England 9.875% 09/15/99 8 Budget Group Inc 9.125% 04/01/06 0 Buffets Inc 12.500% 11/01/14 74 Builders Transport 6.500% 05/01/11 0 Burlington North 3.200% 01/01/45 52 Calpine Gener Co 11.500% 04/01/11 34 Cell Therapeutic 5.750% 06/15/08 72 CIT Group Inc 6.000% 04/01/36 72 CIT Group Inc 6.100% 03/15/67 69 Claires Stores 10.500% 06/01/17 74 Clear Channel 4.900% 05/15/15 75 Clear Channel 5.500% 12/15/16 74 Collins & Aikman 10.750% 12/31/11 2 Comed Fin III 6.350% 03/15/33 75 Color Tile Inc 10.750% 12/15/01 0 Columbia/HCA 7.050% 12/01/27 74 Columbia/HCA 7.500% 11/15/95 74 Complete Mgmt 8.000% 08/15/03 0 Comprehensive Care 7.500% 04/15/10 60 Compucredit 5.875% 11/30/35 65 Countrywide Home 6.000% 07/23/29 74 Curagen Corp 4.000% 02/15/11 63 Dana Corp 6.500% 03/15/08 75 Dana Corp 6.500% 03/01/09 72 Dana Corp 7.000% 03/01/29 72 Decode Genetics 3.500% 04/15/11 67 Delta Air Lines 8.000% 12/01/15 56 Delta Mills Inc 9.625% 09/01/07 15 Desa Intl Inc 9.875% 12/15/07 0 Duquesne Light 6.250% 08/15/35 74 Dura Operating 8.625% 04/15/12 54 Dura Operating 9.000% 05/01/09 7 Dura Operating 9.000% 05/01/09 4 Dyersburg Corp 9.750% 09/01/07 0 Empire Gas Corp 9.000% 12/31/07 1 Encysive Pharma 2.500% 03/15/12 70 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 18 Finlay Fine Jewelry 8.375% 06/01/12 74 Finova Group 7.500% 11/15/09 19 Florsheim Group 12.750 09/01/02 0 Ford Motor Cred 6.150% 12/22/14 75 Ford Motor Cred 6.250% 01/20/15 73 Ford Motro Cred 7.500% 08/20/32 71 Ford Motor Co 6.375% 02/01/29 71 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 71 Ford Motor Co 7.400% 11/01/46 71 Ford Motor Co 7.700% 08/01/26 73 Ford Motor Co 7.700% 05/15/97 73 Ford Motor Co 7.750% 03/15/43 73 Gateway Inc 2.000% 02/31/11 75 General Motors 6.750% 05/01/28 71 General Motors 7.375% 05/23/48 73 GMAC 5.350% 01/15/14 75 GMAC 5.900% 01/15/19 72 GMAC 5.900% 01/15/19 74 GMAC 5.900% 10/15/19 68 GMAC 6.000% 02/15/19 75 GMAC 6.000% 03/15/19 73 GMAC 6.000% 03/15/19 72 GMAC 6.000% 03/15/19 74 GMAC 6.000% 04/15/19 72 GMAC 6.050% 08/15/19 73 GMAC 6.050% 08/15/19 73 GMAC 6.100% 09/15/19 66 GMAC 6.125% 10/15/19 74 GMAC 6.150% 08/15/19 74 GMAC 6.150% 09/15/19 70 GMAC 6.250% 04/15/19 74 GMAC 6.300% 08/15/19 74 GMAC 6.300% 08/15/19 74 GMAC 6.350% 07/15/19 73 GMAC 6.600% 05/15/18 74 GMAC 7.000% 06/15/22 71 GMAC 7.150% 03/15/25 72 GMAC 7.250% 02/15/25 74 Gulf States STL 13.500% 04/15/03 0 Harrahs Oper Co. 5.750% 10/01/17 74 Hercules Inc 6.500% 06/30/29 74 Hines Nurseries 10.250% 10/01/11 73 HNG Internorth 9.625% 03/15/06 28 Iridium LLC/CAP 10.875% 07/15/05 15 Iridium LLC/CAP 11.250% 07/15/05 17 Iridium LLC/CAP 13.000% 07/15/05 16 Iridium LLC/CAP 14.000% 07/15/05 15 James River Coal 9.375% 06/01/12 70 K Hovnanian Entr 7.750% 05/15/13 73 Kaiser Aluminum 9.875% 02/15/02 0 Kaiser Aluminum 12.750% 02/01/03 6 Kellstrom Inds 5.500% 06/15/03 0 Kellstrom Inds 5.750% 10/15/02 0 Kimball Hill Inc 10.500% 12/15/12 74 Kmart Corp 9.350% 01/02/20 12 K Mart Funding 8.800% 07/01/10 73 Lehman Bros Holding 5.800% 11/08/30 73 Lehman Bros Holding 10.000% 10/30/13 71 Liberty Media 3.750% 02/15/30 58 Liberty Media 4.000% 11/15/29 64 Lifecare Holding 9.250% 08/15/13 61 LTV Corp 8.200% 09/15/07 0 McSaver Financl 7.400% 02/15/02 0 McSaver Financl 7.875% 08/01/03 0 Missuori Pac RR 4.750% 01/01/30 73 Missuori Pac RR 5.000% 01/01/45 73 Motorola Inc 5.220% 10/01/97 71 Movie Gallery 11.000% 05/01/12 25 Natl Steel Corp 9.875% 03/01/09 0 New Orl Grt N RR 5.000% 07/01/32 59 Northern Pacific RY 3.000% 01/01/47 51 Northern Pacific RY 3.000% 01/01/47 51 Northwest Steel & Wire 9.500% 06/15/01 0 NTK Holdings Inc 10.750% 03/01/14 62 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 70 Outboard Marine 7.000% 07/01/02 0 Outboard Marine 9.125% 04/15/17 0 Pac-West Telecom 13.500% 02/01/09 3 Pac-West Telecom 13.500% 02/01/09 8 PCA LLC/PCA FIN 11.875 08/01/09 5 Pegasus Satellite 12.375% 08/01/08 0 Phelps Dodge 6.125% 03/15/34 70 Piedmont Aviat 10.250% 01/15/49 0 Pixelworks Inc 1.750% 05/15/24 74 Polaroid Corp 6.750% 01/15/02 0 Polaroid Corp 7.250% 01/15/07 0 Polaroid Corp 11.500% 02/15/06 0 Pope & Talbot 8.375% 06/01/13 60 Pope & Talbot 8.375% 06/01/13 55 Primus Telecom 3.750% 09/15/10 69 Primus Telecom 8.000% 01/15/14 65 Pulte Homes Inc 6.000% 02/15/35 74 Radnor Holdings 11.000% 03/15/10 0 Rait Financial 6.875% 04/15/27 63 Realogy Corp 12.375% 04/15/15 74 Reliance Grp Hld 9.000% 11/15/00 0 Residential Cap 6.000% 02/22/11 74 Residential Cap 6.500% 06/01/12 75 Residential Cap 6.500% 04/17/13 74 Residential Cap 6.875% 06/30/15 74 Rite Aid Corp. 7.700% 02/15/27 74 RJ Tower Corp. 12.000% 06/01/13 3 Saint Acquisition 12.500% 05/15/17 63 SeviceMaster Co 7.450% 08/15/27 70 Scotia Pac Co 6.550% 01/20/07 50 SLM Corp 5.000% 06/15/28 70 SLM Corp 5.250% 12/15/28 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 71 SLM Corp 5.450% 06/15/28 73 SLM Corp 5.500% 06/15/29 70 SLM Corp 5.500% 06/15/29 72 SLM Corp 5.500% 03/15/30 70 SLM Corp 5.500% 06/15/30 70 SLM Corp 5.500% 12/15/30 71 SLM Corp 5.550% 06/15/25 71 SLM Corp 6.000% 12/15/29 71 SLM Corp 5.650% 03/15/29 73 SLM Corp 5.650% 12/15/29 73 SLM Corp 5.650% 12/15/29 74 SLM Corp 5.650% 06/15/30 75 SLM Corp 5.700% 03/15/29 71 SLM Corp 5.700% 03/15/29 74 SLM Corp 5.700% 03/15/30 74 SLM Corp 5.750% 03/15/29 73 SLM Corp 5.750% 06/15/29 73 SLM Corp 5.750% 06/15/29 75 SLM Corp 5.750% 09/15/29 73 SLM Corp 5.750% 09/15/29 75 SLM Corp 5.750% 12/15/29 75 SLM Corp 5.750% 03/15/30 72 SLM Corp 5.800% 12/15/29 72 SLM Corp 5.850% 09/15/29 73 SLM Corp 6.000% 03/15/29 75 SLM Corp 6.000% 06/15/29 74 SLM Corp 6.000% 09/15/29 74 SLM Corp 6.000% 09/15/29 75 SLM Corp 6.000% 12/15/30 72 SLM Corp 6.000% 12/15/31 72 SLM Corp 6.350% 09/15/31 72 Spacehab Inc 5.500% 10/15/10 49 Spectrum Brands 7.375% 02/01/15 72 Standard Pac Corp 6.250% 04/01/14 75 Standard Pac Corp 7.500% 03/15/13 75 Standard Pacific 7.000% 08/15/15 74 Standard Pacific 9.250% 04/15/12 74 Stanley-Martin 9.750% 08/15/15 72 Solutia Inc 6.720% 10/15/37 73 Solutia Inc 7.375% 10/15/27 74 Telcordia Tech 10.000% 03/15/13 75 Tenet Healthcare 6.875% 11/15/31 72 Times Mirror Co 6.610% 09/15/27 69 Times Mirror Co 7.250% 11/15/96 71 Times Mirror- New 7.7500% 07/01/23 72 Tom's Foods Inc 10.500% 11/01/04 1 Tousa Inc 7.500% 03/15/11 38 Tousa Inc 7.500% 01/15/15 33 Tousa Inc 9.000% 07/01/10 71 Tousa Inc 9.000% 07/01/10 72 Tousa Inc 9.000% 07/01/10 71 Tousa Inc 10.375% 07/01/12 44 TransTexas Gas 15.000% 03/15/05 0 Tribune Co 5.250% 08/15/15 72 United Air Lines 9.350% 04/07/16 43 United Homes Inc. 11.000% 03/15/05 0 US Air Inc. 10.680% 06/27/08 0 US Air Inc. 10.800% 01/01/49 0 Vertis Inc 13.500% 12/07/09 72 Vicorp Restaurant 10.500% 04/15/11 72 Viropharma Inc 2.000% 03/15/17 75 Wachovia Corp 15.500% 12/05/07 69 WCI Communities 6.625% 03/15/15 72 WCI Communities 7.875% 10/01/13 74 Weirton Steel 10.750% 06/01/05 0 Werner Holdings 10.000% 11/15/07 1 Westpoint Steven 7.875% 06/15/05 0 William Lyon 7.500% 02/15/14 72 William Lyon 7.625% 12/15/12 74 Winstar Comm Inc 12.750% 04/15/10 0 Winstar Comm 14.000% 10/15/05 0 Wornick Co 10.875% 07/15/11 75 ********* 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 R. 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 ***